Earnings Digest (TSLA, INTC, AXP, PM); Tim Cook's Farewell; Avis Goes Full GameStop $CAR; Playing a Potential SpaceX/Tesla Merger?

Summary

Chit Chat Stocks – Earnings Digest (TSLA, INTC, AXP, PM); Tim Cook's Farewell; Avis Goes Full GameStop; SpaceX/Tesla Merger Odds?

Date: April 24, 2026
Hosts: Ryan Henderson & Brett Schafer

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Episode Overview

In this episode of Chit Chat Stocks, hosts Ryan Henderson and Brett Schafer dissect the latest developments from a jam-packed earnings season with a rapid but thoughtful breakdown of tech and financial heavyweights (Tesla, Intel, American Express, Philip Morris), a farewell to Apple CEO Tim Cook, the meme-ification of Avis, and speculation around a possible Tesla/SpaceX merger. The show’s conversational, slightly irreverent tone keeps things lively while still delivering insightful analysis and key stats for investors.

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Key Topics and Insights

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1. Tim Cook’s Retirement – Legacy at Apple

• [01:27–09:53]
• Tim Cook leaves Apple, seen by Brett as “one of the best CEOs ever from a financial perspective.”
• Cook’s Impact:
  • Oversaw Apple's market cap exploding (total return 2,600% since 2011; ~24% CAGR).
  • “Free cash flow per share growth... 14% from 2011 to the last 12 months.” (Brett, 05:02)
  • Services segment now 42% of profits (from 20% in 2017); redefined profit structure.
• Criticisms & Praise:
  • Some say he lacked ‘iPhone-level’ innovation.
  • “My iPhone today… is more important to me today than it was to me or would have been in 2011.” (Ryan, 03:58)
  • Successful launches: Apple Watch, AirPods.
• New CEO: Hardware-background; led AirPods development.

Memorable Quote

“If you produce 24 bagger returns already being one of the largest companies in the world, in my opinion, you’ve done more than enough to be a legendary CEO.”
— Ryan, [09:29]

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2. Software Sell-Off & SaaS Valuations

• [09:53–16:12]
• ServiceNow suffering with sector-wide SaaS sell-off — “The entire software sector just got destroyed today.” (Ryan, 11:20)
• AI spend drives margin compression (ServiceNow building AI solutions = infrastructure costs + acquisitions).
• Dramatic drawdowns in SaaS valuations.
  • “All these stocks are in 80% drawdowns and I’m still on the fence.” (Ryan, 15:32)
• Valuation Snapshots (ServiceNow):
  • EV/Sales: 6.1
  • EV/Gross Profit: 7.9
  • “There are at least 22 companies that trade at an EV to free cash flow below 10. There is one… with a PE below 10. It’s Consensus Cloud Solutions.” (Ryan, 14:39)

Fun Moment:

“I love information delivery services. That’s a fax machine.”
— Brett, [17:50], joking about Consensus Cloud Solutions.

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3. Intel’s Comeback

• [18:24–23:40]
• Intel stock surges 17-18% after earnings; four-bagger from $20 to $79 in 12 months.
• Revenue up 7% YoY; Data Center revenue up 22%, Foundry up 16%.
• Still slower than TSMC, but “momentum is getting there.”
• US government and tech giants (Nvidia, Amazon, Alphabet) have incentives to support an American foundry counterweight to TSMC.
• AI spending “doesn’t seem to be slowing down.”

Notable Quote

“There are a lot of companies who want this foundry to work... The incentive is there.”
— Brett, [22:34]

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4. Philip Morris: The Zyn Slowdown & Heat-Not-Burn Growth

• [25:02–29:55]
• Combustible cigarettes surprisingly resilient; US volumes fell but held up vs expectations.
• Zyn: First major US volume decline (-23% YoY); “This is their first decline ever, and it’s their first like by a long shot.” (Ryan, 26:14)
  • Some inventory/channel noise, but underlying softness.
  • Competition with Velo (British American), ON (Altria subsidiary), and “free” (Turning Point Brands).
• Heated Tobacco (IQOS): Grows 11% YoY, especially strong in Japan.
  • “There are markets now where they are selling more IQOS devices than they are cigarettes... higher margin. It’s a great business.” (Ryan, 28:33)
• Regulatory Watch: UK is banning sales to those born after 2008 — small direct impact, but hints at global trends.

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5. American Express: Crushing the Fintech & ‘Stablecoin’ Threat Narrative

• [33:51–40:57]
• “They have not been killed by stablecoins yet.” (Brett, 33:55)
• 9% billed business growth overall; 38% from Gen Z.
• Platinum card growth, $900 annual fee, with increased cardholder spending and low churn.
• Added 3.1 million new cards in the quarter; shares outstanding down 2% (steady buybacks).
• Durability & Pricing Power:
  • “It’s shocking... how durable the desire is for people to pay with a cool looking card.” (Ryan, 36:48)
  • Active cardholders have grown for 5 years straight.
  • Average fee per card has increased >10%/year.

Quip:

“The ladies like American Express. What can I say?”
— Brett, [37:56]

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6. CME Group: Geopolitics & The Long-Term Risk from Prediction Markets

• [40:57–44:38]
• All six exchange segments saw contract volume growth linked to global turmoil (e.g. commodities, metals, ag).
• Hosts express concern about the disruption risk from prediction markets (e.g. Kalshi) long-term, but note liquidity/regulatory barriers still exist.

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7. MSCI: The Moat of Index Providers

• [44:38–46:19]
• New research report coming from Ryan: “Running an index — what an easy business!”
• Notoriety and reputation critical for attracting ETF funds.
• Operating margins are superlative: “Maybe the lowest incremental cost in the world of any product ever.” (Ryan, 45:34)

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8. Tesla Earnings & SpaceX Merger Speculation

• [46:19–55:17]
• No major surprises in Tesla earnings; narrative driven by Musk’s control of messaging.
  • “He’s mastered the narrative... Absolute master.” (Brett, 47:24)
  • Heavy focus on future projects (Optimus, Terrafab, Space Data Centers) in shareholder deck vs. core financials.
• Capex plans: $25 billion/year.
• Profitability down; $3–4B trailing 12-month net income vs. $1.5T mkt cap.
• Merger speculation: Real-money market on Kalshi for a Tesla/SpaceX merger.
  • “You can... 10x your position in 6 months from today. That feels like a good risk reward for something I think is fairly likely to happen.” (Brett, 51:25)
  • Both hosts agree a merger is plausible as an “incentive for people to own more Tesla shares” if TSLA underperforms, but timing is uncertain.

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9. Avis Goes Full GameStop: Bubble Watch

• [56:03–59:51]
• Avis ($CAR) becomes a meme stock: surged from $100 to $700 in a month, crashed 65% in two days.
• “Feels like there’s a little bit of GME energy... but it’s not the same sort of energy [as 2021].” (Brett, 57:58)
• Brett got “extremely lucky” shorting the peak; stresses the importance of small, diversified positions.

