Six Flags is circled by activists. One brings real estate ideas, the other brings Travis Kelce. We unpack what's going on. [music] Qualcomm, Porsche, and Lululemon. We break down today's market movers and flying taxi stocks are flying high. What should investors be watching? We ask Archer Aviation's co-founder and CEO, Adam Goldstein. For Monday, October 27th, it's Brew Markets Daily and I'm Anne Bry.
More market details to come, [music] but first, flying taxi stocks have flown up this year. So, with earnings looming for the two major players, we wanted to dig into the context for why. Starting with the June executive order in which the White House made it clear that promoting new aircraft technologies is a priority for this administration, launching the tagline, quote, unleashing American drone dominance. Now, this includes electric vertical takeoff and landing or eVTOL aircraft, both manned and autonomous, and actually with passengers inside it, paving the way for what essentially feels like electric helicopters taking to American skies.
Now, since that announcement, two publicly traded eVTOL companies have had strong share price performances. And if we look over the past six months, Joby Aviation, ticker JOBY, has seen a nearly 150% increase in its stock price, grabbing headlines with its acquisition of helicopter services business Blade and announcing a partnership with ride share giant Uber. Archer Aviation, ticker ACHR, has seen a 30% jump in its share price over the same period, announcing a deal with Korean Air for 100 of its Midnight Aircraft, as well as a partnership with the Los Angeles Sports and Entertainment Commission that positions Archer's air taxis for visibility during the 2026 World Cup and the 2028 Olympics.
Now, from a technology perspective, it's an incredibly exciting time. But from a market's point of view, the message is a little less clear. Because with $14 billion and $7 billion in market cap, respectively, Joby and Archer each generate almost zero revenue today.
Well, I sat down with Archer CEO Adam Goldstein to ask when that revenue will come, what timelines investors should expect for military and commercial uses of Archer aircraft to go live, and if public safety concerns about small aircraft like helicopters can be overcome by software capabilities in their electric counterparts. Well, stick with us for the conversation. It actually got quite spicy at times.
Meanwhile, coming up, Six Flags, ticker FUN, that's FUN, is being eyed by activist Jana Partners. We break down why Travis Kelce is partnering with a hedge fund. And we run through today's market movers. That's Qualcomm, Porsche, Lululemon, and a couple more. But first, a word from our sponsor, Capital Group. John, why don't you tell us a bit more about their new show, The Power of Advice.
That's right. I've learned a lot from the show. They share that some of the best lessons don't come from the classroom, they come from experience.
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Go check out The Power of Advice published by Capital Client Group, Inc. Well, last week an interesting story made the headlines, and that's Super Bowl champ Travis Kelce taking a stake in Six Flags, the amusement park company. Now, I got to tell you, we absolutely saw this hit the headlines. But in the thick of earnings, we thought we would focus instead on breaking down exactly what was driving share prices based on what they were reporting over the course of last week.
But this weekend, I did what I tend to do, which is catch up on the news. I literally go and buy print copies of the Financial Times, The Economist, or the Wall Street Journal. And I literally could not put down an article in the Wall Street Journal this weekend that broke down exactly why a famous footballer is jumping in to take a look at an amusement park operator with a hedge fund. So, we're going to break this down a bit because actually when you unpack what's going on, there's a lot more that meets the eye and it touches on a lot of themes that move stocks on a much more regular basis.
Yeah, I was really interested to read about this partially because I know Six Flags. I'm familiar with that and so was Travis Kelce. We both grew up going to these kind of amusement parks. So, let me just tell you about the deal, the potential deal. Travis partnered with Jana, like you mentioned, and a few other parties. They're putting in around $200 million into Six Flags, which would give them a 9% stake in the company.
And just as a reminder about Six Flags, ticker symbol FUN, as you mentioned, the share price is down 44% year-to-date. Last year, the company merged with Cedar Fair. That's the Cedar Point chain of amusement parks. The combined company has a market cap of about $2.5 billion, but with $5 billion of debt on the books, they're having a tough time. And guest attendance was down 9% year-over-year. And then Six Flags in its latest quarterly earnings said it lost 10 million annual visitors during the pandemic. So, they're just down. The CEO is stepping down at the end of this year. So, I'm wondering, is there just a vacuum now? They did this merger, it didn't go well, and the CEO is leaving. Now they're looking for a change.
