DoorDash Rehash; I’m With the BAND; Uber’s Robo-Taxi No More
Knocking on Heaven’s Door(Dash)
Great Ones … welcome to Reader Feedback day!
If you happen to be new ‘round these parts, today’s the day that Great Stuff answers your questions, researches your investment ideas and indulges in your rants … whatever the topic may be.
Seriously. Last week, we covered everything from artificial intelligence to McDonald’s to trading wood for sheep. Umm … you had to be there.
It’s all fair game because Reader Feedback is all about you!
I know you have questions (so many questions), and Great Stuff has answers. Well … that’s what we call them anyway. They might actually be Funyuns; who knows?
So why not drop us a line at GreatStuffToday@BanyanHill.com? You might even see yourself in the spotlight this time next week!
Now, that’s enough jibber-jabber. Today’s feature presentation harkens back to last week when I asked you for your thoughts on soon-to-IPO DoorDash. And, boy, do Great Ones either love or hate — or love to hate — DoorDash:
I’m not looking for a minimum wage. I make all I need with my dashing as is. I’m not sure what you’re looking for, but I stand behind DoorDash 100%.
— Mark S.
Believe full time workers (32 hours)/week should be employees. If that’s the case, the stock will tank.
— William G.
I tried DoorDash for a while but finally decided it was not even worth my time because twice I went out for eight hours and managed to earn $73.50, but by the time you figure fuel, wear and tear on the car, commercial insurance and taxes at the end of the year, I’m lucky if I break even.
Some nights I’ve worked four and a half hours for $35.00, which is a joke! And after all the deliveries I received one tip.
So, more power to other dashers, but for me it costs more than it’s worth to even go out, so it’s not even worth all the effort. So, I cancelled my commercial insurance and don’t deliver anymore because it’s a joke!
— John L.
That’s a pretty fair sampling of the feedback we received on DoorDash. Dashers either love the company or hate it.
Investors, however, aren’t sure what to make of it … and for good reasons, including profitability and the potential for government regulations.
Luckily for us, my good friend Ted Bauman recently weighed in on DoorDash. Ted is one of the best economists, asset protection specialists and investors that I know.
Ted immediately zeroed in on DoorDash’s shady profitability, noting: “It’s always cost the company more to make a delivery than the revenue it earns. That’s why, for example, it lost $450 million even after earning $900 million in revenue in 2019.”
The pandemic may have made those margins a bit more attractive due to volume and rising market share, but that won’t last forever. Furthermore, having more than 50% of an unprofitable industry doesn’t make you profitable.
“The reason is simple economics,” says Ted.
His advice on the DoorDash IPO? Don’t buy it. Instead, be a smarter trader by leveraging options. The idea is simple: Buy call options when the stock is on the way up, buy put options when the stock is on the way down.
Oh, right! Just trade options? Mr. Great Stuff makes it sound soooo simple. How do I not lose my shirt trading options, Mr. Smarty Pants?
Well, it just so happens that Ted Bauman is in the process of putting together his own options trading service designed around his unique brand of no-nonsense market analysis. It’s not ready yet, but you can be sure that Great Stuff will let you know when it is.
In the meantime, you owe it to yourself to check out the other BS-spotting and fine-toothed comb investing tips that Ted Bauman does best. In fact, Ted’s been on a mission to hunt down and uncover the same tax secrets the wealthy use … so Main Street Americans can follow in their footsteps to cut their taxes down to as little as possible.
Contrary to what they’ll tell you, the little-known strategies used by America’s wealthiest to slash their tax bills to near nothing are also available to you.
(By the way, if you think that November’s far too early to get your tax ducks in a row … I’ve got some bad news for you about this thing called “procrastination.” Go click that link above pronto!)
Now, with that word from our sponsor out of the way, let’s get right to answering your emails! Again, if you haven’t written in yet, drop us a line at GreatStuffToday@BanyanHill.com. We don’t bite … unless you ask nicely.
What a long strange week it’s been, Great Ones.
On Monday, the light was all shinin’ on me. The rest of the week, I could barely see. But, like the do-dah man once told me: “You’ve got to play your hand.” Even if the cards ain’t worth a dime.
Judging from your emails, Great Stuff readers have moved beyond both the pandemic and the 2020 election. Literally none of you are talking about it. And that makes me happy. I’m tired of living on reds, vitamin C and caffeine.
Instead, there’s more of an investing tilt to today’s Reader Feedback questions. Imagine that! Investing questions in an investing newsletter? Who knew?
Let’s kick it off by continuing with the DoorDash gig economy theme:
Et Tu, Robo-Taxi?
Hello Great Stuff,
As far as the gig economy goes, I’m bullish on Uber. I’ve been invested in it for a few months now with almost a 50% gain to show for it. While their food delivery service is keeping them above water, I think the real value in the company is the ride-hailing service.
In the future, I’m looking for Uber to go full robo-taxi, and then the contractor/employee issue will be a moot point. I think the company has a lot of upside.