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10. Small Cap of the Week: Zeta Global Holdings

• [60:42–64:38]
• Marketing tech company enabling large enterprise customer acquisition, growth, and retention.
• Claims 27% annual revenue growth since 2019, strong net retention (128%+).
• Caution flags: Beat-&-raise culture, heavy stock comp, short seller reports alleging data collection tactics via “consent farms.”
• Ad tech arena “a little dirty” — tough without owned platforms.
• “The numbers are pretty good. 128% net retention rate is phenomenal.” (Ryan, 63:45)
• Key metric: SBC is 11% of revenue — “still pretty high.”

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Timestamps for Major Segments

| Segment | Start | End | |------------------------------------|---------|---------| | Apple/Tim Cook | 01:27 | 09:53 | | SaaS Selloff/ServiceNow, Meta | 09:53 | 18:24 | | Intel Earnings | 18:24 | 23:40 | | Philip Morris (Zyn & IQOS) | 25:02 | 31:51 | | American Express | 33:51 | 40:57 | | CME Group/Prediction Markets | 40:57 | 44:38 | | MSCI | 44:38 | 46:19 | | Tesla Earnings/SpaceX Merger | 46:19 | 55:17 | | Avis Bubble Watch | 56:03 | 59:51 | | Small Cap of the Week (Zeta) | 60:42 | 64:38 |

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Memorable Quotes Recap

• “[Tim Cook]... If you produce 24 bagger returns already being one of the largest companies in the world... you’ve done more than enough to be a legendary CEO.” — Ryan [09:29]
• “I love information delivery services. That’s a fax machine.” — Brett [17:50]
• “It’s shocking to me how durable the desire is for people to pay with a cool looking card.” — Ryan [36:48]
• “He’s mastered the narrative... Absolute master.” — Brett (re: Elon Musk) [47:24]

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Episode Tone & Takeaways

• Tone: Conversational, lightly irreverent, data-driven, candid about both their investments and market fads.
• Overall: The episode excels as a fast-paced tour of critical earnings, CEO changes, meme stock mania, and deeper trends in software, hardware, fintech, and index products. Listeners are left with thoughtful questions about hype cycles, durability of business moats, and the line between speculation and long-term investing.

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Recommended for:
Investors seeking sharp, accessible commentary on earnings, sector rotations, company culture, and real-world takeaways from quirky Wall Street headlines.

Transcript

[Ryan Henderson]

For the past three years, IBKR individual clients averaged 24.3% annually, beating the S&P 500's 23.1%. Lower costs and 170 plus global markets matter. Interactive Brokers Member SIPC Visit ibkr.com performance welcome to Chit Chat Stocks, the podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson and I am joined today as always by the one and only Brett Schaefer with got our weekly Investing Power hour episode. Earning season has officially kicked off. We've got a legendary I'm putting a question mark on that CEO officially departing. Tim Cook is gone from Apple. We've got a new CEO stepping in at Lululemon and really we've got earnings palooza. I mean Philip Morris, CME Group, Tesla, American Express, ServiceNow. The the list kind of goes on and on. So we will rip through a bunch of those. But before we get into the show, I do want to remind listeners that a review goes a long ways. So if you want to review the show, you enjoy it, feel free to do so on Spotify or Apple Podcasts. And Brett has a free or we've got a free chat on Substack. Brett really runs it. Look it up. Chit chat stocks or emerging moats as well. I'll leave it there. Brett, where do we want to start?

[Brett Schaefer]

Well Ryan, we're seeing some more bull market stuff this week. I have quite a few bubble watches. Of course we're not going to and I'm getting tired of talking about anything AI. There are some AI related things. SpaceX acquisition. There's Avis. Did you see Avis? You had to have seen this. Yeah, Avis turned into a meme stock. I will say I got extremely lucky and I'll maybe tease that for the bubble watch episode. I did actually trade that but let's take it off with Apple. Tim Cook, you said maybe legendary CEO. I would put him definitely as one of the best CEOs ever from a financial perspective. He combined the hardware efficiency, the maybe most complicated best supply chain management in the world along with the financial engineering and capital returns program that took the stock from I believe probably a hundred bagger total return levels. We can probably look that up from when he took over. But fantastic tenure, retiring maybe at an opportune time. It reminds me of a little bit totally different industry when the Chipotle CEO left. It's never the best. Okay, how do I say this? If competition is increasing and there's kind of some innovative things out there and there's worries that there's going to be a whole new competitive cycle in your industry. Things have changed. And then the CEO goes actually I'm done, I'm out. I historically you can kind of go. And maybe that. That was some tells to shareholders. But what do you think? Do you have any notes on. On Tim Cook?

[Ryan Henderson]

Mental notes? I didn't write anything down here. But yeah, I think he gets a lot of flack because he hasn't reinvented the business after the success of the iPhone. So, you know, people basically give him a hard time for not doing anything crazy innovative or being on the iPhone 16 version or whatever. And it's just like kind of one incremental improvement after the other. There's also a lot of criticism that he's missed the AI cycle or AI that's good.

[Brett Schaefer]

They don't have to spend 100 billion on capex.

[Ryan Henderson]

Yeah, I mean I honestly different strategy.

[Brett Schaefer]

We'll see if it works.

[Ryan Henderson]

Like if you look at his time as CEO, I think he stepped in in 2011. The. It was. It's more than a 20 bagger Apple's stock. So it done quite well. Free cash flow per share has grown at I want to say 15 to 20%. Maybe you can double check that for me on fiscal Brett. And if you think about the value in the eyes of the consumer, like I'm thinking about this, I have an iPhone. My iPhone today. Even in the world of AI where all these tech companies are like investing so much, my iPhone is more important to me today than it was to me or would have been in 2011. Granted I was a kid, but even if I were an adult, I just think there have been. He's done a great job continuing to have influence with the customer. Maybe he didn't reinvent the business, but there have been some successful product launches in that time. Apple Watch, AirPods. Um, I think iPad.

[Brett Schaefer]

Apparently the new guy. The new guy was in charge of AirPods so maybe that's a good sign. Hardware guy, engineering background. That's probably better than the financial person. It's hard to tell. It's. It's almost always a wait and see with the new executive. But I had the free cash flow per share September 2, 2011 maybe was that 2011 was the year. I believe it was. Either way, right around when he took over. We are at 13.7%. Let's round it up. 14% from 2011 to the last 12 months. Free cash flow per share growth. Let's give a quick look. I do Love the new charts on fiscal AI because we can go to an exact date when I get pulled the total return. Maybe you can estimate what you think.

[Ryan Henderson]

Oh, I think I looked this up. I think it's up like 2,300% somewhere around there.

[Brett Schaefer]

Should I just go to the start of 20?

[Ryan Henderson]

Well, you can punch in the date if you want, but yeah, I'm pretty sure total return is around 2,300% since his tenure.

[Brett Schaefer]

Yeah, you probably have the exacted. I have 2,600% and a compound annual growth rate. Total return level of 24%, I'd say especially because you're starting out at a large cap level. That is definitely legendary CEO performance. We can have all sorts of debates on what Apple, the state of Apple over the next decade. Because as you mentioned, the iPhone is as rock solid as ever. But the growth is maybe where people will have a debate versus the other big tech companies.

