Roblox Goes Public, and the Future of CRISPR and Gene Editing

In this episode of Motley Fool Money, host Chris Hill is joined by Motley Fool Analysts Jason Moser and Emily Flippern to discuss Ulta Beauty‘s  CEO stepping down, and the declines of Docusign and JD.com on earnings. Also, Bumble bounces higher and Roblox has a big debut. They’ll also discuss the outlook for the sports betting industry, and share two stocks on their radar.

Plus, best-selling author Walter Isaacson talks about his new book, The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race.

Chris Hill: We’ve got the latest headlines from Wall Street, best-selling author Walter Isaacson is our guest, and as always, we’ve got a couple of stocks on our radar. But we begin with some big shoes to fill. Ulta Beauty’s fourth-quarter earnings report took a back seat to the news that CEO Mary Dillon is stepping down in June. She will transition to executive chair of Ulta’s board and stay there for a year. Company President Dave Kimbell will take over as CEO. Shares of Ulta were down 8% on Friday, Emily, because Mary Dillon has been the CEO since 2013. She has done a great job leading this business, and the new guy has a tough act to follow.

Emily Flippen: That’s an understatement, Chris. What’s really interesting is back in December, Ulta actually reorganized its leadership team. They brought in four new leaders for things like international operations and merchandising. All while keeping the CEO, now CEO Dave Kimbell, in his role as president. This transformation, I guess, was precursored by the transformation in the leadership team back in December, but it certainly still took me as a shareholder and the market by surprise because of what an excellent job Mary Dillon has done.

Now, she will be staying on for the next year, helping the transition, helping the new CEO, Dave Kimbell, take over his role. But he certainly is going to have a challenging 2021 because when you look at Ulta’s quarter, just their earnings this quarter, their same-store sales fell nearly 5%, revenue fell just nominally year over year, they stopped their expansion into Canada — all of these negative effects coming out of the COVID pandemic. They still have a lot of initiatives that they need to prove out over the next few years to say, “Hey, Mary Dillon, she did some great things for the company over the past eight years, but here comes Dave, and Dave can still deliver that same return for shareholders.”

Hill: I think about all the success that business has had, Jason. This is something you and I have talked about before. The building up of the Ulta Beauty and Salon loyalty program, the tens of millions of people that got into that. It’s one of those things that shouldn’t be overlooked in terms of Mary Dillon’s legacy as a leader.

Jason Moser: No, not at all. I think you’re absolutely right. I think the loyalty program plus the progress they’ve made on the mobile front, I think has been phenomenal. I think they’ve really embraced the changes in technology. Not only the move to mobile, clearly mobile is the thing, [laughs] it’s not a fad. They saw that early on and made the investments, I think the appropriate investments for a business like that to bring in technology like augmented reality, allowing folks to be able to try on different products without necessarily having to even be in the stores. I think you put it all together, it really is just a phenomenal job that Ms. Dillon has done. I think she will be sorely missed as the CEO. However, it’s nice to know that she will be holding that executive chairman role still.

Hill: Real quick, Emily, before we move on, if you look at the performance of the stock, up I think in the neighborhood of 250% during her leadership, the stock falling on Friday, do you look at Ulta Beauty as a strong enough underlying business that this represents a great buying opportunity? Like, “Hey, the stock is almost 10% cheaper?” Or is this a little bit of a wait and see?

Flippen: I tend to lean on the cheaper side, but I will say that hesitantly, because some of the numbers that we’ve seen for Ulta need to move in the right direction to really make this a good buying opportunity. In particular, the focus that the business has put on their loyalty sales — loyalty members actually fell 10% year over year, which is exactly the opposite of what Mary Dillon was trying to do, which was transform this company into something that had a character, had a loyalty program, and had lots of people shopping online through these augmented reality initiatives. Two-thirds of their users, of Ulta buyers, are still in-store shoppers only. Those numbers, the loyalty numbers, and the online shopper numbers need to continue to climb to justify buying today.

