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- [00:00]
Host
Support for the show comes from Public Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by.
- [00:44]
Public.com Ad Reader
Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash all investing involves risk of loss. See complete disclosures@public.com disclosures you need to.
- [01:00]
Nicole D'Souza
Make a huge presentation in an hour.
- [01:03]
Co-Host
Luckily, Adobe Acrobat Studio uses AI to take all your documents and generate a presentation with a single click, building slides faster than ever before. So if you need a last minute pitch deck, do that with Acrobat. Need to level up your presentation design? Do that with acrobat. You have 30 plus documents that need to be simplified into a proposal. Do that with Acrobat. Learn more@adobe.com do that with Acrobat.
- [01:32]
Sponsor Voice (iShares)
With Voli from iShares you get access to both monthly income and growth potential in one simple etf. It's the best of both worlds. Discover Bali Ishares Large Cap Premium Income Active ETF iShares the market is yours. Visit www.ishares.com to view a perspective for investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Risks include principal loss and the use of derivatives, which could increase risks and volatility. Monthly income is not Guarant. Prepared by BlackRock Investments, LLC.
- [02:01]
Podcast Announcer
Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [02:22]
Host
Tons of earnings coming out here, a lot of tech stuff, a lot of users, economy stuff. I'm looking at Airbnb, Instacart, all kinds of stuff. Mandeep Singh he covers all the tech industry for Bloomberg Intelligence. He's got the team which he manages all around the world for Bloomberg Intelligence. Mandeep, let's start with Airbnb. I've seen a stock trading up here. They some pretty good numbers. I was kind of surprised. Their double digit revenue growth in 2026. What's the story there?
- [02:49]
Mandeep Singh
Yeah, I think anytime you have a big event coming up, which in this case it's the FIFA World cup in the summer, that's always good news for Airbnb. And that's what you're seeing, I think. I mean, expectations were low, but clearly they are seeing some lift from big event as well as the reserve now, pay later, which is another way to stimulate demand. But overall supply growth seems to be improving and they want to expand into hotels and other areas. It may compress their take rates a little bit, but there is no doubt that they want to expand the footprint of, you know, what they have to offer on the platform.
- [03:31]
Co-Host
They've also, thanks to a lot of marketing, made clear that they want to expand into services as well. For guests sourcing at Airbnb venues wherever they go, how much is, is that a meaningful contributor to revenue?
- [03:44]
Mandeep Singh
No, not yet. I think all of that hotel services experiences is still less than 5% and dilutive to margins. But look, the UI for these companies may change because of AI. So one of the things that they got asked on the call is how are they preparing for that UI change? And I think the moat over the years for all of the marketplaces has been get bigger in size and have more frequency with the users. And that's why experiences and hotels is just their way of engaging more with their daily active users.
- [04:24]
Host
Mindy, what's the, how's the market share kind of shaking out here in the, in the world of hospitality in terms of the, the Airbnb's of the world versus the traditional hotel motel here? What's the market share, what's the split and are we still seeing movement there?
- [04:41]
Mandeep Singh
Yeah, I mean, all of these big three OTAs, booking Expedia and Airbnb, they do the major of the book room nights. When you think about the global scale, these are the three scale players. The difference is in the profitability. Airbnb is a lot more profitable than, let's say Expedia, which is why you see that kind of stock reaction today. And I think what Airbnb has done well is really added more fragmented supply. So the more fragmented the supply, the harder it is to disrupt. Even if you get a new UI tomorrow because of, you know, all the innovation, how do you add the supply, you know, the host that Airbnb has added over the years, it's very Hard to kind of disrupt that mode because that supply part is the hardest part when it comes to marketplaces.
- [05:31]
Co-Host
I'm kind of surprised that Airbnb is now offering rooms at boutique hotels in New York, LA and San Francisco. Like, that feels like it's going into the market that it intended to disrupt and the hotel companies are teaming up with it. How did that come about and does this become a bigger part of its business?
- [05:49]
Mandeep Singh
I wouldn't say will become a bigger part, but those smaller independent boutique hotels, we're looking for additional distribution. And Airbnb as a platform obviously has a lot of direct traffic. So I think it made sense for Airbnb to boost their supply because they are sort of plateauing out when it comes to the vacation rentals, especially in developed markets. And so from that perspective, supply growth is very essential for a marketplace. And adding independent boutique hotels does add to, you know, that supply. And overall, if it helps them boost frequency and engagement on the platform, I think that's what they're looking for here.
