Travis Kelce’s Six Flags Activist Role & the Rise of Celebrity Investors

0:04Travis Hoium:Travis Kelsey is taking an activist role at Six Flags, so are we going to get Taylor World next? Motley Fool Money starts now.

0:20Travis Hoium:Welcome to Motley Fool Money. I'm joined today by Lou Whiteman and Rachel Warren. Look, the big news over the past 24 hours has been Travis Kelsey taking an activist role. At least that's what the headlines say at Six Flags. Janna Partners is actually the one, I think, fronting a lot of this money. But, Lou, this is at least interesting. The interest here is that he has a background going to Six Flags. But we also have Dolly Wood, Dolly Parton. Is this going to be Taylor Swift building her own theme parks? Is that the next thing here? I hate to say it. It would probably work, right?

0:56Lou Whiteman:Absolutely, it would work. I don't think that's what's going on here. But look, at the end of the day, I love activists. I've worked with activists my whole career. A lot of it is activists is just a PR campaign at heart. You can have correct ideas about a company, but if you can't get those ideas out into the world, to the shareholders, you're still going to lose, even if you're right. So, there is always an element of trying to attract attention to yourself. A lot of times, it's with really over-the-top language. It's about accusations. There's a lot of ways to do it. But look, Jana has used celebrities before.

1:37Lou Whiteman:They used Dwayne Wade of the NBA and a pitcher of CeCe Sabathia when they went after Fresh Pet. Famously, Starboard Value, another firm, they used Shaquille O 'Neal to go after Papa John's.

1:48Travis Hoium:That at least seems more successful. You see Shaq in those commercials.

1:52Lou Whiteman:But it all works. This is just a way of going at it. If you look at Six Flags, very, very ripe for an activist here. It's been a disaster. The stock's down 50 % year to date. No one is going to these parks in the volumes that we're supposed to. They did a merger with Cedar Fair that was supposed to solve this. It didn't. So, you know, Jana, I don't know if Jana wants to say you need to improve marketing. You need to improve your customer experience. In a way, Six Flags already tried that. We're going to have fewer people coming through, but we are going to treat them better and they're going to spend more.

2:31Lou Whiteman:So I don't know if this will actually work, but I do think that this is just, this is the classic activist campaign with just a little twist from the Swifty world.

2:42Travis Hoium:Yeah, Rachel, this seems interesting in the sense that celebrities or influencers seem to be more involved in investing. I think Ryan Reynolds, if we go to more kind of the startup VC world, he's brought a lot of attention to the businesses that he's involved with. He's on the commercials. It's implied that he's a huge owner. Sometimes that's not necessarily the case. Magic Johnson, I at one point thought he actually owned the Dodgers. He owns like 2 % of the Dodgers. You know, Jay-Z, that was the thing. He bought the Nets. He owned a teeny tiny portion of the Nets. He got courtside seats. But, you know, these celebrities do bring attention.

3:18Travis Hoium:And in an attention business like theme parks, that seems like a valuable thing to bring to the table. Yeah. I mean, it's an incredibly smart marketing strategy that we have seen replicated by numerous firms. This is not new, you know, for Jana Partners. It's not new in the space. I mean, you could also go back, you think about how well-known figures like movie star George Clooney back in the day was involved in the activist campaigns, like the one led by Daniel Loeb against Sony over a decade ago. He even tried to build a casino at one point. Right. So this is something we've seen before, but I will say for Janna Partners, I think the addition of Kelsey to this is a really smart marketing move.

3:53They have a very successful track record of shareholder activism, as Lou was talking about. And they've driven significant changes at major companies. A few other examples, you think about how they took a stake in Whole Foods. They pushed for changes before Amazon ultimately acquired the company, right? You know, they had a role in the acquisition of PetSmart back in 2014. And I think that this is something that is very much needed at this point in time. Yes, there's this, you know, presence of Kelsey, but they also, the hedge funds brought in experienced executives from consumer and tech industries to advise on improving marketing, you know, the guest experience, technology.

4:27This is very needed by Six Flags right now. You know, they are reporting steep net losses. They have over$5 billion in debt. A lot of that's tied to the Cedar Fair merger. They had a roughly 9 % drop in attendance in the second quarter. And their CEO that had come in from Cedar Fair as part of the merger, he announced he's stepping down by the end of 2025. So there's a real role here for Janna Partners to play. And I think that's one of the key takeaways.

4:55Travis Hoium:Lou, is this the kind of thing that we should be paying attention to? Six Flags stock up 26 % over the past week, but you look out over the past five years, shares are down. Over the past one year, they're still down 35%. So is our activists the kind of thing that we should kind of follow, or is this just kind of noise for regular investors?