Yeah. And it almost feels with this one, doesn't it? If you're going to make a change, just rip off the band-aid, right? Endure the change at once. Which isn't completely atypical when we think about how public companies sometimes struggle to make difficult decisions as they're in the glaring public eye of their investors.
The thing here that struck me, I mean, everything's sort of going poorly for them at the moment. Guest attendance down, a merger that hasn't gone so well, definitely got too much debt. And then the golden child while all this is going on, of course, is Disney, right? When you listen to Disney talk about their business, John, they're constantly talking about how well theme parks are sort of performing and springing back to life and they're building new international locations. So, it's a real contrast in stories on this one.
And Disney has found that its attendees are willing to pay a premium. And Six Flags raised its prices thinking that well, we'll get fewer people in the door. It didn't work.
Right? And also they tried to sort of tweak around the edges, right? Saying that we're going to have better beverages and we're going to have marginally better queuing experiences, but at the end of the day, it kind of looks the same, it feels the same, it just is a bit more expensive.
The thing that struck me here, and again, there's so many themes around investing here, how difficult it is to turn around when you're in the public eye, number one. Number two, how an activist can really shake things up and get attention on a company that's been flagging, pun intended. And then number three is really thinking about what are the different kinds of companies that tend to attract attention.
So if we look at Jana Partners, it's got more than $2 billion in assets under management. It's a large number, but actually not as large as some other professionally managed funds out there. They've come into the headlines recently, John. Jana Partners took a stake in Cooper Vision within the last couple of weeks, which is the contact lenses business, and is stoking up potentially a deal for Bausch + Lomb, another public company, to go buy the contact lens piece of Cooper, leaving behind some women's fertility assets, so perhaps to split the company.
So, they're making major moves. Also in the past, Jana has shaken up Freshpet famously in 2023. So, the thing that Jana Partners is focusing on here is really the consumer experience. There's another activist we'll talk about in a bit who's saying go and do some more things with your real estate portfolio, Six Flags, and get some money out of that, which we'll come back to. But Jana is really saying, look, you got to fix your technology, build your loyalty, get a loyalty program going that's much more inspiring and improve the actual customer experience.
And this is sort of Travis Kelce's perspective, right? It's the stuff that he feels he knows.
Right? Exactly. It's what he grew up with. And he said this on his podcast to his brother. We're going to be part of the theme parks and amusement parks that actually rocked our world as kids and hopefully give families nowadays the fun and the memories that we had and cherished growing up.
And so the Wall Street Journal article had some insight into Travis Kelce's investing. Said he's invested in over 30 companies and they said that the point is that he invests in what he knows and he tries out these companies including things like consumer goods, software, entertainment, and also Garage Beer where they pointed out that he and his brother enjoyed a lot of Garage Beer before they invested in the company. But does knowing a product make it a good investment?
That's a good question. I mean, investing what you know is the age-old adage, right? But I'll give you an example. I know PayPal, right? I know Venmo. And one of my great complaints as a shareholder in that until I sort of gave up and sold the stock was, you know, this is something I know and I use. And yet the company has just completely failed to figure out how to turn itself and its share price around. Although hold that thought because earnings is coming up actually imminently.
The thing that I think is interesting is there's two elements of what you know here. A celebrity investing what they know and then we as investors investing in what we know and we always think we know a celebrity, right? So let's talk about that angle.
One of the reasons I paused and really wanted to dig into the headlines before we decided to talk about it on the show is whenever you see a celebrity name flash across the screen. There's always a slightly cynical button that gets pushed and we really saw this around SPACs in 2020 and 21 when a lot of celebrities were getting involved in launching publicly traded vehicles and folks were saying but what do they know about you know investing or doing due diligence on companies and buying companies.
So I think some cynicism kicked up there. And then you've also seen in private markets, Kim Kardashian, for example, launched a private equity fund. The idea was to invest in consumer goods and the idea was to bring her star power to raise awareness of these products and help them basically get lower cost marketing as a result. I think she's sort of parting ways with that fund. Certainly her role in it has changed.
