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Chit Chat Stocks
Earnings Kickoff (TSM, ASML, NFLX); AI Absurdities; Amazon's Starlink Competitor; Hermes Opportunity
01:06:02
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- [00:00]
Brett Sch
Will The Fed raise rates 25 basis points in June 2026? IBKR prediction markets let you trade the outcome alongside your stocks and options, earn interest, get it right and earn $1 per contract@ibkr.com predictions. Last trading day, June 17th.
- [00:20]
Ryan Henderson
Welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. I am your host, one of your hosts, Ryan Henderson, and I am joined as always, by the one and only Brett Sch. Today we have our weekly Investing Power Hour episode. We do these live on Thursdays at 5pm Eastern Time, and we talk all things financial markets. Any news from the week? Earning season is heating up again, so we're going to be talking about that. We've got Taiwan Semiconductor, earnings asml, we've got Netflix just reported. And we have one of the craziest business model pivots in recent history. A former fashion brand. People might know. Allbirds, or I should say Newbird AI. New name change there, Brett. I don't know if you saw this.
- [01:10]
Brett Sch
Is that what they officially called it?
- [01:12]
Ryan Henderson
That is going to be the rebrand, yes.
- [01:15]
Brett Sch
All right, can we pivot to Chit Chat Stocks AI? I'm thinking either Chit Chat Stocks supercomputer, Chit Chat Stocks Compute. It's got to be something along with the computer. You know, I use the C words as help here. It seems like if you announced that you acquired GPUs, which I think we technically have, because we have laptops that might have a Nvidia core processor on there, we can update our laptops and say, hey, We've acquired some GPUs for some AI compute.
- [01:49]
Ryan Henderson
Yeah.
- [01:50]
Brett Sch
It seems you get 10 times the valuation. So our company's not worth that much money. We've tried to figure it out before, but if we, if we just pivot to AI supercomputers, I think we can do well.
- [02:02]
Ryan Henderson
The irony here is that people are treating well. We can talk about whether or not there's any valuation work being done here. There's obviously not little spoiler alert there, but they're treating GPUs like they are the assets. The most valuable assets in the world, which I guess maybe they are. It obviously depends what you do with them. But they are also the fastest appreciating assets in the world. Close to them. But we've got other topics as well. I've got a little more on the boring industry of consulting. I won't spend too long there.
- [02:39]
Brett Sch
Yeah. Can we. Let's, let's not start with that one. Get everyone to tune out we'll do that.
- [02:44]
Ryan Henderson
In the middle, we've got an Amazon acquisition. That's right, Global Star. We'll talk about that in a sec. Uber's got some AV investments and you've got Claude potentially massaging the numbers. So all that hype we've seen is. Well, there's still plenty of hype to be had, but the. I think there's some interesting accounting going on there potentially. Where do you want to start, Brett? Let's start with Albert. What happened here?
- [03:11]
Brett Sch
Ryan, people might not have heard. People that are in the online world following all the financial news every day like us. What exactly did this company do and what was your reaction when first seeing it? Because I just started laughing.
- [03:25]
Ryan Henderson
I laughed as well. Yeah. I mean that's all you really can do. What's the point of getting frustrated? This is going to be maybe the future of crappy micro caps, bankrupt companies like we. For better or worse, we live in a meme stock world. We live in a world where
- [03:48]
Brett Sch
you
- [03:48]
Ryan Henderson
can catch virality fast if you're in the right subreddit, I guess.
- [03:57]
Brett Sch
Or Twitter. Or Twitter. It seems like it went viral on Twitter.
- [04:01]
Ryan Henderson
If you have low flow, you can, you can pop a lot in a single day. So let me, let me go through the actual announcement. The press, all birds. For those that don't know, I think Allbirds was sort of a, it was a trendy thing, I'd say five years ago they were a shoe company that just looked very casual. It was started by a former soccer player. And when they went public, they reached, I believe, a $4 billion valuation at one point. Well, they've had a horrible run. They were functionally bankrupt and they recently sold their business really to I believe a private equity group. But they released an announcement on Tuesday morning that reads as follows. Allbirds Inc. Executes $50 million convertible financing facility agreement announces expansion into AI compute infrastructure which caught the world off guard. The one this stock was pretty much left for dead. So if you are one of those investors that loves to just dig through complete trash and find bankrupt stocks, most of them are going to be trash. But you can occasionally find something like this where ethics maybe are not like the highest concern. Here's the quote. Uh, the facility, which is expected to close during the second quarter of 2026, will enable the company to pivot its business to AI compute infrastructure with a long term vision to become a fully integrated GPU as a service and AI native cloud solutions provider. In connection with this pivot, the company anticipates changing its Name to Newbird AI. So here, okay, what do you think
- [05:53]
Brett Sch
they were doing at the, the executive meeting before this plan? They just go, look, we got no options left. And someone goes, what if we kind of as a joke, what if we pivot to AI and everyone starts laughing and then they go, maybe that's our only option left.
- [06:11]
Ryan Henderson
So they sold their business to. They sold their footwear business, brand assets. I believe they've already closed down all their stores to American Exchange Group, I think for $38 million. And then they've raised this $50 million convertible facility to basically beg Nvidia for GPUs. Following this announcement, Allbird stock jumped 781% in a single day. This.
- [06:40]
Brett Sch
I got, I got the numbers right here. Yeah. $252.50 Monday, Tuesday, pretty much yesterday. We go up to 20 at its peak today, down 30 something percent. A little bit of a drawdown. Already entered a bear market, closed at 11. So, yeah, wild ride.
- [07:04]
Ryan Henderson
Here's my question. Do you think there was genuine intention from management that they thought they have some expertise in AI, some edge where they can be.
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Brett Sch
No.
- [07:18]
Ryan Henderson
Like, is this like, do you.
- [07:19]
Brett Sch
This is the Hail Mary.
- [07:21]
Ryan Henderson
You don't think that they act like deep down believe this business model could maybe work? Or is this just pure, let's get the stock pumped as much as we can?
- [07:29]
Brett Sch
I don't think they're necessarily doing it solely to pump the stock, but I think they're saying this is a Hail Mary. This is an option a lot of companies are doing. It's not illegal. We can. Technically, any company can get into this business. It's not like there's something illegal going on here. Unless there was insider trading or something like that. Yeah, it's absurd. It's the same thing as. It really brought me back to one of the formative events in my investing career when the Long island blockchain debacle happened. Do you remember this one?
- [07:59]
Ryan Henderson
No.
