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B (6:38)

Story of M and a drama to one that is seemingly non contentious. And there was a merger announced today between two major education technology or edtech companies. That's Coursera and Udemy bringing together two rival online education platforms. Now the deal is expected to close by the middle of next year and values the combined company at nearly two and a half billion dollars. So John, give us study notes for this one.

C (7:04)

That's right. Coursera shareholders will own about 59% of the combined. And Udemy shareholders will get the remaining 41%. The new entity will operate under the Coursera name and trade under the ticker Core C O U R on the New York Stock Exchange. And Coursera CEO Greg Hart and Chairman Andrew Ng will stay in their positions to lead the Combined company.

B (7:24)

So pretty clear who's calling the shots on this one. You've got Coursera keeping its name, keeping its ticker, and keeping its leadership team at the very top here. So we've got two edtech companies. They've got quite different models. John, let's start with Coursera, which partners with universities and companies to provide full courses that satisfy certification and professional credential requirements. Then you've got Udemy, which historically has had a very different position, which is a platform where anybody can publish a course. It's got a bit of a user generated content flavor to it at Udemy versus again at Coursera, which is working with other people's credibility to provide content that folks can kind of hang their hat on. Well, in September, on our sister podcast, After Earnings, I really enjoyed a conversation with Udemy CEO Hugh Sarazin and he highlighted that Udemy has 85,000 instructors worldwide. That's pretty dynamic. And I was, I was really struck by one example that he provided.

C (8:22)

That's right. And he highlighted how dynamic it is. And he said that when Deep Seq AI was unveiled, within weeks there were hundreds of Deep SEQ courses uploaded to Udemy.

B (8:32)

And but the issue that is right is just how curated is it? When you've got hundreds of courses popping out of nowhere, it sort of begs the question, what's the quality of them? If you're a user, which ones do you know how to trust? What's the curation that's really happening? So one of the benefits of Udemy has been at scale. One of the issues with Udemy for the user has been at scale.

C (8:50)

That's right. And it seems that the new company is seeking to combine the strengths of both approaches. With Coursera CEO Hart saying, as AI rapidly redefines the skills required for every job across every industry, organizations and individuals need a platform that can evolve quickly. So that's that part as the new and emerging skills they must master.

B (9:08)

Well, that's sort of intriguing. So we're going to think about them basically putting together a content library, a content selection, bringing the scale of the Udemy approach with the curation that's come to the Coursera approach. So bringing together those two relative strengths at the front end, which is really driving getting new users onto the combined platform and then ultimately creating revenue opportunity from that. The other reason that this deal makes sense is that there is annual run rate cost synergies expected of about $115 million, which is actually a decent chunk within only two years of closing operational efficiencies and shared technology investments, which is a really key piece here because there is, there is a question around how much AI is going to be used efficiently when it comes to editing content, when it comes to idea generation, when it comes to looking at how to distribute more effectively. And really think about in the same sort of way that you and I, John, think about how do we get our show to reach an audience? How do these businesses get their content to reach audiences to.

C (10:07)

Right. And at this point, if you have a question, if you want to learn about something, it's easy to go on YouTube and get a tutorial there. And so I think these higher education online platforms have been suffering for a while now.

B (10:19)

There is one company that we haven't talked about in all of this. We've talked about it before on the show. But let's just touch on Chegg for a moment because that's the other Edtech company out there. The other one I think about is Duolingo. Those are the two I think about slightly different fates at the moment. Chegg struggling.

C (10:35)

Yeah. And that's the company. They focus more on homework help and test prep and textbook rentals. Their share price is down 43% this year. They're suffering. Their share price is down 99% over the last five years. And so it seems that these companies are looking to scale up or maybe go away.

B (10:52)

Chegg actually I think brought back its old CEO Dan Rosenzweig and really trying to figure out what to do there. I'm not optimistic, this is not investment advice, but I'm not optimistic that Chegg is actually going to be around for a whole lot longer unless they figure out how to do something really transformational. Speaking of needing to do something. And this is where I actually do raise my hat to Coursera and Udemy. Both of them stared truth in the face. It's not been easy for either of them. Udemy eked out super anemic 0.1% revenue growth year over year in its latest latest earnings, as you said, trying to compete with free user generated content and leaning towards this new model which is actually having in house content creation. Right, right. So the more produced flavor to it, it is a more expensive way to go and grab courses. It stocks down about 35% for the year. Coursera, let's go out. Coursera. John. I mean this IPO was In peak techy IPO season early 2021 has been disappointing. Analysts with its profitability outlook just not getting to the kinds of levels folks wanted. Stocks down 5% year to date. But you go back further in time, it's even worse.

C (12:00)

That's right down 80% since going public.