But what shocked me here or not shocked but surprised me to very much the upside and pleasantly is Travis Kelce takes his investing really seriously, John, right? He's got a team.
And he tends to partner alongside experts. So in this case he's investing alongside Jana Partners who are experts in public company activism and in the past he invested in Cholula hot sauce which turned out brilliantly for him. That company got sold to McCormick and in that instance he was partnering with a firm called Alcala which is a very highly regarded private capital firm that invests in consumer goods. So, he's putting his money where his excitement and his belief is, but he's doing it with people who are really seasoned and proven.
Now, this jumped out to me from this situation because you got Six Flags, and we've talked about the activist investor, but just several weeks ago, we heard about a different activist investor, Land and Buildings. They at that time had a 2% stake in Six Flags and they are advocating that Six Flags sell off its real estate. If people aren't coming, you're sitting in all this land. So, what happens in these situations when you've got different activists going in the same company?
Well, the nice thing is in this instance, and I say nice because this is all just deeply uncomfortable if you're certainly in the management team and you think about it. The other activist you're talking about Land and Buildings who popped up a couple of weeks ago taking their 2% stake. Really that fund's expertise is in thinking about how to unlock value from real estate. Jana Partners is turning up with Travis Kelce and saying let's figure out how to unlock value from the consumer experience.
So I think the nice thing or at least the convenient thing here is you've got a total of 11% sitting in the hand of two activists where they've got their own individual superpowers so they can align, right? Where things get dicey is if you get two sets of activists who have totally different opinions on how a company should reorient itself. So at least here they can kind of stick to their expertise and actually align on sort of areas they can focus on separately.
And the market probably spent the weekend reading about these stories and the headlines. Shares in FUN were up over 6% today after this story was processed.
Yeah. Settling down a little bit because the market's always trying to figure out how much is noise and how much is tangible. This one's definitely worth continuing to watch though. First of all, it is definitely fun to look at theme parks and consumer entertainment. But second of all, again, really understanding this is an example of where there can be multiple different ways for a public company to try and shake itself up. Sometimes it needs an external prod to do it. Sometimes it's a prod that comes from a footballer.
Let's take a quick break. When we come back, chips, cars, and yoga gear. We're going to break down the stocks really moving today. And a new Fed chair, we'll take a look at who's in the running.
Founded in 2018 and going public by SPAC just three years later, Archer Aviation's battery-powered ascent has been swift to say the least. Now, as an electric vertical takeoff and landing vehicle manufacturer, Archer focuses on making aircraft that can cover 20 to 50 mile routes, aiming to provide an air taxi alternative to trips that can take over an hour in urban auto traffic.
So, how is Archer's strategy different from others in the still relatively nascent sector? Which markets will evolve the fastest to embrace it? And how should investors track if the company's $7 billion market cap is actually justified? Well, to unpack this, I sat down with Archer Aviation's co-founder and the CEO, Adam Goldstein. So, you listen and you decide.
Well, Adam, thank you so much for joining. Let's start by breaking down your business model. Lots of members of our audience are familiar with Archer Aviation, but for those who aren't, just walk us through quickly the difference between your aircraft and just good old-fashioned helicopters.
Well, thank you. It's great to be here. So, we are building electric air taxis or as some people call eVTOLs, electric vertical takeoff and landing aircraft. And these aircraft are designed to fly in and around urban environments very similar to helicopters, but they are fully powered by electric power systems. So, electric engines, battery packs, and this enables us to build an aircraft that can be super safe, that could be super quiet, and actually can be very affordable to the masses. And that's quite a big difference than what helicopters present today.
And in terms of the way in which they fly, are these autonomous? Are they piloted? Are they both?
So, these are piloted aircraft that we will go to market with, but ultimately can be flown autonomously. They're piloted. They carry up to four passengers. They fly 150 mph up to 100 miles. So you can think about trips that take 60 to 90 minutes on the ground in cars that can be replaced with flights that take 5 to 10 minutes.