- [08:00]
Brett Sch
So Long island Iced Tea, 2017, I think it was 2017, 2018. Crypto boom/ bubble. I guess bitcoin is much higher than it was then. So it was definitely a boom bust cycle. You know, the fallout, down 80% from there. But during the uptimes, there was a lot of companies, and in this period it was more about the blockchain. A lot of companies were doing blockchain initiatives. Press release is kind of like the one Allbirds is doing here, but just insert. We're investing in blockchain strategic assets. Blah, blah, blah, blah, blah. Long Island Iced Tea which you know, is a brand. They decided to do essentially what Allbirds is doing and then pivoted their company name to Long Island Blockchain, which was just an alz timer and all birds. I think it goes up there in the mountain Rush. More of hilarious business pivots. What do you think about this, though? We titled this episode as a press release Chitchat Stocks Unveils New AI Supercomputer.
- [09:04]
Ryan Henderson
Don't forget Quantum.
- [09:06]
Brett Sch
Quantum. Yeah, I mean, we're investigating. It's like these new. The nuclear energy companies, the fusion ones, the small nuclear reactors, the micro nuclear reactors. Some of them, full disclosure, I may be short. They put out these press releases that just go, we're investigating new technologies for this micro fusion reactor that'll fit into semi trucks. And you have no approvals for any of this. There's. The Nuclear Regulatory Commission hasn't done anything. So yeah, you can announce chit chat. Stocks can get into the nuclear energy program if we want. Like this stuff is just all nonsense. It's all hail bears.
- [09:45]
Ryan Henderson
Let's. I'm going to veto that, that podcast title.
- [09:50]
Brett Sch
I just, I think we get a lot of listens. I think we would.
- [09:54]
Ryan Henderson
Well, that's. That's probably the pitch they gave at this board meeting. I think we'd get a good share price. So the irony here is that. So I checked, there's this. There's several lists online that it's like biggest movers, biggest stock movers today, biggest gainers, biggest losers. And every single day you check, there's some micro cap up 200%.
- [10:17]
Brett Sch
This is the world.
- [10:18]
Ryan Henderson
Like they're now. Usually they're nothing. It's not like a company that used to be something like Allbirds. But here's what I find ironic is if they did this just to sell shares, like if the goal was just for insiders to get out with this pop, they could have gotten out at a $4 billion valuation in 2021. Like it, the stock is still down, I think 96% from highs, even after a 700% gain.
- [10:50]
Brett Sch
So that's a lesson in shorting. Don't press your short when a stock's already gone down 90 something percent for you and the market cap's below $100 million. Yeah, there's another company out here on the Toronto Exchange I may have told you about. This one I was talking about in the substack chat. It's called Xanadu Quantum Technologies Ltd. And it's up like 400 in the last week, just went public.
- [11:15]
Ryan Henderson
How did these Companies get public. Like is it not insanely.
- [11:20]
Brett Sch
Toronto Exchange, Australian Exchange. There's less OTC markets, there's less regulations and that. There was another company found called the Stablecoin Development Corp. It used to be a biotech. There's so many. They used to be just something Relay Pharmaceuticals or something. Yeah, we've gone forever on them.
- [11:39]
Ryan Henderson
But these are the Jordan Belfort meme companies, basically.
- [11:45]
Brett Sch
Exactly.
- [11:47]
Ryan Henderson
But let's talk some real news. Do we want to talk the world of semiconductors? Real semiconductor businesses.
- [11:54]
Brett Sch
The companies that. This is the real. The fulcrum in all birds is supply chain, TSMC and asml. Take us through the numbers here. I glanced at them. You read the call looked fantastic.
- [12:08]
Ryan Henderson
Yeah, I mean the numbers were really good. So Taiwan Semiconductor revenue was up 41%. Gross profit up 52%. And just I want to pause for a second there that those are staggering figures for a business of this size. You can tell how impressive the growth is because management focuses on sequential growth quarter over quarter. And they're talking about like massive, like impressive jumps. Like I was reading this and I think it was like we grew revenue 20%. I was like, oh yeah, that's all right. Decent results. Quarter over quarter. I was like, okay, that really is impressive. Anyway, revenue growth 41% gross profit, 52% earnings per share up 58%. Wafer shipments grew 28%. So the majority of their wafer shipments are now the most advanced nodes. So 7 nanometer and below.61% of revenue comes from high performance computing now, which hit a record for Taiwan Semiconductors. So for context, smartphone I think is second, is their second largest revenue contributor. About 25% or a quarter of the
- [13:21]
Brett Sch
business doesn't grow that much. And for anyone high performance compute. Just think of that AI cloud.
- [13:27]
Ryan Henderson
AI cloud, yeah, exactly. They hit record operating margins this quarter. So this was their highest operating margin quarter ever in their history. 58% operating margins. And I was reading the conference call, which the conference calls are hilarious for. For most. I think for most people it's question interpreter. Yeah, who just basically repeats the question almost to CC Way, the CEO. And then CC Way just gives the most like blunt short response he could.
- [14:01]
Brett Sch
It's like the Japanese baseball players that pretend they don't know English. I need my interpreter.
- [14:08]
Ryan Henderson
Yeah, but anyway, the first question I was actually, I thought it was a good question. It's from an analyst who basically. So TSMC is generating record operating margins right now because all the AI customers are. They can't get enough chips. They're supply constrained Whatever. And they're paying more for the most advanced nodes which now accounts for the bulk of Taiwan Semiconductors business. So margins are higher. They Taiwan Semiconductor is getting basically full utilization out of their manufacturing facilities and they are ultimately operating at their highest margins ever. The analyst was basically like okay, supply is still constrained and people are paying whatever they can. Not really but they're paying more than they historically would for these advanced nodes. Should you expect margin strength to be better throughout the rest of the year? And the interpreter asked him will margins, will margins be better than we're estimating? And more or less CCWA is like yes, and he keeps it so short. But it's, it's funny because you read these results and you're impressed. They beat and estimates, whatever you think of estimates, they beat them. 41% revenue growth is staggering for a business of the size. Stock's down 2 and a half percent after earnings it they could generate. Let me check the updated estimates here for operating income for 2027. Now again there is potentially some cyclical nature to this but analysts think that Taiwan Semiconductor could produce pulling this up right now a friend at fiscal AI. US$133 billion in 2028 operating income 133. The market cap today in US dollars is 1 point. Well the enterprise value is 1.8 trillion. Do you have any interest in this?
- [16:24]
Brett Sch
Yeah, I think it does. Well over the next decade. The question I believe people should ask is not what one year is going to be because who knows if 2028 is the peak spending for the AI build out. I think I would ask what would the average earnings power be over the next decade? And off the top of the head I'd maybe say per year 100 billion, maybe 90, depending on how bullish or bearish you are in AI. There's a lot of uncertainty there, probably a wide range of outcomes. But I'd say on average maybe 100 billion per year over the next decade is a good way to put it. That feels like a good price, not a great price. I like it. But you have to expect margins to come down a little bit once the boom period ends. And I think that's why we had someone in the comments here on the live show say best quarter in history and it drops 4%. Yeah, the market doesn't care about the past. That's really it.
