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Coupang In Free Fall; Uber and Snap Stock Pitches; Gold + Silver All-Time Highs $CPNG $UBER $SNAP
01:09:55
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- [00:01]
A
Welcome to Chit Chat Stocks, the podcast that helps you discover your next great investment. I am one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. And today we have a special guest, Aria Radnia. We are going to be talking Uber, maybe some Adobe. We've got Nike, earnings, Lululemon. This is our Power Hour episode where we talk all things financial markets. Plenty of stuff on the docket for this week for anyone that is new to the show, we do these episodes live on Thursdays on YouTube at 5pm Eastern time usually. We had some technical difficulties getting started today, but we are live now. So let's introduce you. Aria. I'll give a little bit of a introduction and then you can tell me where I'm wrong. But Aria was he worked with me at Fiscal AI as a research analyst and he is self taught, if I'm not mistaken, and runs a YouTube channel of his own where he discusses primarily Uber, but some other stocks as well. Plenty of good coverage over there, but maybe tell the audience a bit about yourself and what type of investor you would categorize yourself as.
- [01:16]
B
Yeah, absolutely. First of all, thank you guys for having me on. Been a longtime listener, I think since 2021, 2022, something like that. So it's a bit of a surreal experience. Now I'm on the show, so this should be interesting. Yeah, in terms of investing, I would, I kind of, I've done a video on this as well, but it's, I wouldn't necessarily label myself or bucket myself into a specific category. Oh, I'm a quality investor or I'm a growth investor, whatever. I've kind of described it as sort of the Bill Ackman style of investing where I would say it's, you know, strong moat businesses, doesn't have to be the widest mode of all time. Strong moat businesses, usually pretty well known companies and you kind of invest in them at a reasonable price and hold until egregiously expensive. And a bit of emphasis on that last point where I completely allow myself to, you know, sell these businesses if I find a drastically better opportunity. I'm not, you know, this whole notion of never sell and this and that or whatever, it works for some people, keeps it simple, you know, less tax implications and whatnot. I don't shame you for, you know, going that route of things, but I would say me personally, more so strong businesses at a reasonable price, ideally try to buy into them and hold until egregiously expensive or you find a drastically better Opportunity.
- [02:30]
A
Yeah, it's always nice if you can hold until they're egregiously expensive. That's usually a sign things have gone well. I think we should start with Uber because. Because people have actually asked us to talk about this. Brett, you can cut me off here if you want to start somewhere else, but I'm thinking Uber. Arya, you are a vocal Uber investor. So I guess maybe give us the elevator pitch. Why do you like Uber in general? And then of course, we will talk about the quote, unquote, wayo threat.
- [03:04]
B
Yeah, absolutely. So, I mean, we could start. I mean, in all honesty, we could be spending the entire podcast on this. So I'll try to keep it somewhat brief. But in general, you know, the. The business is a very dominant network effect business. It has a verb, moat. I think we've all seen the free cash flow chart. Just go up into the right lockstep without failure. It's. It's a fundamentally great business and it's been dragged down by this sort of AV fear. Right. And I'm on. I'm of the belief that very wrongfully it's been. It's been dragged down over this. And there's a lot more implications that people generally don't consider when kind of just chalking it up, oh, it's Tesla roadkill, or it's, you know, Google's roadkill. And, you know, Waymo is going to come around. And sure, it doesn't maybe look like that right now, but this is just like blockbuster in 2007 when Netflix came out, or just like Nokia or BlackBerry when the iPhone came out. So, sure, you don't see it in the fundamentals today, but over time, this is a business that's going to have its moat eroded. Consequently, the profitability, the free cash flow, whatever the case is, and, you know, it dies a slow death. In essence, I think that's a good.
- [04:13]
A
Job of keeping it brief. What. What do you say to the person? And I'm silently pointing at Brett here, because I know he said this before as well, to the person that says, yes, Waymo is small now, but they are driverless vehicles that are going to expand to a whole bunch of cities. And it's a very real threat to Uber's business. What would be your rebuttal?
- [04:43]
B
Yeah, absolutely. So we really need to kind of dissect it in the sense of, like, what is it that you ultimately believe? The AV industry. And by the way, for reference, just so the audience is on the same page, AVS stands for autonomous vehicles. Not to be confused with EVs, because sometimes it sounds like that. But yeah, with, with AVs in particular, what we really need to kind of get on the same page with is where do you think this industry is five to maybe 10 years down the line? If you're of the belief that there will be a sort of pseudo monopoly player, whether it's a Waymo, a Tesla or somebody else that has a, call it, dominant market share, a 70, 80, 90% market share five years down the line, that is the scenario in which they completely cut out Uber altogether. Eventually, all if not most of ride hailing goes onto this theoretical AV company, whether it's a Waymo or whoever. And obviously that spells bad news for, for Uber. Now, I'm personally of the belief, and you know, we'll kind of dive into some details here, but I'm of the belief that this will be a very fragmented market. Similar, but not necessarily, you know, exactly like these sort of models, like the AI model race that we've recently seen. I personally think that you'll have a lot of players where, for example, it's a Waymo, a Tesla, whoever, where they do have a dominant, Dominant Ish sort of market share. They have their own app and whatnot. But in order to maximize utilization and maximize revenue per car, they'll also list on an Uber to be able to, you know, maximize the utilization and revenue per car.
- [06:19]
C
All right, let me hop in here. Again, I should say, Arya, thank you for joining the show. I was trying to be patient and also, you know, testing. Apologies to anyone watching the live stream. My video is not the best and for starting a little bit late there, that is my fault to the listeners, but we're getting the, we're getting the technical difficulties kinked out for my new laptop here. But, Arya, back to the topic at hand. I see. I guess on the one hand you can talk in circles about Uber's network effect, its dominance in the industry. Its dominance, I wouldn't say dominance, but market share leading many, many countries globally. Right? I mean, North, South America, Europe, what have you. On the other hand, I just see, and we had someone in the chat here saying that Waymo raised $15 billion, I believe, or is in talks to raise $15 billion in capital at $100 billion valuation. Yes, that is a high valuation. But do you think the fact that Waymo may be able to, I don't know how to say this, operate unprofitably just because they have the Alphabet backing? Is that something you were concerned about? And maybe what are the KPI'S you're looking at to say, hey, look, I'm wrong here, because as of now, you look at the numbers, I can pull up some stuff on fiscal AI here. I mean, they look phenomenal. Earnings ratio looks decent. What are you looking at as kind of the big risks? And I guess that's kind of a double question, but thoughts on the heavy capital investments that Alphabet can put in here?
- [07:53]
B
Absolutely, yeah. So, I mean, I don't think there's any denying that with the Alphabet backing, they can essentially throw infinite money at this thing. I mean, that is the most profitable company on earth. I think the AV disruption, fear, and let's just talk about Waymo in isolation for, for a little bit here, I think. How about we play this? What would it take in order to actually disrupt Uber? And to answer that, it's not as simple as, okay, this car comes along, the technology is solved, and, you know, they keep on expanding into new cities. They offer a car ride at a cheaper price than what it would cost on an Uber, and it immediately becomes obsolete because they cut them out eventually, even though, you know, there's a partnership between a Waymo and, and Uber at the moment.
