Shopify Had Mixed News for Investors

In this podcast, Motley Fool senior analysts Jason Moser and Ron Gross discuss:

• Shopify's guidance outweighing its results.
• Airbnb beating profit expectations by a wide margin.
• Record revenue for The Trade Desk.
• Shares of Roku popping more than 25%.
• The latest from Marriott, Twilio, Cisco Systems, and Zillow Group.
• Boston Beer surprising Wall Street.
• Outset Medical's latest results.
• The state of Microsoft's bid to buy Activision Blizzard.
• The latest from Coca-Cola, Roblox, Chipotle, and Alphabet.
• Two stocks on their radar: Etsy and Paramount Resources.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Feb. 17, 2023.

Chris Hill: There's a lot going on, so let's get to it. Motley Fool Money starts now.

It's the Motley Fool Money radio show. I'm Chris Hill joining me in studio, Motley Fool Senior Analysts Jason Moser and Ron Gross. Good to see you as always gentlemen.

Jason Moser: Hey, doing Chris.

Chris Hill: We've got the latest headlines from Wall Street. We will dip into the Fool mailbag and as always, we've got a couple of stocks on our radar. But we begin with the latest reminder that the stock market is forward-looking. Shopify's fourth-quarter profits and revenue came in higher-than-expected. But guidance was light and shares of Shopify pulled back from what had been a pretty good start to the year, Jason?

Jason Moser: You hit it. This was a reaction based more on what's to come as opposed to what they did. It was a good quarter, but the guidance for the current quarter it's OK. For a company valued the way this one is, that's going to be just far more sensitive to slowing growth and we're seeing that play out. You look at just some of the numbers of the same quarter a year ago, that top-line grew 41 percent. Revenue for 2021 was triple what they recorded in 2019. They pulled as many of these pandemic names did. They pulled a lot of growth forward. It's not to say it's a business in trouble by any means, but that growth, you should expect it to slow, revenue for the quarter up 28 percent, that's excluding currency effects, gross merchandise volume was up 13 percent. Gross payments volume grew to $34.2 billion.

That represents 56 percent of gross merchandise volume processed in the quarter versus $27.7 billion, 51 percent from the fourth quarter of 2021. Gross margin for this quarter 46 percent, that's versus 50.2 percent in the same quarter a year ago. They're seeing some of those costs from the deliver acquisition and also the build-out of Shopify payments. That's not a bad thing. Again, this is a business that's investing in growth. But again, you go back to those slowing growth rates those valuation is just going to be more sensitive here. You can't really blame them for investing in that growth. They're pursuing a massive market opportunity, but I think you've got to really take the long view with this one.

Ron Gross: The pulling growth-forward thing it's very interesting too, because there's nothing wrong with getting money today instead of next year. It's when you continue to project that that will continue, or you put infrastructure in place in terms of employees or other spending, that assumes that will continue. That's where the stocks can get ahead of themselves and you get into trouble. But money today, hey, burden the hand, I'm all for it.

Jason Moser: Absolutely. They're guiding for revenue growth in the high teens percentage for this current quarter. That's not bad, let's not say that's bad. But relatively speaking, it's a much different scenario than what we've seen over the last couple of years.

Chris Hill: Airbnb it's fourth-quarter profits were nearly double what Wall Street analysts were expecting. There were other numbers in the report, Ron, but I feel like the profits being nearly double the expectation are a big reason why shares of Airbnb rose more than 20 percent this week?

Ron Gross: Yes, strong report, better-than-expected stocks at a six-month high. They've recorded their first annual profit, which I'm sure is nice to get under their belt and the numbers do bear out that things are going pretty well. Fourth quarter revenue up 24 percent, strong travel demand, strong dollar abroad, had a lot of folks traveling, European travel picked up, stays in urban centers interestingly picked up. That's actually important because those are sometimes at lower price points. They can have a price mix effect. But those were strong. There was a 20 percent increase in nights and experience booked, which led to a 20 percent increase in gross booking value. That really does drive the business.

