Play Times Over for D&B

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Seth Jason thanks for being here. I'm in my full don't run me over callers with my greasy sweaty guy who biked in a look. So for those of you who can't see me look for the video, that's, that's almost ever this is. Yeah. This is when the people are like, no we're happy that it's an audio podcast, we're thrilled. We don't need. We don't need to see you in the bright, orange biking shirt. I don't even have a handsome voice. Nice speaking voice. Let's move along. We've got we've got a bunch of news. And we're going to we're going to preview some earnings that are coming after the closing bell. Let's start with Dave, and Buster's, though, because first quarter profits came in lower than expected. And that's actually the first time in five years, that's happened for them. Shares of Dave and Buster's are down more than twenty percent this morning. I know they lowered guidance how much did they lower it? I mean they didn't they didn't miss by something. It wasn't a whole much that full year guidance to and they missed by a penny or something. But people are freaking out. I think once you've set up the expectation that you're going to do better than than people. Expect all the time than the minute, you don't all heck breaks loose. Hey, I on a stock that's done fifty percent or something. And he's a very clever tech company. So if you really want to know how to lose money come to me twenty twenty some percent and a day or a week, nothing but Dave and Buster's to me is one of those businesses seems odd to me that sort of still exists because you've. You've so much restaurant competition. And then you on game and food. I mean how is everybody not at home? Getting door dash food delivered while they play eight packs legends on their on their XBox. Can I answer that because you don't always want sixty your friends coming over to do that? You sometimes you just want to get out of the house. I suppose a comp comp suggests that the a slightly slightly negative flat. People aren't all add excited at least the last quarter, or so they've been getting a little growth over the years by opening new locations. The margins I was like, in the margin been kind of creeping downward for several years now. So this is not my idea of a super awesome, opportunity that free cash flow isn't really there. So unfortunately, you know, sitting there at a price earnings ratio of seventeen sounds like a bargain today. But I think it might need to be more of a bargain before it's a before it's a real deal. Glad you mentioned the cops because that was one of the things that leaped out at me when I was looking at this quarter was that they're, they're comps really. Aren't that great? The new locations. And by definition for those who are new to this podcast or new investing. When we talk about comps, same store sales by definition. Those are locations that have been open for at least a year, the new location. I mean, this, this is one of those things that is maybe not a red flag. But maybe it's a pink flag. Not just for Dave and Buster's. But for any, whether it's a grocery store, just a basic retail operation, or in this case, Dave and busters where it is a little bit of a pink flag where you go wait. So the new locations, there's the initial excitement. Dave and Buster's has opened up in your town or your city or whatever it's like, oh, let's go there. But if they can't sustain those people, and I'm wondering how much of the gross margins creeping down has to do with an increased marketing spent because it does seem like they are doing a lot of promotional stuff. Yeah. While the margin I mean, all the margins are on the way down. So I mean their food prices were going up for a while. And then we had labour and other costs going up. So, but a lot of restaurants are experienced. It's just plain old competition. You have to match prices or in, in some way or another, to bring people in the door. One of I guess, one of the challenges, I would guess, exists for Dave and Buster's is hey, it's a it's super small location without much stuff in it, right. No, it's, it's not it's a place where you play stuff. So it's not like cranking out another one of those poll as with the wrought iron furniture made out of black pipe from from the, the plumbing store. It probably costs, a little more money to build these locations, if they're not paying back so quickly. Your financial start to their other way. So I think on the plus side over the next couple of years, Dave and Buster's to the extent that they're looking open up new locations. We'll probably have more options as commercial real estate continues to face some challenges on the flip side, whenever the conversation turns to well, we think of recession is coming next year or two. You know, when I think about stocks that are recession proof, Dave and Buster's. It's at the other end of the spectrum, this is this is a business. That's done. Well for a bunch of years, but it seems like one of the ultimate discretionary income stocks. Yeah. I guess we'll find out someday. I'll predicting recessions has been a bad business. Yes. In a while. So the fact that the stock is at a two and a half year low, you're not looking at this ain't no. Yeah. By on this dip now. Yeah, I got I got a long history with with value, finger, quotes value stocks like this, that continue becoming more, and more of a value, but less and less of a value, if you know what I mean. Tesla had its annual shareholder meeting on Tuesday. Shares were up briefly this morning in part because Alon musk made comments at the meetings at the meeting. He said he say anything positive. Well, I can hardly imagine, you know what? Let's, let's be clear if he's not any CEO, who's not saying positive things that their shareholder meeting is doing a bad job of being the c. So I don't knock him for that. He said, among other things, it won't be long before we have a four hundred mile range car talked about in twenty twenty Tessa drivers will be able to