[Ryan Henderson]

Yeah, and there's also, when you look at where did the growth come from for the last 15 years, while Tim Cook was there, the most successful segment by far was services, which is also the highest margin segment for them. It's grown much faster than the iPhone, albeit from a smaller base, I think grown faster than any of their hardware lines. Maybe wearables is up there, but services is now a real piece of the pie. In terms of profits, I think it almost gross profits. I'll pull this up on fiscal, but I think it might account for the majority of gross profits for Apple. I'll double check. But do you see that as this was innovation of the ecosystem that was already like building the ecosystem on top of the hardware, or do you see it as maybe they extracted more value out of existing customers?

[Brett Schaefer]

Could you call it innovation?

[Ryan Henderson]

No.

[Brett Schaefer]

But if you're a shareholder looking back at 2011 to the 2015, 2016 period, I mean, you could definitely say, and there's people that made a lot of money because of this Warren Buffett, a lot of friends out there, Motley Fool, a lot of people. You could look at it and say, well, is there product innovation? Sure, you know, not maybe not as revolutionary as the iPhone. You have some things at the edges, but the way they went about the moat, expansion and retaining users and keeping people around, even unhappy customers such as myself that have to use that for other reasons. Yeah, I mean, that's a fantastic strategy and it's worked wonderfully.

[Ryan Henderson]

I'm pulling.

[Brett Schaefer]

What are you bringing up here?

[Ryan Henderson]

All right, so again, fiscal AI custom metric here. As a percentage of their total gross profits, services specifically accounts for 42% today versus 31% four years ago. It's been a constant evolution. If I go to annual, it'll be even more so I can pull that up. It's gone from 20% in 2017 to 42% of overall gross profit. He has changed the margin profile of the business by having the services component, the asset light side, be such a dominant piece of the puzzle. We've gone long on Tim Cook. I am firmly in the camp of legendary CEO. I mean, if you produce 24 bagger returns already being one of the largest companies in the world, in my opinion, you've done more than enough to be a legendary CEO. Do we want to. I mean, we can go a lot of different places. We could go SaaS Apocalypse 4.0. I think we're on the fourth SAS Apocalypse here. Earnings.

[Brett Schaefer]

I was hoping my WIX rebound would be a little bit better, but apparently it got hit today. What happened? ServiceNow, they just. I looked actually the earnings this morning. I like reading, you know, various earnings kind of during earnings season. Kind of going through maybe five or six press releases in the morning. What happened? I thought it was fine. Was there just some chatter about weakness?

[Ryan Henderson]

Yeah. So, okay, for starters, ServiceNow reported earnings yesterday as of this recording after hours. The revenue beat the earnings per share, I think met or beat. But there was mark beats just gosh, they don't matter really.

[Brett Schaefer]

Like I know the Tesla one was like, oh, they beat by a billion. Let's analyze what their net income was over the last 12 months.

[Ryan Henderson]

Yeah, it's. If you give the number to Wall street and then beat it, it means nothing. The. Anyway, so the concern is that there was margin compression, I think is probably the biggest concern. And a lot of that came down to the AI. They are working on their now ServiceNow assist AI, which is meant to help customers. Kind of be their AI solution which requires a whole bunch of infrastructure investments. And then they also made a big acquisition and some of the integration costs compressing margins.

[Brett Schaefer]

But we try to talk AI and we just. It always comes back to it.

[Ryan Henderson]

We can't avoid it. This goes to show how much secular like indiscriminate selling there is based purely on industries. ServiceNow is having pretty issues that I would say are pretty specific to their business. They dropped 17% I think at one point today. The entire software sector just got destroyed today. Guidewire down 10%. Atlassian down 10%. Figma down 10%. Monday.com, you could go through the list. Literally every single software or Software related company Remitly, which there's no correlation between ServiceNow and Remitly's business, I promise you.

[Brett Schaefer]

Yeah, they do Remitly selling off correlate a little bit.

[Ryan Henderson]

Yeah, it's. It's really dumb. I thought the numbers looked pretty good on the face of it. I mean, if you look at the revenue for ServiceNow, it's probably one of the best revenue charts you'll ever see. Over the last decade, since the launch of ChatGPT, since the launch of Claude, customer retention rates are still 98%. 97%. 98%.

[Brett Schaefer]

What about mythos? Myth. Mythos is going to kill everything and hack the world. Correct. This is what I'm hearing.

[Ryan Henderson]

Is that the one where they said it's too powerful to release?

[Brett Schaefer]

Too powerful to release. Interesting marketing strategy. They're a bit crazy.

[Ryan Henderson]

I think that might piss off some of your customers, but whatever. Anyway, customer retention rates are really strong. Contract values continue to rise. So revenue continues to grow. This has always been a company that spends a ton of money on expenses. But I thought this stat was kind of funny. Two quarters ago, maybe three quarters ago on the conference call, Bill McDermott, who's the CEO of ServiceNow, he's a very eccentric guy.

[Brett Schaefer]

Oh, yeah, yeah. I know what you're about to say.

[Ryan Henderson]

He came out and said it should no longer be called the Mag 7. We are in a new era. It should be called the Super 8, which is the Mag 7+ service now since that quote, shares of ServiceNow are down 53%.

[Brett Schaefer]

Yeah. Stock. Yeah, the MAR stock has a market cap below a hundred billion dollars. People should look up him. If they haven't, he kind of looks like an Al Pacino that it's aged gracefully.

[Ryan Henderson]

Yeah. Yeah, I guess that's fair. He looks like a rock star as a, as a ServiceNow CEO. It's. Yeah, it is a bit bizarre, but it's. I mean, I feel like at Groundhog Day here, I think a lot there are some software businesses that'll be just fine that are hardly impacted, I guess by AI that get traded down with any sell offs. But I don't know what it's going to take for those to see a resurgence.

[Brett Schaefer]

Let's look at the numbers. They're not even that cheap. EV to sales, 6.1.

[Ryan Henderson]

No. ServiceNow, no.

[Brett Schaefer]

EVA to sales, 6.1. EV to gross profit, 7.9. You look at that, eh? Not terrible. Then you look at the PE and I'm still thinking about your stat last week that there's not a single SaaS company with a GAAP PE below 10.

[Ryan Henderson]

Well, I did some digging after that, Brett, Is there one? So there are now as of today. Well, after these drawdowns, maybe there's more. There are at least 22 companies that trade at an EVD free cash flow below 10. There is one. One company with a PE below 10. It is. Let me pull this up for you. It's like some like fax to email solution. So I think it's, it's working in a dying industry. But I, I'll find the name here in a second. I'll.

[Brett Schaefer]

Yeah, the yellow Pages. Let's see. Well, the. While you're looking that up. So not dead radio servicenows PE Gap 50. That's tough.

[Ryan Henderson]

It blows my mind because it makes me think like you look at some of these companies today, you know, as you, as you go through the software bucket there, there are a lot of companies where you could say I could make the case like Monday.com, i could see how you generate good returns from here, assuming certain growth rates. But it makes me think, what on earth were people thinking two years ago? All these stocks are in 80% drawdowns and I'm still on the fence about

[Brett Schaefer]

a ton of them. Five years ago. I think you mean four or five years ago. 2021 peak.

