Ann Barry (6:43)

Plus guided learning paths with content designed to fit your unique interests. No sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn more@schwab.com trading well, John, one of

John Curto (6:56)

our favorite things on the show is getting feedback from the audience on what they want us to talk about. And we did get an email. We got a note from one of our listeners, Bella.

Ann Barry (7:03)

That's right, Bella in Colorado wrote. Hi Ann. I have been interested in evtol companies for a year now. I've been invested in them and was very excited when you had Archer CEO Adam Goldstein on the show. I'm curious about your thoughts on Joby Aviation, given that their share price is up 50% in the last year, while Archer's has fallen 15%.

John Curto (7:24)

Well, this note came in sort of a couple of days ago and we were really excited to get it because we knew that Joby's earnings were about to come up. So there would be some more information to share on the back of that report. And I got to say, I really enjoyed my conversation with Adam, the CEO of Archer, hoping to have him back at some point because we caught him right as some exciting announcements were coming out from that business too. Well, let's dig into Joby for the moment. Company reported earnings yesterday. Recently announced an expanded partnership with Uber, which we'll get back into in a moment. But John, give us a little background on Joby itself.

Ann Barry (7:57)

Ticker Joby on the New York Stock Exchange.

John Curto (7:59)

Job. Why I love it.

Ann Barry (8:00)

Job Y. You ain't got no alibi. Market cap near $10 billion. It's a California based transportation company developing an all electric vertical takeoff and landing air taxi. That's the EVTOL acronym you mentioned before. It aims to be an air taxi service in cities worldwide. Shares were up 5% today. On the back of earnings, reported revenue of $31 million, which nearly doubled. Estimates and adjusted earnings per share were a loss of 14 cents, which beat the expectations of a loss of 20 cents.

John Curto (8:29)

So just that acronym, the EVTOL, it's the electric vertical takeoff and landing. I wish they would just reference a helicopter, right? Because I mean, they don't have blades, but I do wish they would just make it a bit more intuitive. Very exciting technology. So much so that it's become clear that Even with that $10 billion market cap, this is a big company. It's certainly not based on. On revenue or profit. Right. So you just talk there about the quarterly earnings, 31 million sales and earnings clearly not mattering that much in terms of what's fueling valuation. Instead, investors are focusing on what is the outlook in terms of timing and ultimate positioning and revenue generation when this business actually gets to having a commercial launch. And the milestone along the way to doing that is obtaining Federal Aviation Administration certification for flights in the United States. So these regulatory milestones and all this sort of piloting, pun intended, of the product are really critical to seeing what moves the stock here.

Ann Barry (9:27)

Yeah, that's really important. In November, Joby announced it's testing the first aircraft built for quote, Type Inspection Authority, or tia. And that TIA status comes up very frequently in Joby's earnings highlights. They're the first FAA conforming aircraft for TIA to set to fly shortly and that all the aircraft required for TIA are now in production.

John Curto (9:48)

And tia, again, that's type inspection authority that specifically refers to plan, are basically in the final design and testing. This means they're really close. They can sort of See, the end is coming and they're going to take to the skies and potentially have people in them. So that's a really important sort of milestone to get to. Well, there is competition in the evtol space and there's a race at the moment to hit the commercial market before burning through too much cash. Now, analysts seem to be pretty positive at the moment. John on Joby's cash Runway, and that's his jargon for how much cash do you have on the balance sheet today? How much are you burning and by default, how long does it mean? That cash war chest you got, how long is it going to last for you? Well, Joby reported $1.4 billion in cash and short term investments as of the end of the fourth quarter. So that's December 31st. Plus the company did receive another net $1.2 billion earlier this month. So feeling pretty good about what that means. Now, the use of that money and what Joby says it plans to spend it on is partly to acquire a manufacturing facility in the Dayton Ohi. It's big. It's going to be more than 700,000 square feet. And the reason for doing that is that Joby wants to double production to four aircraft per month next year in 2027. So it's been doubling down on the real estate to be able to do that.

Ann Barry (11:10)

And this is all impressive. And, and let's talk about the reality of what this is. A double to four aircraft, that scaling seems very similar.

John Curto (11:18)

Double sort of obfuscates that it is only going from 2 to 4. From 2 to 4.

Ann Barry (11:22)

That seems, that seems like a real challenge. Of course that's a challenge for the industry, but here is the headline. While Joby is still awaiting FAA approval, it expects to carry its first commercial passengers in Dubai this year. So waiting on American approval. But then in other foreign air spaces, Joby is partnering with Uber for that launch. So let's talk through the process. As described in the press release, riders will simply open the Uber app and enter their destination in the where to bar. If their trip qualifies, Uber Air, powered by Joby, will appear as an option. With a single tap, the app seamlessly connects and books every leg of the journey, sending you an Uber black pickup and drop off.

John Curto (11:58)

This is luxury travel. This is a luxury experience, is an integrated luxury experience.