- [06:27]
Host
All right, well, we got you, Mandy. Pinterest stocks down 21%. What is going on there?
- [06:34]
Mandeep Singh
I mean, that's when better, you know, when they guided to 30% top line growth in the first quarter, it had to be at the expense of, you know, the smaller companies. And we saw Reddit do well, but clearly snap interest. These guys are exposed to the same advertisers as Meta is. And last night Pinterest called out, you know, tariffs being one of the reasons for advertisers pulling back on their platform. But retailers, you know, clearly are spending a lot more on Metta. Even though Meta is the scale player, these companies are not getting the advertising dollars at the scale that Meta is getting. And that's why you're seeing that slowdown in growth.
- [07:16]
Co-Host
Does I save the day? Pinterest says it's launched Pinterest Assistant, its first. And of course, this is marketing jargon, first AI powered, visual, first collaborator for online shopping.
- [07:27]
Mandeep Singh
I mean, the problem is, you know, no matter what you do, you are competing with a scale player like Metta, which is allocating $135 billion in capex this year, building their infrastructure, using that for AI. And that's where I think competition is very tough for all the smaller players on that.
- [07:48]
Host
Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend small cap stocks with improving operating margins or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by.
- [08:47]
Public.com Ad Reader
Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com disclosures small businesses are.
- [09:06]
Co-Host
The pulse of every community. They bring people together, create opportunities and drive growth. With a widespread presence in communities across the country, Chase for Business supports small business owners at a local level that makes it possible for you to connect, learn from each other and grow together. There's a real commitment to seeing small businesses succeed. The Chase for Business team has knowledge and expertise that span a wide range of financial areas. They can help you make more informed decisions as you navigate the complexities of running your business. They'll help your business grow with individual guidance and convenient digital tools all in one place. With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more@chase.com business chase for business Make More of what's Yours the Chase Mobile app is available for select mobile devices. Message and data rates. May apply JPMorgan Chase Bank NA Member FDIC Copyright 2026 JPMorgan Chase Co. Finding.
- [10:07]
Sponsor Voice (4imprint)
The right promotional products can feel overwhelming. But with 4imprint it can be easy. They call it 4imprint certainty which means the process is stress free, straightforward and backed by real peace of mind. Not sure what promo products to order? No problem. You can get free samples, product guidance, even free help with your logo so everything can meet your expectations. Need options? They've got thousands including branded apparel, drinkware, outdoor and all the trade show essentials. And when your order arrives, it's backed by their 360 degree guarantee. That's 4imprint's promise. Your order will be packed with care, show up looking great and right on time in a rush. 4imprint has quick turnaround options too, to help you hit your deadline. Whether you're prepping for an event or just refreshing your promo lineup, 4imprint helps you get it done. Head to 4imprint.com to explore. That's fourimprint.com for Imprint. For certain.
- [11:05]
Podcast Announcer
You'Re listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg business app Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [11:19]
Co-Host
All right, let's shift gears and talk a little bit about what's been happening in Techland. Software companies have had a rough, rough week, rough couple of weeks. To be honest. It hasn't been limited to this week. On Rana is our Bloomberg Intelligence technology analyst and Anurag, talk to us a little bit here about how management is dealing with the AI scare that's just, you know, taking every part of the economy by storm. It's kind of rolling through different sectors and everyone seems to need to be able to answer for how they're going to survive the onslaught of AI.
- [11:55]
Anurag
And this kind of scale is very different than anything we have seen in the past because, you know, in the previous downturns or whenever we saw a big sell off, the question was the near term demand is an issue or save some balance sheet issue with someone. In this particular case, the case is that there is no need for software a few years from now. Not today or tomorrow, but a few years from now. So what that does is when you're doing discounted cash flow analysis, the terminal value of that particular company or a stock, you know, they're saying is going to be close to zero. And that's an argument it's so difficult to deal with because that event hasn't happened. It's all you could say a thesis of a particular group of investors that says that there is no need for a lot of these companies that depend on the intellectual capital of software developers, people who are using it, and we could all do this in house. And I think that's the big fear everybody's grappling with. And every time you see somebody say, well this, this particular software can go out and do something in the legal world, all the stocks that are part of the data network or the software that sells it would, you know, sell off. So it's really a big dilemma for even management teams as to what to even do right now.