- [17:25]
Ryan Henderson
And the CEOs are not going to sell the future. This is. They are.
- [17:30]
Brett Sch
He's no Elon Musk.
- [17:31]
Ryan Henderson
They're the anti promotional folks. ASML reported. I think a Day before TSMC maybe 10 years ago. And it's kind of funny when you read both of the reports because they're kind of similar where the tone is sort of the same, where it's like look, yes, demand is incredibly strong. We are fulfilling orders as fast as we can. We will continue to raise prices and it's kind of that simple. Like I think Taiwan Semiconductor and TSMC maybe has a little more variability in terms of demand. Like maybe they have to have more mobile phone or Internet of things revenue during a certain quarter, more shipments towards that. So it might affect margins but generally they have the same tone. My question for you, ASML trades at 39 times EBIT today, trailing TSMC 26 times EBIT. If you had to pick one for the next five years, which do you think generates better returns?
- [18:37]
Brett Sch
I for the next five years my gut says go tsmc. But the one thing I would just reiterate again, same thing I said I'm less concerned about ASML margin compression. I'm more concerned about TSMC margin compression over a five year period. What happens if in year five operating margin goes back down to 40 something percent? You might be able, you know that earnings multiple you're buying might not be as attractive as you think and it's not like it's dirt cheap and we've already had three years of mega growth. So yeah, I think it does fine. I like TSMC a little bit more kicking myself for not buying ASML last year right around this time, maybe a couple months after here like nine, ten months ago, stock was trading at twenty something times earnings. I would have liked that a lot more there but this disparity. Yeah, I only tsmc, what about you?
- [19:35]
Ryan Henderson
Yeah, my assumption is that they'll probably grow earnings at a similar rate over a decade. Maybe one. I would say ASML is maybe a little more predictable but you're going to get probably faster earnings growth from Taiwan Semiconductor over the next couple years just because they can move a little faster. So purely on valuation, I would go Taiwan semi the Also I assume that as the Arizona Fab and the Japanese Fab start to become operational, those are going to be a little bit of a drag on margins would be my guess until they're at sort of full utilization. So I think you're right. There probably will be a little more margin compression than people are expecting. These. I just can't pay above 30 times EBIT for a business that's for a mega cat Mature. Yeah, for a large mature business. Even if they, even if I think they can grow mid teens earnings growth for a while. 30 above almost 40 times is a lot to pay. Will the Fed raise rates 25 basis points in June 2026? At IBKR prediction markets, the yes recently traded at $0.05 while the no traded at $0.90. But the markets can change quickly. Trade prediction markets on political climate and economic events with simple yes or no prediction style contracts where prices reflect probability. Explore trending data, spot the trends and if you get your prediction right, you earn $1 per contract at settlement plus you'll earn a 3.14% APY on your investment with an interest like incentive coupon. And you'll get $3 for signing up with IBKR Prediction Markets which you can use for any purpose or to start trading. Prediction contracts are not suitable for all investors. Go to ibkr.com predictions and turn your views into IBKR prediction contracts today. Last trading day for this contract is June 17th.
- [21:34]
Brett Sch
Yeah, similar in a way to Costco 40, 50 times earnings. You kind of go eh. If your argument is this is going to be a bond like instrument forever. Yeah, TSMC and a smell a little bit different. But if that's the argument, it's a little bit tough for me to get excited. Maybe we can take some listener questions. There were a lot in the substack chat this week. Someone asked and they did have an earnings update. Hermes going down. Is there an opportunity? Did you look at the quarter they report? Kind of the European style. Just some unaudited stuff. Couple numbers.
- [22:11]
Ryan Henderson
I did not see their quarterly report. Let me pull it up here.
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Brett Sch
Stocks down again. Let's look, let's go. Draw down first. Give some context for the listeners. Draw down from high. We're at 41%. We are back at the same era we were in 2023. I mean it was much cheaper in 2022. People are very worried about one the Middle east conflict because there's less travel from the Middle east to Europe to buy goods. That's kind of one of their big markets. The euro strengthening I think also hurts them. And honestly, besides that, there's been a slowdown in luxury spending in general. But if you look at the figures, I kind of think they're doing all right regardless of like a slow period. Like okay, you're facing overall headwinds in the luxury space. You're seeing a lot of your competitors post worse figures. And maybe if you have the numbers, Ryan, I forget but I think leather goods were still at 8.9%. It feels like they still have a good lock here and can consistently Raise prices. And I'm looking at maybe our friends at fiscal AI again. I'll use EV to ebit. Don't know what the best one is. Maybe you can use PE. We're back to 25. You know, you probably do all right here.
- [23:35]
Ryan Henderson
Yeah. Leather goods business is growing 7% top line last quarter. And a lot of this is a lot of the headwind is the drag from Asia, specifically China. And even that is with all everything that's happened to the Chinese consumer. And you look at like Ferrari, for example, shipments to China are. Have basically been cut in half. Asia, total Asia revenue flat year over year this quarter.
- [24:09]
Brett Sch
Yeah, that's pretty. That's not bad.
- [24:11]
Ryan Henderson
If I were. This is kind of a contrarian opinion, it seems, but something about luxury, the luxury industry just doesn't do it for me. I don't know why. I just not that interested.
- [24:24]
Brett Sch
Durable growth. That's it. It's. That's kind of the whole thing. Oh, can they raise prices at 3% above inflation forever? That's kind of the big question.
- [24:33]
Ryan Henderson
Yeah. I don't know. You just look at like lvmh. Did they just destroy their brand over the last couple years with such strong growth, like. Or. And I guess they have a lot of different brands, but.
- [24:50]
Brett Sch
Oh yeah, for sure. That's. There's a huge risk for LVMH specifically with the core Louis Vuitton business with that. But I think with Hermes less so they still have the artisan French makers. You still. It's incredibly difficult to buy their, you know, top SOT bags. The aftermarket prices are still 2.3x higher than the retail prices, meaning there's a disconnect between supply and demand that they keep permanently low. You probably do well from here.
- [25:18]
Ryan Henderson
There's just something about it that like, okay, I walk by an Hermes store like every. Every time I go to the office here in Austin, and maybe it's just because maybe Austin's struggling. I've never. I have never seen a single person in that store and. And maybe all it takes is one to cover their costs. But.