B (12:02)

We've seen a lot of those, these 20, 21 IPOs. It's really high valuations and these companies just haven't been able to grow into the valuations they went public with.

C (12:11)

So you see Udemy trying to become a little bit more like Coursera. Coursera trying to get a little more nimble. And now they're going to see what they can do together.

B (12:18)

Well, I salute them. I salute them for acknowledging there's a problem. I salute them for trying to find a solution, even if that means not being able to do it independently. And I salute them for trying out at least doubling down on scale for a shot at actually turning things around, stronger, perhaps together than they are going to be apart. We're going to have to watch this one. Shares in Udemy up 18% on the announcement. Really, you know, not to be shocked by that one too much. Udemy shareholders frankly delighted to see an exit path here. Shares in Coursera up nearly 1% during the day. The market's still trying to figure out just how this is going to work out. Post integration. Well, onto another one here, a different AI flavor and one that was flagged to us because we had a listener we heard from Kenny who wanted to learn more about Jabil, which is an engineering and manufacturing company that's been having a great year. We'll get into why in just a moment. Just want to flag this. We've been getting some fabulous suggestions from our listeners asking us to unpack certain companies that they've been curious about. Some are well known, others might be new to some or they may have known these companies. Jabil, I think, is one of them. That's right. In a slightly different capacity now being viewed at in a new way.

C (13:29)

That's right, because Jabil was started in 1966 in Detroit, Michigan. It has design and production factories all over the world. They make a broad range of items from medical devices to sensors in cars to data equipment. And Jabil says we turn ideas into products. So that's the basis of what they do. Ticker jbl, which I find confusing because of the speakers in market cap of nearly $25 billion. It's a big company. They operate 100 sites in 25 countries and employ over 140,000 people.

B (13:58)

I think the key word I would use for this company, Jabil, just as we set the stage. Again, been around for a long time. This is traditional manufacturing. It's very diversified, diversified in terms of geographic locations, diversified in terms of the products that the business actually makes. Now the company reported earnings today and just hit some of the highlights here. Earnings per share beat estimates by 15 cents. That's of the base expectation of 2 bucks. 85. Revenue hit 8 plus billion dollars up nearly 19% year over year did beat expectations. And then the third thing that was a highlight from this report, what the market loves to see at the moment where it can Jabil lifting its full year fiscal 2026 guidance by actually healthy amount up to 32 billion from a prior guidance level of $31.3 billion. Now the headlines after the earnings report really reflects what's been going on with this company for the last year and why Kenny, it probably caught your attention and that's because this company has been bolstered by strong demand from AI and cloud computing infrastructure customers. So again it's diversified but in the last sort of two years or so, this evolving customer base of AI driven demand has really juiced up expectations for this stock and it's doubled down. So not just in terms of organic growth. John In November, Jabil announced it's buying Hanley Energy Group, that's a provider of energy management and critical power solutions serving the data center infrastructure market, buying it for about $725 million. There'll be a little bit more if that business performs 725 off the back of a market cap of $25 billion. I put this as like a nice tuck in as an all cash transaction, one that Jabil could and it's doubling down through acquisition activity on the next pillar of growth which the market's clearly rewarding in terms of the share price.

C (15:49)

That's right. And they're calling that pillar intelligent infrastructure. And the CEO Mike Daster said on the call today our intelligent infrastructure remains a major growth engine and in that sector alone the net revenue was up 54% year over year.

B (16:03)

Now it's very interesting and also to see in terms of the way in which Jabil is talking about its activity, it's focused not only on revenue growth. Too many I think of these AI businesses are focused on AI growth. Jabil's actually talking about profitable growth. So in this acquisition of Hanley Energy, if you go and look at the way in which Jabil's talking about it going out of its way to say Hanley's first year annualized revenue is projected to reach up to $400 million supported by mid to high teens EBITDA. That's the measure of profit margins. So basically saying it's going to have double digit revenue growth, but it's going to have it at pretty attractive profitability margins as well. It's that double whammy that the market gets really excited about.

C (16:40)

And you're right to make a distinction in all these different AI plays and all these companies that are part of the AI we're hearing about. So we've covered different companies like Dell making servers, Snowflake making AI software and of course Nvidia designing chips, T, M, S, C making the chips. But J Bill, like you pointed out, emphasize the diversity in the products they manufacture and they say they take a holistic view. So they make everything from next gen liquid cooling platforms for those data centers to switches in the data centers and power management devices through that acquisition that you mentioned.