Average daily rates were down about one percent, again driven by the fact that urban was on the higher side. But they're doing really well. Interesting, the company makes money on the float. The float is the money they collect from people who stay at an apartment or house and don't pay it out to the owner of that apartment until later. In this quarter they made $100 million in interest on the float, and that's up from four million dollars a year ago. That's almost 100 percent profit right there. It's a very interesting part of their business model. You take that all together, net income was up almost 500 percent over $300 million and the company is doing well. Guidance was good, but the comparisons are easy because first quarter of 2022 was impacted by COVID, but they're on the right track.

Chris Hill: The Trade Desk posted record revenue in the fourth quarter and shares of the programmatic ad tech company rose 25 percent this week. Jason, at the start of the year, we did our preview for 2023, you called out the Trade Desk as a stock poised for upside. I think this is what upside looks like. 

Jason Moser: Well, it is a very good start. This is a company I've owned for a number of years and hope to own for many years to come. But, absolutely a good start to the year. If you remember that over-the-top spend when we were talking about that, it's poised to grow from $6.3 billion today, the advertising spending in over-the-top entertainment, it's going to grow from $6.3 billion stay to project an $11 billion by the end of 2024. This is a market that's growing very quickly and a lot of that money is going to the Trade Desk platform. They saw $7.8 billion in total spend on their platform in 2022. That's versus $6.2 billion from a year ago. That translated into some very encouraging numbers. Revenue was up 24 percent from a year ago to $491 million. That's just at the top of their guide from a quarter ago.

The adjusted EBITDA, was better, they beat at $245 million. That was a little bit closer to their guidance. They have a habit of really under-promising and over-delivering. That was just one thing that stood out here. But retention remained over 95 percent for the quarter as it has for the past nine consecutive years. They're guiding for 15 percent revenue growth in this current quarter. Ultimately, this is a company that continues to gain share. They solve that estimates pegged, total global ad spend grew eight percent last year. Spend on their platform grew three times that. That's what you'd like to see. Picking up that market share. Strong performance of verticals including travel and automotive. Political spend is starting to ramp up and they did announce a $700 million share repurchase authorization in the process.

Chris Hill: That's what I wanted to ask you about. Because I saw that and I'm wondering if you think that's a good use of $700 million.

Jason Moser: Well, OK. It's an authorization, it's not like they're just blowing it all at once. You do like to see the confidence there. If we look back at this and it brings the share count down, Chris I'll be happy. If it doesn't, then we'll revisit, I'll have some issues there. But again, it's an authorization, not a promise.

Chris Hill: Back to the business of room rentals. Marriott fourth-quarter profits in revenue came in higher than expected. Marriott also with some nice guidance on bookings.

Ron Gross: Yeah, stocks up 20 percent this year on the nice rebound to the business. Revenue per available room RevPAR, if you will, like to talk about the acronyms up 29 percent worldwide, 24 percent in the US and Canada and 45 percent in international markets. So strong, but comparisons to last year are easy because of COVID and we have to understand that. When we look at them compared to 2019, to get a better comparison, worldwide, RevPAR was up about 5 percent and that was driven by a 13 percent increase in average daily rates. Still fine, but not the astronomical numbers you see when you compare it to COVID periods.

With the exception of greater China, RevPAR in all regions more than fully recovered, continues to show meaningful advances and occupancy. That leisure demand is strong. Business demand was that nearly 90 percent recovery in the quarter. Those average daily rates were about 3 percent above 2019. Pretty good operating income up 60 percent, adjusted earnings up 50 percent. Guidance was strong roughly halfway through the quarter now, global booking trends are up, RevPAR up 52 percent in January as an indication of how this quarter is tracking. Again, comparisons are somewhat easy compared to last year so take that with a grain of salt. But the businesses is on track and doing well.