Hill: Shares of DocuSign falling 7% on Friday, despite the fact that fourth-quarter sales came in higher than expected, capping a year in which overall revenue came in at $1.5 billion. Jason, DocuSign’s up 200% over the past year. It’s not a cheap stock, but when you look at billings, when you look at the way they’re adding customers, it seems like the business is growing in the ways that you would want.

Moser: Oh, yes, it’s growing in the ways that we would want. [laughs] Chris, as a shareholder and myself, I am very happy with this quarter. I think if you’re looking for a stock to buy and hang onto for years to come, it’s one that should be at the top of your list. At the end of this year, this is going to be a $2 billion revenue business, and to your point, not a cheap stock but hey listen, that puts these shares that are refreshing 20 times forward sales in a world where 40 times sales now seems to be the norm. DocuSign maybe looks like a deal, but I think the metrics that matter really do tell the tale for this company — revenue growth, 57%, billings growth of 46%. They brought in more than 70,000 new customers for the quarter, now have just under 900,000 customers worldwide and saw their strongest expansion in upsell rates yet, actually driving their dollar net retention rate to 123%, highest it’s ever been.

This is a business right now, today it’s generating positive operating cash flow even after you back out the stock based compensation. GAAP profitability is still a ways away, but at this point, I’d argue they don’t have to worry about that given the numbers they continue to lob up. They grew enterprise in commercial customers by 50,000 for the year. International revenue grew 83%, it’s now 21% of total revenue.

They have a pretty cut-and-dried strategy — it really all just centers around this idea of being the go-to platform for the agreement process, pre- and post-signature, and it seems to be working. They’re building out some pretty strong technology that is resonating with customers and there’s an interesting data point on the call. I think this is really a testament to the decisions that they’re making and the strategies that they’re employing. They added nearly the same number of customers this past year, approximately 303,000, as they actually had in total at the time the company went public in 2018. Clearly, it’s a business that’s benefited from tailwinds of the pandemic. I would argue that the pandemic — notwithstanding this is a business that is still doing all the right things — maybe that hastened the growth a little bit. But I think the guidance for the coming year is strong. They took a little bit of a target-like tone there in a conservative nature, noting that the ongoing impacts from coming out of the pandemic make operating expenses a little bit difficult to fully forecast, but all things considered, this is a business that just continues to do all the right things, it seems.

Hill: Fourth-quarter revenue for JD.com rose 31%, profits were also higher than expected, but shares of the Chinese e-commerce company falling more than 5% over the past week. Emily, it seems like it was a nice cap to a strong fiscal year though.

Flippen: Extremely strong year for JD. If anything, the fall today is just a contraction in valuation because of what a great 2020 it was for JD. When you look forward to what 2021 could be for this business, even thinking about 2022, it’s important to differentiate JD versus its other competitors in China, in particular, Alibaba and Pinduoduo. Part of the reason why JD is going to have a tough time living up to their comps in 2020 is because virtually every other e-commerce platform in China had to suspend their delivery services during the lockdown. This is where the difference in business model comes into play, because JD owned their own logistics network, they own the warehouses, they own the distribution, they were able to stay in business, while Alibaba’s T-mall, Taobao, and Pinduoduo struggled. A lot of customers actually transformed to becoming JD customers, paying that a little bit premium to get the white-glove service that JD offers just so they could get food and other items delivered to their house during the pandemic. It will be really interesting to see how many of these customers JD is able to retain heading into 2021 versus how many churn back to the cheaper platforms.

Hill: Bumble’s first earnings report as a public company was a hit. Shares of the online dating company up more than 10% this week. Bumble is a growth company, Jason, and revenue grew more than 30%.

Moser: Yeah, hey, listen, [laughs] I’m clearly not the target demo here, but a women-first dating app, as founder Whitney Wolfe Herd describes it, I think there’s a possibility that my daughters will be using this platform at some point or another. I appreciate her perspective, and I’m rooting for this company, to be honest with you.