[Ryan Henderson]

2021. Yeah.

[Brett Schaefer]

We have, let's see, questions in the chat. This must be a new listener because I think a lot of longtime listeners know they answer this one. Brett, is Meta a buy for you today? People? Long time listeners know I'm not generally a fan of Meta as a stock. I know it's done well, it's just not my cup of tea. And I say things like Zuckerberg is not a great product guy and I get a lot of hate for it. But then I saw today there was a very renowned software investor on Twitter, anonymous account saying pretty much the exact same thing. Maybe it's a slight contrarian take, but I don't see them building their own products very well. And I see despite having one of the best businesses in the world, poor capital allocation. In my humble opinion, I'm just a guy. But that's.

[Ryan Henderson]

So you're not using llama 4.0.

[Brett Schaefer]

Yeah, I didn't go into Horizon Worlds. I'm not buying the sunglasses from Ray Ban and I'm not buying back stock in Q4, 2021 at the peak and then not buying back in 2022 aggressively. Yeah, so.

[Ryan Henderson]

Well, I, I found the company, by the way, the only soft, the, the only Software company in North America that trades below.

[Brett Schaefer]

That's a clickbait video right now. That could be a great one.

[Ryan Henderson]

Yeah, It's Consensus Cloud Solutions. Nice. Nice vague name says provides information delivery services, including E fax and online faxing solutions.

[Brett Schaefer]

I love information delivery services. That's a fax machine. That's, you know, that's exactly what it is.

[Ryan Henderson]

Yeah. I mean, this is a legitimate. I mean, the business seems to be in decline, but it is legitimate. $150 million in operating income. Enterprise value is 970 million. Look, I wouldn't probably touch this, but we've done it. We have found the loan software company that trades at a true GAAP Earnings multiple below 10.

[Brett Schaefer]

You research your investments, you analyze markets, you manage risk. But did you research your broker? For the past three years, IBKR individual clients averaged an annual return of 24.3% compared to 23.1% on the S&P 500. IBKR's lower trading cost, competitive rates, efficient execution and access to more than 170 global markets helped investors keep more of what they earn and put more capital to work over time. The broker you choose matters. Interactive Brokers Matter Member sipc. If you care about performance, find out why the best informed investors choose interactive [e-mail] performance. All right, that's enough. That's enough software. We got plenty of other things to discuss. Intel up 17 after hours. I'm looking. They reported right before we recorded. I just was glancing at the numbers as you were going through some of the SAS numbers here. I see now 18% after hours stocks at $79. I think that would put it, you know, in the last year. A year ago, we were trading roughly at $20 a share. So what is that, a four bagger in after hours here, right? Yeah, I'm doing the math correctly. In a year. What did I try to call it? American Manufacturing? No, American Semiconductor Manufacturing. That's what we're going to have to spin it out to. Let's look at the actual numbers here, though. I don't know whether they beat or missed again, anyone that once that on this type of show, we're not, we're not going to give it to you. Overall revenue up 7% year over year. I'm sure we can look at net income and free cash flow, but here's what I thought was interesting. Data center revenue compared to Q1 20, 25, up 22%. Client computing up 1%. And then foundry is finally getting a little bit of legs, up 16% year over year maybe they're getting. Starting slowly. You know, they're still growing slower than tsmc, but the momentum is getting there. And yeah, you can see that chart, Ryan. We're making a little bit of a comeback and I want to know, yeah, maybe we can look at their business outlook. Revenue. They didn't give out a growth rate. I guess I can't calculate it live, but gap revenue, 13.8 to 14.8 billion next quarter. I'm assuming what they're saying on the conference call right now is nice. Gross profit seems to be growing and hey, maybe we're finally making a comeback.

[Ryan Henderson]

Yeah, I'm looking at the data center segment here. If you look at it, Since April of 2023, things look phenomenal. Operating margins have expanded a lot for that segment in particular. But if you zoom out a little further and I'm wondering if there is some sort of reclassification. It's still down quite a ways or maybe they sold some division. Overall revenue growth, Brett, was 7% this quarter. Yes, of course the stock is up. I think you just mentioned it. It's almost up 300% this year. So it's all about the future, I guess.

[Brett Schaefer]

Exactly. Yeah, yeah. And you mean in the last 12 months, not year to date. I believe that's what you got.

[Ryan Henderson]

Oh, yeah, yeah, sorry. Last 12 months. One year. The lip Bhutan. The CEO said that there is a lot of demand for, as the, as the shift to agentic solutions happens. Apparently there's a lot of Demand for Intel's CPUs so I guess they're there to reap the benefits. I know you're, you follow this company more, but I, aside from the need to have like a semicon, a successful foundry here in America and a leading semiconductor company for like national pride and, and national security, is there anything else that excites you about this or is it just that like national government angle?

[Brett Schaefer]

It's hard to say. There's. Okay, I don't know enough about it to know about the next kind of wave of products people have. There's like a 14A and 18A that goes way over my head. But it seems like they're getting a little bit momentum. That's really all I can say. There is going to be help for, from yes, the US government, but there's also going to be help from Nvidia, there's going to be help from Amazon, there's going to be help from I think Alphabet and maybe, maybe, maybe it was Microsoft, some other companies who want this foundry to work because look at TSMC, they're pushing what, 50 something percent operating margins on Foundry, which is their entire business. That is where they want that price to come down. They want more competition and the incentive is there for Nvidia, for Amazon forever, for Alphabet to find another Foundry player. So I think that's where the bull case is. And overall the AI spending doesn't seem to be slowing down.

[Ryan Henderson]

Yeah, we've got a comment here from John in the chat says, hey Ryan, do you still own Ticker Idn? It is up big time this year.

[Brett Schaefer]

I feel like, do you remember this, Ryan?

[Ryan Henderson]

I feel like Obi Wan in that, in that meme. Like now that's a ticker I've not seen in a long time. The. No, I don't own Intellicheck anymore and I have not followed the story. I remember being, it was kind of an eye opening experience for me because it was one of the first real like small caps I truly followed. And I remember at one point I owned Google and I owned Intellecheck and I read the conference calls one after the other. Google's like, we have seven platforms that just reached a billion users. Like basically all these insane stats. Intellecheck was like, we've hired two sales reps. It's going to take some time to train them up. But yeah, no, it is. It's just two totally different worlds. But you kind of realize the resource constraint that you run into when investing in micro caps and small caps.

[Brett Schaefer]

So maybe we should look at them as another small cap of the week. We can jinx it for everyone. Yeah, stock's gone from like $2 to $8. So congrats to the longtime shareholders. Maybe they're turning things around. But no, I don't own it either anymore and I haven't followed it in a long time. What about Phil?

[Ryan Henderson]

Want to talk the end of Zinn?

[Brett Schaefer]

The end of Zinn. Yeah, go, go right ahead. Philip Morris.

[Ryan Henderson]

So Philip Morris reported earnings this week. The numbers were okay. Yeah, I guess I'll go okay with the question mark. The combustibles business, surprisingly resilient. I honestly think maybe that has been.

[Brett Schaefer]

Ryan, you're just the one that doesn't understand these businesses, they just raise prices. No one cares.

[Ryan Henderson]

No, I mean volumes have held up.

[Brett Schaefer]

Well, I think if I read correctly there's a one time thing okay. For them.