- [25:36]
Brett Sch
Yeah. Yeah. You're not. Nope. 99% of the population of Austin isn't allowed to buy no stuff, but it just allowed to. No. Their core market's not Austin. It's, you know, Paris to Monaco. Monaco, yeah.
- [25:50]
Ryan Henderson
Yeah. If I were to buy one, I think Hermes would be the one because it feels like they. Hermes or Ferrari, maybe they nurture the brand, maybe the best and. And try to avoid like diluting it by letting more people access it. But I don't know, something about luxury. Just feel it's like a snooty investment.
- [26:14]
Brett Sch
Yeah, well, yeah, yeah. I've never owned them, but I think. I think you do. Well, here. All right, other one. And then maybe we can talk Netflix earnings. Someone wanted to talk Coupang's investments in AI and robotics. We are officially. Yes. Yeah. Ryan, you're. You're a shareholder as well. You're both shareholders of a company that has decided to pump up its AI investments in. Press releases. Did you see this come in your email?
- [26:39]
Ryan Henderson
I didn't see the press release, no.
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Brett Sch
Oh, yeah. So US technology company Coupang announced today that is invested more than $84 billion in US and global AI tech tech startup since 2023. One of the many efforts by the company to redefine the future of global commerce through advanced technologies. I'm gonna be honest. This doesn't matter.
- [27:01]
Ryan Henderson
No, Yeah, I mean, I would assume they're investing in AI and robotics and it seems like they are already super advanced in terms of like fulfillment capabilities.
- [27:16]
Brett Sch
They're just doing it for the. Calling themselves a U.S. technology company. They're talking about the U.S. korea tech prosperity deal, you know. Yeah, that's about it. Yeah.
- [27:27]
Ryan Henderson
I don't think much of it, but Coupang, I think it's up around. Let me pull up the numbers real quick. 27% over the last couple months.
- [27:40]
Brett Sch
Startups, they're a GBU company now. They have the Coupang intelligent cloud. It's beautiful.
- [27:47]
Ryan Henderson
If I were like we love to hate and laugh on all the companies talking about AI, but if it happens to my company, then it's. I'm totally fine with it.
- [27:58]
Brett Sch
I don't mind if my if stock that's been a dog is up 30% in a month that it's good for. Fine with me.
- [28:06]
Ryan Henderson
Can't complain about that. We've got a comment here in the chat. Burry buying 3.5% of PayPal at $49. Guess people will stop killing me for buying it at 45.
- [28:18]
Brett Sch
First off, commenter, never listen to what anyone else is saying. Everyone hates. Not everyone. There's going to be someone that hates at least all of your investments, right?
- [28:27]
Ryan Henderson
It would not be a good purchase
- [28:29]
Brett Sch
if everyone liked it would not be
- [28:31]
Ryan Henderson
a good investment if everyone loved it. Although I've been wrong about it. Seemed like that was the case on Nvidia three years ago. But it doesn't matter.
- [28:39]
Brett Sch
That's fair.
- [28:41]
Ryan Henderson
Yeah. Burry, I don't know.
- [28:42]
Brett Sch
I like his payment stuff because his conclusion, I felt was Completely off. And maybe that's why Adyen, I think is a good opportunity because he was like, well, that part's a whole commodity. I was like, well, look at adjunct. It's doing fantastic. Yeah.
- [28:58]
Ryan Henderson
The authorization rates vary by processor and I think a lot of that comes down to your tech advantages. But PayPal, PayPal, PayPal, I've been saying the same thing for a long time. But the court.
- [29:17]
Brett Sch
Do you think their PE is the
- [29:18]
Ryan Henderson
core business is screwed. Right? Like, am I wrong to think the core business is screwed? Like the, the branded checkout, like Apple Pay, Google Pay destroyed that and it's going to keep looking cheap, maybe make out a good return here. I would guess the true earnings multiple is 9. 9 times.
- [29:45]
Brett Sch
Wow, that's a good 9.2.
- [29:48]
Ryan Henderson
Yeah.
- [29:49]
Brett Sch
And the price to earnings, price to earnings gap. Yeah, you probably do.
- [29:56]
Ryan Henderson
That is interesting.
- [29:57]
Brett Sch
You do have a. It's just not like all right, if I'm trying to buy and never sell something, of course that's a philosophy and not always in practice. I look at something like Adjin at under 20 times earnings, maybe not GAAP net income, but EBIT or something like that. That is where, you know, I, I see that durable revenue growth, secular tailwinds, market share gains, and that is something that attracts me much, much more. Although, you know, like every minus. I feel like you do all right with PayPal.
- [30:29]
Ryan Henderson
It ripping and replacing a payments processor is really tough for businesses. Like huge merchants like McDonald's or whatever probably use multiple payments processors so they can kind of ebb and flow their, their volume to whoever's got the best authorization rates at the time. But generally for like startups or growing businesses, the last thing you want to do is rip and replace Stripe or Adyen. So an Adyen is partner for a lot of businesses that are growing really quickly. So let's give you.
- [31:05]
Brett Sch
I'll give you four Starbucks, Chipotle, McDonald's, LVMH partnerships where they're a small percentage today, but that authorization rate is giving them slow land and expand over time.
- [31:18]
Ryan Henderson
They're a big Spotify, if I'm not mistaken.
- [31:21]
Brett Sch
Spotify is early Spotify and Uber. Kind of the core digital only players, especially European ones. They are. They were way like before. Yeah.
- [31:31]
Ryan Henderson
Yeah. I mean the nice thing is as those businesses grow, Adian doesn't really have to do a whole lot of work to grow with them. So.
- [31:39]
Brett Sch
True.
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Ryan Henderson
Yeah, the. I saw a comment here. It looks like the SaaS apocalypse is over. Thought so. I saw something online this week that was like. Because everyone's talking about how software is cheap, myself included. I own some software stocks. Someone was like do any of these companies actually trade at less than 10 times GAAP earnings? And I put together, I put together a full dashboard with every single software company I could find.
- [32:06]
Brett Sch
And that was, that was. So that was the bat signal for you to do some fiscal AI listicles?
- [32:10]
Ryan Henderson
Yes. Yeah, 100%. And I found. Well, let me just pull it up right now. I actually. Yeah, here's a good, nice little shameless plug here. Share my screen.
- [32:25]
Brett Sch
Yeah, let me just do. I'll do the advertisement while you're loading up here. Use our link Fiscal AI chit chat. They're adding so many new features all the time. I like the annotations one as you read through quarterly results. It's going to help me build my own research database. Not having to use in Google Docs as much. Not having to use my own yellow legal pads, stuff like that. Consolidated into that one research terminal. It's fantastic. They're building no AI tools all the time. Use our link fiscal AI chitchat. Get 15% off any pay plan. All right. Ryan, is WIX on this list the love of my life? I'm guessing no.