Chris Hill: What is a reasonable expectation for someone looking at shares of Marriott? Because if you look at a five-year chart, and obviously there's the dip at the beginning of the pandemic in early 2020. But this is basically up flat stock. I know they pay a dividend, but what's a reasonable expectation if you're looking at buying what is, for all accounts and purposes, a strong brand.

Ron Gross: Twenty-three times forward earnings right now that's in comparison to, let's say Hyatt, who's at 47 times, but there's some things going on there. Hilton at 27 times is probably a better comparison. But earnings are still on the weaker side as things rebuild back. That 23 times is probably artificially high and you probably are actually going to buy Marriott for somewhere under 20 times with an approximate one percent dividend. I don't think you're going to knock the cover off the ball, so stock I own and will continue to own, but I certainly think you can own and make money.

Chris Hill: More earnings after the break, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Ron Gross. Shares of Twilio up nearly 20 percent this week after fourth-quarter revenue was just a little bit higher-than-expected. Jason, how strong was Twilio's guidance because this was a razor thin beat on the topline?

Jason Moser: True. But I think the guide for profitability to come is a little bit more encouraging and that's what investors are excited about. Remember, late last year, I said that once they reach this next step of non-GAAP operating profit, the market would start probably look at this thing a little bit differently. It feels like we're getting to that point. Management is holding true to their words, focusing on building a more efficient, resilient, and profitable business. Revenue was up 22 percent for the quarter. Virtually all of that was organic. But more importantly, now we're taking that step into the world of non-GAAP profits. Non-GAAP operating income $33 million translated to earnings per share of $0.22. All very encouraging when you look at the metrics that matter for this business, they now have over 290,000 active customer accounts.

That's compared to 256,000 from a year ago. I think the big news here really it is real, it is restructure, it is refocused. I mean, they are going to let go of 17 percent more of their workforce. That's on top of the 10 percent that they just cut. They're also going to reorganize this business into two units. We'll have a communications unit and then you have the data and applications unit. Communications being the bigger of the two. That ultimately is going to help them continue investing in that data and applications unit, which I think is a good idea. In another sign that management really is getting it, is just in regard to stock-based compensation.

I think that's always been a point of weakness for a company like Twilio here, representing anywhere 20-25 percent and even greater of revenue. Now, as they've cut the workforce, as that stock-based compensation starts to roll off, they're targeting stock-based compensation to be around 10-12 percent of total revenue by 2027. When you put all of that together and then you got management's still guiding for around 14-15 percent organic revenue growth for the year. Then also a range of $250-350 million in non-GAAP operating profit. No, we're not at the finish line yet, but we certainly are seeing steps in the right direction. For a business like Twilio, very sticky offering, they're very necessary in the communications market. I think this is good sign.

Chris Hill: Cisco systems doesn't appear to be firing on all cylinders, but shares of the computer networking company up 10 percent this week after a strong second quarter results. Cisco's guidance was pretty strong to run.

Ron Gross: Yeah. Not your father's Cisco from back in the day. They are doing their best to really transition to a recurring revenue model instead of just selling big machines one at a time and it seems to be working. This was a very solid report, better-than-expected on the top and bottom line, revenue up seven percent, customers keeping investments steady and systems relating, not surprisingly, the cloud, artificial intelligence. Have you heard about artificial intelligence Chris?

Chris Hill: A little bit, yeah. Lately.

Ron Gross: Tools for hybrid work were actually strong and Cisco is benefiting from the backlog of orders that were built up during the pandemic as supply chain constraints now ease but things were backed up for awhile. That it all translated to adjusted earnings up five percent. That's not unbelievable, but for a company of this size and what they do not too bad, and that's why you can buy it for 14 times earnings, by the way, instead of having to pay over 20 times, increase the dividend yield, three percent yield right now. That's attractive to the guidance, was strong. CEO Chuck Robbins is doing a nice job turning this business.

Chris Hill: Roku's loss in the fourth quarter was smaller-than-expected. Revenue was higher-than-expected. Shares of Roku rose nearly 30 percent this week. Jason, was it that good?