To the numbers, 31% revenue growth that was, I think, impressive. Most of that growth came from the Bumble app. The Badoo app, which is the one more international focus, a little bit slower growth there and about 10.5% of overall growth there. But fourth-quarter total paying users grew 32% to 2.7 million users. Total ARPU of $20.02 versus just under $20, it grew 4% sequentially, 3% year over year. The company’s calling for $164 million at the midpoint for the current quarter here. That represents 38% growth from a year ago.

I was a little surprised at the optimistic reception, given that call for full-year revenue of $720 million, that’s around 24% growth. It’s not a company that maybe it’s growing like a number of those other tech-heavy SaaS business models that we’ve become so familiar with over the past year. But again, I go back to DocuSign, talking about seeing stocks at a bit more of a refreshing valuation. That pegs this stock at around 11 times forward sales, which I think is actually pretty reasonable given that it seems like it’s really just getting started. They’ve introduced the new Bumble Premium subscription, introducing ancillary services and Bumble BFF for platonic relationships. Bumble Biz, which is for professional relationships, I’d be interested to see where they take that.

Hill: Poshmark‘s first earnings report as a public company was not a hit on Wall Street. Revenue looked good, but the online seller of secondhand clothes issued soft guidance for the current quarter, and shares of Poshmark down nearly 20% on Friday, Emily.

Flippen: There is a lot of inherent skepticism about the concept of Poshmark, which is a community, again, mostly aimed at female users for people looking to resell their clothes. But if you look at just the numbers that management provided in this quarter, there were actually a lot of good things. We can start with gross merchandise volume, GMV, that was up 28% to just under $400 million for the quarter. Pretty strong growth coming out of the year that was really light for the apparel industry overall. They posted adjusted EBITDA of over $4 million, so increasingly becoming more profitable, at least on an adjusted basis. But more importantly, they kept nearly an 18% take rate on all the orders placed on their platform, that is top tier for online sellers, and even more impressive, when you consider the huge backlog of deliveries and the issues that we saw delivering for the holidays over the past season. Where their issues came in, as you mentioned, was actually guidance. The company is guiding for 32% to 36% revenue growth over the next quarter, which was below expectations. Perhaps more importantly, they only provided guidance for that first quarter, not throughout 2021, which also could have worried some investors. I’ll provide the caveat that this is the first quarter Poshmark has had as a public company. We don’t know anything about management. Are they sandbagging? We don’t have those expectations already set. We’ll have to see if this is a struggling retailer in terms of growing revenue in 2021, or a management team that just likes to beat expectations.

Hill: Roblox went public on Wednesday at $45 a share. For those unfamiliar, Roblox is an online game platform for children that is wildly popular. Shares of Roblox quickly shot up to more than $75. [laughs] Jason, we’ve seen some frothy IPOs over the past year. Does this seem crazy, or given the market as a whole, does this seem reasonable to you?

Moser: Well, it feels like we’ve got a little bit of a theme going on here, in regard to valuation. We’ve talked about it with a few of these other stories. I think with Roblox, a very big debut, trading at around 40 times sales. Now, that seems like the norm for a lot of these companies that are just coming to the public markets, and we still don’t know enough about it. But what we do know, it is obviously a very popular platform in the gaming world for children. My kids, I guess, are a little bit older, they don’t use it, I’ve never used it, so I’m not very familiar with it. But in studying the business and understanding how it works, it’s for creators as well as players. It reminded me, they have an American Express-like closed-loop thing going on here, in allowing folks to both create and play games. It gives them a lot of control over that data. I think that really offers the potential for some very compelling network effects over time, and gaming obviously is a massive market opportunity. While this is something that’s still relatively new to the market, I do understand the enthusiasm there. It’s a direct listing, of course, so no new shares were actually created, and then the IPO didn’t raise any capital, it just gave folks the opportunity to invest in the business. They report having just under 33 million daily active users at the end of 2020. That was up 85% from a year ago. I think it will be noteworthy to see how that active user growth continues on through 2021 and beyond. But to that user growth, revenue followed in line, revenue growth of 82% was just under $1 billion for the year. Again, a lot to learn about the business. I do understand the enthusiasm behind it, though.

