Motley Fool Money: "The Kids Aren’t Alright (Banks, However, Are)"

Date: October 14, 2025
Host: Emily Flippen
Guests: Jason Hall, Jeff Santoro

Episode Overview

This episode dives into three core financial themes:

1. The surprisingly strong performance of major U.S. banks in the latest earnings season.
2. The dramatic rise in Robinhood’s share price and what’s fueling its boom.
3. Whether the sharp decline in U.S. alcohol consumption is a fleeting trend or a generational shift—plus investor perspectives on beer, cannabis, and pharmaceuticals.

Key Topics & Insights

1. Bank Earnings: Strong Results Across the Board

(00:05–06:59)

• Big Banks Beat Expectations:
  U.S. financial giants JPMorgan, Wells Fargo, Citigroup, and Goldman Sachs all reported strong results.
  • Citi: Making progress under CEO Jane Fraser, focusing on profitability and restructuring. Overcame a $750 million write-down linked to Banamex’s partial sale. Improving credit quality and return on tangible equity, though still lagging peers.
  • Wells Fargo: Freed from its 2018 Fed-imposed asset cap after the fake accounts scandal—now able to grow assets. Earnings up 9% (driven by investment banking and card fees), net interest income rose 2%; credit card balances also rising.
  • JPMorgan: Continues to outperform peers. CEO Jamie Dimon known for cautious commentary, but this quarter he struck a more balanced tone.

Jason Hall:
"We saw some serious work from Jane Fraser as the CEO of Citi… working hard to tear down this unwieldy, low-profit empire that her predecessors built and try and turn Citi into a leaner, more profitable bank."
(01:34)

Jamie Dimon & Bank Sentiment:

• Dimon's commentary typically hedges optimism, aiming to steady market sentiment.
• This quarter, both Dimon and Wells CEO Charlie Scharf acknowledged “soft spots” but praised the resilience of consumers and the economy.

Jeff Santoro:
"I feel like [Dimon’s] often bearish when things are going well, but it never seems like the doom and gloom that he predicts actually comes to pass."
(03:29)

Economic Context & Cyclicality:

• Banks—especially those focused on investment banking, M&A, and trading—are highly cyclical.
• Current conditions (business-friendly administration, IPO activity, record trading volumes) are driving exceptional results, but analysts caution about future downturns.

Jason Hall:
"We're in this kind of weird place where everything's working really, really well… Deal making is picking up. That's not just the strength of the economy, but it's also the product, I think, of an administration that's willing to let big M&A happen."
(05:16)

2. Robinhood’s Meteoric Rise: More Than Just Meme Mania?

(07:42–11:44)

• Robinhood’s Comeback:
  After a post-IPO slump, 2024 and 2025 have seen Robinhood’s shares soar over 250%, fueled by:

  • Explosive growth in crypto and options trading.
  • High interest rates boosting margin revenue.
  • Aggressive cost-cutting: operating expenses down nearly 50%.

• Valuation & Risks:
  Shares are trading at ~30x forward sales, reflecting massive hype and speculative enthusiasm ("gambling vibes"). Most revenue (54%) comes from payment for order flow—directly linked to user trading activity.

• Sustainability of Growth:

  • Revenue is coming primarily from existing users trading more, not a huge influx of new accounts (funded customers up just 10%, platform assets up 99%).
  • User retention rates are high across the industry. The key opportunity is capturing and keeping the next generation, especially as trillions shift between generations.

Jeff Santoro:
"This is a story about how speculative and gambling vibes are everywhere in the markets right now… Their revenue from options trading grew 46%, from equities 65%, and cryptocurrency 98%."
(08:42)

Jason Hall:
"The goal for Robinhood is to keep young users for decades… Those same young users that are choosing Robinhood now, they're going to receive a massive portion of the hundred trillion dollars plus wealth transfer from boomers."
(11:05)

• Investment Take:
  Emily notes investors might be buying "at peak hype" and suggests waiting for a market cycle downturn for a better entry point.