Jason Moser: Well, I think it was coming off of a very low base in some difficult times. I do think we've seen beyond a shadow of a doubt, Roku is a force in the cord-cutting movement. It's clearly in a good position to hold and grow its position in streaming in the greater entertainment space. I think the real question now is, what's a reasonable expectation of profits here? What kind of bottom line are we looking at here longer-term? Now, part of that answer lies in the shareholder letter where they talk about through a combination of operating expense control and revenue growth.

They are committed to a path that delivers positive adjusted EBITDA for the full-year 2024. Still a little ways out. But the numbers were encouraging. Revenue in a difficult environment, basically flat at $867 million. Gross profit actually ticked down just a bit, but they've got now 70 million active accounts. That's up 16 percent. Streaming hours even better up 23 percent. Average revenue per user ticked up a little bit at two percent. Although it's not worthy that was down a little bit sequentially. Again, I think with Roku, it goes back to the operating expenses. What kind of expectation is reasonable in regard to profitability? They all are going to roll out this new series of television sets.

Little bit curious here in to their SmartHome investments. I'm not sure that's really the best use of investing dollars given all of the competition that's already out there. I mean, they're talking about things like doorbells and alarms and cameras. That stuff already exists. There are companies out there that do that very well. I'm a little bit more glass half empty on that, Ron. But they're guiding for 700 million in revenue. This current quarter, it's worth noting that's down from the same quarter a year ago at 735 million.

Chris Hill: But this goes back to something we talk about frequently and it's capital allocation into the point you made earlier about the $700 million share buyback. It's just an authorization. They don't have to spend that. If you're making the investment to build entirely new devices, that just comes with higher risk.

Jason Moser: That's a little bit more of a promise. You're making a bit more of a commitment there and in this case, I'm just not sold on it.

Ron Gross: A year from now, we'll see adjusted earnings to adjust for the investments made in those devices. It's like my adjusted body weight. Next year, if we adjust for the chicken wings and the pizza I ate during the course of the year, I am perfectly fit.

Jason Moser: I think Ron's onto something here.

Chris Hill: Zillow CEO Rich Barton, sounds like a man who has gone through a storm and finally come out the other side. Zillow's fourth-quarter results were better-than-expected. Barton says he and his team are focused on the future. Ron, I buying tobacco, can I call it tobacco?

Ron Gross: You can.

Chris Hill: It looks like it is finally in Zillow's rear view mirror.

Ron Gross: Completely unwound that business, and yes, it was a mess, but that's behind them. We can look forward now. These results were significantly better-than-expected, but they're still very weak. This business is not doing that well right now. Total revenue down 19 percent for the quarter, driven by their Internet and media and technology segment, IMT, they call it and their mortgage business. But IMT was down 14 percent. It was just better-than-expected.

Their premier agent business was down 20 percent, again, better-than-expected, but down. Rental advertising revenue was up 13 percent, so a bright spot there. Mortgage segment revenue, although down 65 percent to 18 billion in the quarter, that was near the midpoint of the range they had given. It didn't disappoint investors too much. Net loss for the quarter of 72 million, so losing a little bit of money there. Their vision is to build the housing super app, which OK, that's fine. Let's get out of guys. It'll be OK.

Chris Hill: Am I the only one who thinks that this is going to be a particularly interesting year for the housing industry. Do just thinking about everything that has gone over the past 12 months. You look at Homebuilders, you look at businesses like Zillow, it just seems like we're setting up for a more interesting than average year.

Ron Gross: For sure. It's driven by interest rates. So you predict where interest rates are going to be and I can predict for you where the housing market will be. My wife's a realtor and this is around the dinner table almost every night talking about the health of these industries. 

Chris Hill: Hope you're thirsty because we've got all kinds of beverages right after the break. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. We're still here in studio with Jason Moser and Ron Gross. We're going through some of the big stories of the week and if you're the investor who's looking for more stock research and recommendations check out Epic Bundle. Epic Bundle combines the Motley Fool's four foundational stock investing services into one membership.

