Last time we played The Market Cap Game Show, returning champions Motley Fool analyst Yasser El-Shimy and Motley Fool contributor Brian Stoffel had to be content with a tie at five points apiece. Of course, we couldn’t let that stand, so they’re back to battle once more, and this time we have the listener-submitted “Stevens Sudden Death Rule” to prevent another draw. Will we need to invoke the new rule?
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David Gardner: A lot of people, when they first think about stocks, tend to lock in on the share price. Maybe this was you or maybe this is a friend of yours. They’ll say, “Well, Alphabet, is at $102 per share; that’s expensive.” By contrast, the same mentality when looking at penny stocks can get a lot more excited. Some penny stock they’re seeing promoted by someone, perhaps some ne’er-do-well, and they’ll think, Wow, the stock, is it a $1.02 — not 102 like Alphabet — $1.02.” They’ll think that’s the one to buy, the $1.02, because if it just reaches $2, you double your money. Well, from the earliest days of The Motley Fool, we’ve tried to get people focused not on the price per share of the company, but rather on the market cap of the company. The price per share of a stock tells you almost nothing. It’s the price to buy one share of the stock.
But how many shares does the company have outstanding? In math, we multiply two multiple cans together, but the price per share is only one multiple canned. If you don’t know the other one, you can’t do any meaningful math or figure out much of the world around you. Fools with a capital F know that you need to know the shares outstanding, and then multiply that by the price per share. Now you know the actual full value of the company, its full price tag, its market capitalization, market cap. Well, to teach this lesson inexorably and unforgettably, we invented a game. That’s what I do. The date was Aug. 9, 2017. We’ve been playing every quarter since. You’re playing too. You know this. Now into the sixth the year you’ve been playing along all the way through, I hope. It’s that time of the year, again, that time of the quarter, again, 10 new stocks, two guests stars, both returning champions, actually three guest stars because you too. Only on this week’s Rule Breaker Investing.
Welcome back to Rule Breaker Investing. It is the penultimate Wednesday of the quarter. Therefore, it is the Market Cap Game Show. Can’t wait to share this with you. Bring back two guest stars, play along with you in the hour or so ahead. Before we start, I want to say just a few things. The first is next week is mailbag. Our email address is email@example.com. Any reactions to share to this month’s podcasts, including today’s market cap game show. I led the whole month off with my pet peeves volumes seven, we did a review-a-palooza of 25 stock samplers, five stocks indistinguishable from magic, and five stocks with a tailwind blow. We’d love to hear from you. You can tweet us @RBI podcasts and we hope you’ll subscribe to this podcast and listen in each and every week. I want to thank Mike Steele for constructive criticism to improve the Market Cap Game Show, Mike, you tweeted out to me a quarter ago. It takes too long to get into the game. You talk too much up front.
Get the game going already. Mike, because I told you one quarter ago, I agree. I hope even new listeners have by now grasped our rules here. You’re guessing the market capitalization, the value of 10 different companies will feature this week. You score yourself for correctly agreeing with or correctly disagree with my celebrity contestants. If you’re new, listen and play along, you’ll get it. Now one final note, Brian Stoffel and Yasser El-Shimy, last quarter tied 5-5. Offline before the show one of them said, “It’d be really weird if we tied again.” The other applied, “It would be really weird if we didn’t tie again.” Even though those two statements directly contradict each other, they’re both right. I love paired contradictions. In a past great quotes episode I pointed to another such pair. There’s an old line, we can all appreciate it, but you’ve heard this before. If thing is worth doing, it’s worth doing well. Sure heck, but then there’s the very opposite statement by G.K. Chesterton. “If it thing is worth doing, it’s worth doing poorly.” I can again say here, sure, in some contexts, that’s also right. The lines say the opposite. They’re both right. We shall see whether we tie this time or not. I promise simply that it’ll be weird no matter what. Let’s get started with returning champions, Brian Stoffel and Yasser El-Shimy.[Music]
David Gardner: Brian Stoffel is a Fool contributor. He works primarily on write-ups for Motley Fool Stock Advisor and appears on Motley Fool Live two to three times per week. Yasser El-Shimy is an investment analysts at The Motley Fool, working on several services including Trend Spotter, Next-Gen Supercycle, and the Backstage portfolio. Gentlemen, welcome.
Brian Stoffel: Thanks David.
Yasser El-Shimy: Good to be here, David.
David Gardner: I talked about this a little bit at the start, but you’re not allowed to tie this time unless if you do, we’ll have extra fun and there will be no tie. You guys both have been briefed about that, you know that, and are ready. Let’s get started with company No. 1. By a lot I have selected the first call to be made by Brian Stoffel. Brian here we go, company No. 1. Brian, are you a morning person or a night?
Brian Stoffel: I am definitely a morning person.
David Gardner: Even before I fully asked the question, you were already jumping. Does that mean that while most morning people may rise at six you’re up at 04:30?
Brian Stoffel: Oh yeah, definitely does. It’s an interesting dynamic because my wife is a night owl.
David Gardner: That is also true in my household, although we reverse the gender roles of your household. I think it’s good to have one of each, frankly, because with kids and I know we’ve had kids young and older, but young kids especially, you want to have coverage. Most of the time. Brian, do you sleep well at night?
Brian Stoffel: I sleep well most nights, but there is the occasional night where I find myself up without anything to do and a little bored.
David Gardner: This isn’t even relevant to the company we’re about to talk about, but in my own case, I use an app off my Apple Watch to score my sleep each night. I think I’m addicted to having scoring systems all around me and too many areas of my life sleep, being one of them, Brian. But while most people may not use an app to give a three digit number to score their sleep each night, it’s called Sleep Watch, I use it every day. Many others measure the quality of their mattress. That itself has become a cultural phenomenon. I think a lot of us might know the phrase sleep number. Well these days, sleep number gives itself to a public company. The ticker symbol is SNBR. Brian, have you ever used one of these mattresses?
Brian Stoffel: I have not. Although I’ve got to admit I’m interested when I see the commercials for them.
David Gardner: Because it’s like a number 1 to 100 and you can dial 37 for you and 78 for her. Everybody sleeps soundly and it’s just one mattress. It’s all about your sleep number again, in an age addicted to scoring systems. An historian was pointing out recently to me that about 150 years ago no one really was scoring anything just about; there was no sense of big data or any likes or anything going on. We’re all surrounded by scoring systems today, including underneath us at night for some of us. Brian Stoffel, what is the market cap range you would like to record Sleep Number Corporation, ticker symbol S-N-B-R?
Brian Stoffel: This is not a company I am familiar with, but I’m going to imagine that it’s probably a smaller one that I might think, even though they’ve got enough money to get Dak Prescott on their commercials during football games. I’m going to say it’s between $2.8 billion and $4.3 billion.
David Gardner: All right, $2.8 billion to $4.3 billion. Yasser, is this a stock you’ve ever researched or looked at or maybe a product that you use?
Yasser El-Shimy: I have not looked at it. Although I did think about it as a product I could potentially use. We all could use a good night of sleep for sure, but I imagined in my case, I’m not going to have that no matter what mattress I get, because I have two young kids. I’m going to go with outside the range.
