OK guys I KNOW what the problem here is. The prop is cavitating. It is not made to be just set in the water and go, it needs some forward movement to get the prop to "bite". As you launch your boat, hold it about 6 inches off the water, and give it a strong forward toss . Works best with 2 people, one driving the boat, and one as a pitman/ boat tosser.
Another note about this boat/ propeller- If you are replacing the prop with another stock plastic prop, be very careful tightening down the new prop! In fact, it works best if you don't tighten it, rather, leave it a tad loose. If you tighten it too much, you will crack the prop. (it is very easy to do) ((crack the prop, that is)).