- [13:08]
Host
Yeah, I guess what would be frustrating for investors in some of these software names is like AI. We don't even know what AI is going to be and what the use cases are going to be. So I think what's happening is people are just spitting out the worst case scenarios. That's what I'm seeing in some of these stocks that are off 30, 40% and these are real companies with real earnings. Is this something that plays out over time or how do you think this trades?
- [13:35]
Anurag
Yeah, the fear of the terminal value going to 0, you cannot undo it in the next few months. It's going to take several honestly years to play out. What you have to figure out is do you have a framework under which you are thinking about what kind of companies are better protected than the others? For example, one could ask argue that cybersecurity companies have a better presence there. Second place that we are arguing is companies that sell into really large enterprises that have domain expertise. Companies that are critical to you running your daily operation, your P and L, your human resources. Those are the ones that are a far more sticky product than the point product. Companies that are selling into the smaller or the medium size enterprise. But you know, who knows, maybe that theory goes out of the water as well. So I think you have to have some framework under which you are, you know, gauging these companies not so much anymore by the financials, but by the business model and where the impact could be domain expertise.
- [14:38]
Co-Host
That's a term that I've heard pop up over and over again. Honor. What does that mean in the context of software companies?
- [14:45]
Anurag
So think about it this way. We, you know, when, when, when there is an issue that we have internally while we are working, we put in a ticket to figure, get our H system fixed or our computer fixed. That falls into a realm of a thing called IT Services Management. There's a company called ServiceNow that has 40% market share in that area. You look at somebody like an SAP, they pretty much control the finance and accounting software that's out there. You look at a company like workday they come, they control the HR software market or the HR systems people use. That's the kind of domain expertise I'm talking about because that's something only these guys do. And they do it very well for larger companies. And there are, you know, smaller companies that target the lower end of the market. But these are the ones that deal with it. I'll tell you another one, Shopify for example. Shopify is something that does digital commerce better than any company out there and they probably have one third of the overall market Right now and they're growing at 25, 30%. But guess when they reported, didn't matter, stocks still went down after that.
- [15:46]
Host
This, if you're, you know, an investor with high level of conviction, this is a once in a career type opportunity potentially. Do you talk to some, I'm not going to call it smart money, but are you talking to people that have some experience that are saying this is it, I'm backing it up. I'm loading up on some of these names where I feel I have a high level of conviction in their cash flows. Are you hearing any of that yet?
- [16:11]
Anurag
Yeah, I haven't had that many incoming inquiries to talk about software stock in many years because they were very expensive at that time. I think if you go out and read the article, the Amazon aws, you know, the head, they, he comes out and says, you know, this is just overblown at this point. So you have like somebody like Amazon Web Services CEO talking about it in the market. So, you know, there is. And then, you know, on the other side there is an argument that, you know, all these jobs would be automated in the next two years or so. So is these two fears. And we all know when you have a fear in the market, people shoot first and they think later. And that's kind of the dilemma or that's kind of the market where we are.
- [16:49]
Mandeep Singh
Right.
- [16:50]
Co-Host
Has that fear dissipated a little bit as we gotten towards the end of the week or is it still just as intense as it was a few weeks ago on Rock?
- [16:57]
Anurag
I think it gets worse every week. I mean, I started looking at this the, you know, the second half of last year and every time I would talk about it and know this is, you know, that is just too overblown and this doesn't make sense. You know, next week you come in, everything is down 5 to 7% again. I mean, as in total, there are certain companies, as I said, you know, look at Shopify, they blew out their quarter, grew 30%. Next quarter, consensus was 25%. They said next quarter they can do 30% and they have a massive agentic, you could say strategy that nobody else has. Stock was down both times. I mean it didn't matter. So it's very difficult to put rational thoughts at that point.
- [17:38]
Host
Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from public. Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades and others feel less like investing and more like a game. Public is positioned differently it's an investing platform for people who are serious about building their wealth on public you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts?
- [18:09]
Sponsor Voice (iShares)
Yep.
- [18:09]
Host
High Yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by.
- [18:27]
Public.com Ad Reader
Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash all investing involves risk of loss. See complete disclosures@public.com being a small business.
- [18:43]
Co-Host
Owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools. Looking for tips and advice, their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business. Learn more@chase.com business chase for business make more of what's yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JPMorgan Chase Bank Naomi Member FDIC Copyright 2026.
