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- [00:02]
A
Earnings season is in full swing and we have good news for investors today. Hidden Gems investing starts now. Welcome to Motley Pool and Gems Investing. I'm Travis Hoyam, joined today by Lou Whiteman and Rachel Warren. And this is one of those days during earnings season where there is just a flood of earnings. So we got some interesting announcements. We're going to talk today about Uber, Disney and Novo Nordisk. But let's start with Uber. Lou, Disruption has been on the market's mind in 2026 and that has impacted a lot of software related stocks. Uber is maybe in the crossfire a little bit here, but shares were down about 12% over the past year. There's worries that Waymo is going to take market share. Tesla's potentially expanding, although we don't know how quickly that's going to happen. But Uber's really taking an interesting strategy here. Not only moving into autonomy overall, but also becoming more than a ride sharing company. They've got more retailers. They recently announced hotels on the app and their earnings were pretty good. I mean they're still growing at 20ish percent and just compounding that year over year. So when you look at their earnings in the strategy shift that they're going through right now, what do you, what do you think?
- [01:13]
B
I mean, look, I love what they're doing. I think the core business looks great. I mean this whole idea of like, and you know we were talking about beforehand, this everything app that they're creating, moving around, I'll take the under on that Travis.
- [01:26]
A
I find me you don't think that they can, that Uber is going to be a one stop shop for all things mobility related, whether you're moving people, products, going on vacation.
- [01:35]
B
Look, look, it makes total sense. Just like PayPal's Everything app made total sense as your one stop shop on your phone. Just like meta, what they tried to do with WhatsApp, especially in developing markets, made all the sense in the world as a one stop everything app. X makes perfect sense as a one stop everything app. People don't want everything apps. Companies want everything apps because everything means we get all of the revenue. We can expand our business on the back of our customer base. I get that. But customers don't want that. Customers are used to what they're doing. There's really unless you really, really give them a deal and ruin the economics for you, how do you change just behavior? And look, it's a great idea. If they're not spending too much, go for it, but it's not gonna work. None of these Everything apps have worked and this one won't work.
- [02:30]
A
Let me push back on that with one example, and that's Amazon. Amazon, I think, has probably done a better job than any other company becoming the everything app for at least shopping. And then throw a little bit of video on top of that, throw, you know, pharmaceuticals and all kinds of stuff. You don't think that Uber could potentially do that with sort of their realm? It's not retail, it's more, hey, I need to move myself or I needed to move something around. And that kind of. That's kind of the core, is that transportation as a service.
- [03:00]
B
I sort of reject the premise of that comparison. I don't think. I mean, Amazon is doing a lot of things, but I think more. Amazon desperately begs me to do grubhub through their app and I don't do it. That's the everything app comparison, and I don't think that works. The fact that Amazon has expanded into new markets, I don't know if that's because they have an everything app. Again, I get the idea of it if I want to, but look, if I want a ride share, I'm probably going to go to Uber to train me to do other things like, oh, I want to, you know, book a trip. I'm going to go to Uber. No, I'm going to go to booking. I'm going to go to Delta. I'm going to go to all of the things I go to. Again, you know, points for trying. Gold star. Again, I can't combat this enough. The core business looks pretty good. So I guess this is when you experiment and go ahead and try, but it's not going to work. We've seen this so many times and it makes so much sense for the companies. The companies fall in love with it because look at all the re. If we could just get 2% of this market, that would be so much revenue. Those are the conversations they're having right now. And yeah, I get why they're all slapping themselves in the back, but wake me up when it happens.
- [04:12]
A
Rachel, do you think that this is a strategy shift? That's fun to talk about, but it's still. The core business is really what matters here. You know, revenue was up in the quarter, 14%. We had gross bookings were up 25%. Things seem like they're doing pretty well in the core, like Lou said. But are these ancillary additions going to mean anything?
