A (3:21)

Certainly seems like there's some sort of trail here as to spectrum and making this a much more prominent part of the business. Now look, the deal isn't finished yet. Like I said, this was a lot of rumors and the stock is up on rumors and we don't have a price tag on it. But at the same time, Globalstar is about an $8 billion company and it's not like for a company the size of Amazon that there are huge valuation concerns here for acquiring this. It's certainly not going to break Amazon's bank to make an $8 billion acquisition. So with that in mind, like, what opportunity do you see here for Amazon, the stock. Is this something that's a real needle mover or is it more like a, hey, this is nice to have, but I'm not building my investment thesis around it. Like, when I think of Amazon, I think of like Prime Video. You can agree or disagree anyone you like, but I don't think anyone's building a investment thesis on Amazon based on it has Prime Video and something like Global Start sort of feels like on that level.

B (4:21)

I think that's fair. Tyler, you're not building an investment thesis around this necessarily, but Amazon does have space aspirations. I think what this does that has value for Amazon is that it gets it a revenue stream from space that's reliable while it tries to build out that space business. And so brand breaking down Global Star's business is actually pretty fascinating here. A single Customer accounted for 63% of revenue in 2025. We don't know for sure, but that customer is likely Apple. Apple owns 20% of the business. It owns 85% of Global Star's capacity. Or at the very least, 85% of the capacity is dedicated to one customer. That customer is likely Apple. And so what is interesting here is when we think about the monetization of space, everybody wants to do space, but the monetization aspect gets tricky on the edges. This is something that Global Star does provide Apple with the SOS emergency signal that is actually A pretty important thing. It's a valuable business. And so we have one of the most important, valuable companies in the world in Apple, locked in as this global star customer and locked in for the long term. And so if you're Amazon, I get this space business, a reliable income stream from space as I continue to push forward with my own aspirations. So I think that that's kind of the valuable thing here for Amazon.

C (5:48)

First, to Tyler's point, Prime Video should be a part of the thesis more so than a lot of people think. It's a big part of Amazon's advertising platform, which is one of the fastest growing and most profitable parts of the business. So we'll leave that for another conversation. But to me, Amazon space investments are a nice to have. I am an Amazon shareholder and 100% of my thesis is built around the E commerce platform in aws. Now, there is a solid argument to be made that Amazon building out its satellite count would be a big competitive advantage for aws. Microsoft and Alphabet, which are the two closest competitors, they don't have that. These satellite capabilities, they can remove geographical constraints at the edge. Right now their reach is limited to, you know, where the Internet goes. And it'll let Amazon's customers move data without using the public Internet at all, something its competitors can't offer. So it can be a competitive advantage that helps AWS keep or even grow its already leading market share. So it could be a very nice thesis driver. But right for now, it's a nice

A (6:55)

to have, I would say, at the most generous, I think this acquisition and Amazon's budding space business is extremely early. I wouldn't even say early innings. It's like watching the pitcher warm up before the game even starts in terms of early innings here. So it could be a fascinating thing to watch because clearly Amazon, or Jeff Bezos as the chairman, has had very ambitious plans for space with Blue Origin, which isn't necessarily tied to Amazon. But it's clearly something that Jeff Bezos has wanted to do. And I have to imagine that somewhere that is embedded in the DNA of Amazon. So, coming up next, we're going to talk about another struggling retailer in the form of Restoration Hardware.

D (7:41)

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A (8:45)

Shares of RH, which used to be called Restoration Hardware, I think I like the older name better shares plunged about 19% yesterday after the company reported earnings and offer guidance. John, was it the guidance or the earnings that really had the market saying no thank you to whatever management had to say?

