← Chit Chat Stocks
Chit Chat Stocks
SpaceX and OpenAI Prepare Monster IPOs; Netflix + Wise Earnings; A New Micro Cap Defense Play
01:09:33
Loading summary
Transcript185 lines
- [00:00]
A
Welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. Today we've got a lot to talk about. We've got some political news that is potentially investable. We'll talk through that. Greenland, We've also got the first week of earnings season, so a bunch of companies to talk about. Interactive brokers, Netflix, intel just reported. We've also got wise, a big holding for me and we've got a small cap of the week. I don't know, there's a lot of places we can go. Softwaremageddon has slowed for the time being, but we can sift through some of the companies in the software space that we are maybe looking into. Brett, I guess before we get into the content, I should mention this is our weekly Power Hour episode. We do these every week at 5pm Eastern Time on Thursdays on YouTube. If you ever want to ask us questions, feel free to head on over to YouTube Chitchat Stocks on Thursdays at 5pm Eastern Time and get your questions in. I'm going to stop there. Brett, where do you want to start content wise?
- [01:11]
B
Why don't we. Oh, I don't even know. You got some, you got some Greenland news. Macroeconomically, some potential Danish consumer stocks if they get a nice stimmy from the US Government. I'm not sure what's exactly going on over there. It seems like things have cooled down. But why don't you take us through the information that may or may not be stale within an hour?
- [01:33]
A
Yeah. By the time this is released, it could be totally meaningless. But apparently, and I throw some big emphasis on the word apparently because it might not. I don't know how much truth there is to this, but United States is, and I'm reading a quote here, United States is finalizing a staggering $700 billion cash offer to buy Greenland outright from Denmark plus 100,000 dol lump sum payments to.
- [02:01]
B
Oh yeah, I think that that's, that's been staled for a day.
- [02:03]
A
But as that. Was that wiped?
- [02:07]
B
Yeah, I believe so.
- [02:09]
A
Okay, so let's leave it at a cash offer to Denmark. I still think the same question applies. If, if there's a big influx of cash to Denmark, what Danish stocks could potentially. First of all, do you think this isn't, if this does happen, do you think it's an investable event for you? And do you see any Danish stocks that would be natural beneficiaries.
- [02:40]
B
Danish stocks, Natural beneficiaries. It feels like too small of a country. But I did tweet out something along those lines, like, hey, are there any Danish consumer stocks out there? And we have a follower named Micro something Denmark. Let me try to find that. But it was companies I'd never heard of before. Honestly don't know if it makes sense to invest on this because the last thing I heard, and maybe that has changed, is they came to an agreement on defense and then there's not going to be any sort of acquisition of the country. Yeah, I got the question here. Okay. This guy said it plays. That doesn't matter. Yeah, but that's not going to affect anything. Other names, Matas Makeup, Sea Brain. Government spending it. T TRI Insurance, DSV for transport. Oh, here's a good one. Carlsberg for the brewery. Though that might be international makeup. Makeup might be the one, though that's discretionary.
- [03:44]
A
I'm looking at. I just screened for Danish stocks above $2 billion market cap on fiscal AI. I had the same thought. I'm scrolling through this list. I saw Carlsberg. I thought, you know, if. If Danish consumers have a little more money in their pocket, maybe they're going to be buying some beer.
- [04:04]
B
Yeah, and I don't think this stimulus is going through. I'm pretty sure I read this morning that they've made a preliminary deal that there's not going to be any. It's. It's just a deal over defense.
- [04:17]
A
So although the real beneficiaries are the defense.
- [04:21]
B
Defense contractors, per usual. Per usual. It's important to keep those shareholders happy. But yeah, all the blustery narrative. Not really much. Not really much there anymore. All right, what about. We had either Wise, IBK or Netflix. And many listeners in the substack chat were saying we should talk about them. Why don't we pick one of those?
- [04:46]
A
Why don't we eat our veggies with Wise here? I think it's a little less sexy than Interactive Brokers or Netflix, although it gets some attention as well. So the stock was up, I think 18% after the report. First of all, they did like a third quarter interim trading report. So a lot of people don't always see it because it's not just a 10Q filed like a Q3 normal quarterly earnings report. There's really no difference. They act like they kind of publish like a US company, which makes sense given they're about to uplist. But anyways, the business looked really good this quarter. It looks like there's a lot of Momentum personal customers grew 20%, business customers grew 25% and then total volume was, which is total payments volume flowing across the wise network was $64 billion. So that is up 25% year over year. Strong volume growth and it's the largest sequential volume increase. So compared to last quarter, I think they added roughly 5 billion doll new volume. Now maybe there's some seasonality in this business. I wouldn't think so that much but it's possible. But yeah, strong quarter across the board. Take rate dropped year over year. It's been flat roughly for a few quarters. But the take rate, their aggregate take rate is 0.5%. So half a percent of your payments are getting taken by Wise. Although really a lot of that's being passed on to bank partners. They're trying, they are proactively trying to lower the take rate as much as they can. The quote that I'll pull here is from Crystal Carmen on the letter. He says our financial performance and performance in Q3 and throughout fiscal year 26 has been strong and we remain on track. To meet our guidance, we expect to complete our dual listing in the first half of 2026, which will further increase our profile in the US as we remain focused on accelerating global growth and becoming network for the world's money.
- [07:00]
B
How's the competitive advantage for the New York Stock Exchange and the Nasdaq? God, it's beautiful, ain't it?
- [07:06]
A
It is. It is great business.
- [07:09]
B
Probably one of the few them Hermes, Ferrari, one of the few that deserve to trade a 30, 40, 50 times earnings. Yeah.
- [07:17]
A
And from what I've heard, it's people are getting frustrated listing in Europe. Companies are apparently the London Stock Exchange has been. There's been a lot of backlash. I'm just kind of reading international news. I don't know, I'm not that in tune with it. But you're seeing companies like Wise, which is a burgeoning tech company in based in the uk, want to move their primary listing to either the New York Stock Exchange or the nasdaq. They haven't made clear which one it's going to be. I do think that will raise visibility. Honestly, I think that's going to. People are going to start looking at Wise a lot more US investors that have previously just omitted them. The one stat that stood out to me here is Card revenue grew 41% year over year and it now accounts for more than a quarter of overall revenue. And sometimes financial companies launch a card and I think like what? Oh, you know, it could be a nice cross Sell.
- [08:25]
B
But for you know who launched a card ibkr not a soul is going to use it yet.
- [08:31]
A
Yeah, those are things where it's like a quality of life feature for a customer and it can be helpful. But with Wise there's a very natural inclination to use the card because you can minimize you further minimize your fees. So if, if you're doing let's say a Wise account to Wise Account transfer from the UK to the US it's going to be zero fee. I think it'll be like 0% commission because it's just Wise bank account to Wise bank account the fee and I think it's like a $$20 cents in the US to go from your Wise account to send it to your bank. That's when it happens is the off ramp from Wise. If you choose instead to keep your money in the Wise account and use your card, the transaction that you're paying is the interchange fees as opposed to actually the transfer fees and then ultimately the interchange fees from your bank. So you really are. That is the. I know I'm kind of maybe might be a little hard to follow but it really is the lowest cost form of sending money across borders and spending it. This is what stablecoins wants to be.