- [33:01]
Ryan Henderson
Yeah, it is. I mean it's like every software company you can imagine is on here.
- [33:06]
Brett Sch
Oh, okay. Okay.
- [33:08]
Ryan Henderson
So ev to free cash flow. If you look at this metric for this, you're going to find a ton of companies below 10 times. I think we've got probably 20 companies below 10 times free cash flow. If you look at it on a pe, if you exclude the ones with negative earnings. There are. There is not one.
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Brett Sch
Oh my.
- [33:33]
Ryan Henderson
There isn't one.
- [33:35]
Brett Sch
Sbc, the silent killer.
- [33:38]
Ryan Henderson
Yeah, and it's, it's kind of an. And I've seen a whole bunch of people lately that say like there's empirical evidence that stock based compensation just doesn't matter.
- [33:50]
Brett Sch
Which that could not be further from the truth.
- [33:52]
Ryan Henderson
It has to matter, obviously. But you said that there's a whole bunch of studies done that hasn't impacted. That is not the key contributing factor to investments results. I don't know. A lot of it is venture capital studies. So that tells you what you need to know. But if you're the software company and you've traded at 60 times sales for a decade. Atlassian, for example. Because everyone bashes Atlassian for using stock based compensation and they are egregious, just to be clear. I mean they are probably the worst about it. If you're trading at 60 times sales doesn't it make sense to be heavily diluted using that as currency.
- [34:39]
Brett Sch
Well, what if, okay, you gifted all that stock at an inflated price. You know, the dollar amount looked good to your employees at the time, but if you go into a 90% drawdown, they go, well, either my options are worthless or these RSU's at $10,000 are now worth a thousand dollars. I wouldn't look at it that way. Yeah, maybe acquisitions make sense. For example, I was just doing crack and robotics this week for Emerging Moats. Little quarterly update coming in your inboxes. They made an acquisition, I believe. I don't have the numbers in front of me, but something like a company, the market cap is like 25% of their size, but the company they acquired has two and a half times their revenue because they were able to use their stock price at 20 times sales to acquire something at 10 times EBITDA. That is smart stock based compensation. I don't care how people spin it, it is a headwind. It is so annoying. And stock prices would be so much higher if the companies stopped doing that. I wish I could just shake Wick's management's head and just go stop this. Because your stock price would be at 200 if you didn't do this over the last decade.
- [35:58]
Ryan Henderson
Yeah. And it's, if you pay people well in cash, I think most of them are happy. You can get talent that way. And actually now you kind of see the double edged sword that is stock based compensation. Because you're seeing it all the time now where it's like ServiceNow CFO just left to join Claude or Anthropic or something like that.
- [36:19]
Brett Sch
I, I, he joined Claude.
- [36:23]
Ryan Henderson
Well, he probably was, he probably did join Claude at some point.
- [36:25]
Brett Sch
He started using Claude and he goes,
- [36:27]
Ryan Henderson
oh yeah, executives leaving enterprise SaaS companies to go join Anthropic or OpenAI or whatever. It's like, yeah, because their options are not worth anything now. They're all underwater.
- [36:43]
Brett Sch
Fair.
- [36:44]
Ryan Henderson
So, and if that was what your compensation was based on, you know, you go where the grass is greener. But yeah, I was astounded when someone was like, there's no companies with an Earnings Multiple Below 10 in the software space. It was like, that can't possibly be right.
- [36:59]
Brett Sch
That's score one against the software balls. My God. Well, back to that question. Is a SaaS apocalypse over. Thoughts? Let's give it a quarter. It's been a week. The NASDAQ was up like 10 straight days, which was an absolute record, one of the best 10 days in market history. I think it was the biggest anomaly since the 50s, according to some random Wall Street Journal article I was reading. Let's calm down everyone. Allbirds is up 1000%. Let's give it a little bit before we determine the SAS apocalypse itself. You don't want to be the George Bush Mission accomplished on the aircraft carrier. Study and play Come together on a Windows 11 PC and for a limited time, college students get the best of both worlds. Get the unreal college deal everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox game. Pass ultimate with a custom color Xbox wireless controller. Learn more@windows10.com studentoffer while supplies last ends June 30 terms@akams.collegepc Experience a membership that backs what you're building with American Express Business platinum unlock over $3,500 in business and travel value annually with statement credits on select purchases from brands like Dell, Hilton and Adobe and other benefits. American Express Business Platinum there's nothing like it. Based on total potential, potential value of statement credits on select purchases and other benefits, enrollments required monthly and other limits and terms apply. Learn more at americanexpress.com business-platinum
- [38:41]
Ryan Henderson
all right, do we want to talk Netflix earnings just reported?
- [38:45]
Brett Sch
Sure.
- [38:46]
Ryan Henderson
So I guess first of all, Reed Hastings stepping down from the Board of Directors. So generational run. Congrats to Reed Hastings. It sounds like he was pretty uninvolved to begin with. Apparently he was also kind of anti the Warner Brothers acquisition from some stuff I heard, but ultimately that didn't go through. Revenue grew 16%, operating income up 18%. I've got a couple quotes from the report I guess I'll quickly on the regions United States and Canada grew 14%, Europe, Middle East, Africa up 12, APAC up 18% and Latin America up 19%. Here are the quotes. So the first one is Our recent price changes have gone well, reflecting the strong value we provide members and our advertising revenue remains on track to reach $3 billion in 2026, up 2x year over year. I was a little surprised by this number. I know the advertising business is pretty new, but Netflix is pretty probably going to do 50 billion or so in revenue this year, so I would have thought the contribution would be a little higher than just 3 billion. Anyways, here's the second quote that I thought was interesting. In Q1 we aired more than 70 live events, including our first regional live event with the World Baseball Classic exclusively for our members in Japan. This massive event delivered 31.4 million viewers becoming our most watched program ever on Netflix in Japan and sparked our large, largest day of signups the country. As a result, among the 190 countries in which we operate, Japan was the largest contributor to member growth in Q1. What do you think of this idea of. I mean they've been doing live events for a while, but live events as sort of the top of the funnel, draw people in, keep them with everything else.
- [40:41]
Brett Sch
I've been with them that in prime they got to do that with the sports. That's how you get, how you get the biggest, biggest audience. I agree. I've been on this bandwagon for years.
- [40:52]
Ryan Henderson
They've done it largely without paying the big league. Well, I guess NFL, they've got like a couple days or a couple games or so.
- [41:02]
Brett Sch
They play hundreds of millions of dollars for the single NFL game. Yeah. They're not locking into 10 year commitments. I don't know.