use self driving features without intervention. I it seems like you just look at the stock chart today, there was some initial enthusiasm stock. Doc was briefly it's now down a couple of percents of problem. If you if you say things that don't turn out to be true often enough, sometimes people stopped believing you it was more than two years ago that Elon Musk promised us that you'd be able to sleep in your tesla while at drove across the country. And everyone believed it then, and then, you know that never happened, and then he kinda dials things back and then a couple of months ago, he doubt things if he said, four sure there will be a million robo tesla robo taxes on the road, you'd be stupid, not to buy any other car, which is just laughable. I mean, consumer reports a couple of weeks later rated autopilot, as dangerous and more difficult to drive with than just driving yourself because it was so erotic. And now we have a couple of months after that autonomy day, which to me, seemed like a smokescreen designed entirely to try to shift, the sentiment of the, the company away from financials and towards, you know, hey, we're going to become an Uber competitor and now. Now, a sort of walking things back and saying self driving without user intervention. But also at the same time supervised robo taxi, which, by the way like Waymo is doing that right now in that exists in other forms? And he just makes these promises that don't match up that don't line up with the reality of what other self driving car leaders are saying and what they're doing. This is a really difficult task and it's not just a matter of getting a couple hundred thousand or a couple of million more miles. There's real diminishing returns for machine learning for doing this, and they have not cracked, this not yet in Tesla's doing it with more. Limited hardware than other companies is nobody else trying to do it their way, which tesla true believers would say, well, that just shows a genius. Mosque is I tend to think that if he's the only one doing it this way, and all these other really smart people are seeing you probably can't do it that way that he's probably the one who has it wrong. So very interesting shareholder meeting. There were some other comments that stood out. To me, Tesla's shareholders are obsessed with the idea that there of being victims. They love this idea that they're victims of a media conspiracy, which is hilarious because they are the, the beneficiaries of so much media incredulity for years. I mean nobody nobody looked at mosque and said, can you really do all those things until recently, now, of course they don't like it. I one of the remarks of something about, you know, it's crazy. The media talks about you is if you're about to go bankrupt, and he says, you know, of course, we're not that's just insane. Except not too long ago, everyone thought they would need to do that. They were running on a cash and must claim they weren't. And then after they had a quarter or they got some free cash flow. He came out and said, yeah, we were only a couple of weeks away from running out of cash. So they wanna have it both ways. It's really nutty. And to me, it's the kind of stock where I wouldn't take a real position in it either way. Because on the one hand you have a CEO who's very comfortable saying things that are not true. And you have a lot of other executives leaving the company probably related to that on the other hand, you have this rabid shareholder fan base. That makes the stock whip Cy it's completely detached from fundamentals. It's all about this crazy personality, not for me. You just reminded me of. The Alex give new documentary that was on HBO and for for those who haven't seen it. It's a it's a fabulous bit of documentary filmmaking about theranos, and Elizabeth homes. And one of the things that. Was noteworthy to me in that was the opening of the documentary. That was a decent bit of information about Thomas, Edison, and sort of, you know, sort of tracing the line of the Silicon Valley, fake to you make it mentality back to Thomas Edison, and saying, you know, Edison did a fair amount of that. Like, there's, you know and, and, and that's, that's a tried and true practice that, you know, didn't didn't start with Elizabeth homes. It didn't start with the Elon Musk. And you know that, that kind of thing goes on all that being said they report earnings second quarter report is scheduled to come at the end of July. It really seems like on the times when tesla has come out with, like a legitimately, encouraging slash great earnings report. A lot of that other stuff just disappear. So and by the way, I'm like you, I don't own shares. I would never know millionaire short stock. I'm on the sidelines just watching all of this play out Noddy and. I just sort of think, to myself. Well, you know, no one ever gotten trouble for walking up to bat and hitting home run. And if they don't, if they come out at the end of July and have some blog quarter, and that, then that helps. Well, of course you have to do it. Yeah, but, you know, the miracle quarter was it was to a large degree, and it wasn't really spoken about at the time. The cash flow quarter was was a artifact of really massaging working capital and calling in some favors. And so you wonder can actually keep doing that. They raised money following the miracle quarter because they needed it. So the suggests that they couldn't keep doing that. It's not easy to build cars. It's not easy to build cars, and you also tell everyone you're going to build self driving electric trucks and all of this other stuff. So maybe they pull it off. I really hope the industry goes, but they have a lot more competition, coming from all the other manufacturers, and those manufacturers are not stupid. If you're looking at a higher for your small business naturally want to find the best person for the job. And the odds are that, that person is on linked in and Lincoln jobs makes it easy to get matched. 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