3. America's Alcohol Downturn: Temporary Shift or Permanent Change?

(13:51–19:39)

• Beer Brands Hit:
  Constellation Brands (owner of Corona, Modelo) and competitors like Boston Beer report declining sales, despite a reputation for resilience.

• Macro vs. Generational Shift:

  • Surveys show U.S. alcohol consumption is at "all time lows."
  • Management often blames the macro environment, but hosts see evidence of broader, generational change.
  • Younger adults socialize less in person and are less likely to drink—a possible side-effect of isolation and smartphone culture.

Jason Hall:
"The trend aligns with data that younger adults are less likely to go out in public group settings like bars… Some of the trends that have led to the rise of the Robinhoods of the world are things that on the other side may be affecting [alcohol]."
(14:50)

• GLP-1 Drugs & Other Explanations:

  • Both Jason and Jeff are skeptical that GLP-1 appetite suppressants (e.g., Ozempic) are causing a permanent shift; adherence is low and effects may not endure.

• Cannabis as a Competitor:
  Cannabis is seen taking share from alcohol, especially as legalization spreads. Constellation Brands' stake in Canopy Growth hints at possible future major consolidations between alcohol and cannabis firms.

Jeff Santoro:
"I think what would be interesting to watch is how these alcohol companies handle cannabis when and if it becomes federally legal… I think we're going to see more consolidation in this space."
(17:20)

4. Rapid-Fire: Cannabis, Alcohol, or Pharma—Who Wins the Next Five Years?

(18:16–19:39)

• Emily: Picks cannabis: "That's where a lot of the growth is… I think in five years [they] probably relatively outperform."
• Jeff: Picks alcohol: "Five years is too quick for the cannabis industry to outperform… alcohol companies are going to figure this out… learn to pivot."
• Jason: Picks Altria/Tobacco: "Cannabis… has too many yellow flags… Can I just actually skip both and just take Altria for the over here?"

Notable Quotes & Segments with Timestamps

• On Citi’s progress:
  "Citi and Wells, their businesses for different reasons have long struggled… We saw some serious work from Jane Fraser as the CEO of Citi, working hard to tear down this unwieldy, low profit empire." (01:23)

• On Jamie Dimon’s market role:
  "I don't think he's really making predictions as much as just trying to buffer the worst tendencies of the market to swing to those extremes." (03:51)

• On Robinhood’s business model:
  "Most of the revenue—54% in this last quarter—comes from transaction revenue or payment for order flow. So put another way, every time someone trades, they make a little bit of money." (08:42)

• On the generational shift away from alcohol:
  "The trend aligns with data that younger adults are less likely to go out in public group settings like bars and have become more socially isolated, spending more time on apps." (14:50)

• On industry outlooks:
  "I think this is a pendulum swing, not a death spiral for the alcohol industry." (17:20)
  "Cannabis… has too many yellow flags and the consumer goods-ification of that industry erodes the potential for anybody to do what the tobacco industry does…" (19:20)

Timestamps for Important Segments

• 00:05–06:59: Banks' Earnings Deep Dive—performance, leadership, economic trends
• 07:42–11:44: Robinhood’s comeback, business model analysis, investor caution
• 13:51–19:39: Alcohol consumption decline—macro vs. generational shift, cannabis competition, rapid-fire on sector outlook

Episode Takeaways

• Banks: Riding high on a favorable economy and deal activity—but always at risk from economic downturns. Cyclical but currently robust.
• Robinhood: Benefiting from a hyperactive, speculative market and increased young user engagement, but faces sustainability and valuation concerns.
• Alcohol/Cannabis: The landscape is shifting—longstanding brands are grappling with new generational trends, and cannabis is on the rise as a competitor. Where to invest next is up for debate, reflecting the continued evolution in American consumer behavior and preferences.

Engaging, well-rounded, and packed with both data and humor, this episode equips investors with perspectives on where today's hot sectors—and investor dollars—could be headed next.