- [41:10]
Ryan Henderson
Yeah, I wonder if that's a better way to go to do like single events as opposed to big watch the whole season here kind of thing.
- [41:19]
Brett Sch
I mean Amazon's gonna have much more scale in American sports within a few years and then there's no way for Netflix to get in. You kind of get what I mean. So that's a downside.
- [41:33]
Ryan Henderson
Yeah. When I think about the, the channels or apps that have done like full exclusive league rights for an extended period of time, I feel like it rarely works out for those platforms. I'm thinking of like Apple TV with the mls.
- [41:54]
Brett Sch
Yeah. But they have zero scale. Amazon or Netflix could do it and they're not exclusive. You know, prime does not have an exclusive league rights, just certain amount of games.
- [42:05]
Ryan Henderson
Sunday nights, I guess. Isn't. Isn't prime exclusive on Sunday nights or am I misremembering what sport for NFL?
- [42:15]
Brett Sch
No, no, that's Thursday. Yeah, they're not the all. But they don't have every NFL game.
- [42:21]
Ryan Henderson
That's right. I guess Netflix kind of bores me a little bit now because it feels very predictable. Like I think it's a really well run business. By the way, got a nice little $2.8 billion in cash from a termination fee this quarter. So record free cash flow. Congrats, Netflix.
- [42:42]
Brett Sch
Good for them.
- [42:46]
Ryan Henderson
I just think. It's more mature than a lot of people think.
- [42:56]
Brett Sch
Yeah, it's going to be a harder next 10 years to get, you know, execute to get earnings growth in the last 10. I think more important. They mentioned that price increase. I saw what it was for me and internationally you actually can't get an advertising tier in every market, so you have to use the full price tier. And even though T Mobile helps me out, I canceled immediately. It's like, what this is.
- [43:26]
Ryan Henderson
How much was it?
- [43:27]
Brett Sch
A pretty big jump for a single pair.
- [43:29]
Ryan Henderson
What was it?
- [43:31]
Brett Sch
I think it's like 20 something a month.
- [43:34]
Ryan Henderson
Yeah, that's not.
- [43:35]
Brett Sch
Or maybe low, maybe high teens, like 19 before tax. The.
- [43:42]
Ryan Henderson
I mean, it makes sense what they did it. It's kind of funny how long they held out from advertising. But now with the like $8 whatever ad supported tier, it introduces so many more people that can access the app now. And if you want to be the premium member and not pay, you can do that as well. Not much else on Netflix. Now, can I bore you for five minutes on consulting?
- [44:09]
Brett Sch
Sure, sure. Okay, what do you want to follow up here?
- [44:15]
Ryan Henderson
So last week we talked about some of the consulting businesses. I said I was looking into them, I did a little more digging, and I do think some of them actually look cheap, especially the ones that are sort of like vertical specific consultants. So. And also last time we spoke at the spoke about this, we mentioned that there was like two reasons, two or three reasons why people would use a consultant. And it's because either they don't have the time themselves, they don't know how to do it. And then you also said because they need someone to seem objective. So those three reasons are actually like well known, I guess. They're called the three Cs. It's capacity, capability and cover. So capacity, you don't have the time to do it yourself. You don't want to hire someone full time. So you bring on a consultant capability. Someone's good at a certain thing, you want to hire them to do that certain thing, maybe like a ERP implementation or something like that. And then the third one, cover the third C. This one is the funniest one to me. And it's probably the irony is in the world of AI, this might be the most durable reason to hire a consultant. So political cover is timeless. People have used this for 100 years. And an example here would be, and you've probably seen this, we hired outside counsel to conduct a comprehensive review of our organizational structure, and the results determined that we need to conduct a layoff, basically. So whether it's compensation, consultant, an outside counsel told me I need to get paid $50 million this year, or you need someone to do the layoffs, and you need someone to point your finger at and it can't be you. These are perfect reasons to hire a consultant. Anyways, back to the point. There are a bunch of. Pretty much all the consulting businesses are in big downturns or I would Seems like all of them almost. But most of them Gartner is really struggling. Accenture really struggling. EPAM Systems really struggling as well. They're all trading around 10 times EBIT and I think some of them are sort of maybe being thrown out with the bathwater. And I want to get your take on this. EPAM Systems for example is basically outsourced software developers. So basically they have a bunch of engineers in Ukraine, Russia, Belarus.
- [46:48]
Brett Sch
It's almost like contracting less consulting. We're going to go with the two separate definitions.
- [46:54]
Ryan Henderson
Yeah. And the stock sold off? Well, initially it sold off because the Ukraine, Russia war, but they were able to relocate a bunch of their employees. And now with AI hitting, the concern is that people aren't going to hire as many developers. Do you think that is likely? Do you think less people are hiring contracted developers in the future?
- [47:20]
Brett Sch
Yeah. Outsource to Claude instead of outsourced to Ukraine or India. It's an interesting bear point stock said 19 times earnings. From what I'm seeing on fiscal AI here, it doesn't seem that cheap to me. If you think the business could go away. It's not a call center which are all going to zero. But yeah, maybe, maybe they'll have Claude and these cheap engineers. It's hard for me to say. I kind of go on the fence.
- [47:56]
Ryan Henderson
Yeah, I'm seeing maybe they have a big cash balance EV to EBIT today of 10.9. So maybe something some big discussion there.
- [48:07]
Brett Sch
I'll check if there's a difference. Yeah, yeah. Significant difference between enterprise value and market cap.
- [48:12]
Ryan Henderson
Yeah. This was a incredible business for like three decades apparently. Like there was just when it was like a Belarusian founder in the 90s or maybe early 2000s that knew there was a whole bunch of engineers in Ukraine and Belarus that like coming out
- [48:30]
Brett Sch
of the Eastern bloc.
- [48:31]
Ryan Henderson
Yeah, yeah. That were being underutilized and he literally just connected them to a bunch of American companies. They were way cheaper than their American counterparts. And the revenue growth over the last 20 years. Let me just see if I can pull this up real quick. Revenue CAGR of 26% since 2006.
- [48:53]
Brett Sch
What about the last three?
- [48:56]
Ryan Henderson
Well, it's flawed by Ukraine, Russia, but
- [48:59]
Brett Sch
okay, well that's an event that happened.
- [49:03]
Ryan Henderson
That is since 2021. Revenue has grown at 10% a year.
- [49:08]
Brett Sch
Yeah, it was not bad. They had a little. They're recovering. It's interesting this Is one maybe you could lean into if. Yeah. You like the management team EVD a bit of 11. Okay. Not bad.
- [49:25]
Ryan Henderson
Yeah. I'm kind of a doubter that there'll be less developers just because of Claude. Like seems people like, like who uses Claude the most developers. It feels like it'll just be a massive improvement to output as opposed to like hiring less people.