Hill: Shares of Dick’s Sporting Goods up a bit this week, fourth-quarter profits and revenue came in higher than expected. Emily, this is another company with some tough comps coming up in 2021, but over the past year, this is a stock up 175%.

Flippen: Tough comps is the perfect description of what 2021 is going to be for Dick’s Sporting Goods. This quarter, they had a 66% increase in earnings per share with their record-setting 10% increase in same-store sales growth, but next quarter is when COVID kicks in. If you actually rewind to the fourth quarter of 2020, so last year or 2019, I should say, it was a completely different picture. They had guided for flat to 2% same-store sales growth in 2020, so that will be a critical number to watch.

Hill: Funko is one of the leading creators of licensed pop-culture products, and shares of Funko rose 25% this week after a strong fourth quarter report. Jason, people aren’t just watching the Mandalorian, they’re also buying Mandalorian Funko pops.

Moser: Many may call this a toy company, but really, they call themselves a pop-culture consumer products company. While that may seem on the surface like semantics, I think it’s really not. Looking at the numbers, fourth-quarter sales in the U.S., they had a great holiday season. Sales were up 18% to $171 million. That offset weakness internationally. When you look at what this company sells, to that pop culture nature, it really does feel like a lot of what they’re selling is straight out of a Simpsons episode. You’re talking about things like Snapsies and Funko Vinyl Soda, and pop items, and Stitch Shoppe, and board games. But they’re best known I think for their figures, specifically bobbleheads. To that point, non-figure products represented almost 23% of the company’s sales today. They’re trying to go beyond being just the bobblehead company, so to speak, and it seems like it’s working.

They are building out a direct-to-consumer business. Those sales grew 80% over $50 million represent about 8% of the business now, versus about 4% a year ago. In just an interesting note there in the call of that, there’s a New York toy fair that’s held annually. Because of obvious reasons, they hosted their first ever virtual Funko Fair, where they partnered with licensors and retailers to engage. That event led to nearly 1.5 million units being pre-sold to fans through their retail partners, and many of those products still don’t ship. They’re not even going to be released for six to nine months. You can see, they obviously have a pretty popular line of products there that the consumers seem to not get enough of, and for the year, they’re calling for sales growth of 25% to 30%.

Hill: Walter Isaacson is an award-winning writer and best-selling author who is definitely a fan of innovation. Start with the fact that he’s written biographies on da Vinci, Albert Einstein, and Steve Jobs, so it makes sense that his latest book would explore one of the most interesting parts of science and the Nobel Prize winner at its forefront. The book is The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race. Earlier this week, Isaacson talked with my colleague Corinne Cardina about gene editing, starting with how CRISPR technology works.

Walter Isaacson: CRISPR is a pretty simple system. Bacteria have been using it for more than a billion years. It’s how they fight off viruses, which is of course a useful talent to have as we face all these pandemics. What CRISPR is, is a system in bacteria that can remember the genetic code of viruses that attack them. Then, they see that genetic code again, they take an enzyme, a scissors that will cut up that invading genetic code. What Jennifer Doudna and her team did is said, “We can turn that into a scissors that will cut our own DNA at some place we’ve chosen.” If we want to get rid of a bad gene like the mutation that causes sickle cell anemia, or if we want to create healthier children, we can use this system to just take a target that we want to cut in our DNA, and to use a guide that will take an enzyme scissors there and cut it there.

Corinne Cardina: Within the gene-editing space, there is a major difference between what is called somatic gene editing and germline gene editing. I’ll give you my understanding [laughs] and you can check me on this. With somatic gene editing, you’re altering the genes within a particular person. There’s either the ex-vivo method, removing their cells, engineering them in a lab, putting them back in the body, or the in-vivo method, in which you inject gene-editing molecules into the body. Somatic, it means body. It changes the person’s genes and how their body creates certain proteins, but it does not impact how they pass on those original genes to their offspring.