David Gardner: You’re going with outside the range. Now again, listeners at home, you’re playing right along with us. You either say inside the range or outside the range, Yasser is going outside the range of $2.8 billion to $4.3 billion and [bell] he’s right. Indeed, friends. I, myself was surprised how low the market cap has gone for this well-known consumer branded public company that has had some remarkable recent volatility. Sleep Number’s market cap is $962.27 million as of market open Tuesday, Sept. 20. That is indeed outside Brian’s range. Brian, I liked your answer. It felt comfortable and what I thought of sleep number and the truth is, as of about a year ago, that would’ve been a good call, but the stock has dropped from 150 down to 40 in the last year or so. Sleep Number has had a number done on it. I do want to point out over the 10-year run, this dock as well. It’s a double from where it was five years ago from 20-40. But it had one of those COVID swoons in March of 2020 went from 60 to below 20 in one month, and then it went from below 20 to over 140 for that glorious year of something like summer 2020 to summer 2021, but not so good. Since one of the things guys we’ve talked about sometimes in the past is when you think a company has a higher market cap than it actually does, that can sometimes add a ticker to your watch list. Because Brian, if you thought this company, maybe a $3-billion company and by the way, it was not too long ago and it’s one-third that maybe worth a look.
Brian Stoffel: I agree. It’s not my investment, but I think that that thought recognition, that pattern recognition holds true.
David Gardner: And Brian, why does this one not really fit the Stoffel Folio?
Brian Stoffel: I don’t see a ton of optionality for sleep number. I don’t see them getting into cushions for cars or bring this to your sporting game and your butt won’t be sore.
David Gardner: Well said, I’m not going to say anybody’s but is sore because it’s only one to nothing but Yasser one Brian, nothing. Let’s move on to company No. 2. Yasser, did you ever follow the foolish four or dogs of the Dow? Are you aware of that strategy?
Yasser El-Shimy: I’m aware of the strategy, although I have not followed it as closely.
David Gardner: It first appeared in a book and the 1980s by Michael O’ Higgins called beating the Dow and whether or not he invented it. It’s not clear to me, we tweaked it a little bit and wrote about it as the foolish four in our first book, The Motley Fool Investment Guide, and the age-old practice is basically to look at the Dow Jones Industrials, find the ones that have performed the worst over the last year or three or five, however you want to do it? Then check the dividend yield to look for higher dividend yields and worst-performing stocks and then maybe to buy that, or at least consider buying that stock because these, after all, this I sometimes say, or the Unsinkable Molly Browns of American commerce, presumably if they’re Dow Jones Industrials and if they’ve gotten beaten up and have attractive dividend yields, well, that might be a good list to beat the market and Michael O’Higgins showed in his book, and we updated the data in our initial one.
That sure enough, this has been a pretty good rinse and repeat way to beat the market. Now, the reason we eventually went away from it, one reason guys, you would know right away as with any regular listener, this podcast, back then we were much shorter term in our thinking and the idea of a new set of stocks to buy each year, sell out last year’s, every year. That does a number on your tax bills and on your ability to compound at good rates. Not really fans of the so-called Foolish for back in the day or the Dow dogs anymore. But I’ve always still liked the idea and I’m glad we got to talk about it a little bit and share it out because I think it has a good underlying philosophy behind it. When you think of the Dow Jones Industrials, Yasser, without trying to quiz you because I don’t think I do too well these days in which is in the 30, which aren’t. Can you think of any really, really big medical companies that might come to mind, specifically ones that have a single syllable?
Yasser El-Shimy: Single syllable.
David Gardner: As a name. That starts with a letter M.
Yasser El-Shimy: Merck.
David Gardner: Good one You must be a professional. You nailed it. Ticker symbol, MRK, Merck, and company been at Dow Jones Industrial for a long time. More importantly, though, Yasser, we’re concerned with the market cap today in the market cap range that you’d like to estimate for Merck. Again, ticker symbol, M-R-K.
Yasser El-Shimy: Wonderful. Like Brian before, this is not the company that I would have probably looked at doing my work. But Merck is a familiar household name of big pharmaceutical company and definitely one of those classic pharmaceutical companies in the Dow if you will. I’m going to give Brian a fairly generous range here and I’m going to say Merck’s market cap is somewhere between $220 billion to $260 billion.
David Gardner: $220 billion to $260 billion. A $40 billion range to work with Brian, although in percentage terms not necessarily as generous as it sounds about a 20% or so parameter there. Brian Stoffel, listeners at home, Merck, $220 billion to $260 billion inside that range or outside that range.
Brian Stoffel: I’m going to say outside that range.
David Gardner: [Bell] Sure enough, you’re right and we’re tied one-to-one, not outside that range by much though. This one was close, Yasser, the market cap for Merck as trading opened yesterday, Tuesday, Sept. 20, $217.06 billion. It’s outside the range of 220 to 260.
Yasser El-Shimy: I think I deserve a half a point for this one. The 2022 discount was the only reason I did that.
David Gardner: Merck, by the way, has been lifting its dividend about 10% a year or so over the last five years. The yield in the stock today, 3.2% for those yield hunters and those scoring at home. Guys, is this a stock that either of you owns?
Yasser El-Shimy: No, I don’t.
David Gardner: Why not? This is a staple of American business, it is a company doing good work in this world, one that a lot of us grew up hearing about, even if it was a little opaque.
Yasser El-Shimy: I’m actually restricted from owning any pharmaceutical or food and beverage companies because my wife works at the FDA. But Merck would have definitely been one of those companies that I would have taken a look for at least my retirement portfolio for sure, but unfortunately, I can’t.
David Gardner: Well, that’s a really interesting answer, Yasser. Either I didn’t know that or I’d forgotten that and between that and then Motley Fool restrictions that we have as employees, where if we mentioned a stock, for example, Sleep Number, on a podcast, we can’t trade in advance of that or after that by a few days. Now, the direction. Yasser, are you able to buy any stocks?
Yasser El-Shimy: I am, just not in those categories. Sometimes the way we work at The Fool and we have all these restrictions, sometimes they just have to wait, it could of wait of a week and could be a few months, but eventually, I get my hands on those stocks.
David Gardner: Patience. Let’s move on to company No. 3. We’ve got Brian one, Yasser one. Brian, do you make any concerted effort to stay fit?
Brian Stoffel: Yes.
David Gardner: What form does that take or forms?
Brian Stoffel: I go running about once every four days and I lift weights. I used to do a little bit more, but that pretty much eats up whatever time I might have available.
David Gardner: That’s pretty impressive. Are you systematic with that four days? Do you circle it on your calendar? Do you start to feel an itch if you haven’t run in five days? How does that play?
Brian Stoffel: I definitely feel an itch, but I don’t circle it on my calendar. What the big thing is, is I start to feel like I need to if I haven’t done it in some time.
David Gardner: Wonderful. Well, you’ve always looked trim to me, Brian, whether it was back in the day at Fool HQ when you came to work for a while full-time or as an older and yet still not that old gentleman approaching middle age with a little bit of a gray beard that you are scratching as we speak. You’re in great shape and good for you. I’m curious, Do power your workouts with a proprietary, clinically proven formula at any point?
Brian Stoffel: This is so funny because I usually don’t, but I will admit that I aim to get my best run at the year-end and always at the Turkey Trot. There’s a Turkey Trot I always sign up for and I cheat because when I usually run, I’ll do it in a fasted state, but when the Turkey Trot comes, I have snickers bar and I will have a Celsius drink to power me.