B (17:13)

So the thing this reminds me actually of a conversation you and I had, John, about GE Vanova. It was a spin out from General General Electric as it was formerly known as. Company's been around. You know, it feels like the door since the dawn of time. It's been around for ages. An energy equipment manufacturing company. Very similar in the sense that there's a base business that's pretty diversified, there are other uses. And the upside, the vig is coming from this AI trade. So again, very interesting to see these long standing traditional companies now getting a little bit of extra juice from AI optimism. That said, I will say folks, G V nova shares up 89% year to date because of this AI upside was down 10% today on AI jitters. Stay with us through the show because we're going to talk some more about where those AI jitters are coming from and why it has impacted such a broad part of the market today. Well, the market's still taking this all in. Shares in Jabil started the day up 5% after the earnings beat. It did come down again because of the AIG, but overall up nearly 50% this year. Well, let's take a quick break and when we come back, it's the most tax advantageous time of the year or it kind of can be. We'll see. We're going to get tips from an expert on year end strategies to try to make the most of some market losses to offset some market gains. This message may be shocking to many millennials. If you are one, you might want to sit down right now. Loads of people are searching the following on low rise jeans, halter top, velour, tracksuit, hookah shell, necklace, disc belt. You likely place these in the dark of your closet in 2004 never to be seen again. But if you can find it in yourself to dust them off, there are a lot of people who will give you money for them. Sell on Depop where taste recognizes taste. Ford BlueCruise Hands Free highway driving takes the work out of being behind the wheel, allowing you to relax and reconnect while also staying in control. Enjoy the drive in BlueCruise enabled vehicles like the F150 Explorer and Mustang Mach E available feature on equipped vehicles terms apply does not replace safe driving. See ford.com/bluecruise for more details. It's a sprint to the year end and the time that many investors look at their portfolio of stocks to see what's up and what's not and if there's a way to make the most of those differences in some way, even perhaps through tax optimization. So to cut through the jargon and see if this lens is worth looking at your portfolio through, we're welcoming onto the show one expert from leading brokerage firm Fidelity. Well, here's our conversation and afterwards come back for more on today's AI sell off and Medline's landmark ipo. So, Josh Krugman, head of Brokerage Product strategy at Fidelity, thank you for joining us on Brew Markets Daily on a topic that I know is very much top of mind for investors at this time of year and that is tax loss harvesting. So if you don't mind, would you just explain what that is?

A (20:17)

Yeah. Generally tax loss harvesting is a way in which a customer or an individual can sell a position at a loss to offset a taxable gain or a gain in a short term or long term gain. So it is a way to minimize your long term or short term capital gains in your your brokerage account to ensure that your tax bill is less than it would be if you just had gains in there.

B (20:44)

Now there are some sort of important technical points around this, right? So you can't just sell your securities and then turn right around and buy back something similar. Just touch on that. Just the nuance of some of this because it does point to the reason that it is important that folks do get professional advice before they go down this path.

A (21:00)

Yes, yes. Generally you cannot buy a security that's a substantially similar type security that is considered a wash sale. And when that happens, essentially the irs, you have to adjust your cost basis so you can't take advantage of the tax loss at the full basis that you would otherwise. So your choice in the next investment that you make or the next investment that you choose to make with those proceeds needs to be considered because you cannot choose the same stock or a similar security to take advantage of that.

B (21:34)

So Josh, tell us when you tend to see tax loss harvesting in your experience? This is really a December phenomenon. Do you see people doing it throughout the year? What's the decision making driver for this?

A (21:44)

Yeah, I think people can do it throughout the year. Typically when tax loss harvesting is embedded in an account or solution like a managed account or an automated digital advisory account. Those types of accounts do it throughout the year at different times. We see typically customers do it from a tax planning standpoint towards the end of the calendar year so they can minimize their tax taxable gain or a loss. But it can be done at any time during the year when you typically have stock volatility or times in which you have losses or gains that you want to offset.

B (22:22)

Talk to us about some trends. Are you seeing any patterns in terms of the kinds of sectors that retail investors are offloading now to realize some of those losses for their tax benefit or is it really just all over the map and it's really situation specifically?

A (22:37)

Yeah, it's very situation specific and personalized to the investors. Choices, preferences and goals of what they want to do. Here at Fidelity we have tools to help customers. They can do it on a self directed basis. We have a self tax loss harvesting tool. And as I mentioned, you can choose certain types of investment accounts that do it for you from a managed account or from a digital advisor perspective.

B (23:02)

And then just my last question for you Josh, because it's phenomenally helpful when you think about self directed investors in particular, which tends to be our audience. Do you see folks actually exploring tax loss harvesting or does this strategy tend really just to happen with folks who are wealthy and they've got a professional managing their money for them?

A (23:22)

Yeah, I think it all depends on your situation. So obviously if you have more money and if you have more wealth, it becomes more important in managing your taxable income going forward. But any customer can can minimize their taxes is any point in a brokerage account. And it doesn't take a lot of money to get the benefits of tax.

