Snap’s Specs Gamble

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss:

• Snap’s new Specs.
• Rivian announces more layoffs.
• Eli Lilly’s acquisition spree continues.

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A full transcript is below.

This podcast was recorded on June 17, 2026.

Travis Hoium: Is the AR future here? Motley Fool Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium. I am joined today by Lou Whiteman and Rachel Warren, and guys, we've got to talk about probably the most entertaining story of the week. That is Snap introducing its new augmented reality glasses. Lou, these seem to be right up your alley. I assume you're already in line to buy these $2,200 AR glasses that look like there's a reflective film on them. How in the world does this product? I'm actually a believer in the future of AR and VR. We're moving in that direction with a lot of different platforms like Google. But this doesn't seem like it, and Snap just can't seem to be getting anything right at this point.

Lou Whiteman: I'm not going to isolate Snap here. I don't get it for everyone. But definitely with Snap, this seemed like a bad Saturday Night Live sketch. If you watch Evan Spiegel talking about this on CNBC, was it CNBC or Saturday Night Live? I'm not sure. The expression, the beatings will continue until morale improves. I feel like the goal here now is for this whole industry to keep telling us that it's inevitable until the consumer somehow gets brainwashed into thinking, oh, I guess I have to buy these. I'm skeptical. Spiegel's pitch here is after two decades with the smartphone, "People are ready to think about computing differently." My take on that is after two decades with the smartphone, we need a new product to sell. I don't think people are out there thinking, gosh, I wish I could have one-eighth of the screen always in my face because I'm just so sick of looking at this nice screen that I can use for all these things, unproven form factor, unproven user interface.

Snap's answer to people questioning “should we be on the phone as much as we are” is to put a smaller screen in our line of vision 24/7, which is a really bold move. I don't think neck pain is the reason people are starting to have a conversation about are we online too much? But somehow that's the answer. Even the timing here is wrong. Travis, you mentioned the price. This is probably the worst economy in the last 15 years to try to launch a premium product, especially in Snap's demographic, which, to be honest, is much younger than me. These are not the people that are saying, you know what? I'm sick of my iPhone. I want to spend twice as much for something new right now. I just don't see it.

Travis Hoium: Rachel, it does seem interesting that, I'm not surprised that these AR glasses are coming out. I'm actually excited about the potential for them. I don't know if it's necessarily something this year or next year. But you look at a $2,200 price point. That's almost as much as the Apple Vision Pro, which was a complete flop. Is there any silver lining here?

Rachel Warren: I think that's the big question. This comes at a time when Snap's business is struggling. You look at their Q1 results. They had 12% revenue growth. They generated a little under $300 million in free cash flow, but they're operating at a net loss. Daily active users grew just 5% year-over-year in the recent quarter. You're already in a time where the business is not really giving growth to write home about. Specs, their first true standalone consumer augmented reality glasses. These feature a 51-degree field of view. They use these really advanced nanostructure waveguides. They project see-through 3D graphics directly onto the physical world. They are even featuring an integrated multimodal AI assistant because of partnerships with OpenAI, with Google. The price tag sits in a bizarre purgatory, if you will. They're cheaper than Apple's Vision Pro, but they're dramatically more expensive than the Meta Ray-bans, which have somewhat captured the mainstream cultural sites. But I think the important thing to note is, these are still a really far cry from looking like normal everyday eyewear. This is not something that average consumer is going and purchasing en masse. They're very bulky. It's a tough sell for people to wear them outside the home or office. That price tag around $2,200 is also notable.

Another thing, Evan Spiegel, he was saying, Snap's burned about $3 billion over 11 years developing hardware. There's the argument that this R&D budget is something of a vanity project being funded by a volatile advertising business. I think that's another really key point to make. This is a business that is struggling to find its operational footing. They initiated yet another restructuring of the business, slashing about 16% of their workforce just a few weeks ago, and their longtime CFO just left. This is a company with a really turbulent internal period they're seeing right now. The growth is not what it was a few years ago. Does this feel like the right time to launch expensive AR glasses? I wonder that remains to be seen. I don't think this is going to be a big cash cow for Snap.

Lou Whiteman: I don't want to pile on here, but just one more point to just show how ridiculous and non-serious this is. On that CNBC interview, Spiegel justified the price tag by saying that it is definitely not an accessory to the iPhone or to your phone, that it is a replacement and that's why it's worth the price it is. These things have four-hour battery life, four hours. This is going to replace your phone. You can get rid of your phone. Maybe it is a solution to our smartphone addiction because by default, we're going to spend most of the day. We're going to get rid of our phones and then spend most of the day charging these things. Good luck.

