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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This video was recorded on Sept. 21, 2022.
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 protected] 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.
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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…
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