- [04:32]
C
Yeah, I, I do think that the important focus right now is the core business, which is doing exceptionally well. But I Think I have a little bit of a different take on this than Lou. I mean, obviously we're seeing this strategy, right, where they're. We're wanting to shift from being known as the ride hailing and delivery app to maybe become something of a super app, which would center sort of on the entire travel journey, right? This partnership they have where they're adding hundreds of thousands of hotel listings through Expedia and vacation rentals via vrbo. This is this idea that we're seeing where Uber wants to be the first app you open, say, when you land in a new city. And that goal, I think, is to create kind of a very seamless experience where you maybe book your hotel, you get a discounted ride there, you order food or forgotten essentials. It's interesting too, because this is a model that has proven really, really successful in other parts of the world, right? You think of WeChat in China. It's sort of the gold standard of super apps. You've got a billion users on there that do everything from messaging and paying bills to booking their doctor's appointments. You've got Grab in Southeast Asia, right? There's Go Jek in Indonesia. And so this is a model that has been successful in many, many, many markets. Now, in a lot of the Western markets where Uber predominantly operates, this is not so much the type of app that consumers tend to use. And so I think they're trying to see whether the appetite is there. I mean, I think by bundling some of these services, this idea is to create something of a loyalty loop, right, where maybe you earn credits on big ticket, hotel stay, it pays for your daily rides. There's a lot of incentives with Uber. 1. There's a challenge, though, for consumer adoption. And I think that's the biggest question about whether this works for Uber specifically long term, because the model itself works very, very well in other markets.
- [06:15]
B
The.
- [06:16]
A
Well, the interesting piece here, Lou, is the Uber one piece. And the analogy that I would make is to Costco. Costco is the company that made this really profitable and huge business out of. They. They basically run their stores at break even. That's why they have really low gross margins. That's why their products are cheaper when you go into the store. And they build everything around basically being break even at the store and making that the best experience they could possibly. And then all the profit comes from those memberships that you pay each year to be a member of Costco. Could something like that work for Uber? I mean, you know, reduce that take rate and say, hey, if we have, you know, 100 million subscribers to Uber 1 at, you know, 10, 20 bucks a month. That could be a really good business.
- [07:04]
B
It could. But again, I mean, look, if this isn't that novel, right? I mean, the difference with Costco is, is at the end of the day, you're getting a really good price price on all of these things. And, you know, I mean, I don't know, can with third parties, can Uber manage those margins? But look, I'm flying Delta tomorrow. The second I bought an airplane ticket, Delta said, hey, you want to get your rental car through me? You want to get your hotel through me? And you know what? I didn't. And then I paid for it with a Capital One card. Capital One said, hey, you're taking a trip. Do you know about our Capital One travel app where you can get your rental car and hotel? You know, look. Look at what Airbnb has tried with experiences. Tell me. I mean, that's the. That's a fine ad.
- [07:44]
A
That is a great pushback. Airbnb has not been successful moving into other areas.
- [07:48]
B
What it say is, it's that, again, I get why Uber wants to do this. I get why it makes sense. I think the really hard thing is to change consumer behavior. Why does it make sense for me, the consumer, to do it? I get convenience, but I got convenience, everything. I can go to booking.com and do it all if I really want convenience. I just think changing consumer behavior is much harder than these companies realize at the time. Again, I go back to. I thought the PayPal everything app was a really good idea. And I do think that if we had followed through on it, probably it would have made my life and everyone's life easier. And yet none of us did it anyway because we're stuck in our habits. And I feel like that's what's going to happen here.
- [08:31]
A
Can Uber change people's behavior? Just remember that 20 years ago, getting in a random person's vehicle to get a ride across town was a completely foreign concept.
- [08:41]
B
But. But again, yes, it was a convenient.
- [08:44]
A
Right.
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B
I didn't have another way. I'm used to doing it. It was a foreign concept. I mean, you know, again, yeah, I get it. I love these straw man, you know, reasons why I'd love to be an optimist here. It would probably be easy to just do it all through one app. But again, I'll believe it when I see.
- [08:59]
A
Well, the market is buying it for today. Shares were up about 10% early in trading, so we'll see if that holds. When we come back, we're going to get to the news from Disney. You're listening to Motley Fool. Hidden Gems Investing.
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D
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- [10:15]
A
Fools Hidden Gems Investing. We got results from Disney this morning and this is one of those companies that's gotten a lot of flack for investors. You know, shares have really struggled. If you look back over the past decade or so. They have a new CEO, Josh demaro, this quarter. I, I thought was interesting, Rachel, because there's not a lot of flash there, but it is just sort of steady as it goes. The company's growing profitability is improving. This is what we want to see. And Disney just seems like the kind of company that the market would love. You know, you have a lot of these big retailers that the market's saying, hey, these aren't, these companies aren't going anywhere. Let's, let's trade 50 times earnings. Disney's not getting the same love from the market, but it seems like the results are showing that this business has a ton of staying power.