- [09:50]
B
If you're doing the card is it for a merchant transaction because our consumers never paying the interchange fee. I'm a little confused there.
- [10:00]
A
Yeah, I mean it's just baked in.
- [10:01]
B
Right.
- [10:01]
A
So the like the, the transfer is 0 fee. When you pay there's the 2 point you you technically are not paying a fee to but your price.
- [10:12]
B
I mean the list price isn't going.
- [10:14]
A
To change the list price of the good like when you buy something. Yeah, yeah.
- [10:20]
B
Correct.
- [10:20]
A
I mean technically there's no fees.
- [10:23]
B
Maybe merchants will be happier. I think in general them building spending stuff they should invest in that if they're going to try to become a global bank account for people traveling around the world. It's been lacking in recent years. Their, their progress on that front. There is.
- [10:40]
A
Like not all platforms, not all businesses accept wisecards because it's sometimes gets treated like a prepaid card. But it is the more that people spend through Wise A that means dollars are staying on Wise. That's great for interest income for Wise's business but it's also it gives proof to the business model that they can actually truly for the first time I think in like 300 years give money Without Borders like their mission statement. It actually comes true. I was reading this week about just the whole global transfer system and it is a very complex system and it's mostly a patchwork of like individual countries have their banking system. Countries do it differently elsewhere. Swift has kind of become like a standardized communication layer between those. But ultimately you end up still going to the correspondent banks. And it's like if you try to wire $10,000 from here to China or whatever, there's going to be multiple stakeholders that take a fee throughout that process. Wise, this is really the only way to make fees as close to zero as possible is to be the bank on both sides because then you're just crediting the accounts as opposed to actually transferring any money. It's sending money across borders without actually ever crossing the borders. So anyway, it was long winded. I read the whole thing and I just thought like this is all a pitch for Wise's business model and it makes it gives. I know I'm going long here. It gives me confidence that companies like Nubank are using Wise's network to offer the service. Like it's hard to beat.
- [12:31]
B
Yeah, it's a, it's a good business. They keep compounding. We have a comment here. Question. Actually two questions from Tyler. What does Wise results mean for remitly? Are there any look throughs from Wise's results that will have an impact on remitly? I actually don't think so really at all. It's, it's too different customer bases. You have Wise for anyone that doesn't know they're serving more of the international. I mean on a global basis, wealthier consumer. It'd be someone from the United States or Europe or maybe Japan or something like that who's traveling to foreign areas who need some sort of international connection there or to send money to family potentially internationally. But when you look at remitly, it's immigrants, immigrant families sending money back in their core. Three quarters that they started off at were three of the largest ones for US people or people living in the US to send money back home, which was Mexico, the Philippines and India. Now that might change in the coming years as Vermili targets the small business customer that Wise also uses. For example, we use Wise for chit chat stocks. It helps for international things. But overall another good quarter and seems like TPV will continue to grow. Yeah, really no complaints. Feel solid.
- [13:55]
A
I agree with you. I don't think remitly and Wise, I think the overlap on the customer base is very low. People use, from what I understand, people use remitly for convenience speed. Looks like we lost Brett there. But people use remotely for convenience speed. And different ways to receive money. So you can, for example, pick it up in cash. If you're sending it back to your grandma or they want to go to the store, pick it up in cash, spend it that way. You can do that wise. The focus almost exclusively I think for most of their customers is cost minimization. How do I get money across borders? The cheapest possible. Brett, I think you there for a.
- [14:40]
B
Second but yeah, not sure, not sure what happened. The application must have just bugged out. But the Internet seemed totally fine. Nothing stopped there. So yeah, let's keep plugging along. Do you want to talk Intel? Only true patriots own it. Only true patriots own intel, right? Right or wrong, you can't own Taiwan Semiconductor. You have to own Intel. True, true American. Well, I mean the company is extremely important for the future of just compute AI. Who? Whatever buzzword you want to toss out. They reported this right before we decided to record stocks down about 6% in after hours. We're still at about $50 a share and over the last year it's up about 150%. Now if we look at the Q4 earnings, revenue was down 4% year over year. Full year, revenue was flat year over year. Ryan may be pulling up some charts for us right now. He's really showing off for his friends at Fiscal AI that update stuff instantly. Here's a quote from the new CEO and apologies if I'm mispronouncing your name Lip Bhutan. Our conviction in the essential role of CPUs in the AI era continues to grow. We delivered a solid finish to the year and made progress on our journey to build a new Intel. The introduction of our first products on Intel 18A, the most advanced process technology developed and manufactured in the United States, marks an important milestone. We're working aggressively to grow supply to meet customer demand. Our priorities are clear. Sharpen execution, reinvigorate engineering excellence, and fully capitalize on the vast opportunity AI presents itself across all our businesses. Ryan, if you were a shareholder, how would you feel reading that quote?
- [16:27]
A
If you're a regular listener to chitchat stocks, then you've probably heard us talk about Interactive Brokers. Here are three reasons why we think Interactive Brokers is better than any other brokerage platform. Number one, they've got it all. Stocks, bonds, ETFs, options, crypto, you name it. 170 markets, 36 countries, 28 currencies. We believe they are the absolute best platform for global investors. Two, best in class pricing. They have zero commissions on US listed stocks and ETFs and offer margin rates up to 54% lower than the industry. Three, you can ditch the separate High Yield Cash account. Interactive Brokers offers up to 3.14% interest on instantly available cash held in your investment account. Head on over to ibkr.com Rate subject to change Margin evolves. Risk restrictions apply. Interactive Brokers is a member of sipc. Kind of feels like the same platitudes everyone's saying, Honestly, sorry, I was a little distracted looking at the results, but it's hard to be inspired by these numbers. And I think investors think the same. It's down 8% after hours. So it's. I keep thinking with Intel, I'm pretty sure the stock's up like a double 150%.
- [17:44]
B
150%, yeah. Yep.
- [17:46]
A
Yeah. None of this is fundamental, right?