With Epic Bundle you get immediate access to all of the research and recommendations within Stock Advisor, Rule Breakers, Real Estate Winners, and Everlasting Stocks, and for a lot less money than if you paid for each one of those four services individually. For more details just go to epicstart.fool.com, that's epicstart.fool.com. Boston Beer Company surprised investors this week and it was not a good surprise. The parent company of Sam Adams Beer posted a loss in the fourth quarter. Guidance for the current quarter was also for a loss and shares of Boston Beer are falling more than 15 percent as a result, Jason.

Jason Moser: This really is all about what's coming down the pike and it all looks fairly challenging at least in the near term there's plenty of data out there that says Americans are drinking less beer, I'm not sure what that's all about. We've seen the trouble that this company's had with its core Samuel Adams brand over the years that's not news. They are witnessing some real challenges there with the Samuel Adams core brand and so it's become more about other things. For a while it was cider, they did great until that ran its course and then it was Truly Seltzer and that's done great. The problem is now Truly Seltzer is running into some headwinds as well. They've had a pretty good run here over the last few years.

They ended 2022 with revenue of $2.1 billion which is essentially almost double what they recorded in 2019 at $1.2 billion. Again though, this is really all about Truly Seltzer at this point because that's where they've been hanging their hat over the last couple of years and now they're seeing those headwinds start to build and that's reflecting in the guidance. They see volumes declining in 2023. They do see growth in Twisted Tea but that's such a small part of the business. You do have to ask yourself some questions what is next for this company? Because they are playing in a very competitive space. I like the strategy of being more things, introducing new beverages into that portfolio. Looks like they may need to find another rabbit to pull out of that hat.

Chris Hill: Shares of Coca-Cola flat this week despite fourth quarter revenue coming in higher than expected. Ron, we were talking about this earlier today. The soda sales, they're not great but they're doing better than the non-soda parts of Coke's portfolio.

Ron Gross: Except for coffee. Coffee was actually strong but.

Chris Hill: Well, it's coffee. 

Ron Gross: Sales of juices, dairy, and tea were down. Coke Zero Sugar was actually probably the strongest in the sparkling segment up nine percent. But overall, sparkling soft drinks were flat, coffee up 11 percent. Different pockets carrying the weight there. Overall organic revenue was up 15 percent, that was driven by 12 percent growth in price and some mix assortment and two percent growth in concentrate sales but unit case volume declined one percent. Price increases here are the main story as to how they're actually putting up numbers that look somewhat good.

Adjusted operating margins were up a bit, operating income up 24 percent, net income was down 16 percent but if we adjust for some things as we all want to do, they were actually flat. Increased their dividend for the last 60 years, 2.9 percent yield right now, not too bad. They did increase their guidance they're going to continue to increase prices. That's interesting to me because Pepsi said they were going to hold prices steady so that'll be interesting to see how that shakes out but overall report was fine just not great.

Chris Hill: I'm glad you made the comparison to Pepsi because that really is going to be interesting to see not just with these two businesses with a lot of consumer-facing businesses that for perfectly good reasons have raised prices pretty significantly over the past 12-18 months. It can be interesting to see how they deal with it in 2023.

Ron Gross: You know the old Warren Buffett loves companies with pricing power and that's why he owns companies like Coke and it is great. There is a limit, you can't continue to just price your way into growth but when you need to pass along some higher cost to the customer, companies like Coke and Pepsi are able to do so.

Chris Hill: There's no way to make this transition smooth so let's go from beverages to dialysis technology. Mixed end to the fiscal year for Outset Medical, the med tech company reported a loss in the fourth quarter but revenue was higher than expected. Jason, what's your diagnosis for Outset Medical?