David Gardner: It does come in several delicious sparkling and non-carbonated flavors. Do you have a favorite flavor of choice for the Turkey Trot?
Brian Stoffel: I like the berry.
David Gardner: I have tried some of these, I like the orange. I haven’t tried the berry. Have you tried the orange and you like the berry more?
Brian Stoffel: Yes.
David Gardner: I’m going to shift to berry next time. Thank you, Brian Stoffel. But I guess more to the point, the ticker symbol for Celsius Holdings is C-E-L-H. This is a stock, I never formerly recommended this myself, but there are a number of Fool analysts and stock pickers who are fans of this company have been. And man, talk about a stock that has lifted off in the last couple of years. It’s had its volatility like all the rest, but this looks like a home run over the last few years. More to the point though, Brian Stoffel, what is the market cap range you’d like to accord Celsius Holdings ticker symbol C-E-L-H?
Brian Stoffel: We’re going to go with $6.1 billion to $8.1 billion.
David Gardner: $6.1 billion to $8.1 billion, I like how you’re rocking the point ones. That could be helpful or detrimental to Yasser. It’s really hard to know how he’s reacting to those right now. Yasser, 6.1-8.1 billion. On the face of it, a tight range of only two billion and yet a little bit more generous than you were giving Brian for your Merck, if we’re scoring percentages, not points. Yasser, listeners at home, 6.1-8.1 billion is Celsius Holdings inside or outside that range?
Yasser El-Shimy: I’m going to go outside the range.
David Gardner: [Buzzer] It is indeed inside Brian’s range, so Yasser, Brian scores that point. You said outside and boy, were you close to being right because the market cap for Celsius Holdings is $8.09 billion and it’s almost like Brian Stoffel keeps up with these things and studies market caps in the wee hours of the morning.
Yasser El-Shimy: I think the stars are aligned against me today. This question, it’s of $100 million, the previous question was $3 million or something like that. It’s just crazy, come on.
Brian Stoffel: It’s not even $100 million, it’s $10 million.
Brian Stoffel: $10 million? Yes.
David Gardner: Good math, you’ve slipped that passed me yourself, Yasser. But Brian, you’re absolutely right. Oh, my god, $10 million. Listeners at home again, if you said inside the range, give yourself a plus one. Brian, it seems like you have familiarity with this company. You’re also a consumer of the product at least once a year. Is this a stock you own or follow closely because my golly, was that market cap close?
Brian Stoffel: Follow closely, yes, just because I think it’s interesting because it’s a consumer-facing brand and its only moat is its brand. That’s why I’m not invested in it, but I like it and it is taking market share like crazy.
David Gardner: I’m not really following it, although I do use it from time to time. I haven’t followed the stock. For those who haven’t, you should know along with me that this stock was around $5 a share as 2020 began, today, the stock is trading at about $100 a share. We’re talking about a 20-bagger over the last two and a half years and again, many of my favorite stocks aren’t up that much. They’re more like down 40% over the last year or two. This is a volatile stock. Celsius topping at just over 100 at the end of last year, bottoming this year closer to 40, but again, back up to 102. It’s interesting, Brian, to think that this company whose products is, I would say, maybe less well-known than Sleep Number maybe it’s just Sleep Number has been around longer, but the market cap, eight times Sleep Number’s market cap. Any final thoughts about Celsius before we proceed to company No. 4?
Brian Stoffel: I’m very glad that you took the market caps at the beginning of the day because if right now Celsius is down even 1%, I think I would have lost that.
David Gardner: It’s an actual point. The market not strong Tuesday at least as we’re recording, so probably it was, but we’re doing start of market trading on Tuesday as mentioned earlier. Let’s move it on to company No. 4. How are you doing at home? If you’re doing really well, you have three points. Yasser, now, as an American and I grew up in this country, I’ve spent my entire life in this country, basically, 56 years or so. It does seem to me that there is somewhat of a coastal bias felt by some in the U.S. I think that thinking goes that there’s more business, there’s more savvy, or more restaurant choices, or whatever it is on the coasts maybe because of geography, maybe because more people just go to the coasts of other places and hang there and the beach and others. As opposed to the Midwest or some might say, Middle America. Brian Stoffel, I’m not asking you this question, but I’m quite conscious that you are a Wisconsin man and I think a lot of us would say that as the middle of America. Yasser, there does seem to be some coastal buys felt by some of the U.S. Is there an Egyptian equivalent?
Yasser El-Shimy: For sure. We have this idea of Cairo versus the rest. Cairo being of course the capital city, it’s a huge metropolis of over, almost 25 million people. Roughly one out of every four or five Egyptians resides in greater Cairo. There’s definitely concentration of everything from colleges to businesses, and government offices in that city, and not so much if you travel even 100 miles outside.
David Gardner: Now I know you’re not saying this, you didn’t actually say this. You’re not saying that there’s not charm outside Cairo. There aren’t great, amazing people and things happening in Egypt outside Cairo. You’re not saying that?
Yasser El-Shimy: No, absolutely not. In fact, if I were to retire in Egypt in the future at some point, I probably would prefer to reside somewhere in the less densely populated cities of Egypt, either on the Red Sea or the Mediterranean Sea. That’ll be my pick, not the hustle and bustle of Cairo.
David Gardner: That sounds amazing and I still haven’t been to Egypt and thank you for sharing that, Yasser. Well, I guess the reason I’m asking about this, and I know Brian Stoffel will not only weigh in with his final guess, but I’d love to hear his viewpoint in a minute. But the reason I’m asking is because we’re talking about a company whose name, and this is not one I’m familiar with. This is not a company that I’ve ever picked or researched. The name of the company is Mid-America Apartment Communities and the ticker symbol is M-A-A. It’s a quick reminder, how do I find companies? Well for each market cap game show, I randomized from our Fool data base. We have a list of the companies that we favor and cover the most. I take the top 500 of those, I think of them as the Fool 500 and I randomized for that group and I happen to have come upon Mid-America Apartment Communities. It’s a publicly traded REIT, that’s a real estate investment trust. Mid-America is based in Memphis, Tennessee, it invests in apartments in the Southeastern and Southwestern United States. Before I ask you for your market cap range, Yasser, have you ever heard of or looked at Mid-America Apartment Communities?
Yasser El-Shimy: I did a while back. I was looking at various REITs and Middle America Apartments definitely came up as part of the high-quality REIT companies worthy of consideration.
David Gardner: Excellent. That means you have more clue about Mid-America Apartment Communities than I do. I love my Middle America, I just don’t know my real estate investment trusts that well, but forget about me, Yasser. Let me turn to you now and ask you, what is your market cap range you’ll give to Mid-America Apartment Communities, ticker symbol M-A-A?
Yasser El-Shimy: Sure. I will give a market cap range of $12.8 billion to $17.8 billion.
David Gardner: $12.8 billion to $17.8 billion. I noticed you rocking the 0.8 in the same way that on the previous question, Brian rocked the 0.1. Is this a little bit of psychological warfare I’m starting to pick up on?
Yasser El-Shimy: You will never know.
David Gardner: [Laughter] Players at home, Brian Stoffel, Yasser has stated $12.8 billion to $17.8 billion for this company which owns well as of December a year or two ago, 300 apartment communities containing over 100,000 apartment units. The largest owner of apartments in the United States, the seventh largest apartment property manager in the United States, Brian Stoffel, players at home inside Yasser’s range, of 12.8-17.8 or outside that range?