- [17:51]
B
Well, I mean, they're getting a lot of stuff from customer orders. You're seeing cash flow, I think, improve a little bit. And it's basically saying, look, demand for AI is so strong, they're eventually going to become the second player here, regardless of whether they can catch up. Exactly. To what TSMC is doing. They are going to build at all these data or not data centers, these factories in the United States that are going to serve customers. They have signed contracts and I think an investment partnership with Nvidia. I believe there's rumors that Apple is going to come back to them for some products. You have the government stake here. I think, if I remember correctly, it's really hard to remember all the stuff that comes online for them. Amazon is in some sort of partnership with them. So there's a lot of stuff under the hood. But with any sort of product like this. I remember we talked last week, the fact that TSMC has to invest two to three years ahead of where they think demand is going to be. And that's very, very difficult right now. And it's why that CEO is extremely nervous. Well, for intel, we're not going to see the fundamental results today, but you kind of have to read through the tea leaves and say, all right, what's setting them up? Two to three years from now, they're going to. I wonder what they're going to plow CapEx into. I'm looking at the guide here for Q1. They don't have a CapEx unless I'm. I'm missing that. I would like to see what that number is and what they think they're going to be able to do. But overall, yeah, you're not going to see it in the numbers today. It's going to be almost entirely of. All right, what's the order book on things like Intel 18a? Again, I no expert on this business. I don't know the nomenclature that well, but it's going to be that. All right, are we getting orders from whoever? And I think the next step is to finally separate the design business in Portland, which is one of the only advanced design areas in the world, along with Taiwan and South Korea and the manufacturing businesses, which are, I believe in Arizona, Ohio and other areas I'm forgetting.
- [20:00]
A
I know Arizona is a big one, but yeah, it's. I mean, I guess if the demand is so strong that they just need foundry capacity, like the world just needs it, and Intel's going to capture that excess demand. I mean, that could just propel the business higher, propel the top line higher. I just. There's been excess demand for three years. Like, where's it. How is it not showing up in the foundry?
- [20:28]
B
Well, they're not. I mean, again, it's. I know it takes a while.
- [20:35]
A
It takes a while to build these facilities.
- [20:37]
B
They have to catch up on design. Well, there's a lot of things, yeah, they tell the same story, but it.
- [20:43]
A
Feels like it's kind of been the same story for a decade.
- [20:45]
B
It's different now. The government's involved. That's not the end all, be all. And you have actual orders from all of these customers, specifically customers that are also customers of tsmc, saying, we believe in you, we'll invest in you. We're going to commit to orders. Again, I think Apple's a rumor, but Nvidia, Amazon, Apple, that's a huge boon. And I think it logically is going to play out as, look, they don't want TSMC to be a monopoly because Nvidia loses their pricing power. So they want as much as possible, intel to survive. I think that's just how it plays out. And it was the type of investment I like. No, but really, congrats to the people that bought in. I mean, anywhere in the, the 2024, late 2024, early 2025 period, because you finally got that. All right. This is a structurally significant. From a national security standpoint company. And regardless of what the numbers look like, it's not going to matter eventually. I guess the risk is that you kind of get diluted away or something like that. But eventually they're going to play out.
- [21:57]
A
Yeah, the incentives make sense. Like, obviously there's all the incentive in the world for the US to have this domestically instead of relying on Taiwan, which is geopolitical hotspot. But there's also all the incentive in the world for Nvidia to not rely exclusively on Taiwan Semiconductor so that they can not be gouged on foundry prices or whatever. If I were buying here, my worry would just be that this isn't necessarily something that you can just throw money at the problem like say you get government investment, government backing. Is it still too complex to build to keep up with what Taiwan Semiconductor has?
- [22:44]
B
They're not that far behind. They're not that far behind.
- [22:46]
A
I honestly have no idea. So I mean I guess I could take your word for it but I would just think if they weren't that far behind, you would seen it in some of the financial results.
- [22:57]
B
Well, I guess they're not that far behind in a, in like a couple of years maybe. But TSMC keeps going ahead and remember these are long lead time contracts. So Nvidia is saying, look, we need our supply. We know TSMC can provide this and they're the ones that can do 2 nanometer, 3 nanometer at the moment. They're not going to go to intel unless they get some persuasion. But I don't think you, you could again, you could definitely be right. I'm not buying Intel. But you can envision a world where 10 years from now intel is just as strong as TSMC, if not stronger because these, these cycles have gone through before with these manufacturers who can design better, who can innovate better, some new innovation can come through. And I again I haven't kept up on this in the last year or so but I believe the ultra advanced, I forget the name but ASML's like ultra EUV machine is first going to Intel I believe were in 2025. So we'll see what happens there. Let's see what the market cap is. What are we at?
- [24:12]
A
We've got a couple comments here. Tyler says revenue down 4%, stock up 150%.
- [24:18]
B
Yeah, yeah. Hey, you don't make money on the past.
- [24:22]
A
And we've got.
- [24:23]
B
That's what you always say when the numbers are bad, right? You don't make money on the past, you make money on future earnings.
- [24:29]
A
And we've got Amazon to the moon, which you know what, I took a stake in Amazon this week actually.
- [24:36]
B
Good, you're on the sound.
- [24:38]
A
But I ended up just buying I think like a couple shares.
- [24:42]
B
All right, let me close that Intel. Let me close that intel at the market.
- [24:45]
A
Go ahead.
- [24:46]
B
$270 billion TSMC I think is pushing 1.5 trillion. Does the Risk reward make sense here.
- [24:54]
A
I'm not a buyer if that's what you're asking.
- [24:56]
B
No, neither am I.
- [24:57]
A
Look, it could, but not to me.
- [25:00]
B
Yeah.
- [25:00]
A
And I don't have. I don't have any insight here. It feels like also me neither.
- [25:06]
B
I still. Yeah.
- [25:08]
A
Competitive in like you gotta be really bright to have any sort of edge here.
- [25:14]
B
It is competitive for the analysis and it's complicated enough almost at the end of the day you kind of go, I'll wait for asml, which unfortunately I guess was cheap last summer. But at periods when that's at 20, 25 times earnings, that's maybe the easiest way to play things in this industry. Let's go to another topic though. Want to hit IBKR earnings? I'll mention we can do this briefly because. Well, I guess you made the notes but for the Emerging Moats newsletter this week it will be focused on Interactive Brokers will be out as most of these people are listening on Friday morning. So if you want full details. Good. Many, many paragraphs to read about the full analysis from myself will be there. But Ryan, what were the headline numbers? I see you have a title here which is music to my ears. Is this the best business in the entire world?
- [26:09]
A
Well, yeah, I guess it's a two part question. Is this the best business in the entire world or is it at a cyclical peak? I honestly don't know.
- [26:21]
B
Yes, could be both.
- [26:23]
A
Is this your best investment over the last few years?
- [26:27]
B
I think so. After. After it jumped this week. Yeah, I think most likely. Percentage wise. Yes. And when we did that end of year episode, I believe on a dollar value it was nelnet since that's such a large position for me. Percentage wise. I think IDKR and then Grupo Norte Airports also up there. The appreciation of the peso, the Mexican peso versus the US dollar is kind of being under. Underappreciated by the markets. Those, the, those Mexican airports are doing quite well but that's getting us off track. Take us through Interactive Brokers earnings.