So if you're in Manhattan and you have to go to JFK to the airport, that's a trip that can take you 90 minutes on the ground, but in the air it can take you 5 minutes. So you can skip pretty much the entire trip to the airport. And even better, if you land on the airport side of the terminal, go through a private screening, you can pretty much skip the entire airport itself. So, quite a big upgrade from the typical 90 or 120 kind of slog that it takes us to get to the airport.
We're going to come back to that and specifically the sort of airport shuttle element. But before we get there, talk to us about when we're actually going to see Archer come to market. What is the timeline for seeing your first commercial activity and where will we see it out of the gate?
Well, there was actually a lot of things that have come together to really help push this stuff forward and bring it to market. So, the first thing was batteries. They really just got good enough where they were energy dense, power dense enough that you could actually enable an electric flight that could go far enough, carry enough payload, and can go fast enough that it made it interesting. It made it worthy of somebody wanting to pay for, so for a company like Archer to become economically viable.
So, that was step one in this journey. We crossed that point really several years ago. So even though the aircraft have been worked on for 20 years, it's really only at this point where you've gotten to the energy density levels where it's now economically viable as a business. So because of that, you had a lot of movement from the regulator side of the industry and given the geopolitics, the US wanted to maintain this leadership position in aviation. So the US really created this new category for this industry and they called it powered lift and it's the first new category that was created in around 60 years.
So that really helped frame how we could bring these aircraft to market. And then once all the framework of regulation was in place, it really was back onto the companies. And so Archer is now in the final stages of certification to bring these aircraft to market. So you will start to see these aircraft flying around the US.
Which cities do you imagine those first launching in the United States?
Well, the cities are actually competing now to determine which ones will become the first cities. And so back in June, there was an executive order issued by President Trump which mandated the US maintains this leadership position in this industry to bring these aircraft to market. But you will likely see them in the big cities, Los Angeles, New York, San Francisco, Miami. And so that's really where we've been targeting. But internationally, you also start to see these aircraft come to market too, starting in the UAE.
Got it. And so let's talk about that sort of race to get the electric aircraft going in the United States. Your competitor Joby bought Blade over the summer. And when you look at why they did that, they're very clear that the rationale was to try and buy the infrastructure that that helicopter business already has in some of the major cities you've just talked about so that they've got the heliports ready for when Joby actually goes into commercial operation here in the US. What's your strategy to build out that kind of infrastructure if it's not available to buy anymore?
Yeah. Well, Blade didn't actually own any of the infrastructure. Blade used the infrastructure. It's public use infrastructure. So, in New York, it's owned by the EDC and the Hudson Park Development Corp. So, you have these two different entities that operate these terminals.
Now, it was actually a very interesting acquisition and I think was smart on many levels because it does bring a lot of awareness to the eVTOL industry from a lot of flyers that are already taking this market. But the good news is that most of the heliports around New York City and many other cities are all public use which gives us access to it. So we designed an aircraft to fit into the existing heliport operations. So below a 50-foot wingspan, we're using infrastructure that is already there. We're using flight corridors that already exist, so it allows us to use the existing helicopter infrastructure.
Are you getting ready to build Archer-branded terminals or would you look to partner with somebody else to provide those terminals and build out that infrastructure with you, Adam?
Yeah, so we'll do both. Okay. And so there are partners kind of all over the world that have been interested in doing this, specific companies that are dedicated to building vertiports. We will likely remain more focused on the OEM side of the business, building aircraft. But you will certainly see us partner with a lot of good groups and in some cases build our own infrastructure as well.
Got it. And so if you're going to focus more on the OEM side, Adam, how do you think about again just looking at the competitive space, partnerships with Uber have been struck by others out there? Are you going to completely stay away from that sort of distribution of service part of it as you focus on OEM or do you think that that will evolve?
Yeah. So when you look at sort of the end-to-end trip and last mile use case, I think there's an evolving landscape. So on one hand you have some of the established players like Uber and Lyft and those are great options and I do think we'll wind up partnering with both of those organizations.
You also have some newer options that are starting to come to market from Waymo and Tesla and I do think we'll look to really expand the partnerships to really help last mile. But whether we do it internally or whether those services just exist on their own, I think there'll be plenty of options for people to get to and from the terminals themselves. And so it really will depend on how all this does play out. But I think the consumers in the end will have really great choices.