[Ryan Henderson]

Yeah, I mean, okay, comparatively, compared to the US market, the volumes have held up really well. Yeah, but I, I do think that was probably, I bought Philip Morris, I want to say, three years ago or Something like that. And, and that my thesis was based around the growth of Zyn and ICOs. And I think the biggest surprise for me was the resilience of the actual cigarette portfolio.

[Brett Schaefer]

Still got to spend some time in Europe or Latin America.

[Ryan Henderson]

I do.

[Brett Schaefer]

Or really any. A lot of places there's. There's still a lot of smokers out there.

[Ryan Henderson]

The biggest concern from this quarter was Zinn. Volumes fell 23% year over year in, in the United States. This is their, it's their first decline ever and it's their first like by a long shot. So they delivered or shipped 155 million cans this quarter and last. This time last year they shipped 202 million. There was some one time inventory channel issues.

[Brett Schaefer]

It's like selling versus sell through, right?

[Ryan Henderson]

Yes. But even if you strip that out, it was a decline.

[Brett Schaefer]

They said so.

[Ryan Henderson]

Okay, yeah, I saw something. It was minus 3% and instead of minus 23%. So I mean it is a big difference. But this is happening at the same time that Velo from British American and I believe ON is still reporting growth as well. Could be wrong about on.

[Brett Schaefer]

Don't forget free.

[Ryan Henderson]

Yeah, ttb. There's heightened competition in oral nicotine right now. And so I think there's valid concerns around this in business. This could also be a temporary headwind. I've seen that there's like flavor. They're waiting for flavor approvals to be able to roll out the full portfolio. In the United States being an analyst is strange.

[Brett Schaefer]

Like you got to put a note, we're waiting for flavor approvals. You're supposed to be this high paid Wall street analyst. Just. It doesn't matter.

[Ryan Henderson]

I'm still optimistic about the Zen business in the long run. I feel like it can be a lot like Marlboro was where it's maybe seen as a potentially premium brand that you pay a little more for. And it holds market share in a growing category where there's a lot of pricing power and costs $0.05 to make you sell it for a dollar. Whatever. The margins are phenomenal. The most optimistic part and really what matters to the business more. I think people, people love to talk about Zyn just because it's kind of a popular consumer brand.

[Brett Schaefer]

But that is in the United States.

[Ryan Henderson]

I think more US focused iqos which is their heat not burn devices is growing at a really strong rate. Especially in Japan. Apparently this is actually a much bigger business for them as well. If I'm not mistaken. Trying to pull up the numbers, the number of heated tobacco shipments grew. Sorry My friend at fiscal here heated tobacco shipments grew 11% year over year. Cigarette shipment transactions were down 5%. So I guess I was wrong on the volume side of things. There are markets now where they are selling more iqos devices than they are cigarettes or I go not devices but the sticks. And this is higher margin. It's great business. I think it can ultimately you're going to see over time as the cigarettes become a smaller and smaller percentage of Philip Morris's business. I still think you're going to see a combination of pricing power, volume growth, margin improvement, which is a recipe for good returns assuming you buy it at a decent multiple.

[Brett Schaefer]

Yeah you can see the stock reaction Zinn While part of the thesis could have been that the nicotine pouches are a mega growth story over the next decade, in the near term it is the pricing power and combustibles and the continued market share dominance in Europe and Japan maybe a couple other places of ICOs. The I think another thing investors forget or don't look at as much and again look at the newsletter for anyone that's interested in the to dive deep into tobacco is Devon Laur's invariant newsletter covers it pretty much each week. The if you look at Philip Morris and ICOs they get 2.5x revenue per like customer. If someone switches from ICOS to or sorry from combustibles to ICOs because you have to buy the device up front which is it costs a little bit but it's still kind of an expensive device and then the actual sticks are more expensive and you should have less or more customer loyalty because in order to switch to a competing product, you have to switch to an entirely new device. So it's more cost prohibitive. Let's see. We have a comment here. Might have gotten brought up but UK banning cigarettes permanently for what was it people born after the age 2008. Yeah, that could have something like that. It's a small market but it's definitely a headwind and it might be fine for Philip Morris because they're in new age nicotine. So this could help ICOs, this could help Zinn, this could help nicotine pouches in general. But yeah, those laws are always generally dumb. It just creates black market incentives.

[Ryan Henderson]

Yeah, I was going to say I mean I think countries have tried this before. You just start buying illicitly or illegally and ultimately the governments lose out on tax revenue.

[Brett Schaefer]

So what Here, here's. Here's something I have for you and our interview with Fabio from Capital Mindset. Mindset Capital. I always get It. I can't ever get it right. Turning Born Brands is down to $75 a share. Little macro learnings.

[Ryan Henderson]

Can you contextualize that for me?

[Brett Schaefer]

Okay. Okay. Let's look at the drawdown from 50% pretty much. Okay. They could be, they could be worthwhile. That could be interesting at these levels.

[Ryan Henderson]

I like the nicotine space. I like the tobacco space. They're the ones that have it's fre. Is the brand right?

[Brett Schaefer]

Yes.

[Ryan Henderson]

Yeah. I, I could be interested and them and they might, if I'm not mistaken, they might have the highest overall exposure as a percentage of the overall business to the oral nicotine space compared to the other big tobacco giants. Like obviously on is a small piece of the pie for Altria Zinn, still a pretty small piece of the pie for Philip Morris. I think it's maybe 20%, 25% of revenue somewhere in there. Uh, trying to think of the other ones. British, American, it's. I still don't think the exposure is as high as Turning Point Brands. So yeah, I could honestly, I could get interested in that. Maybe, maybe a future research report.

[Brett Schaefer]

Yeah. And for anyone that wants to hear more about that, when we did have our interview I think a month or two ago on the stock, probably 45 minutes on that. Pretty, pretty. Yeah. Pretty in depth, I'd say. All right. What about American Express? Huh?

[Ryan Henderson]

Go for it. Let's tell. Yeah, good earnings.

[Brett Schaefer]

They have not been killed by stablecoins yet. It's almost the same thing as AI, right? It's like, oh, AI is going to kill these businesses. Stablecoins are going to kill credit card networks. And then each quarter the numbers come in. We'll see what happens with these in MasterCard but I would assume they're right in line with American Express. 9% build business growth, which is kind of for more or less, it's going to be their transaction volume. 38% build business growth from Gen Z, which I'd like to see small part of the business. But you want that because from people that say Ryan and ri's age that join American Express, you have much more of a lifetime value on average over the next 20, 30 years if you stick around with them. You start a family, you have much higher, higher spending needs from someone that's in their 20s versus 30s, 40s and 50s. The spend growth for the platinum card is accelerating after the card refresh with no change in churn and the annual fee on that one From I believe 700 to $900. So pretty impressive performance there. It looks like they knocked it out of the Park. They added 3.1 million new cards in the quarter. Total revenue growth 11% shares outstanding down by 2% they just consistently buy back stock. Is this still a business you would buy in a bear market? That's kind of how I look at it. It's a little expensive today. I get slightly nervous about more and more restaurants, retail locations having different fees for credit cards versus not that gets me a little nervous. But so far the numbers haven't borne out anything from that fear. It's been all narrative, no fact experience.