B (9:06)

Well, the earnings were not fantastic, but definitely the guidance is a big part of what's going on with RH and investors. Adverse reaction to the report basically here if you look ahead to the first quarter, it just reported fourth quarter results, but if you look ahead to the first quarter, it looking at a sales decline. And this is after already a couple of years of just kind of mediocre lackluster results. But then guidance for the year is modestly positive. And so if you take that in combination, what management is saying is, hey, our business trends are actually about to get worse, but don't worry, they'll be better before the end of the year. And I think just as an outsider perspective, I think management has cried wolf one too many times here in recent years. And what I mean by that is it seems like that is routinely now the guidance. Things are about to be bad. But don't worry, it'll pick up in a couple of quarters and investors just aren't buying it. Right now. Everything that drives RH's business you, housing prices, interest rates, even the stock market, all of these things are trending in the wrong direction. And that's kind of the point here. It's doing okay under the circumstances, but it's not great being under the circumstances and investors don't know when the circumstances will get better. I don't think that it was buying what management was selling and that's why the stock is down after the report.

A (10:38)

Well, you can certainly say that the report is a continuing trend that we've seen with RH because this is not anything new. Over the past five years, shares of RH are down 81%. And I don't care how you slice it, that is not good. Now there's clearly some internal problems, as you said, John, and there's some broader macro problems as well. And because this is furniture mostly and home goods and things like that, people buy furniture when they buy a new home or move. That tends to be the most frequent time that these purchases happen. The challenge is existing homes in the United States from 2022 to today are at about the same rate that we saw from 2008 to 2012 when you know, we had that thing called the Great Recession going on and housing was not in a great place. Now at the same time, retail struggling and businesses struggling with their turnarounds is not a new story. I mean, yesterday Travis Liu and Racerl were talking about Nike and their seemingly multi year turnaround strategy that, you know, know hasn't quite gained traction yet. It seems to be like where RH is in a similar position. So look, we know it's some sort of combination and like if I were to just ask which one is it? We would all say it's a combination of both. So I'm going to make you guys be a little more specific here. I want you to put percentages too. When you look at this situation, how much of a percentage is it's the company and its problems versus it's just a really bad market. And how would you break that kind of share into what to blame for

C (12:13)

RH's woes before I give my percentages? As you mentioned, the housing market is pretty terrible right now and that's weighing on the business for sure. It isn't just that people aren't moving into new homes and buying furniture for their new home, but people are largely not tapping into their home equity to complete big home purchases. That's generally talked about with projects like building a new deck and renovating a kitchen, but it also is a very common source of funding if people want to replace a few rooms worth of furniture. So, so because of interest rates, that's generally not happening right now. And plus with the inflationary pressures over the past few years, economic concerns, consumers are generally feeling squeezed, especially when it comes to making nice to have purchases like updating furniture. So although the company missed estimates, there's an argument to be made that 4% year over year revenue growth in this environment isn't that terrible. But there are some things not to like about the company. I mean, its debt levels are high. I feel like management should be a little more conservative right now when it comes to investing for growth and really trying to innovate in this type of environment. In all, I would say 70, 30 market versus company.

B (13:25)

Yeah, maybe I'm being a little bit too harsh here, but I put it closer to 50. 50. But I agree with everything that Matt just said. It is true. The housing market is a huge reason that RH's business isn't booming like investors hoped. There's only so much that the company can do in that environment and management does point out, as Matt alluded to, that it is growing or producing results that are better than many of its peers. So I guess give it a little bit of credit there. It's a hard market to be in. But what is interesting is the numbers do look particularly weak right now because of what Matt just said. Management isn't very conservative when it's building up to the long term vision of the company and it's continuing to invest like, like business is booming. And so look, we are long term investors. We do like it when our companies take a long term view. But I think that does contribute to the numbers perhaps looking worse than they need to be right now because it is investing still so much in what it wants to do now. What does it want to do? RH aims for 5.8 billion in revenue in 2030. That would be up 70% in five years from what it just turned in in 2025. And in the past it's had operating margins of around 20. That's what it's aiming for. Definitely not there now. But look, if things go swimmingly, according this plan, there's a scenario where RH could be generating a billion in operating income within five years. It only has a market cap of 2 billion right now, so. But the thing is, as Matt pointed out, it is using debt, it is using a sale leaseback strategy which kind of ups the ante a little bit. It's buying these opulent properties. These are financial moves that are anything but conservative. So if RH does succeed, it's making great moves right now, but the outcome is becoming increasingly binary. If it fails to hit its goals, it's really put itself in a tough financial position.

