Buying Your Own Sports Team (with Stocks)

**Tyler Crowe** (0:02)
Buying Sports Teams on Motley Fool Hidden Gems Investing.
Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by long-time Fool contributors, Lou Whiteman and Matt Frankel. So it's been a big week in the world of sports. We had the New York Knicks win the NBA Finals. We had the Carolina Hurricanes win the NHL Finals. We have a very large football or soccer tournament that has global implications going on, but for trademark reasons, we can't say the name. But all of this just kind of has sports on our minds. So we're going to talk about owning sports teams through publicly traded companies. We're also going to hit the mailbag. But first we want to start with the news of the day. And what we saw was Robinhood announced that they are going to lay off about 10% of their workforce. Now, Matt, when I first see this, we've seen a lot of layoffs lately. So my question is, was this a layoffs for a good reason, layoffs because they're in trouble, or perhaps just a nothing burger?

**Matt Frankel** (0:59)
Well, it depends whether you believe what Robinhood is going to tell you or not. So we've seen this with many companies so far, right? Robinhood is going to frame this as either a move toward efficiency, streamlining operations, the AI tools are making it more efficient to do, you do more with fewer people, etc. We've seen that time and time again. And to be fair, it's true to some degree. And plus Robinhood CEO has been very vocal lately about the need to control costs and get margins up to where they should be. But on the other hand, it's worth noting that Robinhood, like many other companies, kind of over hired during the 2021-2022 period. Even after a couple of layoff rounds in 2022 and 2023, there are still many more people working for Robinhood than there were before the pandemic era.
My general take, and this is just generalizing, is that a 10 percent cut to a workforce rarely happens when everything is going as well as expected.
Something is going slower than management expected it to be. We'll dive into what that might be in a little bit. When whether it's good or bad to reduce the workforce in response, it depends on what it is.

**Lou Whiteman** (2:10)
Robinhood basically said that this is just cutting fat. They said these are middle management positions, and Vlad talked about not being heavily layered as an organization, which to me is code for we had too much. I don't know if it's always mean something's wrong. I mean, it could be in this case, but I think you also see this at times when there is cover. I think everybody else doing it and the AI bugaboo, I think that gives cover. Whether or not it means there's something wrong with the business or whether or not you don't waste an opportunity, we'll see. I don't think though whatever we say about AI that this is about AI. I use a lot of AI tools. I do see the value. I'm yet to see that AI can completely take over the functions of a human being.
Maybe it's coming, but it's not here yet. This is bloat and I guess good on them for getting rid of it.
We could see a turnaround, guys, if it is the business. Robinhood's US downloads hit their highest total in at least six months on Friday, thanks to the SpaceX IPO, so to the moon.

**Tyler Crowe** (3:10)
Well, it only took us half of a segment to get to a SpaceX position already.
I want to put on my cynical hat for a minute because with a lot of Robinhood's earnings and stuff like that, a lot of it is related to order flow for equities, but also they do tend to charge fees for things like Bitcoin, and that has been one of their more profitable segments for a while. One of the things I was thinking is, is this masking for the fact that Bitcoin has been down, trading in Bitcoin is down, and those fees associated with have not been as good. Since this was, I wouldn't say like their bread and butter, but it was pretty close. Is that maybe to that duck and cover thing, is this maybe a sign that the Bitcoin cryptocurrency trading aspect of their business isn't doing so hot?

**Matt Frankel** (3:54)
Bitcoin is way down, as you correctly point out. Crypto revenue for Robinhood has been volatile for a while. That's nothing new, whether it's been in the right direction or the wrong direction. It could certainly move in the wrong direction, given where Bitcoin and other cryptocurrencies are at right now. But I have to believe that some of it, there's a lot going on in the business. There's regulatory risk related to that pay for order flow model, and options in particular, not IPOs like SpaceX, I said the magic word again. Options in particular have been the cash cow when it comes to pay for order flow. And the prediction markets, which you didn't even mention, there's a lot of regulatory risks surrounding those, which remember, those aren't gambling. I know you guys are soccer fans, and you could buy securities on soccer there, not gamble.