- [08:36]
C
Right.
- [08:36]
B
Eventually they cut them out. Quote, unquote.
- [08:37]
C
Right.
- [08:38]
B
The issue is, it is, like many things, not that simple. Uber, in order to actually replicate the service that Uber provides, you would essentially need to connect, in this case, 9 million drivers with 190 million monthly active users across 70 countries in 10,000 cities. That's what you need to do. So it's a massive scale issue. But again, we're operating under the presumption that eventually they do scale and, you know, go to a lot of these different cities, the technology is solved. There's question marks around. Does this work in all different types of weathers? Because, you know, at the moment it's only like the Sunshine Belt. Right. It's only in cities where, like, it's, you know, there's not much snow or rain or whatever. Let's just say all of that is eventually solved by technology, which it likely will. You still have one very clear issue, which is the supply and demand dynamic of it. So, guys, I put a couple of different charts from the Uber. I think it's the Q4 of last year.
- [09:32]
C
Yeah, I can share them.
- [09:33]
B
That's your slide deck. Yeah, yeah. So I, I put these in, I think, particularly the second one, if you could show that. And this. Or, excuse me, the, the third one that, that, that I put in there. And this one essentially shows throughout an average week what it would look like in terms of the supply and demand against the baseline. Now, for audio listeners, this might be a little bit hard to visualize. So I do recommend, you know, to take a look at this chart maybe on your own time. But essentially what the chart is showing is there's a baseline of, let's just say, and we'll throw some numbers at this to, to kind of maybe help it land a little bit more. There's a baseline of like on average per hour, Uber in the city of Toronto, for example, does a thousand rides per hour, right? And so a little bit after midnight, that falls all the way down to like 0.3 times. So on average, on our. Excuse me, on average per hour after midnight, there's only 300 rides being requested. And then there's actually a peak near rush, rush hour. So, you know, between the hours of 8 and 9 or between the hours of 4 and 5, for example, where the demand for that is massively higher. So what you have with Uber is this sort of like supply and demand dynamic. It's one of the clearest sort of supply and demand businesses that you can kind of analyze. And essentially there's a sort of volatility, if you will, or there's this variance in terms of the supply and demand for vehicles depending on the hour, the time, if there's a concert happening that night, all these different things. And so because of that, if you are an AV company that is going to do this independently, which we're assuming that Waymo in the future, that's what they're going to do, or if Tesla comes online, that's what they're going to do. You have a fleet of, let's say 500 cars. Now if there's a thousand cars on average being requested per hour, well, you're underutilized, you're under monetizing. But at some point a little bit past midnight, there's only 300 rides. So now you have more cars than there's rides being requested. So again, you have a handful of cars that are sitting idle. The point is you either have too much supply or you have too little supply. And so the real value that Uber would be able to provide is you have this like sort of baseline number of cars on the platform, Waymo or other, and then you would be able to supplement that with actual drivers coming online and offline the platform depending on those hours. I, I personally haven't ever drove for Uber, but if you've ever seen like the map of an Uber driver, there's like multipliers so, you know, if there's a surge in demand in a certain area, a certain neighborhood of Toronto, for example, then there's multipliers that are applied that, you know, drivers go to this area, you'll get 1.5 times earnings search pricing, you know what I mean?
- [12:09]
A
So yeah, it does. In an open marketplace, you're able to balance the supply better because you can give those incentives and say, I know you're not driving right now, but if you want a $25 bonus or whatever it is, here's a two mile ride near you. So I agree with that. And the other thing to chime in here is there's this narrative that Google will spend whatever. But if Google will spend whatever, why are they raising outside capital for Waymo? Why are they raising $15 billion from outside investors? Why aren't they just keeping all that in house? Like I think there is not. Even though Google, of all the companies, maybe Amazon, seems the most willing to invest in moonshots, I think there's still ceilings to how much they're willing to throw at these things.
- [13:03]
C
15 billion is a lot. Though I will say it's not open AI a lot, but pre AI, we might have said that was an insane amount of money. The last thing I'll say on Uber, because as Aria mentioned, we can boost. We could talk about this for the entire episode. Right now I'm pulling up on fiscal AI the EB2 EBIT and tell me if this is not the best way to look at it. Tell me if you look at the valuation differently. I see EV to EBIT trailing of 37. Now. How are you bailing the stock? Because I guess the stock's not in a huge drawdown, but maybe you're not someone that's buying today. But does that seem cheap to you? Is that cheap versus their long term opportunity?
- [13:47]
B
Yeah. So it's valuation with Uber is a bit of a weird one because they're still on the income statement valuation ratios, they're still kind of ramping their margins. So on a trailing basis, I think just off memory, that's like 8% operating margins or thereabouts free cash flow margin of this business, which is a little bit overstated because of the insurance reserves. It is significantly higher. It's roughly 18, maybe 20% ish. There's a couple of different ways you could do the valuation. You could value it on free cash flows, which in that case, I think just off the top of my head today it trades at 24 times excluding stock based comp. So roughly a 4% free cash flow yield on a trailing basis. And then if you want to do it. I think my new preferred way of valuing Uber is either just the basic 4 p. E because there is actually like a trailing tax deferral thing that also happened which throws off that number. So we can't use that either. And then you could either do it like that or you could use EBT earnings before taxes on a trailing basis. So essentially take it as a proxy of, you know, price to earnings. It trades at like about 30 times trailing earnings, which for a business that is growing revenues at 18%, a little bit margin expansion, a little bit buybacks, you're looking at comfortably north of 20% earnings per share growth essentially for 30 times earnings. And I know maybe some people in the audience kind of, you know, don't love to hear that immediately they hear 30 times earnings and equate that to being an expensive multiple for a growing business. In my opinion, wide moat business like this. I think that's totally fair. If I can quickly add, by the way, Ryan, to your point about raising outside capital, that's an interesting point you bring up. And a new development for us as well is Google has bigger battles to fight, particularly with cloud. They are dumping what, a hundred billion dollars of CapEx there. So sure, there might be like a Runway of, you know, high returns on investment for this new AV business, but I think the bigger TAM and the bigger long term ROI for them would be to fight and be competitive for the cloud business.
- [15:48]
A
Okay, all right, I think we've got.
- [15:52]
C
Before we go on run, let me share. Go ahead, let me talk with. Yeah, the chart I'm sharing here for the audio listeners and it was a little bit surprising compared to what I thought beforehand.
- [16:02]
A
Pause. Brett, no one, no one can see your screen.
- [16:04]
B
I don't think.
- [16:05]
A
I. I can't see.
- [16:06]
C
Oh really?