Travis Hoium: The crazy thing for Snap is that this is a company that also has a lot of financial risk. They have currently about $2.8 billion worth of cash. They also have $3.5 billion worth of debt on the balance sheet. That debt only started coming on the balance sheet in 2018. This is one of those companies that I have wanted to root for a turnaround for a competitor against a company like Meta in the past, but I just can't get over these what seems like continual missteps and the financials never quite seemed to turnaround. I don't know. I think we're in agreement. This probably doesn't seem to be it. When we come back, we're going to talk about more layoffs in the market this time from Rivian. You're listening to Motley Fool Hidden Gems Invest.

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Travis Hoium: Welcome back to Motley Fool Hidden Gems Investing. Rivian announced another round of layoffs. I think this is the fourth round in the last couple of years, Lou. This time it's hitting customer service and marketing. We talked, I think it was last week, about them officially launching the R2. This is supposed to be the product that really brings them into the mainstream. They should be in this growth phase. Why in the world are they laying off people in what should be an area of growth, you would think at this point?

Lou Whiteman: I think where these layoffs are coming matter. You mentioned customer service and marketing. Yesterday on the podcast, we were talking about Robinhood layoffs. It was mostly layers of middle management. That I find easier to dismiss, because I do think a lot of these companies are bloated, and if you're just trying to get rid of some layers of middle management, but it's hard to spin layoffs in customer service and marketing at a time you're trying to ramp your product in a good way. Now, look, there are people out there who say that this is just as ridiculous of a product as those glasses we were just talking about. I know there are a lot of mixed reviews on what the R2 looks like. I don't think we know yet whether or not it's going to be a success or not. I'm trying to take the glass half full approach here, which is, I think, Rivian, they do need to lower their burn to the extent they can hope that other people have more positive feelings about the R2, that they can gain scale here. I don't think that layoffs, you can look at it and say, they're definitely doomed, definitely success.

But look, here's the thing. Automaking is very hard. Tesla was the exception, not the rule, in that they made it. They almost went under a few times. I think anyone investing in this, if you believe in the R2, I don't think the story is ruined. If this is a popular product and they can start generating cash flow, marketing would have been a nice-to-have and not a needed. But this was a long shot even when things were going well, and it definitely, I think, highlights the risks.

Travis Hoium: Rachel, one of the things that stands out to me is that the cash from operations is negative $1.3 billion over the past year. That's the thing they're trying to answer. It just seems like Lou said, the place and the timing is a little bit strange when you're launching your most important product ever.

Rachel Warren: It is a bit strange. This layoff comprises about 2% of the total workforce. But you have to think, you noted that one number, but Rivian also lost almost $4 billion last year. They're losing thousands of dollars in every vehicle they build. That era of easy, unlimited start-up capital is gone. If you’re looking at this, trying to take the bull angle here, maybe you look, and you think, management, they’re executing these cuts now. Maybe they're trying to show institutional and individual investors that Rivian has cost discipline. We already know that R2 has an enormous backlog of reservations. I want to add that angle, but there is a bare case here, and I think the optics are concerning.

One of the things to note is the R2 supposed to be the vehicle that transitions Rivian from more of a niche luxury brand for those early adopters into a mass market powerhouse. Early adopters have maybe tolerated the bugs, the long wait times because they love the take as market buyers probably aren't going to do that. When you're seeing cuts to customer service, support staff, marketing, as we are expecting thousands of new R2 vehicles to hit the roads, that's an operational gamble, and I think that's something that investors need to watch. The other question I'm asking if demand for the R2 is as massive as Rivian saying, why are they cutting back on the teams that are meant to handle that volume? It begs a lot of questions about their cash runway, obviously, concerns about profitability. If you're an investor looking at this, maybe it's a positive. If you're a consumer waiting on an R2 order, this has to give you pause. I think, regardless of where you stand on this news, Rivian is walking a bit of a razor-thin tight rope. I think it remains to be seen how successful the R is going to be for the business.

Lou Whiteman: Let me give you what I think management's answer would be to Rachel's points. I'm not saying this is my view. I don't think we know, really. But the reason these two conflicting thoughts can be in the head together is because you can only build the things so fast, so you can only recognize cash flow so fast. There is a world where they both still see a lot of cash coming in over the next 18 months, two years, and they don't have the cash on hand today. That is the perfect sweet spot that they're trying to ride here, that that is the bull case. There's a lot of things that can go wrong, even if that is an accurate portrayal. I don't want to sugarcoat it. But there's a world where this all makes sense together, and it's just the timing of cash flows.