Brian Stoffel: I feel like he’s playing mind games with me because my guess was going to be much lower. But he gave me such a generous range that I’m going to say inside.
David Gardner: [Buzzer] It is outside that range. But once again, friends, and this is why Brian and Yasser are invited onto this show, and many of my past guests, these people are professionals, they’re really good at this. I wouldn’t have known a thing about Mid-America Apartment Communities market cap, but it is $19.06 billion. Outside the range, but again, not by much. Only about $1 billion outside range from 19.
Yasser El-Shimy: Giving you a taste of your own medicine, Brian.
Brian Stoffel: Yeah, that’s fair.
David Gardner: [Laughter] Brian. What state were you born in?
Brian Stoffel: I was born in Wisconsin.
David Gardner: You identify as a Wisconsinite?
Brian Stoffel: Very much so. It annoys my wife quite a bit, but I do.
David Gardner: When I use the phrase Mid-America, what do you think of?
Brian Stoffel: I usually think of more plains states like less populated because I live near Milwaukee, it’s a major metropolitan area. I usually think of farmland, more like where I went to college.
David Gardner: Farmland, and I’ve driven across some of Americans, certainly seen some of it, not all of it, it’s beautiful.
Brian Stoffel: Especially during the summer.
David Gardner: Especially during the summer. It’s also really important. We’re finding, especially given some of the world events in 2022, the importance of food and making sure that we’re well cared for, or if possible, that we can grow as much as we can ourselves. There are a lot of people who love to buy local and eat local. Are you one such?
Brian Stoffel: I tried to as much as I can.
David Gardner: But that may or may not include Celsius Holdings drinks once a year, which probably aren’t produced in Milwaukee.
Brian Stoffel: When you talk about beverages in Wisconsin, it’s just beer or water and that’s about it.
David Gardner: Well, let’s keep the game moving. Friends it is Brian two, Yasser two. We’re not working toward a five-to-five tie, are we? Let’s go to company No. 5. Brian, if you had to toss out a couple of, let’s say, your highest-conviction winners for the long term — one, two, or three stocks that you really believe in that are presumably in your portfolio with stronger positions, you may not think that they’re going to skyrocket in the next year, but you have high conviction that this company will win over the only term that counts, the long term, throw us a few stock picks.
Brian Stoffel: The top three for me would be Amazon, MercadoLibre, and Axon Enterprise.
David Gardner: How about for the fun of it, a line or two elevate our pitching each one.
Brian Stoffel: Amazon with their fulfilment network plus AWS that’s hard to beat. MercadoLibre it’s much the same thing in South America, except instead of AWS it’s their payment platform, Mercado Pago. And Axon is the closest thing to a functional monopoly in my portfolio.
David Gardner: I like all three of those companies. I think of each of them as a rule breaker unto itself. I certainly love the idea that this forms some of the bedrock of yours and your family’s portfolio, is awesome. Thank you for sharing that, Brian. I will share out that in the Fool 500, one of the very highest-rated stocks of all is our next company. The ticker symbol is M-D-B. The company is MongoDB. Is this also in the Stoffel folio?
Brian Stoffel: It most definitely is.
David Gardner: I have a lot of the companies that we cover in my family portfolios, one or another of them. Yet, I don’t always know the market cap, even of the stocks that I hold. It will be interesting to hear your range right now Brian for MongoDB ticker symbol M-D-B.
Brian Stoffel: My range is going to be $14.7 billion to $15.3 billion.
David Gardner: 14.7 to 15.3, by far, the narrowest range presented on this edition of the Market Cap Game Show. Anyway, thus far, Yasser players at home, $14.7 billion to $15.3 billion. Yasser, is MongoDB inside or outside Brian’s range?
Yasser El-Shimy: Well, speaking of mind games, this is an awfully tight range right here and I see what you’re trying to do, Brian. But you know, I’m not going to fall for it. I’m going to go with outside the range.
David Gardner: [Bell] It is indeed outside the range, though as I’m starting to become accustomed, not far outside another great stated range. The market cap as of the opening of Tuesday’s trading Sept. 20 for MongoDB was $16.1 billion. Therefore, if you said outside a tight 14.7 to 15.3 range, you give yourself a plus one, players at home, and we’re going to give you a plus one, Yasser, for that. How confident were you as you answered “outside the range,” Yasser?
Yasser El-Shimy: I was about 80% confident. I knew that it was higher. I didn’t realize how perfectly close it was to Brian’s range, but I knew it was higher.
David Gardner: It should be pointed out with the market not having a very strong day yesterday, of course, we’re taping this before we even know how the market closed on Tuesday, it might have ended up in Brian’s range, but as things live, friends and as the rules have stated, this time it’s outside. Yasser, we’re going to be a plus one. You are at a 3-2 lead. Yasser, I somehow forced a couple of stock picks out of Brian Stoffel. Could I force a couple out of you using the same considerations?
Yasser El-Shimy: Of course. I would say that one of the companies that I have the highest conviction in and one that I don’t even spend a lot of time thinking about, which is a good trade for a stock with high conviction, is The Trade Desk. It’s a company that completely reinvented how digital advertisements are effectively traded between buyers and sellers. It has completely overcome, or maybe I shouldn’t say completely, but it has definitely overcome the big challenges of Apple and Alphabet cracking down on cookies and other tracking software that advertisers love to have. A lot of advertisers are flocking toward The Trade Desk. That’s one stock I like. Another stock would be Confluent, ticker symbol C-F-L-T. It’s one of my highest-conviction stocks. I believe that data is the future. You started the show, David, you said we score everything, we keep numbers and everything. Confluent helps keep data moving within an enterprise. It’s effectively a data-streaming platform. I believe that the way they have their proprietary software, Apache Kafka, that they’ve built, and customers love it, and I see a much brighter future ahead.
David Gardner: Well, thank you for that. We don’t do five-stock samplers anymore on this podcast, but you guys just provided five pretty good stocks that I know a lot of our listeners either already own in some cases or I’m sure with interests will begin to research further. We’re at halftime right now, guys, and I say, let’s open up our halftime follies. I have a simple halftime question for you both. After all, the purpose of this podcast is to make the world smarter, happier, and richer. That’s the purpose of The Motley Fool. One of the ways we make the world happier is occasionally we share out our best streaming entertainment ideas. We live in the age of capitalists streaming, arguably, there are too many shows that one could stream at this point and even more coming. Then there’s YouTube, which aren’t even professionally-produced — in many cases — streaming shows. And yet they get a lot of views, too. We are living in a video-centric age, fellows, I think you know that. But I thought I would ask. Let me turn to Brian first. What’s a recent streaming show that has given you delight and you think listeners, if they haven’t already watched, would enjoy?
Brian Stoffel: Think any listener who might have come of age in the 90s and is a sports fan would enjoy The Last Dance which chronicles the [Chicago] Bulls, their dynasty building up, falling apart. Being from Milwaukee, was huge in my upbringing because we always lost to them. But it’s really fascinating and it’s also really fascinating to go back and realize that Michael Jordan retired and went and played baseball for 18 months.
David Gardner: It is incredible to think back on it. I think he went to the Chicago White Sox, staying in town, and I remember he was in minor league ball. Did he ever get an official Major League at bat? I can’t remember, Brian.