5:17Lou Whiteman:Somewhere in the middle. You know, look, activists like short sellers, I think, play an important role. I think it's case by case. Again, just like short sellers. In this case, like I say, I do think that the target makes sense. Whether or not the solution makes sense or how the solution evolves, that's something that an individual investor has to look at. I want to hear more from Jana here, because like I say, Salim Basoul was in here before the Cedar Fair merger and he was trying to do a lot of what he was doing. Sounds a lot like what they're talking about, and it didn't really work then. So, I'm not convinced, like I'm not ready to put my money into chasing this.

5:54Lou Whiteman:But generally speaking, activists have done a lot of good work cleaning up companies that were in desperate need of it. And this does look like a good target. So I'm curious to follow it and see how it develops.

6:06Travis Hoium:At least it's something we could maybe do a research trip, go on a couple of roller coaster rides. Let's do it, guys. Might add some value to the show.

6:12Lou Whiteman:But Travis is welcome to come along, right?

6:16Travis Hoium:When we come back, we are going to talk about ChatGPT's new browser. You're listening to Motley Fool Money. Trading a Schwab is now powered by Ameritrade. Unlocking the power of Thinkorswim, the award-winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a new light on Thinkorswim Desktop with robust charting and analysis tools. All while you uncover new opportunities with up-to-the-minute market news and insights. Thinkorswim is available on desktop, web, and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly.

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6:52Travis Hoium:Welcome back to Motley Fool Money. chat GPT yesterday introduced a new browser chat GPT Atlas. I had a chance to try this. It's not available everywhere, just Mac OS, but Rachel, I just want to go high level. Is this something that we need? Now the browser is pretty established. We're going on what 30 years of kind of looking the same. We've moved things like the search bar into the actual, you know, the address line. So kind of melded those. Google really owns this market, something like 60 % market share with the Chrome browser. They've already introduced a lot of AI features into it, but AI isn't taking over.

7:32Travis Hoium:So is this something that's going to be successful, or is this just another spaghetti at the wall thing from OpenAI? I think it's too soon to tell. As a Mac user myself, I'm very curious to try this one out. I haven't had a chance yet. I do think that there is an element of OpenAI is trying all sorts of different things to see what sticks. But I also think that they are very strategically trying to build out their ecosystem. And I think one of the biggest things that I'm curious about right now is what would the business model be, right, for this browser? I mean, there's kind of this idea that there could be a bit of a hybrid approach where they could make some money from subscriptions, from sort of a new type of advertising network.

8:11So the browser allows...

8:12Travis Hoium:We talked about payments a couple of weeks ago, too. That seems like something they want to integrate into this. Maybe it's easier if you own the browser. I think so. Well, and you think about how the browser allows OpenAI to embed their AI right into the user's web experience. So that gives them unprecedented access to valuable real-time data. That's obviously something that would be really valuable for advertisers. I think it's very much kind of designed to gather data in a way that's fundamentally different from traditional search engines. And we're already seeing, you know, they're being integrated with platforms like Shopify and Etsy.

8:43So maybe users could complete purchases within the chat bot. But you have to think about the fact that OpenAI's model, as it is right now, is hemorrhaging costs and losses. And so they're on this very aggressive monetization push. And I think that's what a lot of this goes back to. Now, we might see some really valuable tools come out of that, right? But I think it's far too soon to say whether this is going to be something that's going to be broadly adopted by users. I mean, how many of us are going to switch from Chrome to this? That's what I'm not sure about.

9:13Travis Hoium:Yeah, the idea in tech is generally that the new product has to be 10 times better than the old product for people to actually switch. So, Lou, that was sort of the context in which I started trying Atlas. And let me tell you, I didn't get very far. And I had multiple pop-ups asking me to upgrade to a paid version or an upgraded version of ChatGPT. That's the kind of thing that's going to turn people off. So I appreciate it. Like Rachel said, they're trying to figure out their business model. But here you have Chrome that is free, that is basically just helping Google's ad business. And it's consumer.

9:53Travis Hoium:It's 100 % consumer surplus. And then you have a new product that comes out that basically does the same stuff with AI stuck in it. And now they want you. It's sort of an upsell machine. I just don't know if that's what people want.