Jason Moser: Well Chris, I'm not a doctor and I don't play one on TV but as a shareholder and one who's recommended the stock, I will say the big picture here for Outset Medical is good. This company is in a good place and investors should be very encouraged with this progress. They did pre-announce these results earlier in January so there weren't any real surprises but to recap revenue of $32 million in the quarter was up 15.3 percent. They are growing margins, non-GAAP gross margin grew 5.1 percentage points to 17.1 percent and to put this in context management sees a long-term target there of 50 percent so there's a long way to go there if they can reach it. Ultimately, the business is of course, still recording a bottom-line loss but the profits are a matter of when and not if.

It really boils down to how are they doing with this tableau dialysis system. In the news, there is encouraging. Year-end installed base grew 54 percent to approximately 4,000 systems and even more encouraging that includes a more than doubling of units with home providers to almost 100 and that matters because they essentially see home as the largest long-term market opportunity. That's the differentiator is in the home. The Mexico production facility is up and running for the usable cartridges for the consumables and this razor blade model that will help on the margin side, management's calling for revenue growth of around 26 percent at the midpoint for 2023. They'll continue to get these machines placed. They'll continue to pump those gross margins up. They'll continue to bring those operating expenses down, so slow and steady wins the race here, I think.

Chris Hill: This is still a small company. It's a one billion dollar in market cap. How confident are you that three years from now Outset Medical is still a stand-alone business and hasn't been snapped up by a bigger player?

Jason Moser: I hope it is. I would be surprised if it's not because what we're seeing is clear signs here that their Tablo system is a really good one and it is gaining share quickly. When that happens at this size, you usually see a lot of big interest from a lot of bigger companies.

Chris Hill: Shares of Roblox up nearly 20 percent this week after fourth quarter results were much better than expected. Roblox also reported nearly 60 million daily active users. Ron, is this business on the right path because it's been a rough couple of years for shareholders?

Ron Gross: It is on the right path but you could see the roller coaster ride, just take a look at the stock chart. Up 60 percent this year but still off 25 percent from a 52 week high and off 66 percent from its all-time high so one would argue that all-time high was probably a bit frothy if you will, and things have come back down to earth. But this report is good. It's good in the sense that they reported a smaller-than-expected loss so if that gets you excited then it's a good report. Revenue up two percent but bookings were up 17 percent.

As you said, average daily active users were about 59 million that's up 19 percent year over year so that's pretty good, hours engaged were up 18 percent year over year. An interesting metric was that growth was strong across all geographies and age groups but particular strength among those 17 years old or older and when I think of Roblox, I think of it as really an application for younger kids. That's probably very interesting to the company to watch those demographic shifts. January metrics are encouraging so the growth is continuing, estimated revenue up about 22 percent, they believe, in January, estimated bookings also up about 20 percent in January. So if those numbers follow through, it bodes well. I think we'll have another good quarter.

Chris Hill: Well, and to go back to the daily active users, close to 60 million. You mentioned it's up 19 percent year over year. That's not insignificant because this is a year where we're basically came out of the pandemic so 20 percent growth if we're talking 2020-2021 that sort of thing. I feel like that was one of the more encouraging parts of this report.

Ron Gross: For sure, it does have to continue and they have to make sure their operating expenses are reasonable to both grow but also to some point earned a profit. Because as I said, we're still not profitable yet so we want to keep an eye on the bottom line as well.

Chris Hill: Well, you asked the question, are you interested in loss that's smaller than expected? I was like, well, that's on the pathway to actually turning a profit, I assume. Chipotle is getting ready to do something it has not done for six years. Details after the break so stay right here. This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Ron Gross.

Our email address is [email protected]. Got a great question from Kevin Skinner who writes, "What are your thoughts on the state of Activision Blizzard's deal with Microsoft? It doesn't seem likely that this deal with Microsoft will go through, so what is your outlook on holding or selling Activision Blizzard stock before things get any farther along?" It's a great question, Ron. It was over a year ago, I believe, that this deal was announced. It's expected to close late spring, early summer of this year assuming it doesn't get formerly blocked. I think Warren Buffett, among others, has played the arbitrage here with shares of Activision Blizzard trading below the buyout price that Microsoft is willing to pay.