A (15:19)

Coming up after the break, we're getting into the mailbag to ask what our reading list is this time of year

E (15:25)

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A (16:37)

bit of technical difficulties in between takes here. John's having some technical difficulties, but we're going to soldier on and we're going to talk about our last mailbag question here. Just before we do that though, we want to make you part of the conversation if you have a stock or an investing question for Matt, John, myself or anyone else on the show, you can now email us@podcastool.com we'd love to have your mailbag segments whenever possible, like this one we're about to do. So send in your questions. Just remember to keep them foolish. That email again is podcastool.com podcastsool. So our email question comes in today from Jack Quinn and this is probably one of the favorite ones that we always get because I think I've answered this one before in live events and things like that, and it's always a fun one to do. And Jack asks newer listener here and newer investor as well, aside from listening to the Molly fool, is there any books you recommend for beginner or amateur investors to get a better understanding of the markets, stocks, etc. Thanks. So before we get into that, we do have to mention that the Motley fool us we Our founders Tom and David Gardner have written several books. We have the Motley Fool Investing Guide, Rule Breakers, Rule Makers. And David Gardner also wrote a book recently, Rule Breaker Investing. So there's lots of options in the Motley fool universe already. But we're going to step away from that for a second and focus on some non Motley fool books and I'll do mine first and mine is one up on Wall street by Peter Lynch. This I think for beginner investors this is kind of that one that gets you inspired to want to invest. I remember the sensation I had after reading that book was I wanted to run through a wall to invest in the market. After reading about this book, it kind of explains how using your expertise in whatever field you have before you got into investing can be an extremely valu and how you can use that as an example of making better decisions and how to invest in the market and how he did it for several years running a fund called the Magellan Fund at Fidelity. I've always been a big fan too of the Intelligent Investor, but I would also say that is probably not the one that is a first time reader. It's a little bit of a dry read, so keep that in mind. And not to discount John's part because he wasn't able to join us, but the book that he recommended was the Psychology of Money by Morgan Housel. Matt, what did you have?

C (19:07)

You already mentioned my favorite investing book, One up on Wall street and the Intelligent Investor is absolutely a great one. It's by Warren Buffett's mentor Benjamin Graham, but not great for first timers. I agree. But since you already mentioned my favorite, I'll add that one of the best ways to learn as a newer investor is by reading all of Warren Buffett's annual letters to Berkshire Hathaway shareholders. He's been writing them for decades, or he was writing them for decades. He wrote his last one last year. There are certainly some company specific business discussions specific to Berkshire, but he generally spent about half of each letter talking about important investing principles, lessons he's learned like how index fund investing can be a great tool, how to avoid excessive fees when you're investing, how to have the right mentality in stock market crashes and corrections and recessions and a whole lot more. Now his letters have been compiled into books that you can buy, but they are all available for free@berkshirehathaway.com right on their website. And because they're relatively short, you can read one here, one there and just pick up some lessons as you go. Great thing for first time investors to read.

A (20:16)

Also, just a slight aside, I think Berkshire Hathaway's website is probably in a horse race with craigslist.org as the put me in a time capsule and send me back to the Internet in 2005. In terms of web pages and graphics and stuff like that, it is not the most updated site and kind of almost a nostalgia, which I think is a fun little site. So we've got the Berkshire Letters, we've got the Psychology of Money and one up on Wall Street. Three great options for somebody who's getting started in the investing world. As always, people on the program may have interests in the stocks they talk about, and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show Notes. Thanks for producer Dan Boyd and the rest of the Motley fool team for Matt, John and myself, thanks for listening and we'll chat again soon. Sam.