- [16:06]
A
So yeah, it's not showing anything for me.
- [16:11]
C
Maybe try to reshare and I don't know, it was the operating margin chart.
- [16:15]
A
Everyone'S going to have.
- [16:17]
C
It was the long term last 12 month operating margin chart of let's say it was negative like 50% five years ago, but now it's 10%. I was actually shocked at how low that was because of the business this mature and given their unit economics, I would have thought they would be at like 20, 30% by now. And it seems like that is doable over the long term, especially because that revenue, and again, correct me if I'm wrong, you know the business better than me is post like that's their take rate, not their gpv.
- [16:56]
B
Yeah, that's. That's, that's exactly right. Did you guys have more questions about kind of how they're going to fend off AVs? Because, you know, I have a whole bunch of other stuff we could talk about here as well, but it's up to you guys if you want to keep going.
- [17:07]
C
We have a question on Coupang and a lot of people wanted to talk about. I think I had like 10 people ask about this, especially since the Stock is down 30% in the last month or so and it seems like it's falling every day. Sandeep says in the chat. Why do you find Coupang compelling? How do you value it? Because I am struggling to see it. I think that's a good lead into really why Coupang is in free fall. Let me just kind of go through the summary here. Coupang stock hit a merely high in mid September. It's down 33% from that high since I think we're at about $23 a share. What happened here is they had a major data breach from a Chinese national working at the business. And that's important because politically in South Korea, given the relationship with North Korea and China, having that specifically happen to one of their national champions is turning into a bit of a political scandal. And it exposed the personal information of virtually every citizen in South Korea. What's making matters worse is that the founder, Beomsu Kim, is apparently not choosing to attend hearings that the government wants him to go to. And I guess people are not happy about that. You can kind of see how that looks a bit smug. Not sure exactly what's happening in that situation. We're looking at a foreign country here that I've never been to. But from the news stories, that doesn't smell great. They may get fined about $500 million or so, give or take, depending on what the government's decided here. And, yeah, that's a big chunk of change for this business. But long term, I really don't think that's going to affect the terminal value. There's a lot of news articles out there about people being upset at Coupang in South Korea. And that can drive a lot of fear that can, I think, drive people away from the stock. And there's even an article in the Wall Street Journal covering them. They usually never really. None of the financial news covers them at all. But at the end of the article, and what kind of caught my eye was that there was. I hope I'm saying her name right John Jihee, 34 she says that and she has a one year old child. She is finding it difficult to make a break with Coupang despite disappointment after the data leak at home with a one year old child. She said that finding time to go out shopping is difficult and that she buys nearly everything on Coupang. It's just too convenient and there isn't a better alternative. I think that sums up my opinion. Yeah. Do you want a data lake in your business? No. Do you want it to be in one of your geopolitical rivals to create all political scandal? No. Do you want to get fined $500 million? No. But at the end of the day Coupang's mode I think is still very very wide. Has the potential to widen. They're trading at Some people sigh and roll their eyes at this sort of multiple use, but they trade at 3.8 times trailing gross profit when gross profit is growing at I think close to 20 to 25% year over year. Should be able to grow at that rate for a very long time here. And they're showing pretty good signs of operating leverage within their core business. They have a clean balance sheet, the free cash flow positive. They have a lot of opportunities to reinvest into new kind of adjacent commerce categories within Korea and reinvesting in Taiwan. I feel like it's very cheap here. I nibbled a bit on the stock this week, maybe even a bit more than a nibble, maybe a full bite of adding to the position and that about sums it up I think. Yeah, it feels like a buying opportunity to me.
- [20:41]
D
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- [21:38]
A
I had the same thoughts. Obviously A data breach isn't great and there will be a probably more than a slap on the wrist. They'll be like true impact to the cash in their balance sheet. I think some people estimated a trillion won which they can stomach that. Like they have enough cash on the balance sheet to stomach that. But the, at the end of the day this is a fulfillment business. So they do. Like if Amazon gave away my email I'd be upset. But it's five days till Christmas and I can't get packages in time anywhere else. So I'm still going to go to Amazon. So like I think at the end of the day, even after the data breach, most of the customers are going to say where do I get the most value? They still get the most value from coupang. And you saw that with the excerpt you pulled from the Wall Street Journal. Maybe I'm wrong, maybe this is a more sensitive pain point for Korean consumers. But my guess is that the service, the best service in a year, two years will still win out. Like people don't stop using Instagram because of the enormous data breach five years ago. It's the best service ends up winning out. So I think.
- [23:01]
B
Can I, can I just put it.
- [23:02]
A
Yeah, go ahead.
- [23:03]
B
I didn't even, I didn't even know there's a data breach for Instagram. But yeah, in the long term like realistically if the, you know, the value that the business is providing to its customers is there, you know, it's 24 hour news cycle, I think eventually people just kind of forget about it. At least that's what I'd like to believe. But yeah, this, this more your guys domain anyways.
- [23:25]
C
Yeah, I agree. Feels like, and again it's tough, a little tougher because we don't have boots on the ground in South Korea. Actually asked a bunch of people on Twitter, hey, anyone living there, shoot me a dm. I kind of want to discuss, see what the, see what people are saying but generally, especially when like social media, Google, all that stuff, their whole business model is data breach. Like they have all your information of Korea. If this is the first time it takes the people in Korea to understand that this sort of information is not private. Well maybe that, you know, maybe that's the case but I don't think it's going to change their shopping habits. Typically same with like you know, advertising scandals. Except for that Bud Light one. Any sort of scandal around data breaches. Any sort of scandal around like political like left or right hatred on some sort of brand. Typically it is way, way, way overblown in the news and contemporarily impact a stock price when long term, as Arya mentioned, six 12 months from now. Is that what we're going to be talking about? I don't think so. And it's tough because Coupang itself isn't very public with any press releases. They're an American company. Maybe they would be doing videos on social media, maybe they're doing a bunch of press release. But right now, at least on their IR page they've been completely silent. So that probably doesn't help from an investor perspective because no one likes uncertainty. But I kind of think you have to go.
- [24:54]
A
All right.
- [24:55]
C
This is a founder that's had an incredible track record. He's sticking around. Yeah, they had to get rid of the CEO as a sacrificial lamb of the e commerce business in Korea. And second, you have an emerging competitive advantage here that's probably already pretty wide. So you have great founder led company, reasonable price, really wide moat business feels like a good time to buy. Is it going to work out? I don't know, but I think the risk reward is solid at these prices.
- [25:25]
A
I'm still in a question here from the chat. I'll repeat it here. Brett, what do you think operating margins can be like in steady state? Normalized if we want to call it that because they're obviously reinvesting a lot into capex at the moment. Long term, what do you think operating margins can look like for coupon?
