Salesforce (NYSE:CRM) reports better-than-expected profits and promotes Bret Taylor to co-CEO. Square (NYSE:SQ) plans to change its name to Block. Jack Dorsey steps down as CEO of Twitter (NYSE:TWTR). And Docusign (NASDAQ:DOCU) plummets on weak guidance.
Motley Fool analysts Maria Gallagher and Ron Gross discuss those stories and weigh in on the latest from Ulta Beauty (NASDAQ:ULTA), Okta (NASDAQ:OKTA), Allbirds (NASDAQ:BIRD), and Chipotle (NYSE:CMG). Our analysts share two stocks on their radar: DoorDash (NYSE:DASH) and NextEra Energy (NYSE:NEE). Plus, toy industry analyst Jackie Breyer talks holiday toys, supply chain, and bumper cars for toddlers!
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on Dec. 3, 2021.
Chris Hill: It’s the Motley Fool Money Radio Show. I’m Chris Hill, joining me this week, senior analysts Maria Gallagher and Ron Gross. Good to see both.
Maria Gallagher: Nice to see you.
Ron Gross: How are you doing, Chris?
Chris Hill: We’ve got the latest headlines from Wall Street, we’ve got the hot toys for the holidays with industry expert Jackie Breyer, and as always, we’ve got a couple of stocks on our radar. But we begin with the big macro. The unemployment rate fell to 4.2 percent, which is two percentage points lower than where it was in January. The number of jobs added in November was just 210,000 well below expectations, but Ron, the one thing we know about monthly job numbers, they get revised and I’m going to be stunned if a month from now, this number is not revised higher.
Ron Gross: Yes, that jives perfectly with what I was thinking. I will first point out that this report differs pretty dramatically from Wednesday’s ADP private payroll report, which was better-than-expected. The reports often diverged from that report from the government survey, so I’m guessing, as you said, we may see an upward revision. It’s not unlikely that the two things diverge, but I do agree that this seems a little extra weak here and we may see upward next month. Despite that miss, as you pointed out, the unemployment rate fell to 4.2 percent. Professional and business services and transportation and warehousing led the way, but hiring in leisure and hospitality, which were really strong in October, which was nice to see, were weak this time around, unfortunately.
Retail jobs were down despite hiring for the holiday season, scratching my head a little bit on that one. Labor force participation rate increased for the month to 61.8 percent notably, highest level since March of 2020, indicating that people are returning to the workforce or at least are starting to look for work again and that all-encompassing U6 unemployment rate we talk about sometimes dropped from 8.3 percent to 7.8 percent. We’ll have to wait and see what the Omicron variant does, that’s going to maybe wreak a little bit of havoc with employment, maybe not, too early to tell. The Fed is walking a real tight rope here between a relatively strong economy and inflation and the risk of an economic shock due to Omicron. On Tuesday, Fed Chairman Powell said he expects to accelerate the timetable for the tapering of monthly bond purchases and potential interest rate hikes. I think that’s surprised investors who thought the Fed may pump the brakes a bit until we have more data on Omicron.
Chris Hill: Maria, like Ron, I was scratching my head at the retail number just in part because of seasonal hiring. Was there anything in the jobs report that stood out to you?
Maria Gallagher: Yeah, I was really interested in that participation rate as well. Prime age participation in the labor force is up as well. That’s at about 81.8 percent, which is people between the ages of 25 and 54. But the quits rates, which are workers who are leaving jobs as a share of overall employment is at or near record high. It’s another one of those, it’s a little bit interesting to look at the juxtaposition when you have both of those things in tandem. I think it’s taking it all into account is really interesting.
Chris Hill: Let’s get to some earnings and we’re going to start with Salesforce. Third-quarter profits and revenue came in higher than expected, but the bigger headline is that once again, CEO Marc Benioff is making way for a Co-CEO. Chief Operating Officer, Bret Taylor has been promoted, and hopefully, Maria, this goes better than the last time Benioff had a Co-CEO.