Ann Barry (12:03)

And then your flight experience. The all electric air taxi can transport up to four passengers flown by a commercial certified pilot. A certified commercial pilot. And the craft can move at speeds of up to 200 miles per hour in a range of up to 100 miles on a single charge. So my first thought hearing that again is about scaling up. There has to be be a certified commercial pilot each one of these aircraft.

John Curto (12:26)

Right.

Ann Barry (12:27)

That's different than an Uber driver. That simply has their driver's lift.

John Curto (12:30)

Well, at least for now. And let's talk about where these evto players often say they're going. They're clearly investing in autonomous. Right. There is a world in which there's a lot of discussion about pilotless flying in part for these are basically big drones. Right. And so whether for things like delivering packages, you know, or sort of non human cargo, then there's probably a shift to try and do that relatively quickly. But you're right, there need to be pilots very specifically trained with this kind of technology. And we're going to be able to see pretty soon, I think, where they're recruiting from, where they're training and get some more insight into that. And then just as a reminder, last year Joby acquired Blade. Remember you and I talked about it on the show, actually. And Blade is the traditional helicopter business in terms of the technology, but it has a very bougie business model. We see it, for example, shuttling folks from Manhattan to the Hamptons in New York. They also do quick hops over to the major airports. So it's a way to try and beat rush hour traffic. And as of this year, so those helicopter Blade rides are being integrated into the Uber app, which struck me as interesting because there'll be learning coming from that. Right. To make sure that that integrated experience of the car picking you up, taking you to the terminal and then you getting on your Blade actually works. They're getting their rips in.

Ann Barry (13:45)

Bella also mentioned Archer. Yeah, and so Archer is aiming for air taxi operation in Dubai this year, similarly, and has been named the official electric air taxi partner for the L A 2028 Olympics. So that's a few years off. But according to public documents, the company isn't yet in that TIA stage for FAA approval. And investors may be happy with Joby's approval rate, the cash it has on hand and that partnership with Uber.

John Curto (14:09)

The overall punchline being it perhaps it looks as though Joby at this point pulling away, getting ahead, perhaps getting there a little bit faster than Archer is. Which would explain the sort of deviation in the share price performance a little bit too. Also, just to address that point again on relev, relative share price performances. But one thing I would say is Arch's stock did see a 20% drop from its January highs And part of that is because there's been a number of research reports actually coming out and making this exact point, right. That there are sort of signs that perhaps Archer isn't getting the same speed with respect to moving through these regulatory milestones. And as a result there was a lot of short selling reports. So short sellers, many of you will know this, but this is where basically folks come out and say they're betting on the stock price falling. And so a lot of short sellers were actually coming out and saying that they believed in this thesis and justifying why they were betting against the Archer stock price. Just a final thought on this one because I do think it's fascinating. It's so interesting to see how both companies, Joby and Archer, are looking to debut in Dubai and the United Arab Emirates. I've been to Dubai, I've been to Abu Dhabi. They really are leaning into the Evtol space. And so again, the air taxi operation there is supposed to be up and running before the L A Olympics. So we're going to have sort of a two year window to really take a look and see how does the technology work, what is the adoption like, are people afraid or unafraid to get into these vehicles? And I think it's just exciting. I think there's a lot. This is really interesting space to watch. That being said, the valuations seem a bit bonkers to me.

Ann Barry (15:49)

Yes, I'm looking forward to seeing it too. And Archer valued at a $5 billion market cap. About half of the much.

John Curto (15:54)

Yeah, exactly. And also with the similar characteristics of. It certainly is not with respect to current revenue. And again, that cash burn rate being something that's top of mind and looking at the two on a relative basis. Well, let's take a break and when we come back we'll take a spin through the headlines moving the markets today. Vaneck believes gold is evolving beyond a short term hedge into a more durable part of a portfolio. With strong central bank demand and ongoing global uncertainty, the case for gold remains compelling.

Ann Barry (16:21)

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John Curto (16:29)

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Ann Barry (16:45)

Learn more@vaneck.com brewgds that's vaneck.com brewgdx full fun disclosures in Podcast Description so good, so good. So good.

John Curto (16:57)

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Ann Barry (17:35)

that's right, The S&P 500 finished down half a percent today. The Nasdaq was down 1.2% and the Dow finished flat. Some market headlines Shares in eBay were up 6% today after the company announced plans to lay off 6% of its workforce. Just last week, eBay said it would acquire Etsy's secondhand clothing marketplace Depop, for nearly $1.2 billion in cash.

John Curto (17:57)

Well, the deal should give ebay a greater leg up with consumers under the age of 34 who perhaps haven't grown up with ebay in the same way as some of the older shoppers for whom ebay really was sort of transformational. That under 34 year old demographic makes up about 90% of Depop's user base, while eBay CEO said Depop would also allow ebay to grow its presence in fashion, which has emerged as one of the company's fastest growing categories. In other news, shares and Celsius holdings ticker CELH were up over 7% today after the energy drink maker beat expectations for revenue and earnings in the fourth quarter.