That brings us to germline editing, also called inheritable edits, in which the edits to the gene can be passed on to the offspring. You say that germline editing holds more promise, but more peril. Can you explain some of the big ethical questions that scientists are grappling with about germline editing and why it’s such a big jump from somatic gene editing, which has largely already become accepted? You mentioned sickle cell anemia, plenty of trials going on with the somatic side.

Isaacson: Yes, we’ve already cured sickle cell anemia this past year in a patient named Victoria Gray in Mississippi, using somatic editing. Meaning her stem cells were taken out of her body, edited, returned to her body. We’ve also used CRISPR in a far more controversial way. Just two years ago, a Chinese scientist who had been to Jennifer Doudna’s seminars used CRISPR to edit the embryos which became two twin girls in China. They had been edited so that they didn’t have a receptor that allows them to get the virus that causes AIDS. By doing it in an early-stage embryo, in theory, it means you’re not just editing those twin girls, you’re editing all their descendants, you’re editing the human race. The moral question becomes, should we hack our own evolution? It’s like Prometheus snatching fire from the gods.

We now have the power to design our children and all of our descendants not to have certain traits, or maybe to enhance certain traits like height, or hair color, or IQ, whatever you may do in the future. That becomes ethically questionable to some people. Certainly we want to do it in order to fight off dreaded diseases like Huntington’s or cystic fibrosis or sickle cell, but should the rich be allowed to buy better genes for their kids to make them taller or make them smarter or give them greater muscle mass? Not something we could do right now, but in the next few decades, that will be possible. Will we want to edit out some of the diversity of our species?

Behind me is my balcony overlooking the French Quarter in New Orleans. I look at the passing parade of all sorts of types of people that add to the richness of our society. If we start editing our children, are we going to lose some of our diversity? Are we going to lose this notion that we’re all created equal? These are the things that Jennifer Doudna, actually she makes this discovery, she has a nightmare that somebody wants to learn about it, and when she goes into the room to meet the person in her nightmare, it’s Adolf Hitler. The book not only talks about the science of this, but it talks about how Jennifer Doudna went on a journey, went on a mission to enlist scientists around the world to say, “What rules are we going to have in place for using this new technology?”

Cardina: That’s where the role of public policy comes into the book. You discussed the very valid concerns about genetically encoding inequality. Of course, right now we have lots of financial inequality in the world. But if parents are able to go to the “genetic supermarket”, it’s not going to be free. You discuss references to Brave New World, 1984 — how do you see the role of public policy in gene editing, and maybe how does Jennifer see it as well?

Isaacson: I think initially, Jennifer Doudna and myself flinched at the notion of creating genetically modified children. It’s like we all flinch maybe the first time we talk about GMOs in our food. But like GMOs in our food, we have to figure out, well, when can it be good and when can it be bad? At a certain point, I began to think, and so did Jennifer Doudna, that there are certain times where it would be immoral not to use this technology to alleviate suffering, to try to stop brutal diseases like Huntington’s disease. But the way we’re going to have to figure it out, it’s not just delegated to the politicians or delegated to the scientists. I think we all have to be involved in thinking this new technology through. And by “we,” I mean you and me, Corinne, and you and me, all the listeners of this show, are going to have to say, we should be discussing this as a society. It’s the largest moral issue we’re going to face. And in order to discuss it, it helps to know a little bit about it. So by telling the story of Jennifer Doudna, I hope I make it very easy to understand what the possibilities are. In that way, all of us can engage in this discussion, whether it’s at the dinner table or in our political lives, with what are we going to do with this newfound fire that we’ve snatched from the gods?

Cardina: It’s not just scientists in labs necessarily who are doing and experimenting with gene editing. I want to talk a little bit about what you call the rebels or the troublemakers. You quote Steve Jobs’ famous Apple ad from ’97 that celebrated the rebels and troublemakers who pushed the human race forward. We talked a little bit about the Chinese scientist who created CRISPR babies without getting approval from the greater scientific community. He actually got in trouble, he served time in prison, he’s not allowed to do science in China anymore. Can you tell us about some of the troublemakers that you discussed in the book that have forced us into a new era of gene editing?