- [27:05]
A
Yeah. And I do just want to reiterate since Interactive Brokers is one of our sponsors, these are not related at all. We analyze the business totally independently of that. Anyways. Yeah, another impressive quarter. Total revenue grew 18%. They reported once again for the second quarter in a row 79% operating margins which it just feels weird coming out of my mouth to say that about any business. I just. That blows my mind. I don't know how it could be any higher. Like that might be the highest operating margin I know of.
- [27:44]
B
It could take higher. They could double their business with very, like. They're growing their employees at, I think, 6% year over year, and their revenue is growing 20%. If that continues, it should tick higher. I mean, you can't go above a hundred percent, but it should go into the 80s at some point.
- [28:07]
A
Yeah, I guess, like, they've just done such a good job eliminating their cost of sales, like building everything from the ground up, if I'm not mistaken.
- [28:16]
B
Yeah. It's extremely scalable.
- [28:18]
A
Yeah, yeah.
- [28:19]
B
Now, what does it say about Wise's potential operating margins? I'll let. I'll let people. Let people think about that one. It should be. It should be bullish.
- [28:27]
A
I think, though, they added 272,000 new customer accounts this quarter. That's their second largest ever quarterly net ads and totaling 4.4 million customers, so up 32% year over year. When asked about how long they could sustain this account growth, Thomas Petterfy said, as long as I shall live. Which. Which is just a.
- [28:52]
B
That might not be direct, but essentially he was saying, as long as I'm still here.
- [28:56]
A
And he said, I've got the transcript here. Was it exactly as long as I shall live? Yes.
- [29:01]
B
And then he kind of goes, yes, that's my answer. Or something like that. Yep, that's my answer.
- [29:05]
A
Yeah. First he said it somewhat in jest, and then he's like, no, that might actually be my answer. He's. He. I think he basically says, sky is the limit. Why can't they go out and keep getting more accounts?
- [29:17]
B
They have under 5 million accounts. How many people, especially when you think about globally with smartphones, how many people are getting access to investment products? There's hundreds of millions, if not eventually 500 million potential brokerage accounts to tackle. Maybe you can exclude China. Okay, it's hundreds of millions that still. They're a tiny fraction of their overall space.
- [29:40]
A
They could just pick up the Robinhood graduates and exactly, honestly triple their accounts that way. Operating income has increased at 30% a year over the last five years. It's so profitable. And so again, I posed the question, is this the best business around today, or are we at a cyclical peak? And then the second question is, how much bigger can this get? Because my natural instinct is one of the biggest brokerages, by market cap, one of the. I think one of the richest men in the world, the founder, Thomas Federfi.
- [30:16]
B
So you.
- [30:16]
A
You think, like, must be somewhat close to maturity, because it's been around for a long time, too. It's not a 4 million accounts? Yeah, I think Robinhood's got 15 or something like that.
- [30:27]
B
Yeah. And if you look at accounts, you could say, okay, well they skew more professional traders than Robinhood. They skew more funds and stuff like that. Now if we look at your first question, is this one of the best businesses around today? I think clearly the margins speak for themselves. And maybe I don't want to go into too detail on it, but there are distinct competitive advantages here that I think reinforce over times. And I go into detail with that in the newsletter that comes out tomorrow morning. And are we at a cyclical peak? Maybe. I mean if the market crashes in 2026, the numbers are going to look worse. They are a pro cyclical business. That financials do look better in bull markets, they do get worse in bear markets. That's just the nature of the business. But I don't think it really impacts their long term competitive advantage. And if you are, look, if we're in a great Depression, we got other fish to fry. But I still kind of look at it through the lens of will they keep gaining market share? I think so. And when specifically, and I'll leave it at my final thought on this, they got asked about advertising on the conference call and I will say they're in the early innings of advertising, especially because they advertise with a mid sized podcast such as ourselves and that's kind of one of their first dipping their toes in. It's kind of, I feel, you know, privileged to be one of the first advertisers for them. But they said, look, we are figuring this out. At least this is what they were talking to the analyst at. And they said, look, we've kind of figured out what works here and we're going to push our foot onto the gas pedal even further. And given their size, they can probably scale up their marketing a ton. And yeah, that could impact operating margin in the short term, but that could help them sustain 30% something year over year growth. And yeah, sky's the limit. I mean look, of course bear market happens. Stocks, the earnings are going to go down, stock's going to go down. I think that's probably a buying opportunity.
- [32:27]
A
But you could also, I mean like yeah, trading transaction revenue will probably decline in a bear market. But for example, I was looking at Schwab and cash as a percentage of client assets is at like a record low. If interest rates rise and cash as a percentage of assets rises, that's higher interest income for interactive brokers, which could potentially offset some of the transaction revenue. Declines as well.
- [32:59]
B
I think most of their interest income comes from margin loans, stuff like that, shorting. So like that, given the nature of their clients. But for Schwab, that's specifically. We have a question here that says is it too late or is it still a good time to buy? I think it's got to be up to the individual investor. But the way I look at interactive brokers is it's a perfect stock. Given their conservative balance sheet, they're not at any risk of blowing up in a financial crisis or something like that. And given the fact that they are pro cyclical and they do tend to dip in a more aggressive manner than the broad market in a downturn. If we see a bear market, that's the perfect time to buy during a raging bull market. At the moment, I kind of wish I owned more, but just sitting on my hands for now.
- [33:46]
A
Should we talk Netflix, soon to be.
- [33:49]
B
Debtflix, soon to be Netflix.
- [33:51]
A
Warner Brothers Discovery if they abridged their name.
- [33:56]
B
Oh yeah, the return of. The return of Deathflix. Huh? Remember that when people are saying that for like five straight years, just wait. Next quarter this blows up. Just wait. I don't. Next quarter they'll blow up. Yeah, I guess if you people are confident about things, if you thought that.
- [34:14]
A
The world of streaming was going to be more and more competitive and that Netflix's position would get eroded away, maybe you can. I could see why someone would have made the case. But obviously Netflix proved the case completely wrong. So do we want to talk through their earnings?
- [34:32]
B
Yeah, we have a question here that says do you guys think the government will block the merger? Trying to analyze what this government is going to do is not possible. So yeah, I'll leave that one there. But let's look at the earnings. Really, really strong year for them. They're turning on that advertising engine. 16% revenue growth, 30% operating margin for the year. Operating margin did tick up viewing hours though. Only grew 2% year over year. Let me table this question for you after my notes here. Is that a concern? One, they're investing in live events. They have been for the last few years here they're doing things like the World Baseball Classic in Japan, a lot more sporting events. Kind of a big thing for them. Of course they have the Warner Brothers Discovery thing that we've been talking about for the last month or so. That transaction has now been revised to all cash. They are investing heavily in quote unquote creators though. I do, I always laugh at that term and video podcast. So hey, if you Guys want to throw a couple thousand dollars at a, at a mid sized investing show. We are right here for you. We'll upgrade our backgrounds. Don't worry. They're investing in cloud gaming services. It was kind of the three things here. In a more serious note, live events creators and video podcasts and cloud gaming were the three things they talked about as their initiatives. They're investing and of course they're investing more into advertising to scale it up from a monetization standpoint. But those are from the usage standpoint. They're at about 27 times EBIT right now. I had a chart here from fiscal AI. They were trading at 50 times in 2025 at one point. That really going to pay 50 times for Netflix Guys that just at their scale didn't make much sense to me. I'll ask the two questions. One, is there a concern on viewing hours? Ryan and doesn't the fact that Netflix has to go out and buy all these shows license all these shows mean they are in a worse spot than YouTube which everyone just they don't need to incentivize anyone. Everyone just comes to them.