- [49:46]
Brett Sch
Yeah. I'm just not sure. Yeah, it's a tough question. It's a tough question. All right, we want to talk Amazon, they're acquiring Global Star. Just it's this one was a twitter.take all caps tweet machine. The hype around satellite stocks, it's getting a bit much, I will say heading into the SpaceX IPO. So what happened here? For anyone that didn't follow, quote, Global Star satellites. This is part of the acquisition. Radio frequency spectrum and operational expertise will enable Amazon LEO to add direct to device services to future generations of its low earth orbit satellite network. Amazon is building its low earth orbit satellite network to compete with Starlink. You're going to have direct to device Internet services as well as with the terminal, I'm guessing. Also with commercial aviation. They signed a deal with Delta. They're acquiring Global Star here for I think $13 billion. I can't remember the exact term. It's not giant for them, but it's pretty significant. They're also taking over Apple's emergency messaging contracts. And here's another quote. Beginning in 2028, Amazon Leo will deploy its own next generation direct to device satellite system, allowing Amazon to deliver more advanced voice data and messaging services to mobile phones and other cellular devices. They're debuting a gigabit antenna for commercial aviation. The first thought isn't this bearish for AST space mobile. I was this competition for them. Starlink's also getting into that. That's my first thought. And I feel like this might be turning into a very competitive market where I'm unsure what the full demand is going to be for satellite Internet. Where do I need this besides an airplane?
- [51:32]
Ryan Henderson
I agree there'll be airline customers. There will be rural customers. There already is.
- [51:40]
Brett Sch
Okay, well it's rural for a reason. There aren't that many people.
- [51:44]
Ryan Henderson
No, that's fair. And I, I, I kind of have the same concern, which is like I feel like the addressable market is already kind of figured out. Like airlines are trying to like okay, airlines. Obviously most people want Internet on them. I think most airplanes I've been on lately have Internet. They might not. I assume it's, I don't know who the provider is, but a lot of the people I know that live way out in the middle of nowhere have already looked into potentially satellite Internet. If they don't have fiber as an option, I kind of think there might be a limit on the TAM as well. Maybe I'm just wildly underestimating that. And internationally it could be very different. But yeah, I have the same concern. The. I think for AST Space Mobile this would certainly be bearish. Is there. There must be advantages to scale, right? The more satellites you have.
- [52:54]
Brett Sch
Sure, sure, yeah. You need the most throughput, however you want to describe it, the most capacity. That means the satellite, the antennas, the capabilities have to be improved as well as just your ability to like how much, what do they call it is bandwidth. Right. I don't know the exact terms, but a gig versus ten gigs versus a whole terabyte. There's also the specific radio spectrums, which is why SpaceX made that giant acquisition. This is also part of the Global Star acquisition. And then there's also the crowding out in certain areas. So if you can serve 100 people in a square mile, well, that's great in rural areas, but in the middle of the city, it's pretty useless. Yeah, there's a lot here.
- [53:46]
Ryan Henderson
Did you mention a price tag on this deal?
- [53:49]
Brett Sch
I think 13 billion. It was either 11 or 13. I don't have the press release in front of me. Oh, I didn't realize they have an existing business and the spectrum's a highly valuable. They have the Apple relationship now, which will be interesting once they can get that direct to device Internet. But the thing that, Yeah, I come back to is if this was ready today and I could go boom, I can sign up for any of these services, would I? I don't think so. T Mobile's already got me pretty covered around the world when I need them. Yeah,
- [54:24]
Ryan Henderson
well, if you moved 30 miles outside the city, would you.
- [54:29]
Brett Sch
Yeah, that's fair. But Starlink already exists.
- [54:33]
Ryan Henderson
No, yeah, 13 billion. I am an Amazon shareholder. I honestly didn't realize the price tag was that high.
- [54:42]
Brett Sch
That's nothing.
- [54:44]
Ryan Henderson
I mean, I guess, but when you spend $200 billion on capex and you're. And you're not generating cash flow anymore, it starts to mean something. Yeah, I do. Either. Either their financial department is playing 4D chess and they are just so sound that they can go on as low of margins as possible to improve their consumer value proposition, or it is such a chaos there and there's so many antennas to the business that Costs are simply just getting out of control and I really don't know which one it is, honestly.
- [55:25]
Brett Sch
We'll see. Yeah, there was some real big brain takes on this one. Talking about AWS robotics integration, self driving cars. They're like. It's. Once you see the big picture of Amazon Robotics, aws, Zoox and Amazon, Leo, you're going to get it. I was like, let's, let's see it. I'll wait and see what happens in reality now. Bundling the Internet with Amazon Prime, I could be into that, but I just don't know what the capacity of these things are going to be. And SpaceX has that monopoly on launch pretty much where they can just put Starlink on their own. Rocket Lab and Blue Origin don't have the capacity yet. That's what makes it really tough.
- [56:08]
Ryan Henderson
Do you think it's bad for Amazon's business to have all these different verticals that are like begging for capital and begging for resources? Because you talked about it like Bezos is like poaching talent from. Literally poaching talent from Amazon.
- [56:28]
Brett Sch
I don't know. I think the stock has done well. It's rebounded. I think we're almost to an all time high again or maybe another all time high. But I think you should be nervous about their capital decisions. They are aggressive. There's going to be some uncertainty there.
- [56:42]
Ryan Henderson
Okay, do we want to talk bubble watch?
- [56:45]
Brett Sch
Sure. We got some updated market share estimates for the AI tools and if I saw this and I was OpenAI, I would be. Well, they debuted the code red, so I guess they're already in code red. This is similar web. Thank you to Rahar Jark, recurring guest, for posting this on the good old Twitter machine. It shows Gen AI traffic. They even have, you know, Grok and Perplexing on their smaller players. But if we look at 12 months ago, OpenAI 77% market share dominant chat GPT 77% market share, Gemini 6% Claude 1.4% and this is a gen AI website traffic share. So not enterprise, just website traffic. Today we're at chat GPT 57, Gemini 25 and a half and Claude 6%. That is a. I mean one more year of this and Gemini matches Chat JBT almost pretty, pretty close. I'd be quite nervous.
- [57:53]
Ryan Henderson
I had the take a while ago. I think ChatGPT will be the Yahoo of this. If we're making the analogy back to like the search engine days or the search provider days where I think they were early days, maybe AOL is better comp since it's gone, I believe. Unless someone else still uses AOL.
- [58:17]
Brett Sch
Molly fool partners get posted on AOL.com still.