- [19:39]
Sponsor Voice (4imprint)
JPMorgan Chase Co. Finding the right promotional products can feel overwhelming, but with 4imprint it can be easy. They call it 4imprint certainty, which means the process is stress free, straightforward and backed by real peace of mind. Not sure what promo products to order? No problem. You can get free samples, product guidance, even free help with your logo so everything can meet your expectations. Need options? They've got thousands, including branded apparel, drinkware, outdoor and all the tradeshow essentials. And when your order arrives, it's backed by their 360 degree guarantee. That's 4imprint's promise. Your order will be packed with care, show up looking great and right on time in a rush. 4imprint has quick turnaround options too to help you hit your deadline. Whether you're prepping for an event or just refreshing your promo lineup, 4imprint helps you get it done. Head to forimprint.com to explore. That's 4imprint.com 4imprint for certain.
- [20:39]
Podcast Announcer
You'Re listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg business app, Listen on demand, wherever you get your podcasts or watch us live on YouTube.
- [20:53]
Host
We went to, we want to go to Ireland. And we asked this kid who is a tech geek, hey, we're thinking about going to Ireland. He asked us a couple questions. Fifteen minutes later, he comes back with a full itinerary that he got off of ChatGPT. I said, oh, boy. What does this mean for the travel agents, the OTAs? Not good. Nicole D' Souza joins us. She's an Internet and software equity analyst for Bloomberg Intelligence. I'm thinking about the Expedis of the world, Nick. Nicole, all those types of things. What's going on with that business? Is that going to be one of those business that's really disrupted with AI?
- [21:28]
Nicole D'Souza
Yes. So I think you bring up a great point. Now, travelers, instead of going to booking Expedia, TripAdvisor, they're just working with ChatGPT, so they don't even really have to see the back end. So they are looking at, you know, not just now planning on an AI product, but they're also potentially going to be booking through an AI product. So they will ask ChatGPT, you know, this is where I want to go. This is what I want to say, see what I want to do. It'll give them an itinerary and then it'll work with the supply partners directly to book everything.
- [21:55]
Sponsor Voice (iShares)
Wow.
- [21:55]
Host
Because, I mean, the. Again, this kid came back with an agenda. Kid. He's 28 years old, came back with an agenda that was, this is where you're staying, this is where you're going to eat cars booked, we're going to get a car, do here's your flights, recommended flights, blah, blah, blah.
- [22:10]
Anurag
Yep.
- [22:10]
Host
And then the next step would be booking it.
- [22:13]
Nicole D'Souza
Yes.
- [22:13]
Host
Wow.
- [22:14]
Nicole D'Souza
Yes.
- [22:14]
Host
All right, so if the Expedias of the world, what am I doing here?
- [22:19]
Nicole D'Souza
So they are rolling out their own AI products. It's a little too early to tell if they'll really be able to compete with something like ChatGPT. Expedia has, like, a really interesting product where you can take social media, like a reel from Instagram, put it into Expedia's AI product, and it'll create an itinerary based off of what you're seeing on Instagram. So it's kind of like you go from just having inspiration for a potential trip and then it gives you the exact flights, hotels, everything.
- [22:47]
Host
Expedia just reported some results. How were they?
- [22:50]
Nicole D'Souza
They were actually pretty solid. So the real overhang on Expedia for the last year has been the US travel market, which has been pretty stagnant. That has been recovering. Expedia is primarily exposed to the US market. They don't have as big of a global presence as booking.com and Expedia results were pretty solid, strong execution pointing to a recovering US travel market. So we were pretty pleased just with their execution over the last quarter.
- [23:18]
Host
When I look at Expedia TripAdvisor bookings, are they kind of the same? Totally the same, or are they differentiated?
- [23:25]
Nicole D'Souza
So Tripp I would say is differentiated. They've actually changed their platform a lot in the last few quarters. They are now focusing on becoming an experiences booking platform. So if you are looking to book, you know, a cooking class or a wine tasting or a walking tour, you can book that directly on trip platform. So a little bit different than kind of what booking Expedia do with hotels and flights.
- [23:48]
Host
What's that, how's that industry? What's the percentage now that people book through these OTAs versus going to marriott.com or something like that?