Brian Stoffel: No he didn’t have an impact. He wouldn’t have been in Double-A. according to the documentary. The reason he started in Double-A was because it was the only level that had the facilities to handle the media circus. It probably would have been better for him to start down in Single-A rookie ball.
David Gardner: Fantastic. Well, I’ve watched a portion of The Last Dance, like many shows I’m halfway through, and then got distracted by 14 other streaming shows. But I know it’s a wonderfully produced show and I’m even a [University of North Carolina] Tar Heel. I shouldn’t be a Michael Jordan fan except I showed up at North Carolina as a freshman the year after he left early for the NBA, so I never really got to cheer on Michael, and I always view it more as a Bull than a Tar Heel. But I know much of the world sees it differently anyway. Great show. Yasser, let me turn to you before we go back to the game show. Yasser, what’s a streaming show you would recommend to give delight to Rule Breaker Investing listeners?
Yasser El-Shimy: Well, I’m a big fan of everything off-beat. Recently I caught up on Season 3 of a show called Barry. It’s on HBO Max. If you want to see the story of a veteran who turned into an assassin and then tried to quit being an assassin in order to become an actor in L.A., That’s the show for you.
David Gardner: I’m wondering, Yasser, how did you hear about Barry? I’m half curious, not just the shows we watch, but how we hear about the Bert keep-up.
Yasser El-Shimy: I actually don’t necessarily read a lot on shows or go browsing the internet looking for show recommendations. Usually, what I do is I would browse through my favorite streaming apps and I would try and read the description for the show. If I feel that there’s something there, I’ll give it a try.
David Gardner: Well, Barry, which is the Bill Hader vehicle, I guess it’s three seasons now I haven’t watched that. I have heard good things. I’m a big Internet Movie Database fan, and 8.4 out of 10 from 80,000 voters is enough for me to know, that is quality and it’s probably a show I need to be watching. Thank you for that, Yasser. Thank you, Brian. Without further ado, half time’s over, let’s go to company No. 6. While we’re getting back to the serious stuff of the game show that we’re playing, Yasser, I find myself still wanting to play another game, a metagame, a side game, if you will, a game of word association. Would you play this game with me briefly?
Yasser El-Shimy: I can try.
David Gardner: I will share with you a word or a phrase and you will simply say back the first or second thing that comes to mind as you hear these things. Let’s go, rapid-fire here. Most beloved soccer or football team?
Yasser El-Shimy: A.S. Roma.
David Gardner: Thank you for that. Queen Elizabeth.
Yasser El-Shimy: The second.
David Gardner: Not particularly interesting, but it doesn’t have to be. It’s the word association game [laughs] came to mind. It makes sense. I got two more for you. No. 3, you’re ready?
Yasser El-Shimy: Sure.
David Gardner: Plastics.
Yasser El-Shimy: Recycle.
David Gardner: My last one. You were supposed to say The Graduate, by the way, that was the Dustin Hoffman film where he gets pulled aside by the avuncular friend of his dad at the party is like “I got one word for you, kid. You ready?” Dustin Hoffman comes out with him and he says, “Yeah, what?” “Plastics.” That’s going to be the future, which in a lot of ways it has been. But my last one for you, Yasser, as we get closer to our company now, my last word, association game word for you is lasers.
Yasser El-Shimy: Lasers, weapons.
David Gardner: Well, they can take many forms and well, especially when I think about light sabers, which looks like a standing laser coming out of it’s pommel. They can be weapons and they are lots of different things. Coherent Corp. also comes to mind for some people when they hear lasers. This is a company, a leader recently in a merger with II-VI, one of its competitors. It’s now a larger merged company. The company took on the name Coherent Corp, officially recently, ticker symbol C-O-H-R. Yasser, you had just ended our last company description with one of your favorite companies, Confluent. I was thinking about how similar the word Coherent seems to Confluent. Have you ever looked into Coherent?
Yasser El-Shimy: I have not. I will admit that.
David Gardner: Well, that always makes the market cap game show more interesting. With that said, let me turn right back to Yasser. We’re not playing word-association-game anymore, we’re playing give us your best guess at the market cap range of this company. Again, it’s Coherent Corp., ticker symbol, C-O-H-R. Yasser, your range, please.
Yasser El-Shimy: Sure. I will give a range of $14.5 billion to 16.5 billion.
David Gardner: $14.5 billion to $16.5 billion. Players at home, Brian Stoffel, is it inside that range or outside that range?
Brian Stoffel: I’m going to say outside the range.
David Gardner: [Bell] Sure enough, it is outside. In fact, this is the only real miss we’ve had in terms of the right-sizing for a company thus far. Yasser, I have to admit I haven’t been following this company very carefully myself anymore. Had I been, I would know that the market cap was $5.43 billion, which is what the market cap was as of yesterday for Coherent. Therefore, if you answered outside that range, players at home and Yasser as well, you would have gotten a plus one.
Yasser El-Shimy: I had expected it to be less than 50% of Arista Networks, which works in a similar business that I felt that it would be on the bigger side because of the merger. But you know what? I was way off.
David Gardner: You were at this time, and I easily could have been myself, but more importantly, Brian did say outside that range, and so I think friends, we’re back to a tie. Brian three, Yasser three. Let’s move on to company No. 7. Brian Stoffel, what are a couple of, in your mind, typical reasons that companies change their names?
Brian Stoffel: Branding. I guess they’re related. One is branding, the other is a change in focus. If something bad happens, I remember there was an airline that changed its name when it had an accident. But the other could be branding because like Axon, the company I just talked about it used to be Taser, and they changed their focus and became Axon, focus on body cameras.
David Gardner: Great example. Can you think of any other big, higher-profile renamings far bigger, let’s go with, than Taser in recent market history?
Brian Stoffel: The two that come to mind are Alphabet and Meta.
David Gardner: Those are really, really big. Without giving away the market cap here, the one I’m thinking of, not quite as large as those companies, because I never really followed Square that carefully, I was certainly familiar with the technology, I was certainly a user, but never did recommend a winning stock a lot of the time, a volatile stock. But Square, do we all know this? Listener at home, wherever you are across this fair planet, did you know? You probably did. Square renamed itself recently to Block. Just Block. Block, Inc, B-L-O-C-K. In the same way Facebook went to Meta, Square became Block. Brian, is this a stock that you own?
Brian Stoffel: It is not a stock that I’ve owned, and it’s been a while since I’ve looked at it.
David Gardner: Which is again, what we want from our experts, occasionally, for them to be maybe asleep at the switch, here and there makes the game more fun. You guys have been so good with the market cap ranges. I’m wondering, Brian, whether you can be really good with Block, Inc. What is the market cap for Block, Inc? Get the ticker symbol here, friends, S-Q.
Brian Stoffel: The last I checked, it was down a ton from where it had been. It’s been a while since then, but I’m going to guess big range here, $45 billion to $70 billion.
David Gardner: That is a big range. It’ll be interesting to see whether it’s inside or outside that range. Listeners at home, prepare your answer. I know you’re always making the call before I read off the official result, you’re playing along with us. Yasser, Brian said $45 billion to $70 billion, inside or outside that range?
Yasser El-Shimy: Well, I know that it’s definitely outside the range. Brian was absolutely right that the stock had been absolutely pummeled over the past year or so, and I believe that has taken it below this range.