Ann Barry (18:33)

Celsius is positioning itself less as an energy jolt and more like a daily coffee, highlighting that 52% of its repeat customers make five or more purchases at a time. Celsius CEO John Field Lee saying, quote, it isn't just about recruiting new consumers, it's about becoming part of that daily lifestyle and daily routine. And shares in Krispy Kreme ticker D nut shot up 28% today after the company reported improved margins in the fourth quarter as the chain's turnaround gained momentum.

John Curto (19:00)

So its revenue actually fell 3%, which reflected last year's decision to pull out of lower traffic and less profitable distribution points. And instead we've seen Krispy Kreme prioritize sales in locations that are actually with retail partners like Walmart, Target and Costco, where you've got sort of a sitting customer and a customer base to go buy instead.

Ann Barry (19:19)

And I bought this stock during the pandemic when I saw lines around the block at my Krispy Kreme drive thru. And despite today's jump, I'm still down 72% and not bullish on donut consumption.

John Curto (19:29)

Well, I'm a Dunkin Girl as we know and I actually love donuts so I am bullish on my own personal donut consumption. So it's so good they should be their own food grade.

Ann Barry (19:38)

Well, a different bit of digesting going on with the market. Spending the day trying to decide what to make of Nvidia, the world's most valuable company with a market cap of a whopping $4.5 trillion.

John Curto (19:48)

Well, by any reasonable measure, Nvidia's earnings last night were absolutely stellar. It had record full year revenue for 25 of $216 billion, up 65%. And then when you hone in on the fourth quarter, $68 billion of revenue and also guidance for this quarter of 78 billion. So look at that, a 10 billion do jump just three months later is what we're looking at here. So estimates being blown past for this quarter in terms of guidance by $5 billion. Nevertheless, shares were down over 5% today. This seems to be the story of Nvidia's share price at the moment. There was a sense in the market it was just too good to be sustainable given fears that AI capex announcements by Big Tech are facing increased investor scrutiny.

Ann Barry (20:34)

Deepwater Asset Management managing partner Gene Munster wrote in a blog post that the disconnect between Nvidia's recent announcements and its stock performance comes down to whether investors believe the AI trade is nearing an end or just getting started.

John Curto (20:46)

Well, there was one nugget from the annual report which was flagged by Barron's. And then of course I nerded out. I went over to find Nvidia's actual 10K filing with the SEC to check this out myself too. And for the full year Nvidia invested a whopping $17.5 billion into quote, private companies and infrastructure funds, primarily to support early stage startups. Just think about that 17 and a half billion dollars effectively going into the startup world, showing just how much the innovation ecosystem really matters, particularly in the eyes of Nvidia, to make sure that future growth flywheels are set in motion. Well tomorrow on the show we have my Conversation with the renowned venture capitalist Bill Gurley. And John, you were here when Bill arrived. You did this in person. And it was very funny because after we've recorded, I remember walking out and you made a comment about our relative sizes.

Ann Barry (21:41)

Yes, absolutely. He is a tall man. And our audio engineer was in here adjusting the microphone higher than it's ever been. And then you, who are not as tall.

John Curto (21:51)

I'm really tiny. I'm quite small. Yeah. And he's six nine. Bill's six' nine.

Ann Barry (21:54)

Is that right?

John Curto (21:54)

Yeah.

Ann Barry (21:55)

Okay. So there was about a foot difference.

John Curto (21:57)

Yeah, just. Yeah, and then some. Yes, that's right.

Ann Barry (22:00)

Great conversation. But the visual was striking.

John Curto (22:03)

Yeah, the visual was striking. And I was sharing with John. This reminds me. So back in the day when I was working at an investment bank, I had a boss. Boss. It's quite early in my career. And he too was very, very tall. And as I said, I'm sort of tiny. And every holiday there was a holiday roast. And it meant that your people who worked for you could roast the person who worked directly, sort of, that they reported to. Right. A manager. And I remember the young person who worked for me at that point for the holiday roast decided to make a mock up of the movie poster for the Blind side. Do you remember this? And I was a little Sandra Book bullet person standing next to my then boss who was, you know, obviously the. The football player in that. And I was just reminded of that. Can we please do that? And we'll send it to Bill Gurley.

Ann Barry (22:43)

Yes, absolutely. And can we incorporate some sort of roasting into our offices here?

John Curto (22:48)

Absolutely not. Category. The roasting days are behind us. That's it for today's Brew Markets Daily.

Ann Barry (22:53)

Brew Markets Daily is hosted by Anne Barry and produced by John Curto, Targab de Latif and Emily Millarn. Our technical directors, Uchenwu Ogu. Jim Morzo is our audio engineer. The president of Morning Brew Inc. Is Devin Emmerich. If you have any feedback or company you'd like us to COVID leave a comment or send an email to brewmarketshoworningbrew.com

John Curto (23:10)

and wake up tomorrow with the Morning Brew newsletter and tune in to Neil and me on Morning Brew Daily because I'm pulling double duty again tomorrow, first thing in the morning and also at the end of the day. So I'll see you back here tomorrow for Brew Market Same time, same place.

Ann Barry (23:33)

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