B (23:44)

Loss harvesting just because we're coming up to the year end now, Josh, and this is top of mind for folks. Are there just other tax efficient vehicles that you just have top of mind? You know there are college savings plans, there's retirement funds. You know, we're coming up to December 31st. This is it. This is the window for people to try and make the most tax efficient savings they can what should they have on their to do list before the year comes to a close?

A (24:09)

Yeah, I think here at Fidelity we want to always have a plan. So you should always have a plan to grow your wealth. Part of that includes what are the tax efficient vehicles that you want to invest in. And typically we want you to invest in retirement first and take advantage of those tax efficient vehicles like IRAs or 529 accounts towards certain saving goals.

B (24:31)

And 529. Just define that for us, Josh. 529 accounts, define that for us. Yeah, sorry.

A (24:35)

529. It's a college savings vehicle in which you can grow and save tax free towards college expenses or savings. And then if you have a brokerage or taxable account, this is where tax loss harvesting could be really important that as you go throughout the year, really look at the end of the year, look at your total taxable gain. And most brokerage accounts sort of show you what your total taxable gain or loss is. And you can sort of ask call at Fidelity, anyone can call 24 hours and sort of understand what their positions are or you can obviously talk to a tax advisor who can give you advice.

B (25:13)

And Josh, just last question for you. Going into 2026, if folks listening have one money New Year's resolution that they should lean into, what do you think it should be?

A (25:25)

Yeah, I would say it is always better to save more going in and to not be short term thinking. If a volatility comes and if the market begins to be volatile, make sure you stick with your plan and you stay with your plan regardless of what direction the market is going.

B (25:43)

Well, big thanks to Josh Krugman of Fidelity for joining us. And there you just heard the bell. It's 4pm on the east Coast. The markets have closed for the day. We don't have a ticker tape so we'll throw it over to our human ticker. Our producer John.

C (25:55)

The S&P 500 finished down 1 and 210 of a percent today. The Dow was down half a percent and the Nasdaq finished down nearly 2% today. Some quick market headlines. The biggest IPO of 2025 and the largest public debut since Rivian's in 2021 just snuck in before the finish line. Last night, medical supply giant Medline raised six and a quarter billion dollars at an offer price of $29 per share, placing the company at a total valuation over $50 billion. Today was the first full day of trading for the stock ticker.

B (26:28)

MDLN well, this also marks a big trade for private equity, not just in terms of the magnitude here for the IPO market because private equity has faced sluggish exits. That's through public debuts, public offerings or through sales to strategics for its portfolio companies. Three big private equity firms, Blackstone, Carlyle and Hellman and Friedman have clubbed together to buy this particular company in 2021 for around $30 billion. While Medline makes a wide range of medical products from dressings to diagnostic instruments to health care supply chain consulting services. Diversified seems to be a word coming up a lot at the moment. The stock closing up nearly 40% today. Really strong IPO.

C (27:09)

Next up, OpenAI. It was only a matter of time before it collected another $10 billion investment. With a report from the information that's stepping up this time is Amazon reportedly in conjunction with OpenAI using Amazon's AI chips.

B (27:21)

Well, we started with Oracle kind of in the context of Warner Brothers. So we'll finish with it with news on its latest data center moves or rather one lenders move away. Oracle shares dropped 5% today as the private credit giant Blue Owl. That's Ticker Owl with market cap $34 billion. Shaking things up. The Financial Times reported the Blue Owl had been in talks with Oracle about funding a 1 gigawatt facility for OpenAI in Michigan. But those talks fell through due to concerns about Oracle's rising debt levels. Okay, this is a big story. It's a major reason for the AI sell off broadly today, not just Oracle's stock drop. And here's one of the reasons it caught my eye and it's much less about the broader macro environment and more about what this implies, which is around one of the biggest questions that's related to whether there's a risk of an AI bubble. And one of the key reasons people have been so concerned that this could be unsustainable is they're nervous about how much debt specifically would pile into funding. The massive capital expenditure commitments made for AI spend were only over for this past year, but also projected in 2026. Now Blue Al stock was down today. Market may be suggesting was this the right decision, wasn't it? But this is just one person's view. I actually welcomed the sign that Blue Owl is showing some caution. It's doing and it's having the courage to walk away from a deal showing that there is real diligence and thought going in to stroking those credit checks or not when it comes to these AI investments. That's it for today's Brew Markets Daily.

C (28:57)

Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarkab Delatif, and Emily Millard. Our technical director is Lonnie Fiskis, our audio engineer is Brittany Dotto, and the President of Morning Brew, Inc. Is Devin Emery. We'd love to hear from you. If you have any feedback or a company you'd like us to COVID leave a comment or send an email to to brewmarket show at morningbrew. Com.

B (29:17)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.