David Gardner: [Bell] You are indeed correct, although not by much. Once again, the market cap for Block, which has retained a Square-like ticker symbol of S-Q, the market cap is $40.09 billion. $40 billion, just outside the 45-to-70 generous range that Brian offered. By saying outside, Yasser, you’ve taken a 4-3 lead. Players at home, if you said outside, give yourself a plus one. Yes, this stock has been very volatile. Hugely to the upside through the middle of the last decade, the stock made a meteoric rise from the nearly single-digits now looking backward from these prices around 2016, it almost touched 300, last year, it is down to 62 as we’re talking. It’s lost about four-fifths of its value in about one year. Brian, does that make you bullish?
Brian Stoffel: I have a really hard time understanding what the moat of a company like Square is.
David Gardner: I really like your focus on moat. I know your work and some of your frameworks and how you think, Brian. Many who’ve watched you on Motley Fool Live will expect that from you. Many who are hearing you for the first time might not realize that this is how you roll. What do you mean by moat exactly, and why is that so important for you?
Brian Stoffel: Well, it’s something I learned when I invested in Whole Foods, is that you can have a great company with a great product that does a lot of good for the world. But if it can be copied just like you can go to a farmer and ask them to plant organic food and say you’ll sell it in your grocery store, then you can be undercut on price. All the value goes to the world, which is a good thing, but it doesn’t go to the company or its investors.
David Gardner: Understood. Was that really the stock that changed your mind? Do you still feel burnt by Whole Foods? Do you shop at Whole Foods?
Brian Stoffel: I will. We don’t have one terribly close to us. I don’t feel burned by Whole Foods because Whole Foods was just doing its thing. It was fulfilling its mission. I’m all for that. More than anything, I think I’ve made a ton of money off of that lesson because it’s made me avoid stocks that don’t have a moat. If it can be copied, it probably will be copied eventually.
David Gardner: Well said. There are some things you can’t copy, like I was thinking of Amazon, we have Jeff Bezos, you don’t. That’s one of our favorite moat examples, probably The Fool, and it’s about humanity, and human capital, as opposed to any number you might find on the balance sheet or income statement. Well, that’s brief grandstanding on my part. But thank you, Brian, for sharing that viewpoint. It is 4-3 right now. Yasser, you have taken a one-point lead. I need to turn back to you, sir, as we move to stock No. 8.
Yasser El-Shimy: Don’t worry, we’re going to tie again.
David Gardner: It’s starting to feel more and more that way. Yasser, what are a couple of reasons that companies have multiple ticker symbols?
Yasser El-Shimy: Multiple ticker symbols. I know this is common with specs, for example, where you have two classes stocks with warrants and the regular. But it’s also common for companies that have two or more classes of shares to trade with different ticker symbol, for example, Zillow Group can trade under the ticker symbol Z or Z-G, depending on which class of stock you are.
David Gardner: It’s funny to me. First of all, I wish that that hadn’t happened because it causes online sites that feature the stock market, for example, fool.com comes to mind, to have to reflect the same company, basically, with two different ticker symbols and usually two different market caps as well, which can be slightly confusing, but even just having to repeat. It’s almost like as a baseball fan looking down a box score and seeing that you have both the Chicago White Sox and the Chicago Cubs playing against, I don’t know, let’s go with the Milwaukee Brewers. It’s just confusing. Why do we have the same thing repeated twice? It causes all problems with market data. I really wish founders — and I love you founders — I really wish you didn’t create your own separate class of stock with a separate ticker symbol. I’m not going to talk about specs, but I am glad, Yasser, that you mentioned Zillow Group because it turns out that is company No.8. Now, I am going to use for our purposes here — and the market caps are different, although only slightly — we’re going to use Z-G for this one, Zillow Group.
I think a lot of us recognize Zillow is the online site that gives prices to our neighbors’ houses or that vacation house you dream of one day, and that price may or may not be accurate. It’s the Zestimate. In general, I’m a fan of Zestimates. People in the real estate industry, especially Realtors, often aren’t. Although ironically, there are huge fans often of Zillow because Zillow butters and spread mainly by people who are Realtors advertising for their local ZIP codes. It’s generally a win-win, Zillow with some escapades as a buyer of real estate and then trying to sell real estate. That didn’t work out very well in the last few years. Very disappointing from a standpoint of optionality, the company’s certainly having been repriced. Here, I am talking more about it. It’s one of those companies I own, which is why I guess I can be valuable in the topic. But forget about my view of Zillow Group or what I might think about it. I’m much more interested right now, Yasser, in your market cap range for Zillow Group, ticker symbol Z-G.
Yasser El-Shimy: Right. Not Z, Z-G. Got it.
David Gardner: That’s right, and this makes a huge amount of difference, and that’s where my tongue-in-cheek is.
Yasser El-Shimy: Yeah. Let’s go with a tight range here. Let’s say $6.9 billion to $7.96 billion.
David Gardner: $6.9 billion to $7.9 billion. I try not to tilt anybody, especially my listeners or the person about the guests, but I’m going to say that’s not a bad range at all. I mean, this is fairly consistent with where we are in this show that it seems like Yasser and Brian — and I hasten to add they have no idea what companies I’m going to pick and they are not looking at any browsers, anything there in soundproof, video proof chambers that we’ve sequestered them in their own homes somehow — and so they don’t know what’s coming and yet you guys are pretty good at this, and I’m going to say that was pretty good again. Brian Stoffel, players at home. Yasser said $6.9 billion to $7.9 billion. I noticed the repetition again of the single decimal point, a little bit of a shot across the bow. I think Brian Stoffel. But Brian, inside or outside that range.
Brian Stoffel: I’m going to go outside the range.
David Gardner: [Bell] And you’ve done well to do so because once again, it is outside the range, but only barely of an already very impressively tight range. So Zillow Group’s market cap is $8.55 billion. If you’d looked at just ticker symbol Z, it’s more like 8.01, but both of those are outside a very tight range of $6.9 billion to $7.9 billion. Players at home. If you said outside the range, give yourself a plus one. I’m going to give a plus one to my friend Brian Stoffel. My friends, it’s four to four.
Yasser El-Shimy: I told you we were going to tie again.
Brian Stoffel: David, there’s an episode of Ted Lasso where the team ties its first, like, eight games of the second season, and then they finally lose. And they have a party, and they said, “What’s the party for?” They said, “We didn’t tie for the first time.” Even if we don’t tie and I lose, I still think I’m going to throw a party.
David Gardner: Well, you are both very worthy competitors, and while we may just have spoiled season two of Ted Lasso, shame on you listeners if you haven’t already gotten through season three. So giddy-up. All right, let’s move on to our final two companies. It’s four to four. We’re going to turn next to Brian and ask you kind of offbeat questions. It doesn’t fit with the rest of the conversation today. Brian, have you ever had a particularly good or particularly bad experience buying a car?
Brian Stoffel: No, I can’t say I have. I’ve only bought one car ever and it was pretty straightforward.
David Gardner: New or used?
Brian Stoffel: It was new ,and it’s still the car I own today. I’ve had it for 10 years.
David Gardner: Did you do research ahead of time? Did you take their first offer? Did you walk away angrily and come back a week later? What was the approach?
Brian Stoffel: No. I did my research. I knew what a fair price was, Went in, we were lucky enough to have the cash saved up to pay for it. We left that day with the car, honestly, about an hour-and-a-half later.