- [36:39]
A
Yeah, they are in a worse spot than YouTube. Everyone's in a worse spot than YouTube. It's not, it's not like Netflix can't be, can't also be a winner here in my opinion. The, the thing I don't get is 2% growth in engagement hours but I'm pretty sure their share of US streaming TV time was higher. Hit hit a record high. Right. I remember seeing that Nielsen data we.
- [37:05]
B
Can check doesn't our friend tsoa Alex Morris T Switch. Yeah he tweets that out. Maybe, maybe I'll find it from, from one of his tweets. I, I think they well this globally and Nielsen's US maybe that's, maybe that's a difference there but yeah could be.
- [37:24]
A
But I mean they saw mid teens growth out of every single market revenue wise so I would think unless they raise prices on everyone.
- [37:33]
B
Let's try to analyze this chart. December 2024 maybe they were at 9%. December 2025 they were at 9% of TV time.
- [37:48]
A
They're holding share.
- [37:49]
B
Then let's say the maybe TV time's going down.
- [37:55]
A
It's possible. It's possible. I mean I saw those like super dystopian sounding comments of like producers having to optimize their shows for people being on their phones while watching. It's just maybe that is like oh.
- [38:11]
B
The Damon and Affleck. Yeah. What did you think about Ben Affleck way smarter than he gets credit for. Maybe on his AI tags, he sounded a bit like AI giving his takes on AI, but a lot smarter than a lot of, you know, the average person out there.
- [38:25]
A
Yeah. So I actually kind of like Netflix here. I don't mind the Warner Brothers Discovery deal. I know apparently Reed Hastings is, like, not a huge fan of it, is what.
- [38:37]
B
He's at his Utah ski lodge and he's telling his assistant, drop this to Bloomberg.
- [38:42]
A
How much of the company does he still own, do you know?
- [38:45]
B
Let's look that up on. Yeah, check that on Finch. Physical AI. Excuse me. Drink for me right now. Let's see, we got some comments here. I think Netflix is a buy in the low 70s. Probably we're at about 80 something today. Shout out to Ryan for that 10x EBITDA EBIT in 5 years framework. I've been using it more and more recently. My own valuations. I agree. That's a good framework. It's a nice little rule of thumb to use for a compound or a growth stock. Question here. Do you guys think Netflix will be able to cross sell a discounted Max to Netflix subs and a discounted Netflix to Max subs? They would know which subs are exclusive to each and target them in the Max and Netflix deal. Yeah, I'm not sure exactly on that one how they're gonna do it, but what I do like is that I think they have an either licensing or after this acquisition and ownership of every major studio outside of Disney. So Universal, Sony, you know, that's why they have that. That's why they get all that, those Mario movies is because. Well, there's just one. But they have the partnership to have all the Nintendo movies. Because Universal has a partnership with Netflix. You have a lot of content that's going to be coming online for them. It's just we'll see what happens with that Max and Netflix because I'm sure they can work it out much better than I can. We have another comment here that says 2% viewing hours thing surprised me a bit given the strangers things. Season five. Yeah, I think that would be the only concern. Looking at this quarter, I would be much more inclined to think the stock is attractive at 27 times earnings if viewing hours were growing in line with, say, revenue or maybe closer to 10%. But that kind of makes me think, is this a more mature business than we thought? I would be much more inclined to buy closer to 20 times at this stage of their business.
- [40:33]
A
All right, folks, before we move on, let's Talk about our home for investment research, Fiscal AI. Fiscal AI is the complete stock research platform for fundamental investors. We use it every single day here at Chit Chat Stocks. It has everything you need to research individual companies from 20 years of financial data to company specific segments and KPIs earnings call transcripts, Morningstar reports and insider ownership data and much, much more. And they just lowered the price of their Highest tier by 60%. If you want a complete enterprise grade financial data terminal, check out Fiscal AI. If you use our link Fiscal AI Chitchat, you will automatically get two weeks of Fiscal Pro for free. No card required. And if you want to upgrade, our link will get you 15% off any paid plan. Again, that's fiscal AI chitchat. The link will be in the show Notes.
- [41:22]
B
All right listeners, I want to take this time to remind you about the Emerging Moat Stock Research Service, a newsletter that will produce a stock research report every four weeks and regular updates on existing stocks in the Emerging Moats universe. We have an upcoming schedule including a research report on Wix.com we have interactive brokers, American Express, Nintendo, Airbnb, Nelnet and much more. Please, if you want reach out and get a complimentary free trial. You can do that by contacting me through the link in the show notes and giving me a DM on substack. I hope you'll try out the service.
- [41:58]
A
Yeah, it might be more mature and you're seeing a mix of pricing growth. Sort of buoy that top line growth which I mean maybe that could continue. I think honestly if they integrate all the max content or all the Warner Brothers discovery content in there, they should be able to raise prices. It's actually kind of funny being on a Netflix ad tier these days because the ad business is so nascent for them that a lot of it seems under monetized. Which a is kind of nice like you, you get less ads but they also only have like they seem to only have a few advertisers. Maybe I'm wrong on this.
- [42:37]
B
Yeah, that repeat a lot of it. I'm sure they only have a few Amazon way more mature and they're similar. It's similar.
- [42:43]
A
Yeah. It's just the same advertisers over and over and honestly it kind of degrades the experience to watch like 10 Discover ads in a, in an episode.
- [42:53]
B
I know it does make, it does make it. Hey Discover, they gotta up your targeting. They need to get you on higher demographic targeting. That's an insult. If I, if I was seeing Discover ads I'd be like who do you. Who do you think I am?
- [43:06]
A
Yeah, I guess the. I could see a world where I like Netflix. Sorry, where I owe Netflix. Yes, the YouTube. Like it will never be YouTube. I don't think any platform will ever be YouTube other than you can make the case for Instagram becoming that. But still YouTube's done just as good of a job as long as Instagram's been around.
- [43:30]
B
What do you think about the licensing YouTube, Spotify shows?
- [43:37]
A
I don't like it.
- [43:39]
B
Well that's.
- [43:39]
A
They, they have much better data than I do probably on podcast watching and people watching podcasts specifically on their smart TVs but I just don't like it. Something about it's probably cheaper than a real like production so they can kind of spray and pray I imagine and close some deals with a lot of different shows but just feels like they're chasing after YouTube and they could do just as well playing their own game like focusing on higher value productions.