- [11:01]
C
Yeah, I think it goes to show that sometimes market responses to earnings reports are not always logical. I mean, this was a solid, fantastic quarter for the business. So it was sort of more of the same. Are they hit a record 25 billion in revenue. That was up 7% year over year. So the core business continues to grow at a really solid clip. Operating income for Disney plus and Hulu jumped 88%. You saw the entertainment division grow revenue by 10%. And that was notable because they're sort of carrying the weight for the stagnant sports segment. Right. That's dealing with a lot of pressure due to rising rights fees. And even though we're seeing, you know, consumer spending fatigue, we're seeing some shifts in international travel experiences. Revenue rose 7% and part of that was because they increased the average spend per guest. The newly, newly minted CEO Josh, to borrow, he's moving fast to really centralize marketing and use AI personalization to keep streaming margins above 10%. He's been cutting costs through strategic layoffs. They're moving forward with that $60 billion investment plan. They're trying to turn hits like Inside Out 2 and Moana 2 into physical destinations. And the takeaway for me here is I think betting on physical experiences is very much a safer long term play for Disney than say, trying to enter into sort of this endless content arms race with Netflix leading into that Experiences division which already accounts for a lot of their overall profit. They're monetizing their fans multiple times. This is proving to be a really consistently profitable strategy even in a difficult macro environment.
- [12:33]
A
Yeah, Lou, it seems like the Experiences business tomorrow came from the experiences side of the business. So that does seem to be the core. I, it didn't say that anything was changing strategically, but that sports business more and more seems like it doesn't quite fit under the Disney umbrella. So maybe we see some changes there. But you know, it seems like there's a lot of tailwinds for Disney. You know, I did a little bit of research recently on the Disney experiences and they have a lot of capacity in Florida coming online. That's not to mention the cruise lines and all the other expansions they have around the world. So this may be, this may be moving in the right direction for a while. Yeah.
- [13:09]
B
So we're not going to call this a referendum on tomorrow because he was only CEO for 14 days of that quarter. So I doubt, you know, but, but again, I mean that, that's good. We don't want it. This looked like a perfectly fine large company report. You know, I mean, look, there's a lot of parts in the investing world where, you know, we're not going to strike up the band for 7% revenue growth, high single digit revenue growth. But given Disney size, given the fact that, I mean, my big takeaway here is that, you know, everything's fine and you know, with, with slow and steady maybe what we needed with Disney because we haven't gotten that quarter to quarter for a couple of years. I will say though, I don't know why this big amalgamation of assets is really should wow investors or excite Investors, you mentioned sports. There's a legacy TV business. The more and more I look at this company, the more and more I think that, that it would benefit from some more strategic pairings or more strategic kind of investitures than I realized. We've talked about the legacy tv, we've talked about maybe sports, maybe almost all of the streaming, maybe not get rid of it completely, but find partnerships just to focus on, as you say, the experiences, the things to do really well getting that ip, keeping that IP in house. But I don't know if this is ever really going to work as a market. Wow. Investment as is when it's just this huge bundle of everything. I think maybe the Demario era might be about what they sell, where they partner, where they decide we don't have to do it in house. I think that might be what the future is for this company.
- [14:55]
A
It's pretty easy to see some value here if you're a long term investor though, you know, Lou's probably right. This is not going to be a double, double digit, 20% growth company, but company is growing price earnings multiple on a trailing basis is 17. On a forward basis it's under 15. If we get some sort of, you know, pullback in the market, the, the market is probably going to like some of these safer stocks. That single digit growth at a, you know, mid teens priced earnings multiple isn't, isn't all that bad of a formula.
- [15:24]
B
Well, so the question there is, is that why, if that pullback comes, why does it come? If it comes because the consumer's under pressure, it's probably not going to be Disney yelling into there. Right? Because so much of it is the parks and experiences. But yeah, I do think that this is looking more like ballast than exciting. Again, I wonder if there isn't a way to keep the, to not turn into Six Flags, to keep the natural advantages they have over Six Flags, but not have all of this completely in house. I do think that, you know, if I'm an investment banker, that's what I'm spending time trying to talk to Disney management about. I do think there's ways to craft out a middle ground that might make this a more interesting investment while also not giving up on their competitive strengths.