Maria Gallagher: Yeah, this is hopefully going to be second time is a charm for Marc Benioff. Previous Co-CEO, Keith Block left the company in 2020. Bret Taylor was also named Executive Chairman at Twitter this week, so he has a lot on his plate coming into 2022. Like you said, in terms of results, their revenue was up 27 percent, which was about in line with estimates. If you are thinking about and checking in on their acquisition, specifically of Slack, that was acquired earlier this year for about 27.7 billion. That is actually outperforming their expectations. Slack Connect, which allows inter-company messages between customers, saw 176 percent growth year over year. It’s going to be a couple of more quarters before it’s fully integrated, but that’s something that I’m going to be continuing to watch for Salesforce.
Chris Hill: For the second time in five weeks, a major tech company is changing their name. CEO Jack Dorsey announced that Square is changing its corporate name to Block. In addition to Square, the company is also the parent of businesses like Tidal and Cash App. I guess I see the logic, Ron, but this seem different from the motivations that we recently saw from Facebook?
Ron Gross: Some differences, but also some similarities. Square represents its different businesses as building blocks, or at least that’s what they say they do now. The name is also making a reference, obviously, I actually didn’t realize this at first, but to blockchain, which along with Bitcoin, is a primary focus of Dorsey. Before, I realized blockchain was part of this and it was just changing the name from Square to Block, I was like a lame rebranding, I don’t get it. Now, I got to say I do get it a little bit more. Square had become synonymous with their seller business; the new name will distinguish the corporate entity from its businesses. In that sense, it’s a bit similar to what Facebook Meta did in that sense, I guess.
What you have at Square or what you have at Block is Square, which is a peer-to-peer payment service, Cash App, the mobile payment service that competes with PayPal‘s Venmo and it allows users to buy and sell Bitcoin, Tidal is their music streaming service, and they have their Bitcoin focus financial service segment which has a weird name, right now it’s TBD54566975, do with that what you will. Square Crypto is at a separate initiative, the company dedicating to advancing Bitcoin, that’s going to change its name to Spiral. Square has invested about $220 million in Bitcoin, currently considering creating a hardware wallet for Bitcoin to make its custody more mainstream. Here we go, Bitcoin clearly will be a big part of Square’s future. It’s going to be interesting to see how this plays out, really no predictions for me at this time, we’re going to watch it.
Chris Hill: Dorsey’s tenure as CEO of Square has really been great and shareholders have been rewarded as a result of that. So far, year-to-date the stock is down 20 percent and now that he doesn’t have other distractions, which we’ll get to in a minute, it really does seem like this is going to be one of the most interesting companies to watch in 2022 because they needed all to work.
Ron Gross: They do. As a shareholder, I’m rooting for them. I’m happy to see Dorsey focusing, the focus on Bitcoin is a little bit concerning to me, I want to make sure that they execute on this right, and I want to watch where it’s going. But I am glad to see that he is all in it.
Chris Hill: He is all in, and it’s been a busy week for him because on Monday, he resigned as the CEO of Twitter, and handed the keys to the corner office over to long time Chief Technology Officer, Parag Agarwal, and Maria, activist investors were looking for a change at the top, they got it, but so far, it’s not helping Twitter’s stock price.
Maria Gallagher: I think a lot of it’s going to be about what Agarwal decides to do with the company, he is apparently been on the same page with Dorsey about the value of blockchain, which I think was going to be interesting to see if that gets integrated, especially if he’s coming in from the CTO position. But I mean, we’ve seen a lot of lackluster reaction from users when Twitter rolls out new features, like they had fleets which got rolled back, they have their new Twitter Blue subscription service. Twitter is an interesting one because, it has a lot of value for users, it has 211 million daily active users, nearly nine in 10 of them say they use it for news, 74 percent use it daily. It clearly has a lot of value, but they haven’t really been able to capitalize and figure out the best way to rollout these features that these users are excited about. I think it’ll be interesting to see what he does and then maybe we’ll see the stock react a little bit to those changes.
Chris Hill: We were talking earlier today, this is one of the most important companies that I have no interest in owning shares of. I’m one of those people who’s uses it for news. I think if this company went away overnight, it would be seriously missed. But for some reason, they really haven’t been able to figure out a business that rewards shareholders.
Maria Gallagher: Yeah, I mean, since 2015, their shares are up 85 percent, which is compared to the S&P return of about 127…
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