I’m an avid reader of your service and love your honest but lighthearted take on investing. Keep up the good work.
— Dave H.
Uber going full robo-taxi?
Do you want to tell him or should I?
That means no fleet of robo-taxis.
Sure, this is good news for Sarah Connor. But it’s bad news for any UBER investor holding out for robotic-enhanced profits and lower labor costs.
If autonomous cars are your reason for holding UBER shares, you might want to consider finding a nice, comfy spot to take profits.
Meanwhile, as Ted noted above on DoorDash, the food delivery angle isn’t very profitable.
And with Uber’s ride-hailing business crumbling under the weight of the pandemic, the company is burning cash just to stay relevant.
But, who knows? Maybe I’m wrong on the profitability angle on ride-hailing and food delivery.
Uber could turn things around and post an actual profit someday. The best option for that could very well be a partnership with another self-driving company. After all, Uber does have veritable tons of consumer data. And data is the new oil.
The BAND Played On
What does Mr. Great Stuff think about BAND?
— John H.
Hey, John! Thanks for writing in.
The Band, huh? You looking to take a load off, Fanny? Take a load for free? Or just put the load right on me?
Well, John, my friend, what about young Bandwidth Inc. (Nasdaq: BAND)? Do me a favor, Great Ones, won’tcha stay and keep Bandwidth company?
For those who don’t know, Bandwidth provides a cloud-based communications platform-as-a-service.
What’s that mean? You know how Zoom, RingCentral and Microsoft Teams all allow you to communicate without old-school telephone systems?
Well, Bandwidth’s technology provides the backbone of those services.
Basically, because of Bandwidth, companies like Zoom can provide over-the-internet calling, texting, SMS, number porting etc. The company took the old-world telephone system and put it on the cloud. With Bandwidth’s software, all these FaceTime-wannabes can even provide 911 services.
The pandemic is clearly a boon for BAND, with the company seeing average earnings growth of 111% during the past two quarters. Make no mistake: This is the new normal for business operations. It’s cheaper than flying employees across the country, and it’s easier than old-school conference calls.
If that all sounds good to you, now may be one of the best times to invest in BAND. The stock is down 24% off its October highs but found strong price support in the $140 area. That means investors are buying this pullback, and BAND should move higher from here.
How much higher? The consensus price target is $198, so BAND has an expected upside of more than 34% from current levels.
You do the math. If BAND fits your risk tolerance, I say go for it.
Opinions on Onomatopoeia
Please stop saying Woah! and say Whoa!
I may have more to say in the future.
— Art U.
Art, thank you for writing in with one of the most bizarre emails I’ve received this week. Not only do you have a clear preference in “Whoas,” you felt so strongly about it that you wrote in and all but promised to write in more in the future.
Kudos to you for taking a stand!
However, the “Woah!” you referenced from Monday’s edition of Great Stuff comes from the lyrics of Bruce Springsteen’s classic “Born to Run.” If you listen to Bruce sing the song, you can clearly hear an “H” sound at the end of his “Woah!”
The “Whoa!” you advocate for is more akin to the “Whoa!” that Neo utters in The Matrix. Notice the clear lack of an “H” sound at the end?
I still believe I’m using the correct version here, but I’m sure you’ll have more to say in the future on the topic. I loved this diversion. Thank you.
Sent From My iPhone
I enjoyed reading your article. Nothing special stands out, all interesting.
— Jim B.
Somehow apropos that the cartoon image heading up this email entitled “Pills hard to swallow” are depicted as “Roxicet 5-325” — aka Percocet or Oxycodone + Tylenol. 2020 has certainly been a stock market migraine.
Keep up the humor. It’s much appreciated as we all suffer market whiplash.
— Phil A.
Hey there Joseph, you are truly great, keep up the great work. I read your emails on a daily basis, and I love your recommendations. You guys are truly great, keep up the great work.
Sent from my iPhone
— Farhad T.
What? Chipotle for breakfast and plant-based burgers at Mickey D’s? My wish is for fast food to actually look and taste as good as their advertisements. My compliments to the photographer!
— Capt. Spike
I have to say, guys, random emails like these make my week!
I’ve been chained to this desk since March, making market memes and slinging investment jokes — thanks, pandemic. So, seeing Great Ones enjoy and laugh at Great Stuff on the daily warms my cold, cynical heart and provides hours of entertainment.
Thank you all for participating in this crazy newsletter by writing in. You bring light to my day, and I hope I’ve shed some on you. (Phrasing? I don’t even know anymore…)
Unfortunately, I can’t publish all of your emails — that’d be one long freakin’ edition of Great Stuff. But I promise you: I do read them all and try to cover stocks, companies and stock market trends that you find interesting.
So if you have more to share with us here — or if there’s something you want to see covered specifically — by all means, write to us!
We’ll catch up with you in the next installment of Reader Feedback.
Until next time, be Great!
Editor, Great Stuff