Travis Hoium: It will definitely be an interesting one to watch because I think we sometimes don't realize how hard it is to be an auto manufacturer and how unique it was that Tesla became the valuable company that it was because that still trades for a much higher multiple than you get from traditional automakers, which periodically go bankrupt. When we come back, we're going to get an update from the latest acquisition in the pharma industry. You're listening to Motley Fool Hidden Gems Investing.

Welcome back to Motley Fool Hidden Gems Investing. Eli Lilly is buying another company this time, 4E. Rachel, can you explain to me what 4E is and what this deal is all about?

Rachel Warren: I think the thing I want to highlight before I dive in is Eli Lilly is completely swimming in cash right now. They obviously have their blockbuster GLP-1 franchise. The broader portfolio is doing very well, and they're using that capital to aggressively build a protective mode outside of the GLP-1 space. This buyout of 4E Therapeutics, this is Eli Lilly's 11th acquisition. This year alone, they've spent almost $20 billion.

Travis Hoium: What are, they are hiring in their M&A team?

Rachel Warren: I think they are, yes. They've spent almost $20 billion acquiring businesses over the last few years. 4E etherapeutics, what do they do? They specialize in a class of drugs known as MNK inhibitors. These are oral drugs. They're designed to block chronic pain signals exactly where they start in the peripheral sensory nerves while completely avoiding the brain and spinal cord. This is designed to eliminate heavy risk of addiction, cognitive impairment, and other issues that can come with traditional opioids. With this deal buying 4E, Lilly is absorbing a very specific clinical pipeline. Their lead drug candidate is designed to treat intense nerve damage, neuropathic pain. It is also the first MNK inhibitor for pain to ever clear Phase 1 human safety trials. 4E also has next in line of clinical candidates that could be really notable for EIi Lilly. They target chronic migraines, acute pain. Both are ready to move into advanced regulatory development.

Now, bear in mind, Eli Lilly has been expanding its presence across multiple medical fields through acquisitions. Last year, they spent about a billion dollars buying another pain start-up called Site 1 Therapeutics. This last month, they dropped about 4 billion on three different vaccine developers. They also just bought a company called Ajax Therapeutics to scoop up a blood cancer treatment. The 4E acquisition, it's important to note that developing pain medications has historically been one of the hardest, highest failure areas in all of medicine. Eli Lilly recently had to shelve two of its own pain candidates because trials failed. This is a very strategic move on their part. The GLP-1 franchise is generating billions. They can comfortably absorb those losses and move into acquiring that growth.

Travis Hoium: Lou, it seems like they're making a new deal every week. I got to say, this makes sense. You have the cash flow coming in from GLP-1s. You have Rtotrutide coming that could be, I've heard it called a trillion-dollar drug. Why not continue to add more optionality to the business?

Lou Whiteman: That's it exactly. This is why I really respect this management team. I'm not here to tell you what GLP-1s end up being. I hear the hype, I get the hype. I think the hype might be true. But history shows us that the benefit for the actual pharma company is limited, is fleeting. The patent cliff happens. Look at Statins. Look at so many of these just breakthrough drugs. Pfizer isn't the $2 trillion, $3 trillion company today. These things happen. The most important thing you can do is ride the wave, take advantage of your cash inflows to diversify for your future. Half of these acquisitions probably won't work out. That's the nature of this business. Maybe more than half. But if they are planting a lot of seeds here, as this plays out, if they just get one or two hits out of this, it will have been well worth it. This is what long-term investors should want them to.

Travis Hoium: The only challenge that I see looking at Eli Lilly, I think they're executing extremely well right now, but this is a trillion-dollar company. A lot of this growth that we're talking about that we're excited about the market knows about trading for 40 times earnings, 15 times sales. That's a big tech margin, not usually a multiple, not usually a pharmaceutical multiple. As much excitement as there is, they're requiring a lot of these companies to maybe live up to that valuation that's already priced in by the market.

As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards, and it's not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. See our full advertising disclosure. Please check out our shown us. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, I'm Travis Hoium. Thanks for listening. We'll see you here tomorrow.

Lou Whiteman has no position in any of the stocks mentioned. Rachel Warren has positions in Alphabet and Apple. Travis Hoium has positions in Alphabet, Robinhood Markets, Snap, and Spotify Technology and has the following options: long December 2027 $5 puts on Rivian Automotive. The Motley Fool has positions in and recommends Alphabet, Apple, Eli Lilly, Meta Platforms, Spotify Technology, and Tesla. The Motley Fool has a disclosure policy.