- [25:45]
C
Okay, let's give some context here because yes, if you look at the blank EBIT multiple, you look at the blank PE ratio, it doesn't look that cheap. But I will say and it's not the worst metric but you got to take, maybe take it down. As to true earnings, when they claim adjusted EBITDA margin on their core commerce business of 9% already in South Korea now the consolidated number is much lower because of the reinvestment in Taiwan. Other initiatives like Coupang Eats, what have you, but they already say 9%. They say the goal long term is 10 plus percent. I think if you knock that down to maybe a true free cash flow margin or a true operating margin, you could probably knock that down a little bit. So I think if they say 10% plus and I think for adjusted EBITDA they can get higher. I think 10% operating margin is well within reach if we look at the numbers. And maybe one of you can pull up the market cap here, but I think it's about $40 billion and correct me if that's wrong, the EV is going to be about 5, maybe $4 billion lower than that. So say 35 billion. The revenue within a year or two should get to $40 billion. So if you have 10% margin on $40 billion, that's $4 billion in earnings. The EV is 35 billion. I mean, you get down to 10 times earnings. If they wanted to quite quickly here. They're not going to show it for a while, but I think the value is there and it can continue to compound. I hate to even mention it, but people talk about the demographic bust in Korea. Look, yeah, that's a concern 20 years from now, but their population is projected to be down 10%, 20% over the next 30 years. I'm not really. I'm concerned about the next three right now. Yeah.
- [27:42]
A
And look, they could have a massive business in Taiwan by that point. But by the time that really starts to matter, not to mention the wallet share. They're increasing the wallet share from within their Korean customers and it's more than offsetting for the population decline. Sharing the EV to gross profit here. Yes, your market cap figure was about right. Roughly $40 billion enterprise value to gross profit is at 3.87, close to its lowest ever. 3.6 is its lowest ever.
- [28:15]
C
It.
- [28:16]
A
I like coupon here. I. I took a bite as well to steal what's his name's quote. As for me, I like the stock. We do have a lot more questions in the chat though, so maybe we jump to some of these. Do we want to talk Netflix or should we get to any of the news pieces from this week? I guess Netflix is kind of a news piece, but yeah, it is.
- [28:38]
C
It is. All right, let's read the question. Thoughts on entertaining a Netflix position. Assuming the next year will be rocky with the acquisition, but they could make the company more interesting. I also mentioned that they are making a large push. Well, they announced some sort of FIFA soccer game which we'll see how that goes. Those, those tend to be underwhelming, to put it mildly. But something that is a little bit of a bigger move and kind of a new content license strategy is they're going after a lot of sports, entertainment, comedy, news, podcast in mainly the United States. They're licensing existing podcasts, some that are actually owned by Spotify, pulling them, I think for at least some of it off of YouTube and putting the video podcasts exclusively on Netflix. Maybe we're thinking this is a bigger deal because we are a podcast and I'll say Netflix, if you want to add another one to the mix, you know, we got, we got some zoom video calls that we can put up on the big screen. Feels like a weird licensing strategy, especially when the fact that it's just people talking. I'm curious your guys thoughts here and if it kind of from my one thought was that it shows the power that YouTube has, how Netflix is maybe not scrambling, but a little bit worried that they're losing kind of the quote unquote Talk show to YouTube.
- [30:08]
B
If I can chime in here, I'm cautiously optimistic on this, but I feel like you have bigger fish to fry as Netflix. I mean so for example, you just did the Warner Brothers deal, but also they've repeatedly talked about, and this is only something I recently found out, they've repeatedly talked about wanting to getting into gaming. And so there's a stat out there where it says the entire music industry, the entire film industry is half the size of the entire gaming industry. The music and the film industry are half the size of the entire gaming. So the gaming industry is massive. And there is a gaming tab inside of Netflix and you could imagine if the Warner Brothers deal particularly goes through, I believe they actually own a gaming studio inside of that which has a couple hit games. I think injustice is one of them. And something like that. You can imagine what the financial power of somebody with the financial backing of a Netflix. All of a sudden not only are they making, you know, spin off shows like Game of Thrones and Superman and this and that and whatever, you can also start making very good games, right? Like you can start making AAA games and this and that and whatever. But using the distribution of Netflix, maybe you start to kind of advertise it to a certain extent. I feel like that could maybe be a better point of opportunity for them in the future. And it's something that they've talked about repeatedly. It kind of seems random to me that now all of a sudden they're deciding we're going to start trucking up podcasts on here and whatnot. I feel like that battle is largely decided between Spotify and YouTube over the past, give or take four or five years, whatever the case is. Maybe I'm wrong, but I don't know. I think you have bigger fish to fry.
- [31:47]
A
Having had an off again, on again said that backwards but on again off again relationship with video game companies for the last five years, I would be discouraged if Netflix really started plowing money into video game development. It is a difficult industry and it doesn't really press their advantage. Like when you think about what is Netflix's advantage. It's distribution in video content and primarily good shows and movies like high quality productions. This move to podcasting feels desperate to me. It feels like they're chasing YouTube and going. It feels like they're seeing all the same charts everyone else is about YouTube's increasing streaming time or market share on US streaming TV and thinking we need to catch up. And in order to do that we have to have podcasts. But they can still win. They can still have a great business without going after the. The YouTube strategy. And the other thing I'll say here is Spotify did this. Spotify already tried this out for you. They went in, they paid $200 million to Joe Rogan and they gained a little bit of share in podcasting.
- [33:10]
C
But I'd still argue that that worked.
- [33:16]
A
Yeah, but we still get most of our listens on Apple Music or Apple Podcasts. I know that's a small sample size, but they kind of curtailed a lot of those investments. I got a feeling they got more data than we do. And for them to have slowed their exclusive licensing, that tells me that it wasn't maybe working out the way they thought. The. I think the beauty of YouTube is that it's open and any podcast can win. We're doing this on YouTube right now. It draws people to it. I don't love the like taking shows exclusively to Netflix. And if you are a show, obviously they're paying you a wonderful check, I assume to go exclusive. But unless you're like a Joe Rogan, I would be a little worried that you're going to have a huge drop in listenership.
- [34:13]
C
Yeah, you're probably right. And Spotify put a lot of their video podcast, quote unquote, back up on YouTube. If we look at. I'll just pull, if anyone's curious, our data date over the last 30 days. 48% Apple Podcasts, 33% Spotify. So slight bump to Apple Podcasts. But still, I mean, as someone who, as a platform that has not necessarily tried that hard, I would say compared to Spotify or YouTube or what have you, or the last decade, just still great. And then the rest, you know, overcast. 8%, other 9% plus some, plus a few others there. That is probably proving your point correct here, Ryan. I don't know. Unless it's a giant show, who's going to tune into Netflix to pop on a podcast? It feels strange to me. It feels like a weird strategy. I don't understand it at all. And we'll see what happens. It's. They're They're a smart company.
- [35:14]
A
Yeah, it does. I don't get it. I honestly don't get it.
- [35:17]
C
I.