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[Ryan Henderson]

Yeah, there's a lot more

[Brett Schaefer]

people should

[Ryan Henderson]

do a poll on all the people that say stablecoins are going to disrupt credit cards and ask them how many of them are paying with stablecoins at restaurants. My suspicion is that none people ultimately continue to use credit cards. It's I think the concern around fees is overstated. It is obviously if restaurants are tacking on extra fees it's a different issue. But no, I thought the results for American Express are really good. The business is one of my favorite out there probably. And yes I would love to buy it if it were trading a little cheaper. The it's shocking to me how durable the desire is for people to pay with a cool looking card. Like even if strip out like all the benefits of American Express and the points and rewards, stuff like that. People just want to have a cool looking card. They want the prestige of pulling out a nice Amex.

[Brett Schaefer]

The ladies like American Express. What could I say? Yeah, that's a good incentive right there.

[Ryan Henderson]

It is. They have increased active card holders for I want to say five years straight every every single quarter for five years straight.

[Brett Schaefer]

Oh, yeah, you make some good fiscal AI charts. Some real, real, real good ones.

[Ryan Henderson]

While the average fee per card has increased by more than 10% a year, which, I mean, the price, it's. It's pretty rare that I, I find a company where you can look historically and say, wow, they've really flexed pricing power. But you can, you can also, like in the case of American Express, you look at the lines for the lounges, it feels like they have a lot of room to grow. Like their average fee per card, they can continue to tear it out, continue to add higher and higher levels, higher and higher upfront costs to be a cardholder. It seems like there's a ton of pricing power still to be had.

[Brett Schaefer]

Yep. And the power of the fact that they have so many cardholders that are the wealthier portion in the United States and a few other markets, there's like five or six core markets that they have a decent amount of market share in. If you look at some of the stats they had in the recent IO presentation, four from this morning, go find it in their investor relations page. When they revamped the Platinum card, they added these. Instead of $200 a year, they added $600 a year to their. They call, like fine hotels and resorts, kind of nice hotels, maybe at least $500 a night or more. And you get these discounts if you had the Platinum card, which went from $200 a year to $600 a year. So, you know, you can get quite a good discount. That growth from previously, I think, or I think lodging in General grew at 5%, but the fine hotels and resorts that joined the program grew 50% year over year in bookings. And what they mentioned is that the hotels are funding all of the discounts. So that's a nice business model, that's all I gotta say.

[Ryan Henderson]

Yeah, I mean, why wouldn't the hotels discount, other than maybe like brand damage potentially. But really, I think that's not a real risk. The. We got a comment here that says the physical weight of the card is powerful stuff. Yeah, it is. Just accidentally dropped it on the floor really loud. Yeah, it's.

[Brett Schaefer]

That was the. Who's the island guy. Oh, God. Fire fest guy.

[Ryan Henderson]

Newman or. No, not Newman. Yeah, yeah, I know who you're talking about.

[Brett Schaefer]

His original idea was basically a competitor to the Platinum card, Magnesis. It was made out of, I believe, titanium or maybe something similar to what the Platinum card is. But the thing is, it had no benefits and you actually couldn't pay with it. So it was. It was it McFarland?

[Ryan Henderson]

McFarland, is that his name?

[Brett Schaefer]

Billy McFarland? Yes, that's right. That was back way in the reaches of the brain there, but we got it.

[Ryan Henderson]

All right. What about CME Group? I don't know if you've ever looked at this business, but it's like the leading options and futures exchange. This was an interesting quarter for them because of the geopolitical stuff. So commodities or energy contract volume soared, which as the exchange, you're benefiting a little bit at a time with the fees they saw. So this is the only quarter in their history where they have. So I think the five segments that they have that they offer, like how they break it up. Let me make sure I pull this up. Stocks, so you've got like equity futures or options. They've got commodities, they've got. I've got it pulled up here. Foreign exchange, interest rates. So it's metals, agriculture, energy, foreign exchange, equity indexes and interest rates. So there's six. Every single one of them saw growth this quarter and a lot of it was linked to the geopolitical situation where you don't know what's going to happen with interest rates. Right. How is it going to be affected by the Strait of Hormuz? Energy contracts obviously saw a spike in volume. Same with metals, same with agricultural commodities. The thing for me is I would think that this business is maybe at risk of a little bit of disruption from the prediction markets.

[Brett Schaefer]

Was about to say the same thing. We're on the same page there.

[Ryan Henderson]

Yeah, right.

[Brett Schaefer]

But that's long term though. I mean, those are small marketplaces.

[Ryan Henderson]

Yeah, but I'm sure a lot of funds are, you know, using them as a way to position their opinions.

[Brett Schaefer]

Okay, look, there's some Kalshee contracts I was looking at that have volume, they're pretty popular of like a hundred thousand dollars. There's just not enough liquidity yet. But I agree with you. Long term, maybe a decade, this is definitely a risk.

[Ryan Henderson]

Yeah, I would love this business if it weren't for the prediction markets risk. At the same time, I do think prediction markets are not too far away from having sort of the hammer thrown down from regulation around some of this because obviously it's a new market and there's a lot of transactions that maybe shouldn't take place that do. But yeah, I would be concerned a little bit for CME Group along those lines. I'll also say this. Speaking of capital markets companies, I have my new research report. It's going to be MSCI, not DoorDash I'll save DoorDash for a later date. MSCI. It's impressive. It's a phenomenal business.

[Brett Schaefer]

Burry bought it, huh? They just make a nice title. Ryan's buying Burry's new favorite stock. Something like that. Little click.

[Ryan Henderson]

Burry and Ryan owning the same stock. Yeah, I'm sure people are weighing those opinions the same. But it's. I mean running an index, what a. What an easy business with also like a reputational advantage if you pick some obscure index to follow. If you're an etf, you're not going to attract any funds. You have to have the name, notoriety of a company like msci.

[Brett Schaefer]

So

[Ryan Henderson]

I mean it can't be that expensive to make a list, right? Isn't that basically what most of these indices are?

[Brett Schaefer]

Well, it's, it can be important. Let's SpaceX OpenAI anthropic going to get tossed into that NASDAQ 100 at insane market caps. There is importance to diligence. Like look at the NASDAQ 100. It's pretty much. It's done well over long term, clearly, but it's a bit of a momentum chaser. Adding peloton at the top, adding other stuff at the top. Coinbase, stuff like that. I think maybe not coinbase, I might be misremembering. S and P seems to have a bit more discipline, a bit more heritage. You have stuff like that that seems to. I don't know, it's important. But yes, it's clearly it's kind of like Moody's SMB Global, not a bad business to be in. I think that's a good choice for a research report.

[Ryan Henderson]

You think about like the incremental cost is maybe the lowest in the world of any product ever. Like you've especially for like a market cap weighted index. Right. Like it's. You don't have to make any decisions so it's. You can literally just have that on automatic and new people come and subscribe to that index and it costs quite literally nothing. So it's. Yeah, it and the operating margins reflect that. MSCI is a very profitable business. But yes, that'll be my next research report. I brought that up because they reported earnings this week and it was actually pretty good. Do you want to talk Tesla? Did you even read, did you read the earnings?