Ron Gross: Correct. But Berkshire did recently cut their stake, so they seem to be a little.

Chris Hill: A little hedge.

Ron Gross: It's looking more and more like this might not happen. I think several months ago, I predicted on the show that it would happen. As long as Microsoft and Activision would make some concessions about business units and business lines, this is getting dicey both in the UK and the US. It's time to start to look at Microsoft, but specifically to this question, Activision as a stand-alone business. Before the announcement, Activision was at $65 a share. It was going to be acquired for 95.

Now we're at 77. We're at about 20 times forward earnings for Activision. That's not too bad for a company that is still putting up pretty good numbers and still have some of the hottest games out there. I'm an owner and if this doesn't go through, I would most likely be happy to continue to hold it as a stand-alone company as I would Microsoft too. That's actually one of my favorite companies. I think you're fine either way. Either if it goes through, you'll get taken out at $95 or you can continue to own at a company that is relatively reasonably priced.

Chris Hill: Chipotle is getting ready to open a new brand called Farmesa Fresh Eatery. The new concept will feature bowls with grains or salads along with proteins. Long-time investors may recall Chipotle tried alternative restaurant brands before with burgers and Asian cuisine before ultimately shutting them both down in 2017. Jason, what do you think, third time a charm?

Jason Moser: Well, I remember you asking not that long ago if I thought they would try building new branding in anytime soon. I said I'd be surprised if they did. At least with the gumption that we've seen in the past now, I guess it's interesting from a few angles. First and foremost, this really does seem like a very small bet, as they say. They're using a ghost kitchen. They're not affiliating it with the Chipotle brand. This is just a one-off experiment. From that perspective, I get it. It makes sense. Seems like a competitor to a Sweetgreen or a Cava.

Ron Gross: Chopped.

Jason Moser: Chopped exactly. Maybe there's something there. For me personally, even though the investment and this is likely just a rounding error, it feels to me like if you're looking to really move the needle and do something different, for the love of God, just introduce a simple breakfast kindly. You're fantastically successful namesake stores. Rollout breakfast and those things, I guarantee you that would be worth more of the investment in either time. But I'm not the CEO, Chris.

Chris Hill: I was also surprised that this was the version they tried to go with. In part because you see a business like Sweetgreen, which as a public company, in a phrase Ron used earlier in the show, not really knocking the cover off the ball.

Jason Moser: Well, and no offense to California, but I don't know that California is the place where I will be going to do something like this because I think they live in their own little world. I'm not sure that it's representative of what might work nationwide. What works there might not work here, likely won't work in middle America. Probably isn't better places to try things like this and get some better feedback, but we'll see.

Chris Hill: This week YouTube CEO, Susan Wojcicki, said she's stepping down after nearly 25 years with parent company Alphabet. Senior Vice President, Neal Mohan will take over as the new Head of YouTube. Wojcicki started working at Google in 1999, and in 2006 made the case that the company should acquire YouTube. Ron, a nice reminder that Google Video was an in-house competitor to YouTube before Wojcicki and others said, you know what? Let's just write those people at YouTube a big old check and acquire them.

Ron Gross: Yes, a great legacy. YouTube CEO for nine years and did a lot of good there. YouTube's current Chief Product Officer will take over that job now. It's not an easy job. It's interesting. The advertising model is a stressful one for me. There's a lot of competition there, whether you're at something similar to YouTube or you're even in the search business. Their premium subscription business is interesting to me, but then you're in the content game and that's a little stressful to me as well. Good luck to Mr. Mohan who will be taking the reins. It'll be interesting to watch.

Chris Hill: Yeah, it is one of those things, and we talk about this more often with CEO roles, where it's like someone announces they're stepping down and one of the questions we ask each other is how attractive is this job? Is this a job that people are going to seek out? They're choosing to promote from within, which seems like the right move.