- [35:17]
A
Now, to go back to the initial question, would I entertain a position in Netflix? I think I would. And I mean, we talked all about, we're talking about the licensing strategy with podcasts, we're talking about gaming. And maybe we should mention that they're spending $82 billion on Warner Bros. And becoming Debtflix 2.0 in the process. I, I have kind of come around to being somewhat optimistic about this acquisition. If I were a Netflix shareholder, if this deal goes through at the quoted price, if they don't have to raise their bid, which it seems like it probably will, I. Brett's given us the maybe if it goes.
- [36:06]
D
Yeah.
- [36:08]
A
I would not be too upset. And part of that is because the stock's already sold off in reaction to this. But I remember going through it and thinking like, what they needed to get to where they are today is maybe not what the business needs now. They had a global strategy. Build a bunch of content, license a bunch of content, create your own content that fits specific niches all around the globe. Maybe it's lower cost productions than some of the Ward Bros. Or the big studios, but they gained massive scale, constantly, had something to offer on a regular basis that kept people from churning. Now I don't think they necessarily need that as much now. They can go out and they can go buy big catalogs and it's going to be way more successful on Netflix than it was on any other platform like that. You saw it with Sex and the City, which I think like had a massive boost in viewership when it came onto Netflix. They could probably do that with HBO's back cattle or Warner Brothers back catalog. They could just release one, one new show from their catalog each month for the next five years and probably a whole bunch of customers in that process and attract new ones. It's. And obviously they're going to continue to invest in it and they're getting some other assets like the production studios, but I kind of like it. And I didn't think I would say I like an $80 billion acquisition for a company of this size, but I.
- [37:47]
C
Kind of do it compared to the last 10 years, they're at more of an uncertain time. Already mentioned the gaming. You have licensing podcasts, you have licensing video games, you have licensing sports, you have live events. You have this acquisition potentially here. Yeah, that does add a lot of uncertainty. Versus all right, we're just going to expand around the Globe do some of our own content and kind of just reinvest in that for a long time and just be a market share taker. I agree though. Ryan is probably, you gotta trust this culture. They have just crushed the competition for the last 15 years. But I look at, even with this stock drawdown, EV to EBIT is 32. Is that gonna get me going like at a market cap of $400 billion? That's such a large business. Is that really where your multi baggers are gonna be from? Maybe it'll be a good performer the long term, but yeah, it doesn't get me going.
- [38:49]
B
If I can very quickly rebuttal on that. You can run the math a variety of different ways, but you know, we know that they said that they're going to keep the HBO brand independent. And then if you kind of accept that, you know, some people may argue, okay, this is too high of a cross sell number to throw around, but there's roughly 200 million, quote unquote in theory, Netflix subscribers that are certainly not HBO subscribers.
- [39:14]
C
Right.
- [39:14]
B
If they can convert say 25% of that, and I'm assuming it's at like a reduced price, something like that all of a sudden. Including the synergies, which I know the two of you are not too sold on. But anyways, including the synergies and including the new cross selling ability, just on day one you back into a number where it's somewhere between 8 to 10 billion dollars of instant free cash flow boost to the business if this acquisition, if this acquisition goes through.
- [39:39]
A
So are you talking if HBO customers subscribe to Netflix or.
- [39:45]
B
So if they buy HBO. So HBO has 100 million subs, Netflix has 300. Let's say there's quote unquote the 200 million TAM of cross selling ability of those, we say only 25% of them subscribe. Okay. To the new HBO discounted tier following.
- [40:05]
A
So I'm, I'm don't know if I'm entirely following. So like Netflix offering this within their subscription.
- [40:12]
B
So I would assume. Well we don't know for certain, but I would assume they literally just pull a Disney plus when Disney bought Hulu where it's like either packaged or there's a discount to get hbo.
- [40:23]
C
You won either of both? Yeah.
- [40:25]
A
Okay.
- [40:25]
B
Yeah. So if you're an existing Netflix sub, you get like a 30 to 50% call at discount on, on HBO. And so if they're able to do that and we say 25% of Netflix subscribe to HBO within like say the first year, that's roughly 8 to $10 billion free cash flow boost on year one without even dumping any money into new content, whatever. So sure, on the surface it looks like oh, $80 billion acquisition, you know, they're doing only 3 billion of free cash flow. That seems expensive even if you factor in the synergies. Whatever. The reality is the distribution potential, if they're able to cross sell is massive here. You might be buying this at like 8, 8 times cash flow essentially.
- [41:05]
C
Fair point, fair point.
- [41:07]
A
All right, but. But you know what, discussing all this, what it makes me realize is that the whole this acquisition is anti competitive claim makes zero sense because it seems like it's. I can't think of a more competitive industry grocery. But yeah, there are some. But it's super.
- [41:26]
C
It's more better than grocery. Grocery is like four players.
- [41:30]
A
Yeah, yeah, maybe, okay, maybe apparel, whatever you want to pick. There are probably some more competitive industries, but I mean everyone is just trying to find a way to compete with YouTube it feels like. And you see them spending all this money to stay competitive and doing all these licensing deals to try to stay competitive. It just. I would. I think this will pass with any regulatory concerns with flying colors.
- [42:00]
C
If you regularly listen to chit chat stocks then we know you love analyzing individual companies. We do too. That is why I, Brett Schaefer, co host of the show, decided to start writing the Emerging Moats stock research service. Emerging Moats produces regular stock research reports on companies with emerging competitive advantages, regular updates on stocks I own and on my watch list and has full transparency to my portfolio transactions and returns. I cover under the radar Emerging Moat companies with prior research reports on Oscar Health, Kraken Robotics, the Real brokerage and much more. Emails will be sent out on a weekly basis. Explore the service today and find your next great stock by going to emergingmotes.com the link will be in the show notes.
- [42:43]
D
All right folks, before we move on, we need to tell you where we get our data. Fiscal AI Fiscal AI is the complete stock research platform for fundamental investors. I use the platform pretty much every single day. See the charts in our podcast, you'll see it in our newsletter. This is our one stop shop for stock research. They've got up to 20 years of financial data on all companies globally, including the largest company specific segment and KPI data set on the Internet. That includes metrics like Du Lingo's Daily Active users, Oracle's backlog, Rocket Labs, revenue per launch, and literally millions more data points. They've also got earnings call transcripts, ownership data, equity Research reports and much, much more. If you want complete financial data at your fingertips, you need to check out Fiscal AI. And if you use our link, Fiscal AI Chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. If you want to upgrade, our link will also get you 15% off. Again, that's fiscal AI chitchat. The link will be in our show notes.
- [43:47]
C
You can add on at home entertainment, which is social Instagram, stuff like that, TikTok, as well as video games which I would say match up pretty well for what are you going to choose to do in your leisure time? All right, another topic here. I'll let one of you take the full Ryan made some notes. I know Ari has been talking about this a lot lately. Snap. They've made some developments. I will say I'm someone that feels a bit like a geezer talking about Snap because I never, I never really had it as a service. I don't understand why people are saying this is such a lucrative opportunity, but Arya, Snap, it's been a hated stock for a long time now. So tell us why you think things might be changing. What's this new product here and kind of what you like, potentially the opportunity.