- [44:20]
B
Yeah, it's not going to mean much but it's just kind of interesting for our, for our business. All right, last question from Tyler here. Thoughts on how large ads can get given that at 2.5x last year and it's projected to double this year. A couple of doubles and ads could be half of Netflix's revenue. Yeah, look, they get a ton of watch hours globally and once they globalize advertising they're going to do phenomenal. It's, it's. Yeah, it could be in eventually the tens of billions of dollars. Well maybe 10 billion. $10 billion. Let's not get ahead of ourselves. I also think people underestimate how profitable Amazon's advertising is because they have one now. The connection with the E Commerce, the sponsored listings and all of this free like ad supported stuff you can watch with prime video along with the sports which is a nice captive audience and they're directly competing now with the trade desk with their own dsp. So if Netflix has more watch hours I think Amazon overall their advertising business of course it's, it's later stages but it's just, it's a extremely underrated.
- [45:31]
A
Yeah, I honestly I would love to know how much of the margin improvement at Amazon E Commerce like I think they break it out into three. They do more granular breakouts but they do North America International and AWS is like one of their reporting things and their North America operating margins have expanded. I really wonder how much of that is credited to advertising specifically.
- [46:02]
B
All of it you think? All of it.
- [46:05]
A
I mean they, they can love it like that. Right? That's sustainable.
- [46:10]
B
Yeah, they can. But as a shareholder. Well, I'm not a shareholder. As a psychological long which someone was joking, I think in our substack chat this week that I was like, I'm thinking of buying software stocks. They look attractive here. And someone's like, don't buy it. If you like something, but don't buy it. It actually does much better. I was like, yeah, I think that's true, but it doesn't make me feel better. But with advertising, okay, North America revenue, let's try to pull this together. $400 billion, give or take advertising services revenue. 64 billion, let's say 50 billion of that is in the United States. Gross margin on that is going to be 90, extremely high. And if you look at their North American operating margin, what is it still single digits. So I could be over 100% of the drop party margin at this point. If you encompass all of their science projects that they're working on. Yeah.
- [47:10]
A
I've always thought that marketplace sponsored listings is one of the most valuable natural advertising places. Like such an easy sell to the merchants. Such an easy sell to like if you're Airbnb, there's a whole bunch of value to the hosts. I actually think it's a win win across the board if Airbnb launches sponsored listings. That's kind of a side tangent. Anyways.
- [47:41]
B
Yeah, Airbnb. We were talking about this with Aria on that Uber conversation how Airbnb talks a lot but never actually does something. The fact that Airbnb and mostly borrowed ideas anonymous account who does a lot of, you know, fantastic work covering the tech space. I would subscribe to his newsletter. He was talking about how it's shocking that Airbnb somehow doesn't have a gen AI tool out further the further app. Because it would just be fantastic if you can put an I have these eight criteria. Find me something in this area. It just given the unique supply. And then second. Yeah, the sponsored listings, like if you look at Uber, they've scaled pretty quickly. Their advertising business. Airbnb hasn't done anything but back to. Yeah, Amazon. Yeah. Yeah.
- [48:32]
A
It's funny how a lot of products Airbnb. Yeah. Airbnb went from trying a million things at once, Covid hitting them, narrowing their focus and now they can't do anything. Like it feels like the expansion in terms of the product feature set is so limited.
- [48:50]
B
I just think they have problems with we need to perfect this design and they're trying to build something unique and cool and kind of trying to do a Steve Jobs thing where, oh, we have this new product that's going to change the world. In reality, they have given their existing platform a lot of blocking and tackling to do one credit card or some loyalty program plus a credit card, anything in that regard. Two sponsored listings, three gen AI search slash. Like basically a chat bot to find you the best listing because there's millions of listings on there and. And utilizing like you feel like every time if you use the Airbnb app, you underutilize. Oh well, what if I miss this area? What if I miss this one? You just have to basically go through one by one by one by one. Ah, what does this one have? What does this one have? Yeah, there's a lot of improvements to be made.
- [49:40]
A
I think you're right. I think Chesky has been like so inspired by Jobs and it makes no sense to me, honestly. Like you're.
- [49:48]
B
The thing is their moats.
- [49:50]
A
What powers their business. Yeah, they're fine. What I mean it's one of. I think it's my third largest holding. What powers their business? Supply. Not the cute little animals that they have on their commercials. That doesn't power their business. Look at booking holdings. Their design has sucked. It looks like the 2000s Internet and they just continue to grow stays like if you go to the website, it feels like it's fine. It's a fine website. It doesn't look as pretty and simplistic, but they do a good job because they continue to grow supply. All right, let's shift gears though.
- [50:24]
B
Small, small cap. Small cap of the week. You want to hear a little micro cap here? This is a listener suggestion. I forget who it was, so apologies. It was either on Substack or Twitter or something like that. Ticker here. And this is someone that followed up in relation to our defense spending episode, which people seem to enjoy. So we will be doing more of those thematic shows throughout 2026. The company's name is Castelum, ticker is CTM. Here's what it says they do. Castellum provides services in the areas of cybersecurity, information technology, electronic warfare, information warfare and information operations. Company offers intelligence analysis, software development, software engineering, program management, strategic and mission planning, blah blah, blah, blah, blah. On their website they say they have unique capabilities in electronic and information warfare. That sounds scary but also profitable for the defense contractors. This is a very tiny stock, so I would say you definitely need to do due diligence in exactly what they are doing. They have a market cap of $100 million I don't have a detailed backstory, just given. This is a small cap of the week that the company was founded in 2019. They then acquired seven different companies to get capabilities and regulatory approvals to sell to the Department of Defense. You can see this, I think, and their massive growth in shares outstanding. But now from 2024 onward, they say they claim they're going for organic growth and new contract wins. And so far. Well, I should also mention that they've cleaned up their balance sheet and their operating margin is approaching break even, which is kind of two check marks for a small cap, where you go, all right, the balance sheet's not going to be a whole liquidity concern. And then, okay, are they actually on the path or about to go to profitability? That's one of the things that I will remember to the end of my days from Ian Cassell saying a company going from just unprofitable to break even to profitable, going to get a huge multiple rerating. But speaking of contracts, they have just won a hundred million contract with the U.S. navy and another $50 million follow on contract over five years, among other contracts over the last two years. The backlog is now likely in the hundreds of millions, and we trade at just 4.2 times trailing gross profit. Feels like an interesting small cap, especially given what we kind of took away from that episode of electronic warfare. Cybersecurity information intelligence stuff is going to get a lot of investment over the next decade.