Jason Moser: Oh, I'd agree. I think it's also a far more difficult job today than would have been five years ago. Just managing the content, figuring out ways to incorporate technology to help you filter out the bad stuff to create a place where your audience is going to feel safe enough. We've seen what's happened just in the social media world, and I think YouTube really does fall under that category in this regard. It's a massive engine, but with that is just a massive job too.

Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week?

Ron Gross: I'm going with the company I never heard of before until I saw that it was recommended by our colleague John Rotonti, and it's Paramount Resources, POU, which trades on the Toronto Exchange. It's a four billion-dollar Alberta-based independent oil and gas producer. That this is a blind spot for me, it's actually one of the reasons I'm digging in because I need to really learn more about the sector and have a potentially bigger part allocation to my own portfolio. It's been around for 40 years. It's had its ups and downs, but they're doing a pretty good job right now of both managing costs and debt and expanding their low-cost production. The current yields are around 4.8 percent. That's attractive to me, but I need to dig in and understand how this company fits in.

Chris Hill: Steve, question about Paramount Resources?

Steve Broido: Sure. As an investor, do I want to be actively choosing to invest in a different country? Isn't it just a bunch of red tape? Wouldn't it be easier for me just to stay in the US?

Ron Gross: It can be red tape. It's hard to sometimes trade on the proper exchange or sometimes tax implications. You're right, it is not for everyone.

Chris Hill: Jason Moser, what are you looking at this week?

Jason Moser: Yeah, taking a look at Etsy, ticker is ETSY. They've got earnings coming out on Wednesday after the market closes. This is a stock I've recommended. It's one I also personally own. Given just everything we've seen with retail on holiday results, I think this will be an interesting report. You remember, last quarter they took an impairment charge of one billion dollars in total on the goodwill write-down from the acquisitions of Depop and Elo7. Let's hope that that is fully in the rearview mirror. But they were entering the holiday season on a note of caution just guiding for around three percent growth in revenue. I've got a sneaky suspicion they can beat that. We'll see, and as we've seen throughout this show, it really is more about the guidance that they lay out going forward. But the strategy to build this house of brands continues to seem to be paying off here, and I like where the business is headed.

Chris Hill: I will just add, for a company of Etsy's size in terms of what they're doing for quarterly revenue, a one billion impairment charge is significant.

Jason Moser: It's a doozy.

Chris Hill: Steve, question about Etsy.

Steve Broido: Sure. Does Etsy you have to move beyond their current model or can they just stick with selling things that people have either collected or remain at home?

Jason Moser: I think they can stick with what they're doing now. I think it's really just about expanding the different types of offerings that they have, which really speaks to the acquisitions they've made of companies like Depop and Elo7 in the ultimate strategy of just building that house of brands that pretty much scratches every etch out there.

Ron Gross: Maybe I can hop in like a salad place. You get to pick a protein and a green.

Jason Moser: That's a novel concept.

Chris Hill: Two very different businesses, Steve. Do you have one you want to add to your watchlist?

Steve Broido: I think I might go with Etsy.

Jason Moser: Yeah.

Chris Hill: Steve, if you had to open your own Etsy shop, what types of things do you think you'd be offering in that store?

Steve Broido: That's a great question. I think I would probably try to find something that no one else in the world was making and I would make it and sell it. I don't know what that is.

Ron Gross: That seems easy.

Jason Moser: I would've guessed used an audio-video equivalent.

Steve Broido: That could be it too. One never knows.

Chris Hill: Yeah, it could be. Jason Moser, Ron Gross, guys, thanks for being here.

Jason Moser: Thanks, Chris.

Chris Hill: Keep the emails coming. [email protected]. It's plural everybody, podcasts with an s at the end. That's going to do it for this week's Motley Fool Money radio show. All thanks to Steve Broido. The show is mixed by Rick Engdahl. I'm Chris Hill, thanks for listening. We'll see you next time.