- [44:37]
B
Yeah, absolutely. So I mean, let's just start out by saying this has been a awful business for the entire existence of it on the public markets. It has done nothing but destroy shareholder capital. Management is terrible. SBC is through the roof. Right. So let's just establish that I'm not pitching this as like, oh, this is some misunderstood, perhaps a little bit misunderstood in terms of future prospects. Yeah, I think maybe a decent place to start because I would assume most listeners are kind of 25 plus. Whatever the case is. You've definitely, even if you had Snap previously, you've kind of aged out of the product. I'm starting to age out of the product and I'm only 20. And essentially the kind of quote unquote thesis with maybe they kind of turn on the monetization lever is that they're starting to basically sell you icloud. So part of Snap, on top of being able to send pictures to other people and whatnot, you can save the pictures or videos and whatever into your memories and it's essentially exactly what it sounds like. It's literally like a form of cloud storage for your videos. And so most users, I would assume, have, you know, accumulated more than 5 gigabytes of worth of videos and pictures. Personally, I've accumulated 30 gigabytes in, I don't know, 5 years ish give or take of, of using the app. And essentially it's, it's literally your camera roll. So the, the kind of ultimatum that they've given you now is, okay, you have 12 months to decide either you. Either these videos get permanently deleted, which again, this is like memories and whatnot of, you know, videos, whatever. It's literally like your camera roll. Either you lose your camera roll or you pay us two dollars a month. And that doesn't seem like too big of a hurdle, I would imagine. Again, people already pay for icloud, I can see, and I kind of anecdotally talk to, you know, within my, my circle of friends, roughly 10, 15 different people and some of them have already subscribed. They also have like a Snap Premium, which I'm not sure exactly what it gives you, but I think it's like, you know, no ads, custom wallpapers, maybe you could like pin people. There's a couple like, cool, I guess, ish, neat little features like that, custom Bitmojis or whatever. So one of my friends in particular was like, oh, well, yeah, if I'm going to pay $2 for this, I might as well pay $5 for SNAP premium and get all those other benefits as well. Because the icloud thing, there's no restriction on how much storage you have with Snap Premium. So the thesis essentially relies on this ultimatum. Roughly 12 months down the line, where Snap today has 500 million daily active users, I would assume a large majority of Those people, maybe 70, 80% plus of that cohort of people, they have more than five gigabytes of data stored in their Snap camera roll. They either need to go through and manually export all of that out or pay $2 a month, essentially, as a. Another form of iCloud. And so if you run the numbers on that, even if we say 10%, only 10% of daily actives subscribe to this, that instantly flips them into profitability. If you get 20%, they are all of a sudden like 10% operating margin positive and then obviously scales from there.
- [47:42]
A
So I'm going to try to be. Provide some pushback here. And if the. I'm pretty sure they said in a press release that the vast minority of their daily active users are above five gigs. So they're saying that like not that many of their users, it could just be 30% maybe have above 5 gigs, but it seems like it would be above like, I feel like anyone that's been there for a few years is. Has a good amount of videos and content stored on there. The thing with like the iCloud analogy is that I know I'm going to be generating more stuff that needs to be stored. So I'm willing to subscribe to iCloud to continue to, you know, add my storage with people. It feels like right now, Snapchat, Snapchat, I still call it Snapchat is trying to monetize nostalgia. They're trying to monetize, I guess at a minimum, at least they're not hemorrhaging money storing these for, for old users. But I'm picturing the people my age that have maybe some old videos of them in college doing stupid stuff stored on their SNAP accounts. It seems more likely that they'll go through rip through, export them unless they're still active users. So, I mean, I don't think it can hurt them. This, this seems kind of like a no brainer, but I don't know if I see this being like the second, you know, the biggest revenue driver for the business. I, I just, maybe it's just the fact that everything Evan Spiegel does I seem to be pretty skeptical of, but I'm wary that this is going to be a big driver.
- [49:33]
B
Yeah, I agree. It's not perfect. Yeah, I mean it's, it's definitely not perfect. Like the thesis does rely a lot. That's why I don't have a position. I don't have any plans of opening a position. I'm just saying, like the opportunity is there. I had some anecdotes that kind of lined up with it. We'll kind of see and as you mentioned, it doesn't hurt them. So it's either, you know, these people, they're given the ultimatum, they either do subscribe to it or they export all that data off. And in that case that would actually help snap. They do have pretty low gross margins for a social media business. They only have 50% gross margins, I would assume, you know, if they offload a lot of those videos en masse, you know, across roughly a billion people, whatever the case is, maybe that could help, you know, the gross margin. So there's some cost savings involved in general we should be able to see. Maybe they come closer to a profitability inflection, something of that sort.
- [50:28]
A
I don't know. The one thing I will give to Evan Spiegel and maybe just the SNAP team in general, I don't know if I've ever seen a management team care so little about investor pressure or pressure from the investment community to do something. They seem to just not not care one bit that they have had 10 years of operating losses as a public company and have one of the most absurdly high operating expense lines for a business that probably doesn't need it.
- [50:59]
C
Dual class dual class share structures upside and downside to those if you were to trust that founder yeah one of.
- [51:09]
A
Our episodes, I think it was the money.com episode. We talked about how technical founders and just big big shareholder founders usually eventually as a public company CEO there comes a time when they're like all right, I kind of hate this and I'm just going to step into a technical role. Or they evolve, the company gets profitable and they just continue to enjoy the ride like a Mark Zuckerberg or a Bezos or whatever. Spiegel just doesn't care. He just rides it out. I mean he just it investor pressure, market stock going absolutely nowhere. Employees probably all mad that their RCs are underwater. He doesn't care.
- [51:56]
C
It'll be interesting to follow the story nonetheless. I want to talk Ryan, I know you got Lou Lemonier. I'll tease that I I do want to talk turning point brands because I've had a listener thank you George in the substack chat that has asked me approximately 10 times to discuss this one so I want to give a little time to it. He's wanted to talk about he has an interesting pitch. I'm going to quote him directly from the substack chat. Anyone for anyone? The link is in the show Notes Emerging most newsletter. It's where you can discuss a lot Just in kind of our free forum there you can I usually ask questions what should we talk about this free to join the way to join the chat there. It's fun. We got a lot of comments. It's it's growing and a lot of interesting conversations. Here's the quote from George. TPB is near shoring its production which is all currently in India. They currently spend about $1.30 per can to produce nicotine pouches. When they near shore they'll be about 6060 cents per can. They will exit 2025 with 55 million cans per year. Runway this is nicotine pouches also one of the biggest complaints among ALP users is that it is produced in India because they are a big right wing brand. That will not be the case by the end of next year. Also among nicotine pouch players they have the most exposure to the US market. For PM Phil Morris international nicotine pouches are 6% of sales. British American Tobacco and Ultra Group under 2% TPB Turning Point brands. Nicotine pouch sales are 30% and growing much faster than the industry. The nicotine pouch market is the fastest growing consumer product in history. And TPB is the most levered way to play it. Stocks up 400% in the last three years. Looks like we missed this one.