- [52:55]
A
Yeah, yeah. I'm looking at the numbers now. You're right. It looks like it's getting sort of closer and closer to profitability on an operating income basis. Actually, last quarter, it was their first profitable quarter, pretty much break even. But yeah, the, yeah, I'm, I'm interested. The difficulty for me with microcaps in general, and this is, I mean, this is like the whole game. And it's probably why people subscribe to micro cap club and all that. It's so rare that a company with a $100 million market cap or less has a real competitive advantage, but.
- [53:36]
B
Yeah, but you're not investing for that. It's right. Remember emerging competitive advantages, Ryan? Potential, you know, that's where we make the money. Yeah.
- [53:45]
A
And if, if they do have some sort of competitive advantage that can expand and allow them to kind of either take share from someone or build out their own market. The returns are just enormous. So I'm constantly on the fence of, man, I should spend all my time just digging into these and I should just buy the Airbnbs and Amazons in the world anyway.
- [54:16]
B
Well, if you had, if you wanted to, if you're like buffeting could spend your whole day doing that and wanted to do that. Sure. But it does take a lot more time to do that as an individual. That's really what it comes down to.
- [54:30]
A
I like.
- [54:32]
B
Looks interesting. Like, okay, there's things that I want to look at. One when kind of going through the flipping through the pages analogy of, oh, do I want to look further and spend an hour or something researching this company. Okay. The balance sheet isn't going to destroy them. They seem to be getting contract wins. They actually have a product. I think they're approaching break even on operating margin. So it's not some sort of scam company that's just burning money constantly and the valuation isn't insane. All right, those are kind of some boxes that are checked. Maybe I could research further.
- [55:09]
A
I am a huge fan of the turning the corner to profitability stories. It feels like so often they're mispriced or people are just, people just tend to. Well, maybe in some cases they're right to think this, but a lot of people tend to underestimate what kind of margins these companies could have at scale or could have as they grow.
- [55:35]
B
Like, I mean, of course it's a risk. Yeah, it's a risk that it doesn't materialize. But for example, today you look at remitly, people go, was it trading at 40 times earnings? I'm like, yeah, 2% margin. Look at their gross margin. So yes, they haven't proven yet. But there is that potential. Yeah, there is the potential there. And a lot of people just use that number, disregard it. And I think that's where you can see opportunities. All right, I have some fun stuff. One more.
- [56:03]
A
I was just gonna say, I mean, I think there's a lot of investors out there that like, whether it's funds, whether it's like quantitative, if it doesn't screen well on an earnings basis, it's just like a non starter. And I do think that leaves the door open for companies turning the corner to profitability. Do you want to talk Atlassian?
- [56:25]
B
We should. Did you HEAR they have 26% of their revenue on stock based compensation? I think that's better than Palantir.
- [56:34]
A
Yeah. I believe of all the companies in the, of all the software companies in the world with more than $2 billion in revenue, or maybe a billion, they have the highest percentage of stock based compensation, like the highest SBC to revenue ratio in the world. And it's, it is insane. The one caveat that I will mention here, and this was something that Ian Bizek raised in his recent article. A lot of people are looking at these software companies as they're getting bombed out. Stocks are plummeting and they're saying, okay, yeah, looks good on a cash flow basis. But look at the stock based comp, which is fair, it's a real expense. But when the stock gets bombed out, stock based compensation is going to look very different next year. A lot of the options that were granted three years ago might be underwater. So you got a lot of. Now you could say those people are going to turn around and say, oh, I want cash. I personally don't think the employment market is strong enough that people can just say that or I'm going to leave kind of thing. So you could get a higher like GAAP margin in the coming years because SBC declines, which I think people are maybe underestimating.
- [58:02]
B
Yeah. And especially with that labor market. On the other hand though, you could argue that a lower share price is going to mean more absolute shares needed to make up for that compensation. You kind of get what I'm saying. If someone gets $50,000 in stock based comp, you're going to need more shares, which could technically be more dilution.
- [58:22]
A
You get granted an allocation of shares and invest over for you. So it's a.
- [58:26]
B
But they're not. Okay, okay. But if someone's coming to the negotiating.
- [58:30]
A
Table, AI is incredible. It can teach you how to fry an egg and even write a poem, pirate style, but it knows nothing about your work. Slackbot is different. It doesn't just know the facts, it knows your schedule. It can turn a brainstorm into a brief. And it doesn't need to be taught because Slackbot isn't just another AI. It's AI that knows your work as well as you do. Visit slack.com meetslackbot to learn more. This is pro linebacker TJ Watt and I'm back with YPB by Abercrombie for another activewear drop. My second co design collection has new new shorts and tanks that keep up with all my in season workouts. And their new Restore collection is a game changer off the field too, because even pro athletes like me need rest days. Shop YPB by Abercrombie in the app, online and in stores. Because your personal best is greater than anything. Yeah, I mean new hires potentially, but like you can't.
- [59:39]
B
But if. And also your best workers are going to want it if. If you. If their stock is for zero, they're going to renegotiate.
- [59:45]
A
Yeah, not renegotiate. You can't do it retroactively but you can ask for new option agreements and. But that I just don't think. I think people are going to be able to say sorry like we can't do that now has never really seemed to do that.
- [60:08]
B
They don't care about shareholders. I think that's pretty, just pretty. Yeah, that's clear. They don't care.
- [60:15]
A
Yeah. They built a giant headquarters extraordinarily high.
- [60:20]
B
Yeah and I was feeling bad about researching Wicks again. That's the part of the market we're in spending a lot of time open that one. I guess their stock based compensation is not nearly bad as Atlassian maybe. Maybe you know you can put up with that if it's cheap enough. I don't know.
- [60:42]
A
I like Wix. I like Wix. It's the base 44 investment seems promising actually as well and I think they just actually rolled out their own like build web build the website with AI tool. Probably using base 44 as sort of the.
- [60:58]
B
Oh yeah, I'm a. I've been researching it. I've been researching them for emerging moats. There's a lot of info there. So yeah, keep listeners, readers watch out for that. But we have two things I want to talk about actually. Three, quickly to close things out with some fun topics, I'm going to read you this press release from PayPal PayPal's Agentic Commerce Services and checkout options are now going to be. Well, okay, they're getting. They're acquiring another company called Signboard Symbio. Yeah, acquiring another company.
- [61:35]
A
Symbio maybe Symbio.
- [61:36]
B
Symbio probably Symbio. Yep, you probably have that right. Okay. As A part of PayPal, Symbio's team in technology will enable Stornk, one of PayPal's agentic commerce services. Stor Sync makes merchants product data discoverable within AI channels and it includes the ability to seamlessly drop orders to their existing fulfillment and management systems. Importantly, merchants remain the merchant of record. Blah blah, blah blah blah. Abercrombie and Fitch, Fabletics, Ashley Furnisher are currently live with Store Sync on Microsoft Copilot and perplexity. Well one PayPal challenge. Don't make an acquisition, you can't seem to do it. Two, you're using Microsoft Copilot and Perplexity with this company that means nothing. Both those are going to have zero usage within. Right? Am I wrong?