Isaacson: The most prominent was this scientist in China, He Jiankui, who decided in sort of a rogue experiment to just make the first designer babies. People say, “Well, it’s science fiction it can’t happen.” Well, it’s already happened. He pushed it forward. I think he did it in a very irresponsible way, which is why he’s under house arrest in China. Because it wasn’t medically necessary. You can prevent AIDS in other ways. It was done in a sloppy fashion. But the question becomes, “What happens when it can be done in a safe way? What happens when it is medically necessary?” It’s not that hard to do. In the book, I describe going to Jennifer Doudna’s lab in Berkeley, and within two days, with just two graduate students helping me, I was able to edit human genes. Now, don’t worry, we took them after I edited the cells and we mixed it with chlorine and killed them and flushed them down the drain. I didn’t unleash them on the world. But it’s going to be something that in the next couple of decades will become easy enough for any graduate student to do, and eventually, people will be able to do it like they create webcasts in their own house. We have to learn what the rules should be.

Cardina: I want to talk a little bit about entrepreneurship. Jennifer occupies a really interesting, a huge spectrum from basic science, researcher, and really just curiosity-driven digging into things because she is curious, all the way to being a founder of multiple companies. The race to develop CRISPR technology led to three companies formed by the cast of characters that you chronicled. There’s Intellia, Editas Medicine, and CRISPR Therapeutics. Of course, there are more gene-editing companies now, but these are the three that we’ve familiarized ourselves with, the founders of, by the end of your book. So at The Motley Fool, we’re investors. Many of our audience members may have heard of some of these companies, and some may have invested in one or all three. What would you say generally to anyone thinking about putting their money behind companies focused on gene-editing applications?

Isaacson: Well, first of all, it’s both useful but also joyful to actually understand what these technologies do. That’s what my book is about: What is CRISPR Therapeutics? How does that work? Now, that’s a good company to invest in. It was just very successful in helping cure sickle cell anemia and a blood disease over in Europe. Likewise, things like Mammoth Biosciences, which was founded by Jennifer Doudna and her graduate students, and its rival group, Sherlock Biosciences, which was founded by the MIT Harvard people like Feng Zhang and his graduate students — those have done things like use CRISPR and RNA to detect viruses. Well, that’s become very useful these days. I think that it’s always a problem when you invest based on whims and hunches. It’s useful to understand the product. It’s useful to understand what these companies do. That’s why I spend a lot of time in my book showing how they form these companies and then looking at how everything from coronavirus to cancer, to the sickle cell, are being affected by the technologies these scientists first discovered and then decided to commercialize when they form companies.

Hill: The book is The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of The Human Race. It was released this week as the No. 1 best seller on Amazon.

[…]

Welcome back to Motley Fool Money, Chris Hill here with Jason Moser and Emily Flippen. Our email address is radio@fool.com. We got an email from Steven Lee in Stillwater, Oklahoma. He writes, “I’m always looking for opportunities for long-term buy-and-hold stocks. An idea I’ve been looking at for about a year now has been in the area of sports betting. Fewer than half of the states in America have actually legalized it, so it looks like a growth opportunity. I recently bought a basket of Penn National, DraftKings, and MGM, as these companies already have a strong stake in the sports betting market. I’d love to hear your thoughts on the industry’s future, as well as if you think a basket similar to this is a good long-term buy-and-hold.” Jason, I’ll just start with you. I love the fact that we’re headed out of the gate, Steven has the right mindset in terms of looking for long-term buy-and-hold stocks.