- [53:38]
A
We should have talked about this when he first recommended it in the chat.
- [53:41]
C
Well, he's been recommending it 10 times in the last two weeks, so he still thinks it's a 10x from here. I mean they have 40% gross profit growth coming from these cost savings they've had, I think 600% modern oil sales growth. They are raising money through an ATM common stock offering at these prices. So maybe wait for a pullback. I'm just thinking out loud here. The EV when I wrote this down, about $2 billion adjusted EBITDA guide of over $100 million. So the growth Runway is supposedly longer than this, but you're about 20 times adjusted earnings. And the big questions I'd have is can I keep taking market share? Why will their oral pouches have durable. You know, brand durability is the brand damage to the conservatives who don't like the outsourced manufacturing because it's supposed to be a quote unquote, America first brand. Is that going to ruin their brand reputation? It looks like not so much right now, but we'll see. It feels interesting. I mean, if they can keep growing pouches and improve those gross margins. Look, it feels cheap here.
- [54:49]
A
Yeah, I kind of like the pitch. I, I like the nicotine pouch business. It feels like the cigarette business a century ago where. Maybe not a century ago, but before all the.
- [55:03]
C
Yeah, yeah, I guess.
- [55:06]
A
And you don't have to be the winner to have a good business. It's a sticky product. Cost $0.05 to make. Sell it for a dollar. You know, you've got wonderful margins and there's literally an addiction to, and, and usually like an addiction to a specific product like brand. So I would probably have some of the same concerns as you, Brett, around the competitive landscape. But if they're continuing to grow despite what seems like an already hyper competitive space, more so than I think when people look at nicotine pouches, they sometimes comp it to like vapes. And we saw what happened to like juul when illicit vaping became so mainstream. I don't think it's going to be like that. I think there's a lot more brand stickiness with consumers. So I, I'd be interested in taking a deeper look at this. Thank you. George, for recommending it to us. Do you know where they're near showing production to? Is this a chance to. Is this a Monterey thing?
- [56:18]
C
No, I have no idea. I think it's somewhere in the United States, I am guessing. I don't know.
- [56:25]
A
It's interesting that they're able to make it cheaper here.
- [56:27]
C
I think it's because of tariffs.
- [56:29]
A
Oh, all right. Yeah, Makes sense.
- [56:31]
C
Yeah. And the fact that you probably don't have them, you have transportation costs as well. Arya, any thoughts on this? If not, we're going to be moving to Lululemon.
- [56:41]
B
Nothing in particular, but I am generally bullish on the whole nicotine pouch wave. I think. Definitely has a lot of room to grow. I did miss out on Philip Morris. I know you guys definitely enjoyed some nice gains on that, but I didn't catch it.
- [56:55]
A
Still time.
- [56:57]
C
Yeah, let's hope.
- [56:58]
B
Let's.
- [56:58]
C
Let's pray for a pullback, huh?
- [57:00]
B
I say this, there's a tin of Zins on my desk right now as well.
- [57:04]
C
So I'm glad the younger generation. Yeah. Is still on the nicotine pouches. Yeah. 157 for Philip Morris International. Who knows? Who knows? I hope we get a little pullback where the earnings kind of grow into this. But, Ryan, we're running up on time. I do want to hit some fun bubble watches after this. Lululemon earnings, my psychological long that I've made no money on is now working. And we may have some forceful pressure in here with Elliott Management bringing in a new executive.
- [57:39]
A
Yeah. So Lululemon reported earnings last week, actually. Probably should have talked about them then, but we did not. They. The numbers were okay. The headline numbers looked better because of a massive acceleration in China. So China revenue grew 40, 43%, I think, year over year.
- [58:04]
C
Count that. Those count, right? Those sales count.
- [58:07]
A
I don't know. Do they think they do? But those revenues get a discount in the eyes of the investment community here. Like. Right. I mean, or else we'd be valuing Chinese. Or else Alibaba would be trade closer to the other hyperscalers.
- [58:27]
C
Well, okay, that's fair. That's a longer discussion, but continue it anyways.
- [58:34]
A
Yes. If you're optimistic. And I think there's nothing bad about them growing in China. Like, it's better than them. Just if they just had the North American business, this would have been a much worse earnings report because comp sales in the US Declined at their lowest rate in a decade, excluding Covid. So comp sales are really weak in the United States right now. The China business Also had like some temporary like holiday that was not in last year's quarter. So it made it look a little better. So China accounts for 20% of the business. Now what I keep thinking is like I worry about Lululemon in the US but if they're seeing a ton of growth abroad, that's great. However, what was that company that just got erased from or from China? H and M. H and M. Right.
- [59:36]
C
Don't say anything. You don't say anything bad about the Chinese Communist Party, Ryan, or you will get erased from the Internet. Yeah, I mean that's a risk concern.
- [59:44]
A
And I think that's why investors are somewhat skeptical about the China business for Lululemon is just that they. It's more at risk and potentially less durable. But the results were fine. I should say that the news that came out I think yesterday was that Elliott Management, the massive fund started by Paul Singer, I don't know if he's still involved or not. Interesting guy though. They are taking or they have taken a $1 billion stake in Lululemon and they are working with former Ralph Lauren CFO and COO Jay Nielsen as a potential candidate for the new CEO of Lululemon. Does Elliot's involvement make you any more interested in this business? Because I'll just go ahead and give my opinion real quick. I don't think I. I love active, I love activist investors usually especially in like a software business because usually they just have to do the hard stuff that management is unwilling to do in an apparel business. I worry that Paul Singer and his team might not know exactly what needs to be done in order to drive growth for con for a consumer facing brand.
- [61:08]
C
Could be right. The you just have to get the right creative team involved. And yeah, that's kind of describing how it's not a wideboat business. Maybe this Ralph Lauren person is the right person. We'll see. I think there's just some uncertainty here. But given how the stocks reacted to these terrible numbers excluding China, I feel like that it shows that there was such poor expectations for that stock and I should have bought at least a buck Crocs at the same time as my kind of a parapoi that turned into a real long and it's done okay at kind of the same little bottom trough there. But Lululemon. Yeah, I just felt, I just felt like it felt good about it. At 7 times earnings the numbers were terrible and I guess the stock's working and if they turn things around and the numbers actually get somewhat healthy to average, I mean the Stock's gonna go up quite a bit from here.
- [62:07]
A
The. Yeah, I mean, it's cheap on trailing numbers. It is cheap. How much of. I guess Crocs kind of has a similar exposure to China, right?
- [62:19]
C
Somewhat. It's growing quickly in China. It's not growing as quickly. Yeah, it's. Here's similar.