- [58:20]
Ryan Henderson
Yeah, I mean, it's a tiny business, but it. I just don't see why Chat GPT retains dominant market share and it's. I mean, the switching costs are nothing. Unless I'm wrong. Like. Like maybe you have certain things, certain chats stored in your memory, but unless
- [58:44]
Brett Sch
you fall in love with the chat bot, which we've seen kind of a weird dystopian news stories, but I don't think that's happened to Ryan. Yeah. Well, on the other hand, there was a leaked memo from OpenAI. It was obviously leaked by them because they wanted this information out there, but they believe Anthropic is juicing up revenue by $8 billion for their ARR, which also. The ARR is not arranged. It's like the last week's revenue or more. It's revenue.
- [59:19]
Ryan Henderson
It should just be r. It's.
- [59:21]
Brett Sch
It's annualized revenue from the last week or maybe month or quarter. Well, if they did last hour, that would be hilarious. But it's. It's like, what are.
- [59:31]
Ryan Henderson
What are Claude's revenue generators?
- [59:32]
Brett Sch
Subscription fees and token credits. Yeah, I guess. I'm not even sure.
- [59:37]
Ryan Henderson
Yeah, I would guess a lot of that's recurring, but recurring is a dangerous word.
- [59:44]
Brett Sch
This isn't subscription rep. It's no Netflix. The. Okay. But apparently they're juicing up revenue by $8 billion because they're reporting improperly on their accounting for revenue share agreements with Google and Amazon. I'm sure they're supposed to. The way OpenAI reports, you kind of net it out. And I'm sure Anthropic is doing gross. Yeah. Well, look, we talked about. Let's bring it back to the beginning of the show. We talked about tsmc. Once again, the whole AI supply chain, this entire growth market is relying on anthropic and OpenAI to go to like $300 billion in revenue in three or four years. Call me crazy, I don't want to be attached to this supply chain. None. Nothing. Yeah, run the math. Tell me why that's wrong. Why?
- [60:35]
Ryan Henderson
I think it's funny that OpenAI leaks us because people really don't care that much about the specific number that Claude is putting out for today compared to a month ago. They care about the direction and directionally it's.
- [60:53]
Brett Sch
Yeah. A lot of market share usage. At least that's. Yeah. Probably most important.
- [60:58]
Ryan Henderson
So it feels like OpenAI has been like just on the. On the butt End of the joke for the last year and just constantly like beneath anthropic. I guess maybe it's just my echo chamber, but it feels like all the news is very positive anthropic and negative. OpenAI.
- [61:22]
Brett Sch
Well, Ryan, did you see that one of our other investments Remitly just launched a something with OpenAI and that's why the stock is up. Let's see.
- [61:37]
Ryan Henderson
Yeah.
- [61:38]
Brett Sch
Global has launched the Remitly app within the Chat GPT platform, making it the first crossbody money transfer service on this widely used AI application. This integration allows users to effortlessly check exchange rates and compare international money transfer delivery methods. That's good for a nice 15% boost in the stock price.
- [61:57]
Ryan Henderson
That's bizarre. Like whatever on the partnership, but I don't think that moves the needle. Are people really.
- [62:06]
Brett Sch
Yeah.
- [62:08]
Ryan Henderson
Wait, it's not a native like plugin, right? You can't. It's not like, send this money to my grandma in Brazil.
- [62:15]
Brett Sch
Okay. I'd have to look.
- [62:18]
Ryan Henderson
I'd have to look if it is. I question anyone who is sending money through ChatGPT to their family, but yeah, this feels like it will contribute very little to volume. If anything, it's like the equivalent of SEO. It sounds like. Or what do they call it? Geo Generative Engine Optimization. Yeah, I. Whatever. Again, if this was a company I wouldn't own, I would say that's stupid. But since it's a company I own, I will clap. Let it keep going. Let it ride.
- [62:55]
Brett Sch
It's up 15% on nothing. Great. Good.
- [63:00]
Ryan Henderson
Should have been up 15. Anyways. This is just people repricing for intrinsic value.
- [63:04]
Brett Sch
Yeah, yeah, that is, I think, joking around with Xanadu Quantum Technologies, their discounted future free cash flows went up 400%. Three days fishing market.
- [63:16]
Ryan Henderson
Same with new birds. AI.
- [63:17]
Brett Sch
Yeah, I think maybe to close things out. It's been tens again. Well, I don't know if this is a full, you know, recovery of the bull market or just a bear market rally, but let's just say I been rotating out of some of the gross stuff. A little, you know, repositioning into some of the value stuff or it's not a time to say, oh, I have FOMO on this company. This is. I gotta get in now. Like to stay disciplined. One of the worst things to have in times when a market goes up 10 straight days in a row is FOMO. This is one of the most dangerous, dangerous things also.
- [63:57]
Ryan Henderson
Yeah, I. Probably the biggest investing mistake I've made is late 2020, early 2021, feeling like I had to get in on a lot of these businesses that were growing, partly digital businesses that were benefited by Covid. And I kind of ignored valuation a bit. Like, I just. Just wanted to be a shareholder of the business and wildly overpaid it. I would guess 80% of those stocks are down over the last five years, but.
- [64:35]
Brett Sch
And
- [64:37]
Ryan Henderson
the market darlings change too, like that. I think that's an important one, is you think like, we. We make fun of Wicks or investors make fun of Wicks. Now that was a market darling in 2021, so that's fair.
- [64:51]
Brett Sch
All right. Yeah. I'm also seeing this feels very 2021e 2017 this is from Consensus Media, so could be parody. It says, avis budget continues ascent after company floats mobile data center concept. I hope that's a parody tweet.
- [65:10]
Ryan Henderson
I don't know what all that means, but I.
- [65:13]
Brett Sch
Please tell me that's a joke. Please tell me that's. That's. Yeah.
- [65:18]
Ryan Henderson
What was the Hertz thing a while back?
- [65:21]
Brett Sch
Oh, they had a Tesla order. They bought 100,000 Teslas and it was a terrible investment.
- [65:27]
Ryan Henderson
The rental car companies I have will never get interested. Never.
- [65:32]
Brett Sch
Yeah, it's tough business and there's some of the worst to deal with as a customer, but we're going long. Ryan, anything before we get out of here?
- [65:41]
Ryan Henderson
No, I think that's going to do it. Thank you, everyone for tuning in. Thank you for those in the live show for asking questions. If you have listened this far, please give us a review. If you like the show, it helps a ton. It helps the show grow, and we just like hearing from listeners as well. So thank you again to everyone for listening. We want to remind listeners 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 of the securities discussed in this podcast. So please do your own work. Thank you all, and we will 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. Chitchat listeners can get a discount to my research@stockwriteup.com. that's stock W R I T E U P Com.