[Brett Schaefer]

I did read briefly. Full disclosure, small short against them, I would say. No surprises really. I was curious on some of the bullet points on how they earned some one time benefits on tariffs. That kind of got hidden in the footnotes there but besides that, not really a big surprise. There's a lot of talk about the future and automotive business is doing solid, but really not that great.

[Ryan Henderson]

Yeah, I didn't dig too deep and it's kind of Tesla's kind of done this maybe intelligent thing where they kind of report some of they report deliveries and production numbers like two weeks in advance to kind of dilute the damage of like a one time information load. I think like if you, if you report bad deliveries, you never know what the numbers might shake out to be in, in two weeks when earnings come out. So it's always like a muted reaction but then come earnings. It's like well we've already seen the deliveries numbers, you know, I mean.

[Brett Schaefer]

But he's master the narrative. Absolute master. There's 12 slides I'm blowing up right now on the deck dedicated to their earnings. There's I believe 20 dedicated to photos of things. There's Cortex 2 which is a new factory. There's the AI training center at Cortex 2. There's the mega factory Texas. We have the Optimus factory site preparation, the research fab that looks kind of like a photo from a gold miner. There's a lot of stuff in play here. You have the right. Optimus is apparently going to be building these Terrafabs and then Optimus is going to be building space data centers.

[Ryan Henderson]

Yeah, there was. I'm always blown away because it's been like 10 years of this where investors that follow the situation have one take and, and then the public has a totally different take where. And it's usually, you know, resonates with whatever Musk is saying where the factory in not Palo Alto but Fremont was producing fewer and fewer cars. I mean they were delivering less cars from what was it? The Model X and S production. Yeah. So they needed to do something with that building. And what a great way to control the narrative of we now have to stop producing those cars and completely use the Fremont facility for Optimus production.

[Brett Schaefer]

The man is good at a narrative. But if you look at the numbers, trillion 12 month net income is something between 3 and 4 billion dollars. Market cap's like 1.5 trillion. It is a lot of future. And they're planning on spending $25 billion in capex this year. The mixing between the two companies, SpaceX and Tesla is blurring or the differences are blurring. And that leads me to. And I wonder if you saw this in my notes, Ryan, because we accidentally made two separate documents. You go down to my bubble watch. I have a note here that says A way to bet on the SpaceX and Tesla merger. We're having a hot take. We've had some hot takes that's going to happen. But you can through Kalshi. I guess I have loaded up here. I will say go check out our sponsors, prediction markets, Forecast Trader from ibkr. Go check them out. They're building a lot of contracts and if you're an existing customer, makes it much easier to use. There's a contract here on Kalshi. When will Tesla and SpaceX merge? You can go before June 1, 2026 and get yes at 2 cents. So you can. What is that? A 50x if you get enough. If you actually get that 2 cents to fill. That's a bit ambitious. I think maybe the July 1st one at 6 cents makes sense here. For anyone that doesn't know, you can go check this out. Just look up Cal she Tesla and SpaceX merging. You figure out what, how it all works. Because the IPO is supposed to happen in June and if they're going to merge before the ipo, I'd want to have maybe June window for that to happen. And then if they, if SpaceX does IPO, I think a merger is still possible, but it probably won't happen for at least a few months after that. Probably go late. I was kind of looking at this 10-1-1, 10 cents. I mean you can 10x your position. If you're right, obviously it's a low, it's a low probability bet, but you can 10x your position in 6 months from today. That feels like a good risk reward for something that I think is fairly likely to happen over the next couple of years, if not this year.

[Ryan Henderson]

I do want to caveat this because we got a comment on the podcast last week. It's okay to play around with these. We're not advising that you use this as a huge chunk of your investment portfolio. Have almost all my money invested in stocks. Brett maybe has more shorts and derivatives,

[Brett Schaefer]

but yeah, no derivative, just short portfolio, small percentage of the assets.

[Ryan Henderson]

Yeah, it does feel likely. I think too soon is just not possible. Like investment banking wise. I don't know if they'd be able to pull it off in short order.

[Brett Schaefer]

Honestly, all there has to be is a formal announcement. Oh yeah,

[Ryan Henderson]

that changes things. I think it depends. It's all sort of dependent on Tesla's stock price. I think the worst Tesla's stock does, the more likely this is to happen. So maybe there's a pair trade you could have there where, I don't know,

[Brett Schaefer]

reverse merger Tesla's balance sheet has $40 billion. You raise a hundred and something billion dollars from capital markets that were going to go to the. And boom. The way I see infinite balance sheet

[Ryan Henderson]

is he's going to use. My prediction would be if Tesla is suffering, he's going to say we're going to combine it with SpaceX as a way to propel the Tesla stock price. That is when I think the event would happen. They're going to, they're going to get so much cash in an IPO at SpaceX regardless. It doesn't matter. I think he, he just wants to use it as an incentive for people to own more Tesla shares.

[Brett Schaefer]

But if you can, okay, you can get even more cash by combining with Tesla. That's why he. Right. 40 something billion dollars, maybe. No, I'm saying you can get both, you can do both, you can raise the money and now you have a perfect narrative.

[Ryan Henderson]

Yeah.

[Brett Schaefer]

Terrafab, they're laying the groundwork. There's a reason they have Terrafab as a SpaceX and Tesla project.

[Ryan Henderson]

Yeah, I mean they are all starting to blur. I guess it's just sort of the musk complex at this point.

[Brett Schaefer]

What do you think? Any value? Any, any contracts you like, I like. Again, I would not put very much money on this. It's more of the hypothetical. I don't think I'd ever do it. I like July or October. Sure.

[Ryan Henderson]

If we're betting, I'd say it's gonna be further out. I don't think June's that realistic, but.

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[Brett Schaefer]

Well, it's a hiring look.

[Ryan Henderson]

You know what the best way to get exposure is On Google. There you go.

[Brett Schaefer]

No, that's, that's. You're going to get barely any return from that. Like this is a chance, a low likelihood of a huge, like just a huge win.

[Ryan Henderson]

It feels like I understand how it works. I just not comfortable making the bet. Honestly. It.

[Brett Schaefer]

I don't think you'd ever be a vc, Ryan.

[Ryan Henderson]

No, I want it. The betting on Musk's actions is like. You never know.

[Brett Schaefer]

I think he's laying the groundwork for a merger. We'll see though.

[Ryan Henderson]

All right. Do we want to talk about your trading venture?

[Brett Schaefer]

Other. Other. Other bubble Watch? Yeah. So Avis stock turned into GameStop for a little bit this week. I guess the Internet found out there was a massive short position, similar game stuff. About 100% of the shares outstanding were sold short. People started to squeeze it, you know, whatever the options and stuff like that. Stock went from about $100 a month ago to a peak of over $700 this week. That was earlier this week I believe on Tuesday it peaked. Is now down 65% in two days. Feels like there's a little bit of GME energy before or is back but it's not, it's not the same. There's definitely animal spirits. This is the type of stuff you see during close to market tops kind of peak animal spirits. I mean GameStop almost called the top for the growth bubble in early 2021. But I feel like it's not the same sort of energy. And I will say I got extremely lucky with this. I saw this on Tuesday getting kind of the 6002 range and I thought ah, the market cap's at like 20 something billion now. The short squeeze has gone up a ton so far. I'll take out one share short, you know, not, not a large position but it's still, you know, the per share price is not, not tiny. And for the day I went up to like 700 something. And then I. The last two days it's, it's been nice. I got. Got a little lucky there but I. And then I closed out the position earlier today. So I don't know if there's any good lessons from that, but there's I think plenty if you keep diversified. Because I would have felt extremely uncomfortable making that a large percentage of my portfolio. I think there's a lot of potential short opportunities out there.