Moser: Yeah, totally agree. I absolutely do believe this is a terrific long-term opportunity. I’m a proponent of legalizing sports betting. I enjoy laying down a little cash here and there myself. I mean, a lot of states haven’t even really been brought into the fold yet, but that is just a matter of time, I think. When it comes to finding the companies that will prosper from this opportunity, I think you have to look to clearly the bigger companies, companies like Penn that afford partnerships with media companies like Barstool Sports for example. I mean, they are going to be able to utilize a lot of data that they get from their users. Size really does matter, I think, in this industry. Sports betting is a tough business, but the companies that do it well, I think stand a benefit. I don’t think you can put that toothpaste back in the tube. I think we’re only going to see more and more states legalize it, and I like the basket approach.

Hill: Emily, what do you think?

Flippen: I think this listener should definitely give themselves a pat on the back for approaching a really volatile industry the correct way. While it is a growth industry when you think about the opportunity for sports betting, it also has a lot of risks. Trying to take a single winner in this space whose regulations haven’t even fully developed, is a recipe for disaster. I agree with the idea of buying a basket, spreading your bets across. But in this case, I would just recommend this listener and everybody listening to think about what’s driving the growth in the businesses that you’re adding to your basket. It can be easy to over-involve yourself with casino companies, for instance, when you’re trying to get exposure to sports betting. Don’t forget about businesses like FuboTV, which offers a platform, or Gan Limited, which offers the back-end technology for sports betting. There’s lots of ways to play the space.

Hill: Let’s get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question, Jason Moser, you’re up first. What are you looking at this week?

Moser: Taking a look at a company called Dexcom ticker is DXCM. This is a medical device company that focuses on the design, development, and commercialization of continuous glucose monitoring, that’s called CGM. Those are systems for folks with diabetes. If you look at some of the data, it’s astounding. I mean, the International Diabetes Federation estimates that in 2019, 463 million adults around the world had diabetes. You look at the CDC data, estimates were that in 2018 they had about 34 million people with diabetes, of which 26.9 million people that were actually diagnosed. Dexcom has focused on building medical devices for these folks to be able to monitor their diabetes, and tech and connectivity investments are bringing remote patient monitoring to reality. This is really an Internet of Medical Things play — partnerships with platforms like Livongo to bring data to that ecosystem, ergo Teladoc Health ecosystem because Teladoc Health acquired Livongo. I think that just really opened up a world of opportunities for a company like Dexcom, and to that point, they’ve grown revenue at a 37% annualized rate over the last five years. A lot to like about this one and I’m enjoying digging into it.

Hill: Dan, question about Dexcom?

Dan Boyd: Chris, less of a question, more of a comment. I can’t even remember the last time we did a Motley Fool Money without a medical stock on stocks on our radar.

Moser: I like that comment. I think that’s an astute observation, and I would just reply with the idea that it is a massive, massive market opportunity where technology is just really making things more possible today than we ever would have imagined.

Hill: Emily Flippen, what are you looking at this week?

Flippen: I’m looking at a business called Coupang (NYSE:CPNG). The ticker is CPNG. It’s often called the Amazon of Korea. They went public on March 11, so brand new company. It’s a really interesting play on e-commerce in Korea. Amazing, huge addressable market, over $530 billion in addressable market expected by 2024, of which Coupang has the largest at 20% market share.

Hill: Dan, question about Coupang?

Boyd: Yes, I generally don’t really like IPOs, to be honest. It’s not something that I invest in too much. Emily, is there something about this IPO that’s got you extra excited?

Flippen: Absolutely not. I love the business, but I agree with you about IPOs, which is why this is a radar stock and not a recommendation.

Hill: Two very different businesses, Dan. You’ve got one you want to add to your watch list?

Boyd: Yeah, Chris, like I said, I’m not into IPOs, so I’m going Dexcom.

Hill: [laughs] I like that your disdain for IPOs overcomes your disdain for the number of times we get medical companies.

Boyd: It’s not disdain for medical companies, it’s just that you hear about them week in and week out on this show, at least.

Hill: Jason Moser, Emily Flippen, thanks so much for being here.

Flippen: Thanks, Chris.

Hill: That’s going to do it for this week’s edition of Motley Fool Money. The show is mixed by Dan Boyd, our producer is Mac Greer. I’m Chris Hill, thanks for listening. We’ll see you next week.