- [23:58]
Nicole D'Souza
So we have definitely seen an increase in direct bookings. It's actually hotel partners now are incentivized to maybe work directly with AI partners instead of booking and Expedia because if they go direct, if they have a direct booking, they don't have to pay that 15 to 20% commission to OTAs.
- [24:15]
Host
So there's another. So it's. So the technology, AI chat, GPT, whatever you're using, that actually works in I guess in favor of the actual hotel.
- [24:27]
Nicole D'Souza
Exactly.
- [24:27]
Host
The airline and all that type of stuff.
- [24:29]
Nicole D'Souza
Yes. So they now don't need the visibility per se on booking.
- [24:33]
Host
Yeah, that sounds scary to me. So as I look at the year to date, stock price performance, Expedia down 25%, Trip down 32%. Booking down 22%.
- [24:43]
Nicole D'Souza
Yes.
- [24:44]
Host
The market's definitely telling you that they're concerned.
- [24:46]
Nicole D'Souza
Right.
- [24:47]
Host
Is there a less bear case than that? Because I mean right now we're in an environment where people are throwing everything out the window. Software related.
- [24:55]
Co-Host
Yes.
- [24:56]
Host
Because you don't know where AI is going to go.
- [24:57]
Nicole D'Souza
Right.
- [24:58]
Host
Here's an example, here's an. Where you can see it.
- [25:01]
Nicole D'Souza
Yes. And I think, I mean we are definitely very early in these AI products. So even the bookings product, we've seen examples from Google and from ChatGPT, but not necessarily in a place yet where they're going to have a real impact on revenue at least in maybe the next six to 12 months. And I do think we are seeing, you know, an uptick in the overall travel market. So US Travel has been improving. We have things like the Winter Olympics, the World cup later this year, which are going to kind of boost travel. So I think there is kind of a case for at least short term growth. But there is, you know, the overhang still.
- [25:33]
Host
So is Airbnb. Are they seeing like World cup stuff? Like I can rent out my New Jersey home for World cup for the Finals?
- [25:41]
Nicole D'Souza
Yeah, I think, I mean, I do think the World cup, especially for US Travel, will have a pretty significant impact. I think we're going to look at, you know, Expedia is probably the most exposed to the US Travel market. So if we keep seeing solid execution from them, we could have a next a strong couple of quarters.
- [25:59]
Host
Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from Public Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts Yellow?
- [26:29]
Nicole D'Souza
Yep.
- [26:30]
Host
High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by.
- [26:48]
Public.com Ad Reader
Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services By Public Advisors SEC Registered Advisor Crypto Services By ZeroHash all investing involves risk of loss. See complete disclosures at public.com/disclosures.
- [27:03]
Co-Host
Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. That's why they make business growth their priority. The Chase team takes the time to understand your mission, where you are now and where you want to go. Their broad range of solutions is designed with you in mind so you can bring your ideas to life. From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with their digital tools looking for tips and advice. Their online resources are always available to give you the solutions you need to help your business thrive. See how your business can get stronger and go farther with Chase for Business learn more@chase.com business chase for business make more of what's yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply. JP Morgan Chase Bank Naomi Member FDIC Copyright 2026 JPMorgan Chase Co. Finding the.
- [28:02]
Sponsor Voice (4imprint)
Right promotional products can feel overwhelming. But with 4imprint it can be easy. They call it 4imprint certainty, which means the process is stress free, straightforward and backed by real peace of mind. Not sure what promo products to order? No problem. You can get free samples, product guidance, even free help with your logo so everything can meet your expectations. Need options? They've got thousands, including branded apparel, drinkware, outdoor and all the tradeshow essentials. And when your order arrives, it's backed by their 360 degree guarantee. That's 4imprint's promise. Your order will be packed with care, show up looking great and right on time in a rush. 4imprint has quick turnaround options too to help you hit your deadline. Whether you're prepping for an event or just refreshing your promo lineup, 4imprint helps you get it done. Head to forimprint.com to explore. That's 4imprint.com 4imprint for certain.
- [29:00]
Podcast Announcer
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.
- [29:14]
Co-Host
All right, one of my favorite groups on Facebook is the Amex Platinum Card Benefits and Offers group. It's a private group, it's got about 71,000 members, but everyone exchanges tips on how to get the most out of their AMEX platform.
- [29:28]
Sponsor Voice (iShares)
Really?