10:06Lou Whiteman:It's a shame they couldn't come out with this. I don't know, six months ago, a year ago, when there was like all around OpenAI glittered, right? And maybe you would have gotten more then, but I think that shine is off of it. This is a move. And look, I feel like a broken record here with OpenAI and I don't mean to pick on them, but all of their moves from their funding moves to what their products, their announcement, the kind of some of the pivots they may be doing in terms of what business they're chasing, which, you know fine but these are moves of desperation not of strength uh they're all understandable and i do think like introducing a browser it does make sense but they are in a position of weakness because they don't have the customer right now they are the ones trying to get the customer

10:49Travis Hoium:so when you say they don't have the customer because they do have something like five million paying customers you're saying that like google has a bigger business or google had all things

11:01Lou Whiteman:ready to go, and they're just layering this in. Microsoft has its giant office suite that they can just layer these in. Quite annoyingly, I might say. I'm not enjoying having an OpenAI prompt every time I go into Excel, but it's there. Yes, OpenAI has customers, but they started from zero. Google started from billions. They need to backfill so much just to get to the starting line So they're trying things. But to your point, look, Firefox is sitting on my machine. Bing is sitting on my machine. I still kind of just go to Chrome because I go to Chrome. It is going to take something that just, wow, this is a ton better.

11:46Lou Whiteman:Not just it is the same to get me to switch. From your reports, I'm quite happy. This is another thing that little old me as an Android Windows users have to miss out on, that's fine with me. But yeah, I don't blame them for trying all this. I also don't think it's going to be very successful.

12:04Travis Hoium:Rachel, the other thing I keep going back to is something Brian Chesky said recently about OpenAI and ChatGPT are actually not AI native. And we'll see exactly what he means, I think, over time, because that sounds sort of explosive, but it's an application, it's accessing the internet, it's not a new piece of hardware, it is not quite as disruptive, or the change is not the same as going from a PC to an iPhone, or a mainframe to a PC, those kinds of disruptive layers. This is an area where this is not really disruptive at all, it's just taking the old thing and making your own version of the old thing.

12:44Travis Hoium:So that's what I kind of struggle with here is seeing, what we're dancing around is, is this just a sustaining innovation that OpenAI is trying to make into a disruptive innovation? Yeah, I mean, I don't think when you look at some of the products, right, if you will, that they've launched recently, it's not as though they're recreating the wheel. They're taking, I think, a lot of existing technology and presumably trying to make it better with their own AI innovations. And I think it kind of remains to be seen whether that's going to be effective or not. I mean, you even take this example of the browser that we've been talking about here.

13:18You know, is this its own monetizable product within the broader open AI ecosystem? Or is it going to serve as a sales funnel back to chat GPT, right? I think there's still a lot of open questions as to what that's going to look like and how effective it's going to be. But again, I'm going to stress, I mean, they need to monetize in a more effective way. I think we're really just starting to see what that's going to look like. I think they are rolling out all of these different products, some of which are, I think, quite familiar to us, right? A search engine is nothing new. And I think they're trying to see if they can make it better and if consumers want that.

13:55And that's still, we don't know.

13:57Lou Whiteman:Maybe I'm being too cynical, but I would love to. If I could like get Sam Altman, moment of truth. was a browser really a priority a year ago or was this something we all know that there was talk that chrome would have to be split off as part of alphabets antitrust settlement oh interesting this feels like and i've been in so many boardrooms where this has happened where you start talking about an idea and that idea sort of made sense because chrome had its ready-made audience right you would have gotten all those customers with that but you spend so much time on that and that didn't happen. And then suddenly that is the shiny object you're chasing now.

14:33Lou Whiteman:So it's like, okay, we need to build our own browser then. I wonder absent all of that talk, if browser would have really been like this, the North star they were guiding towards. We'll never know. But I'm just kind of curious how much of it is after the fact with those discussions, them kind of talking themselves into how great it would be if they had a browser.

14:53Travis Hoium:One of these products is going to have to stick or open AI is not going to meet the revenue targets that they have promised to investors. And that's what all of this trillion dollar build out is based on, is them actually turning this into revenue. So we will see if this is a help or a hindrance to that. When we come back, we are going to talk about Warner Brothers discovery, potentially not splitting itself in two and getting bought out instead. You're listening to Motley Fool Money.

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16:16Travis Hoium:Welcome back to Motley Fool Money. Warner Brothers Discovery is back in the news. There are now rumors that Skydance is going to be, or Paramount Skydance, after that merger, is interested in buying the company. Look, Lou, we've been talking about this one for a long time. It makes all the sense in the world. It doesn't necessarily make the companies profitable or businesses that are going to be competing with the giants in streaming. But what did you take away from this?

16:41Lou Whiteman:So the news is that definitely all the rumors are true, that Paramount did approach Warner Brothers and they were rejected. I think it's worth looking at both of these companies separately because there's two separate dynamics going on. I don't know which one is investable right now, but they're both interesting. Warner Brothers Discovery is a mess and Paramount is really being aggressive. Which knife do you want to catch here, Travis? For Paramount, they realize that for all the billions they have and all the billions they've spent so far, they are still second tier. Their solution, and I think it's the correct one, they're not going to invest in so much content that they get the next Stranger Things, they get the next Knives Out.