- [16:13]
A
Well, the market likes what it hears today. Shares are up 8% as we're recording. So we'll see where things go in the future. When we come back, we are going to get to some good news for Novo Nordisk. You're listening to Motley Fool, Hidden Gems
- [16:24]
B
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- [16:58]
A
Welcome to Motley Fool. Hidden Gems Investing. Novo Nordisk reported earnings as well over the past 12 hours or so. Rachel, this is the area that you follow closely, but as I was looking at this, I was shocked to see Novo Nordisk Stock is down 75% since its peak in 2024. That is just a crazy fall for a company that I think is still very identifiable with this GLP1 craze. Things are turning around. At least it seems like the market's thinking. We got a little bit of good news today. So what did you see from the results?
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C
Yeah, I mean, I think the biggest and most obvious takeaway is the oral version of Wegovy that they are selling is proving to be a major volume engine for the business. So this was the first full quarter of the Wegovy pill being on the US market. It did the equivalent of about 354 million in sales. Million dollars. I'm, I'm translating that from Danish Crowder, but that was essentially double what analysts were expecting. And so there's this idea that Novos may be tapping into a segment of patients that weren't using the injectable version. By making the drug a simple pill, lowering the barrier to entry, their overall sales in the quarter jumped about 32% on a constant currency basis. And the Wegovy brand now controls about 65% of all new prescriptions in the U.S. obesity market. And they actually elevated their guidance a bit. They're now looking for sales and profits to contract by only 4 to 12% instead of 13%. So they're still looking at declines.
- [18:27]
A
So we're seeing more prescriptions but less profits. Does this mean that they're lowering prices? I think this is what we've seen with some of their partnerships. They're, I think, down almost 90% from that kind of $2,000 a month. Yeah. Is it, is it we're going to lower prices or we're going to make it up in volume? Is that the story?
- [18:45]
C
I think that's what they're hoping, right. So they're cutting prices by up to 70% in some channels. You've got list prices that are set to drop another 50% in 2027. But there's something I want to note here. The Wegovy pills require significantly more of the key active ingredient semaglutide to be effective compared to an injection. So what that means is Novo is using more raw material to make less profit per patient. So that is a drag on the margins that doesn't exist for injectable drugs. And of course they've already been losing ground to the likes of Eli Lilly with competition in the GLP1 space. The other point I'll make is they are spending billions on Capex to build massive new factories in places like Ireland, like Italy. They're dealing with a very, very competitive landscape right now. So if demand slows down, you know, if the volume drift slows in any way or you have a better drug from a competitor that hits the the market, you've got a major Next Gen GLP1 from Eli Lilly coming soon. Could they be dealing with very expensive underutilized infrastructure? That remains to be seen.
- [19:47]
B
The classic thing, right Travis? We're making it up on volume. Right. I feel like that meme where. Well, it didn't work for these others, but it might work for us comes in here. Look, it's, it's fine and good. I think they are second best right now in their core market right now if we're honest. And that's an issue. It's especially an issue because look, Eli Lilly is investing in heavily in what's next. They have done billions in deals this year. I love it when a company takes profits from an existing business and tries to invest in the future with it. We haven't seen that from. No. I mean I know they are very, very high on some parts of their pipeline. There's since we have candidates here. But if you dig down a lot of that pipeline is just different ways to express glp. Good for them. Use this volume and try and invest in going somewhere else. I think that would be my advice for them right now. Just make sure you don't turn out a one hit wonder because in pharmaceuticals just even if it's going well with the way patents work, one hit wonders tend not to fare too well over time.
- [20:48]
A
Yeah, the clock is ticking. They have about five years left on the patent in the us that patent expired in Canada. Whoops, they forgot to file some paperwork and pay a couple hundred dollars to keep that exclusive in Canada. But yeah, for now, things do seem to be going well. But I agree. You look at Eli Lilly's pipeline in in particular Retitrutide, they've got some other things outside aglp, ones that are really compelling. So if you're looking at pharmaceutical stocks, despite the fact that there's a bounce today, look at the fact that lowering prices is really what Novo Nordisk is doing right now. As always, people on the program may have interest in the stocks they talk about, and the Motley fool have may have formal recommendations for or against. So don't buy or sell stuff stocks based solely on what you hear. All personal finance content follows the Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes for Lou Whiteman, Rachel Warren and Dan Boyd. Behind the glass, I'm Travis Williams. Thanks for listening to Motley Fool Hidden Gems Investing. We'll see you here tomorrow.