- [62:28]
A
Well, I don't know. I have no idea.
- [62:31]
B
Within a couple of Years people seem.
- [62:34]
A
To really like perplexity. Some of the wrappers will be valuable. Like not everyone's gonna. I think they have a ton of users and they've built out some cool stuff. But the I'm looking at it. It says it's an estimated 150 to 200 million dollar acquisition.
- [62:52]
B
I didn't see a number. Yeah, okay, not that bad. But.
- [62:58]
A
PayPal it's so like honestly returns could be good from here. I think it's at like an 11% buyback yield. There's a whole bunch of dilution but 9% earnings yield.
- [63:10]
B
I think. Yeah, yeah.
- [63:12]
A
Why not just sit there and buy back stock? Because here's the thing is like if people are worried about let's the the biggest concern and why PayPal trades at an 11% buyback yield and 9% earnings yield is because their core business is being challenged by the mobile wallets and like just honestly the payments ecosystem in general. Their core business is being challenged. The PayPal button, their highest margin products is there's. I think the competitors are winning. This acquisition does not solve that. It's not like sometimes there's kind of this balance where I'm sure executives think yeah our stock's cheap but if we just sit here and buy back stock when we should be improving the business, we might just be buying ourselves back into a bankruptcy or whatever. But this isn't the solution. Buying agentic commerce is not addressing the core problem. It's not like this is going to be the solution to the PayPal checkout issue. So I would say if you're going to make acquisitions like this, just buy back your own stock.
- [64:27]
B
Yeah, PayPal. Look, I don't envy those the that shareholder base, man. They just I think they tell you time and time again, look, don't buy this thing. I'm sorry but I want to talk about this other one especially because I want to put this in the title sorry I like more listens and I'll go a minute over for this but it is interesting I think really for the bubble watch one of the segments I've been doing the last few years we could see the culmination of it this summer if historical record is correlates to this. SpaceX is preparing their IPO. They're taking the next steps in the relationship with their investment banks. They are courting the four big investment banks which I believe are JP Morgan, Morgan Stanley, Goldman Sachs, bank of America, but don't quote me on that. Rumored to be as large as the Saudi Aramco listing which was $29 billion raised. The current valuation is $800 billion for SpaceX and they'd want to go higher than this. Importantly, According to sourcing, OpenAI wants to IPO because of the SpaceX IPO and Altman and Musk's heated feud. They seem to have a terrible blood feud and just despise each other. And then if OpenAI is going to prepare to IPO, Anthropic now wants to IPO because OpenAI is going public. So we may see all three, potentially all three in the $500 billion to trillion dollars range within the next six months. They don't ring the bell at the top, literally, but this feels like some jingling. The pitch is that they need massive amounts of capital to build data centers in space, which I don't understand how it's going to work because you can't cool it with air convection. I don't know, maybe they've solved something. They got smarter people than me. Does this inspire Xai, which remember, owns Twitter and Xai Grok are owned by the same corporation. Now is that going to now get taken over by SpaceX? And then second, at this moment, according to Bloomberg, Sam Altman is in Abu Dhabi trying to raise $50 billion at an $800 billion valuation. Now we got a lot for you here, Ryan. We can't go long on this, but this feels like the Adam Newman desperation trip to the Middle East. Do you remember that? It's got a little, yes, I'll give a hot take. And it's got a little similar characteristics to that.
- [67:09]
A
Honestly, Altman's got a Newman vibe. He does kind of have a bit. I think it's maybe just anytime you get into bed with Masa son, you build this God complex it seems but it, this would be, honestly, it'd be fun. I'd love to read the S1 for open AI. Love to read it for SpaceX. I think of. I think honestly SpaceX would get an extreme valuation for a little while until insider stump until basically the whatever the lockup period expires and then it would be an unwind like no other retail investors would just get killed predictions. People love the aura. Like the, the retail investor that just likes Elon doesn't look in the financials. Whatever. They love the SpaceX Aura. Like it's easy to think it's the future. Like you can just hear the name and you think this is the future and you're just going to get curb stomped by the market.
- [68:14]
B
Yeah, they just want to be in the Mix. I got a prediction for you. Tell me if this is what the odds would be betting because I think it would be minus like 300. All three. Cash burn. Cash burn. Cash burn.
- [68:30]
A
Yeah, yeah, yeah. For sure. Right. Don't they. Are you saying like right now when they.
- [68:37]
B
When they file? Yeah, sure. When they file.
- [68:40]
A
Yeah, probably. Yeah.
- [68:42]
B
Okay.
- [68:42]
A
I don't doubt that.
- [68:43]
B
I mean. And we're going to do a trillion.
- [68:46]
A
Dollars for each like. Yeah, I mean I think.
- [68:51]
B
Look, come on.
- [68:52]
A
There's a tendency just out of VC backed companies to.
- [68:57]
B
Market cap.
- [68:58]
A
I don't think it's right. Oh, I don't think it's right. But I think they will all claim an absurd valuation as long as the music's still playing and they will all be burning cash. Yeah, that seems very likely.
- [69:12]
B
That feels like a top moment to me.
- [69:16]
A
By Amazon. If anthropic lists. That's.
- [69:21]
B
That's true.
- [69:22]
A
That's Amazon earnings are going to soar.
- [69:24]
B
Aws. I mean right now, Anthropics. I know. We're going long. Anthropics. Revenue seems to be soaring and usage seems to be soaring. So already we're seeing that AWS re acceleration. Hopefully it's coming in. I'll be rooting for you. Claude. Code. Keep using it everyone. It's going to help with that AWS print. All right, Ryan, anything else? We want to cut five minutes long here before we get out of here.
- [69:52]
A
I think that's going to do it. Let's sign off here. Thank you to everyone for tuning in. Thank you to everyone for the comments in the chat today. And 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 a recommend. We may buy, sell or hold any of the securities discussed in this podcast. Thank you again for tuning in and we will see you next time. New Year new me. Cute. But how about New year new money? With Experian you can actually take control of your finances. Check your FICO score, find ways to save and get matched with credit card offers giving you time to power through those New Year's goals. You know you're gonna crush start the year off right. Download the Experian app based on FICO scoring model offers an approval not guaranteed. Eligibility requirements and terms apply subject to credit check which may impact your credit scores. Offers not available in all states. See experian.com for details.
- [71:02]
B
Experian hablas espanol spries to Deutschland.
- [71:06]
A
If you used Babbel you would Babbel's conversation based technique teaches you useful words and phrases to get you speaking quickly about the things you actually talk about.
- [71:15]
B
In the real world.
- [71:16]
A
With lessons handcrafted by over 200 language experts and voiced by real native speakers, Babbel is like having a private tutor in your pocket. Start speaking with Babbel today.
- [71:25]
B
Get up to 55% off your Babbel.
- [71:27]
A
Subscription right now at babbel.com Spotify spelled B-A B-B-E-L.com Spotify rules and restrictions may apply.