David Gardner: I love it. There is something about that Midwestern charm. These things are cliches and stereotypes would probably not fully true. But when you say honestly, I’m just picturing you, an honest man, going into a Midwestern car dealership, having an honest conversation, you said luckily, but there’s not luck there. You had the cash because you’d saved it, and I know you live below your means and you’re very good at that. And honestly, you came by an honest car in an honest place and it sounds like it’s a happy ending, and this lightly relates to the company we’re talking about, but then not directly because it sounds like you didn’t buy that by auction.
Brian Stoffel: Did not.
David Gardner: You didn’t go into an online site and started looking around and poking around and trying to figure out whether you would buy that used car on Copart.com. Copart is a global provider of online vehicle-auction and remarketing services. It’s not as much of a consumer brand per se. A lot of automotive resellers work with Copart. It is a very impressive, long-standing company. It was an S&P 500 company today, not to give away the market caps, and people in Dallas, Texas, may know the company since its locally headquartered there. Brian, have you ever looked at Copart?
Brian Stoffel: I have not.
David Gardner: Well, I’m sorry to hear that as I know, you have your market beater name, but you missed one there because Copart really has been a spectacular performer and I can think of it dearly, as pretty sure I picked it for Motley Fool Stock Advisor many years ago. I don’t own it myself though. It’s a reminder so many of us at The Motley Fool are often picking more stocks than we ourselves can even own, having picked hundreds of stocks over the years. How many times do I say, “Man, I wish I’d actually bought that one that I picked.” But if you’ve been listening to The Motley Fool, are following us for any meaningful period of time, you’ll realize that how we performed for you with our stock picks for many of us is much more important than how our own portfolios do. So I do love that we picked Copart, ticker symbol C-P-R-I-T, for Stock Advisor members even though I’ve never had the benefit of owning it myself. But more importantly, let’s talk about the market cap of Copart. And again, Brian, this is your final chance to state a range for this episode of The Market Cap Game Show. Brian, what’s your market cap range for Copart?
Brian Stoffel: So it’s going to be $25.1 billion to $38.7 billion.
David Gardner: 25.1 to, did you say, 38.7?
Brian Stoffel: That’s correct.
David Gardner: Are you allowing such a generous range because you find yourself less sure than some of the other ranges you’ve specified, or are you playing games with our listeners?
Brian Stoffel: Wouldn’t you like to know?
David Gardner: All right, Yasser, players at home, Brian has said $25.1 billion to $38.7 billion for Copart, ticker symbol C-P-R-I-T. Yasser, inside or outside that range?
Yasser El-Shimy: Yeah. About sets off on David. I’m going to go with inside the range.
David Gardner: [Bell] Indeed, it is $26.52 billion is the market cap of Copart, so it was inside the range. Yasser, you have taken a five-to-four lead, creating a showdown around company No. 10. But before we go there, Yasser, have you had a particularly good or bad experience ever buying a vehicle?
Yasser El-Shimy: So I would say I’ve bought and sold cars at least four times so far, and my first experience trading in a car at the dealership convinced me that I just never want to do this again. I mean, everything about the used-car dealership makes for a horrible experience from the haggling to the long waits to just being surprised with last-minute details you didn’t think about. All of that makes for a pretty abysmal experience, which is why I have been buying and selling my cars online since.
David Gardner: Well, I hear you, and Copart, of course, does a huge business there. Again, a lot of this is just facing the dealers themselves, but 80% of the company’s revenue comes from the service fees just collected for the use of its online auction platform. Does it sound like eBay? It’s kind of the same business but aimed at the automotive industry, so an interesting long performing winning stock. I’m seeing here 10 years ago, the stock was around 15. Today it’s at 109. Ain’t bad for a pretty quiet, sleepy company that most people can’t name or certainly give the ticker symbol for, but now all of us know the market cap. Yep, $26.52 billion.
All right, let’s move to the dramatic conclusion. We’re not going to have a tie this episode. Brian, you can either guess wrong now and just not put us through the tiebreaker or guess right and force our hand at our first-ever Rule Breaker Investing Market Cap Game Show tiebreaker. Which one do you think you’re going to do, Brian, before we start?
Brian Stoffel: I mean, if history is any indication, it’s going to be a tie.
David Gardner: If we were doing this before you came on the show here, you’ve done this. This is your fourth time now and the previous three scores were …
Brian Stoffel: … Five to five, five to five, and five to five.
David Gardner: Here we go. Yasser, five, Brian four. Turning now to Yasser. Yasser, before you came to the Fool — and you’ve been with us for a couple of years and it’s been a delight to work with you, even though I’m not as active or regular as I once was, I’m a Fool for life as you well know, co-chairman of our company, love what you’re doing and what we’re all doing to make the world smarter, happier, and richer. But Yasser, before you came to the Fool, did you ever listen to this podcast?
Yasser El-Shimy: Yeah, all the time. In fact, it’s one of the main reasons I decided to apply for a job at The Motley Fool — is listening to the podcast.
David Gardner: I’m delighted to know that. Did you listen to the early days of The Market Cap Game Show?
Yasser El-Shimy: Yes. I mean, I would say I’ve started listening to the RBI podcasts around 2015-2016, and yeah, so I’ve heard my fair share.
David Gardner: Do you remember that Matt Argersinger was my first guest. And back then it wasn’t a head-to-head game, it was just me quizzing Matt, those first early episodes?
Yasser El-Shimy: Yes, I do.
David Gardner: Do you remember that there was an iconic company that I would randomize, but if we keep coming back and each time somehow, Matt, would get it wrong and he’d always under-guess it. Do you remember that?
Yasser El-Shimy: You know, that one is not coming to mind. I know the one that tripped Emily [Flippen] a lot, and that was Etsy.
David Gardner: She continued Matt Argersinger’s tradition because that is sure enough. The company and I did happen to randomize this one out of the full 500 for this show. This was not intentional even the ordering was randomized. So for us to close this episode of The Market Cap Game Show, hailing back to our earliest origins at this moment of high drama, is very random and very special indeed.
Brian Stoffel: It’s worth noting that when I tied Brian Feroldi the second time, Etsy was the tiebreaker.
David Gardner: Perfect. I have a hard time remembering all of our past game shows, and I’m not even a professional game show host. Think of people who do this every day and people like, do you remember that thing three or four 17 years ago and I had forgotten but I’m so glad you said that, Brian. And now, let me turn to Yasser and ask you, Yasser, what is your range of the market cap for Etsy ticker symbol E-T-S-Y?
Yasser El-Shimy: I will go with $23 billion to $26 billion.
David Gardner: Just sticking with some round numbers this time, keeping it simple.
Yasser El-Shimy: Yes.
David Gardner: I’m not going to get in the way of drama. I know when to sit back, get away from the mic, and just let the game take over — $23 billion to $26 billion: Brian Stoffel, listeners at home, inside or outside that range?
Brian Stoffel: I’m going to go outside.
David Gardner: [Bell] You’ve done it, Brian. You’ve done it. You got it.
Brian Stoffel: What for?
David Gardner: In fact, it wasn’t even close because the actual market cap for Etsy is $14.7 billion. The tradition of overestimating, thinking that Etsy is much bigger than it actually is, has persisted to the present day. Let’s be very clear, fellow Fools, Etsy was worth a lot more until recently. It’s one of those many stocks as a Rule Breaker that had a great run throughout much of the last decade. And yet in the last year, the stock has dropped from its all-time high, at the end of last year, at 300. It’s down closer to 100 as we speak. Its market cap, as I mentioned, $14.72 billion, which is outside the range of 23-26. You guys have done it. You forced my hand.