- [62:29]
A
The Christmas list indicator. I got some. My family does like Christmas lists and send each other what they want kind of thing.
- [62:36]
C
Wow, that's unsurprising.
- [62:38]
A
Didn't see much Lululemon on there. I did, however, see a whole lot of Vori. And we have a comment here from Tyler Ferris. Clean house and fill up with aloe and viori execs.
- [62:51]
C
I fair.
- [62:52]
A
I do think this is. I don't know if they're going to be any different than what we've seen throughout history. I think they pioneered the athleisure category and now they've got a whole bunch of copycats that are slightly better priced.
- [63:08]
C
Yeah, it's fair. Arya, are young people wearing Lululemon? You have. You have better boots on the ground.
- [63:15]
B
Amazing. This quarter zip is from Lululemon. So this is quite funny. A bit too expensive, in my opinion. I. At least in.
- [63:24]
A
In.
- [63:24]
B
So I'm from Toronto, but the main sort of hot brand, you know, particularly more catered towards women is Aritzia. So I believe. Actually, no, I think they are in the US now, but I'm not sure you guys have even heard of it. Ryan, looks like.
- [63:38]
A
Yes.
- [63:38]
C
Just heard of the stock. Yeah.
- [63:40]
B
Heard of the stock, yeah. So that is kind of like the hot sort of newish brand. Like they've been around 5ish years, whatever the case is. But no, I don't know. Just speaking based off anecdotes, I don't think Lulu has the same sort of prestige that they once used to have. They make great clothing, though. Tell you that much.
- [63:58]
C
It feels like it's a stronger brand. It's like a rising brand among men, women. Which is more important is not so much anymore.
- [64:08]
A
What do we have, Brett, for our bubble watch? Because I know we're running up on time.
- [64:13]
C
Let's go through this quickly because we had quite a few things. I think Coinbase and Robinhood are one. Coinbase is adding stock trading, which I think that's admitting defeat. Second, Robinhood, I think is offering the ability to do what is called prediction markets within your IRA retirement accounts. Feels a bit much. We have. I'm just going to roll through a bunch of these. This is pretty much all just today. Trump Media Stock which I don't really know what they're doing is merging with a fusion energy company really makes sense. It's like two companies that aren't actually doing anything. They're kind of just shell corporations merging together to do the same thing.
- [65:00]
A
Truth Media. Brett, it's true.
- [65:03]
C
It's true. At least there's something there. Fusion is for anyone that doesn't know it, it's never worked. Whatever. NASDAQ is going to be offering 23 hour trading which I'd actually like to do an extended segment on one time because I think there could be some beneficiaries. One Interactive Brokers, Robinhood, all those companies with trading fees. Second. All right, I have two more here. Gold and silver at all time highs price of gold up 68 in the last 12 months. Silver up 126%. That it's a fun time in markets. I would not have predicted that. I know sometimes we make fun of them and call them the pet rocks. But hey, nice little run this year. It's a good call for any investor here. And last one is the outcome of the Fermi ipo. It's one that I may have even talked about on the show. It's one I saw. I thought this is a completely ridiculous company. It's really a lesson in red flags. The stock IPO'd on October 1st. It's down 72%. Stills a mark cap of $5.4 billion. I'm gonna close things out for the listeners to read out what they do. Fermi is pioneering the development of next generation private electric grids to deliver highly redundant power at gigawatt scale required to generation artificial intelligence. It combines cutting edge technology with a deep bench of proven world class multidisciplinary leaders to create the world's largest 11 gigawatt next gen private grid. Anyone a guess if they're doing any of that today?
- [66:29]
A
So what they're just a utility?
- [66:32]
C
Private utility. Yeah, but they're working with ex US Energy Secretary Rick Perry. Ryan. They don't have any revenue. That was theoretical.
- [66:42]
A
Oh, they don't have any. I was assuming it was just like trying to put a spin on like a normal utility just riding the AI bubble.
- [66:52]
C
It's a new private utility for data centers for AI. They also sounds like oklo. Similar, similar. Full disclosure, I am short OKLO or oclo. They also were working with former co managing partner of Quantum Energy. So they got some quantum in there too, which is lovely.
- [67:08]
A
These words mean nothing to me. We are like two years into this absurd like Okay, I don't want to boom.
- [67:16]
C
Maybe bubble.
- [67:17]
A
It's like it was the same with 2021 and the SPAC rays and how there was like all these horrible companies that got bit up. And that's. That's what I would describe as the bubble. You could have your own opinions on whether or not the AI this boomer bubble. But we're two years into this and every time, every single time I read a business description like this, I just toss it away instantly like that. The words mean nothing to me.
- [67:48]
C
Yeah, I mean, let me just sell it out. The president's media company is merging with a fusion energy company which doesn't do anything. 23 hour stock trading on the NASDAQ. Gold and silver at all time highs. Coinbase and Robinhood, allowing you to bet on any aspect of your life 24. 7. And all of these potential bubble stocks. Legalese just going public like crazy. I'd say it's. Again, I've been saying this for the last three months. It's time to batten down the hatches. Opportunities may present themselves later, but I do not know if they're presenting themselves today.
- [68:22]
A
This is definitely what the founding fathers would have wanted out of an active.
- [68:25]
C
President Mercury with a fusion energy company. It's entertaining. When I saw that pop on the Wall Street Journal app, I. I didn't know what to say, but I was not surprised. I guess it's fun, though. All right, we're going over time. Arya, since you joined us today. Thank you. And tell the listeners I know you do some videos on YouTube, Twitter stuff. Tell them if anyone wants to follow you, interact with you where they can find you.
- [68:51]
B
Yeah, absolutely. Thank you guys for having me on again. Hopefully we could do this sometime soon. Just Aria Radnia on all socials. I'm mainly on YouTube and Twitter and that is about it. Yeah.
- [69:03]
A
What's the channel called?
- [69:05]
B
Just Aria Radno. Now I simplify.
- [69:08]
A
Oh, all right. I thought it was investing with Aria. Change.
- [69:10]
C
All right.
- [69:11]
B
Yeah, change it.
- [69:11]
C
Just.
- [69:12]
B
Just the name.
- [69:12]
C
I'll put the direct links in the show notes on both YouTube and Spotify, slash Apple. And thank you. We went a little long today. Thank you for Arya for taking the time. I guess I'll take us out of here with the disclosure. We are not financial advisors. Anything we say on the show is not formal advice or recommendation. Ryan I or any podcast guests may hold securities discussed in this podcast may have held them in the past and they buy, sell, or hold them in the future. Thank you everyone for tuning into the live show. Thank you for listening and we'll see you next week. Ever spend all day fishing and catch nothing? That's what happens to hackers when Cisco Duo's on watch.
- [70:03]
A
Every login, every device, every user protected.
- [70:07]
C
Cisco Duo fishing season is over.
- [70:11]
A
Learn more@duo.com.