- [29:28]
Co-Host
Yes.
- [29:29]
Host
So you're one of those people that's really into it.
- [29:31]
Co-Host
I started to become really into it because I didn't like the refresh on the Chase Sapphire card. So I wanted to find out the other options.
- [29:36]
Host
What's the refresh mean?
- [29:37]
Co-Host
They raise the rate, the annual fee and then they change the benefits. And so then you have to do a deep dive.
- [29:43]
Host
See, I know like my daughter and her friends, they are all into maximizing the points.
- [29:48]
Co-Host
Oh, so she knows.
- [29:49]
Host
She travels all over the world and like she's like Charlie Pellet doesn't pay for anything.
- [29:52]
Co-Host
Oh, Charlie Pellet is like the master guy when it comes to these reward points. Okay, let's bring in Edward Najarian. He is a Bloomberg Industry Bloomberg Intelligence industry analyst who covers consumer finance and his team has just written a report on the Platinum card and the fee economics there and word tell us a Little bit more about what you learned because 26 was the start of Amex rolling out its increased fee for the Platinum card. And we're starting to get some understanding of what it might look like.
- [30:24]
Edward Najarian
Right. So I mean when they reported the quarter, great quarter, everything, everything kind of in line with expectations or in some areas better and gave great guidance in terms of mid teens EPS growth for 2026 and you know, lot a lot of conversation about the refresh and how great the refresh is going and acquiring, you know, lots of new customers. But generally there were two things that sort of analysts picked on in the quarter when you're, when you're trading that sort of a high multiple for financial. And those two things were number one, that new card, the new card acquisition rate kind of went down a little bit relative to last year and relative to the third quarter and additionally all the money that they're spending on rewards and services and all of what they call variable customer engagement expenses went up a lot, a little too much in some people's opinions. So what we kind of learned recently was sort of some supporting data around two things. And the big thing was while the number of new cards acquired went down a little bit, the fee per new card went up from 196 in the third quarter to 282. What now? So huge jump now. Why is that? That's because a lot of the much bigger percentage of those new cards came from new Platinum customers, which is much better than just a regular customer. So even though a little less customers acquired, you're getting many more new platinum customers, much better economics. So that's sort of one thing. And then talked a lot about how they're absorbing all of those extra reward costs, if you will. But still that's, and that's fine because it's enhancing revenue growth and sort of the revenue growth benefit of that offsets the reward cost more than offsets that reward cost.
- [32:20]
Co-Host
Okay, Edward, one thing that I've noticed from these Facebook groups is that people get a Platinum card that's you know, for the sign up bonus and everything else. But then they start branching out and they get the Gold card because there's more reward points for groceries there. They start to compile a lot of Amex cards. So a lot of the users have multiple cards, don't they?
- [32:40]
Edward Najarian
Yeah, no, no question about that. And obviously you've got, you know, a lot of sort of families on the Platinum card. So there's sort of a primary Platinum card owner and then issuer of multiple cards. Related to that. So you sort of have this, this sort of network effect aspect of the Platinum card that just keeps building and to some extent, you know, if you can, you know, when you come back to the JP Morgan Sapphire card, if you can, you know, build that reward and service infrastructure even bigger and better, you know, you create the, you know, sort of the mode effect which is what they're trying to do and seems to be working.
- [33:18]
Host
Hey Ed, I have the green card I got the day I graduated college. I kept it all. But Scarlett and other folks I understand they go crazy for these really expensive cards and all the points and managing.
- [33:32]
Edward Najarian
You need to go platinum.
- [33:33]
Host
Paul no, I just can't, I can't do it. But how, how big of a business is that for these card companies? Is that really the value driver, the scarlet Foos of the world?
- [33:44]
Edward Najarian
That's it.
- [33:44]
Sponsor Voice (4imprint)
Yeah.
- [33:45]
Edward Najarian
They, they care much more about Scarlett than they care about you, I have to say. Yes.
- [33:49]
Co-Host
That's why you need to upgrade.
- [33:50]
Edward Najarian
She's going, she's, she's about to pay $895 a year, up from $695 a year. They're going to give her a heck of a lot of rewards and services for that, but a big sign up bonus on average. Now I hope this is not completely true, but on average she, one of the Platinum Card members, spends about 10 times as much on her card as you do.
- [34:14]
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- [35:48]
Sponsor Voice (4imprint)
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