Brian Stoffel: Happened again.
David Gardner: Well, this is a first, and I’m really glad in a way that it happened because it had to, although it didn’t have to at all. It lets me feature the mailbag entry of a concerned listener who reached out after last quarter’s show and said, “Guys, there’s a better way to end this than just say five to five.” His name is Sam Stevens and I shared this on the Mailbag episode earlier this year but I’m going to reshare it because I don’t expect everybody remembers all my mailbag. Sam Stevens, who by the way was a former Motley Fool intern and obviously a longtime Fool and a listener of the Rule Breaker Investing podcasts, had this to say. He said” “Hi, David. Here’s a tiebreaker idea for The Market Cap Game Show. An 11th stock is presented. To ensure no advantage is given to either player by going first or second, both players must simultaneously and secretly write down a range of market caps. The contestants then reveal their written answers one after another, but the correct answer is, of course, not revealed until after.”
Now, if one contestant provided a correct range, the other didn’t, well, of course, that contestant wins. You can include yourself, all listeners everywhere at home, in this very same exercise. You too, dear listener, are also writing down your market cap range. If one of you is right, the others are wrong, that person, of course, wins. If everyone’s right, if both in this case are correct, well, the tighter range wins. Sam’s smart. He was a Motley Fool intern, he’s grown up now. Hey, Sam, if no one’s correct, well, the range with the closest bound to the correct answer will win. Sam concluded, by the way of his Mailbag item earlier this year, you can actually play the whole game this way. But he said, “I like it better as a tiebreaker.” I do, too. We don’t want to make this too complex. Anyway, Sam Stevens, thank you for leaning in. This is known, starting today, as the Stevens Sudden Death Rule. It is being invoked for the first time right here, right now. Gentlemen, players at home, are we all ready?
Brian Stoffel: I’m ready.
David Gardner: As they say, sometimes this on the raceways, “Gentlemen, start your market caps.” This company is one of those cloud-based businesses that people loved for awhile and seemingly now hate or have hated recently. This is one, my brother, Tom Gardner, CEO at The Motley Fool, I believe he had recently a chance to interview, talk a little bit with the brass of this company. He came away impressed, I’ll say that. This is not a stock I’ve recommended, I don’t know it very well. But a lot of people these days, at least those who follow the stock market, might’ve heard the name Cloudflare. If they’re really good, they would know the ticker symbol is N-E-T. Cloudflare is our 11th Stevens Sudden Death Rule company. Rick Engdahl, cue the fake Jeopardy waiting music for about 10 seconds so all players everywhere can think of their market cap range for Cloudflare, ticker symbol N-E-T.
David Gardner: Now, I do want to mention that we are now 3:08 p.m. Eastern on Sept. 20. This is a live market cap as we record because I wasn’t expecting to have to do an 11th company and I don’t know what Cloudflare’s market cap was at the start of trading today. This one is about as live as we get on these one-day delayed podcasts. By the way, a lot of podcasts, and I’m sometimes on other people’s podcasts and I love doing that. I’ll say, I’ll be in your podcasts. Then they’re like, great. We do the podcast and they’re like, “This will be on in seven weeks,” and [laughs] I say: “What? Wait, seven weeks? Everything will have changed by then.” I take pride, Rick Engdahl, my producer to humble ever does his, but we turn this baby around in 24 hours every single week, eighth year in counting. Rick’s really good. That’s why I say this is about as live as this show can ever get. I’m going to ask Brian Stoffel first to provide his range of market cap for Cloudflare.
Brian Stoffel: My range, if it comes in there, is $19 billion to $30 billion.
David Gardner: $19 billion to $30 billion. Listeners at home, I know you’re holding up your piece of paper or shouting out your range as we speak. I turn to Yasser El-Shimy. Yasser, your range of market cap for Cloudflare, ticker symbol N-E-T.
Yasser El-Shimy: My range for Cloudflare is $35 billion to $45 billion. If this is $32.5 billion, I’m going to throw my headset.
David Gardner: Well, you are both worthy contestants and even better than that, you are noble men. That’s what I want to do on this earth. I want to hang out with people who are noble of all genders, all generations, and all cultures. I love it. I thank you both for your work. I’m here to announce that we have our first-ever tiebreaker winner, and it is Brian Stoffel, who guessed a slightly wider range, but more importantly a lower range. Because Cloudflare, having lost a lot of value from, I don’t know, like 180 last year, is down to about 61 as we speak. That puts its market cap at $20.73 billion, inside Brian’s 19-30 range, short of Yasser’s range. Congratulations both to Yasser and to Brian, our champion, this show and everybody who played along at home, presumably some of which got an even better score than our contestants. Yes, that happens, too. Brian, thank you so much. One quick line from you as champion.
Brian Stoffel: I don’t think it counts as a champion if you’ve tied every time, but I’ll take it.
David Gardner: Honorable in victory and noble in defeat. In fact, some people love to cheer for the guy who just came up short. We see ourselves in that person sometimes, Yasser. I think it’s fair to call you a Rookie of the Year of this game. This is which number Market Cap Game Show for you?
Yasser El-Shimy: I believe this is my third or fourth.
David Gardner: We’ll do with that.
Yasser El-Shimy: Probably.
David Gardner: I think it’s third.
Yasser El-Shimy: 1,1, tied 2, I guess, and lost on the sudden death.
David Gardner: How about a line of encouragement to the losers? I include myself everywhere.
Yasser El-Shimy: Well, keep your chin up. It’s OK to lose. You win some, you lose some. The journey is more important than the destination. I’ve had a lot of fun playing this game with you, David, of course, but also with Brian and Tim Beyers before Brian. I look forward to coming back in the, hopefully, not too distant future.
David Gardner: Wonderful. Thank you, Yasser. You are an excellent returning champion and returning tie-er. You performed wonderfully.
I want to thank both of my talented contestants and, of course, all three of us along with my pal, Rick. Thank you for playing along at home. It’s a delight to do this four times a year. I said at the top to the guys offline before we started. It’s only four times a year, therefore by definition, it’s special because there’s scarcity to these times together, and I have so much fun. Thank you, again, to Yasser, to Brian, and to you at home for playing The Market Cap Game Show. Fool on.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brian Stoffel has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Axon Enterprise, Cloudflare, Inc., MercadoLibre, and MongoDB. David Gardner has positions in Alphabet (A shares), Alphabet (C shares), Apple, MercadoLibre, Zillow Group (A shares), and Zillow Group (C shares). Yasser El-Shimy has positions in Alphabet (A shares), Amazon, Axon Enterprise, Block, Inc., Cloudflare, Inc., Confluent, Inc., Etsy, MercadoLibre, and The Trade Desk. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Arista Networks, Axon Enterprise, Block, Inc., Celsius Holdings, Inc., Cloudflare, Inc., Confluent, Inc., Etsy, MercadoLibre, Merck & Co., Meta Platforms, Inc., Mid-America Apartment, MongoDB, The Trade Desk, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends Copart, Sleep Number Corp, and eBay and recommends the following options: long March 2023 $120 calls on Apple, short March 2023 $130 calls on Apple, and short October 2022 $50 calls on eBay. The Motley Fool has a disclosure policy.