[Ryan Henderson]

Yeah, well, congrats on the short.

[Brett Schaefer]

The.

[Ryan Henderson]

I don't understand why if you've got a smaller company market cap wise that has a significant amount of its of short exposure, I can't remember the terminology that's used there. But a percentage of the float that's sold short that seat, like in today's world, don't short those.

[Brett Schaefer]

Right.

[Ryan Henderson]

Like, yeah, it's fair. You have the risk of this happening where like, you know, the right Reddit forum catches onto these and I know a lot of these have been like people track this now like most illiquid highest short percentage of a float as like potential meme stocks. But yeah, it is. It's funny that these happen in the span of a week.

[Brett Schaefer]

Yeah, that's what I think. My philosophy is taking the next step further and just wait for something like these to happen. Don't make it a large position on the short end and you're I think pretty quickly on the other side going to make money. If you can take the stock may be going up to 3x in the interim if you don't perfectly time the top.

[Ryan Henderson]

Do you know like, okay, when this goes up 700% in a day, does the short short exposure go up or down? Like are more shares?

[Brett Schaefer]

It depends how much they. Because the way it works is if the people that are selling short have to buy back a ton, that's what can cause a short squeeze. There's just not enough liquidity out there for all the orders coming in. And then. Yeah, that's how it goes.

[Ryan Henderson]

Yeah. And you know what? There seems to be one of these pretty much every other week. Maybe not to this degree, but this

[Brett Schaefer]

is a larger one. Yeah. Last week was Xanadu Quantum. All right. Did you see that Larry Fitzgerald Ryan was at the Fed confirmation hearing? I just wanted to hit this quick.

[Ryan Henderson]

I did see that. What?

[Brett Schaefer]

Yeah, apparently he's friends with Kevin Warsh. Good friends, you know, back supporting at a confirmation hearing.

[Ryan Henderson]

Friends good for. I mean that's a cool friend to have, right?

[Brett Schaefer]

Yeah.

[Ryan Henderson]

Kind of weird though that he's at these hearings.

[Brett Schaefer]

No.

[Ryan Henderson]

Yes.

[Brett Schaefer]

Yeah. If you were at a confirmation hearing, I don't know if I would go. Maybe I'd go to if it was

[Ryan Henderson]

the Federal Reserve just for fun, maybe. Do we want to do small cap of the week? This has been recommended a number of times.

[Brett Schaefer]

Sure. Zeta Global Holdings. I'll say. Brought to you we've talked about throughout this episode. I know it's getting late for the Advertisement but fiscal AI use our link. Fiscal AI chitchat. Get 15% off any paid plan. Use them to research this. We've used them throughout this episode. They have all sorts of KPIs, all sorts of ways to help you research link Will be in the show notes. Check them out. And they have new products dropping all the time. But the small cap. Zeta Global Holdings. So a bunch of listeners wanted us to discuss. They are a quote marketing technology company. It's a software platform that helps large enterprises acquire, grow and retain customers. It smells like something that Mark Benioff would want to overpay for. That's my first thought. And then the second thought was if you might say Salesforce is for the sales team. Zeta's marketing platform is for the marketing team. Maybe you can make that analogy. It makes sense. One thing I see on the IR presentation is that they are a beat and raise champion or something. They bragged about doing that for 18 straight quarters. It's a slight red flag that you're kind of into pumping your numbers a bit. But again, it's not the end of the world. They've had 27% annual revenue growth since 2019. They're making a nice transition from losing money on a GAAP operating basis to positive operating leverage. They're at five times trailing gross profit. And if I look at one of the KBI charts, their net revenue retention has soared in recent years. I believe we are at 128% 2025 versus maybe 110 to 115% in years prior. So seeing some good growth enterprises aren't my favorite though, right now. I'll just admit that

[Ryan Henderson]

I think.

[Brett Schaefer]

What do you mean by that?

[Ryan Henderson]

Enterprise software.

[Brett Schaefer]

Enterprise software in general. Not really my favorite. Because this would be something I would look at. I have a large enterprise. Why wouldn't there be a little bit of an AI risk here? Yeah.

[Ryan Henderson]

I've also heard that these are. They're running like consent farms. Basically. Like.

[Brett Schaefer]

Excuse me, there was.

[Ryan Henderson]

Sounds weird, but there was short seller reports that accused them of basically, like websites that have like fake job boards or newsletters to gather user data to pull it in so that they can use that for better targeting, which I don't know. That was in 2024 that those short reports came out. Business has done just fine since then. But there is something. The ad tech space is a little dirty. Like there is. Unless you're one of the big companies where you gather all the data yourself because you own the platforms. It's really hard to get a leg up. And you kind of have to do stuff like this, I think. So that would be a bit of a concern for me. But the numbers are pretty good. 128% net retention rate is. Is phenomenal.

[Brett Schaefer]

Yeah. They give it some good figures. One to watch. I know a lot of people are excited about this thing. They give out some good 2028 guidance. But the one thing I would maybe to temper expectations, they give out adjusted EBIT and free cash flow guidance. I'm sure their stock based compensation is out of this world. It's something that like 10 times adjusted earnings and free cash flow on their 2028 guidance. Look, I'm someone that currently owns Wix, but you look at something like, okay, if you say three years or two years out now on 2028 numbers that are totally inflated because of your SBC habits, that's not that cheap. It just simply isn't. Even if you're a durable grower that that's had the success that this company's had. That's all I want to say. But you know, if they keep growing 20 something percent, it's going to do okay. It'll do. It'll do just fine from here.

[Ryan Henderson]

Pulling it up now. SBC as a percentage of revenue 11%. Yeah, yeah, that's come down but that's pretty high. All right, I think we're running up on time. So thank you to everyone in the chat for all the comments this week. Thank you to everyone for tuning in. We will have, we've got plenty on the slate coming up. We've got some going to have some portfolio dissecting. We will have a research report from me. We're talking a super investor who's somewhat controversial today but had a pretty dang. Some people complain but we're talking Howard Marks. It will be, I think a fun one. I think that's going to do it. Thank you everyone for listening. Want to remind you that Brett and I are not financial advisors. Anything we say or discuss here on Chitchat Stocks is not formal advice or recommendation. We may buy, sell or hold any any of the securities discussed in this podcast. Thank you all for tuning in. We'll see you next time. I finally had a light bulb moment about a stock we've all heard about growing at 18% a year and a 15 pe. I shared this insight in a special deep dive report to subscribers of my research service Value Spotlight. The report is called a generational moment Reigniting human connections through a tangible network of intangible assets. Chit chat listeners can get a discount to my [e-mail] that's stock W R I T E U P dot com.