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Apple, SPACs and Stocks We Bought
00:18:41
Apple's WWDC 2025 hits and misses; it's not about being first, it's about being best.
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- [00:02]
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- [00:35]
Jason Moser
We're talking Apple real estate and the stocks we just bought. You're listening to Motley Fool Money. Welcome to Motley Fool Money. I'm Jason Moser. Joining me today, it's Motley fool analyst Matt Frankel. Matt, you got me feeling nostalgic here, man. It's nice to have the band back together.
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Matt Frankel
It has been a long time and not only are we back together, we're going to be talking about a spac later on in the show. So it's really nostalgic.
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Jason Moser
Yeah, yeah, those were the days. Matt, we want to kick it off today with Apple. It's the wwdc, the Worldwide Developers Conference. It's something that we look forward to every year, or at least most people do. I guess it's the chance for Apple to get out there and announce everything that they're doing. The things that we can look forward to. Pat, I'm not going to lie to you. This one, this year, this seems rather underwhelming. I mean, there's not a lot going on. I mean, Apple at its core right now is still very much a phone company. I think they're doing a good job in becoming more like a services company. For example, I mean, I think the services part of the business is really going to be what investors focus on here in the future. This conference thus far, I mean, it seems like the theme is you see this everywhere. It's liquid glass, right? It's this design that they're going to essentially roll out that unites all of their hardware together, give you a more seamless and consistent experience, it seems like, through all of their hardware interfaces. Now I'm an iPhone guy. I do have an iPhone. Beyond that, I'm not an Apple guy. I just, I don't have any other Apple devices. Not that there's, you know, I don't have a problem with it. Just, I just, I like having choices, Matt. But to me, this conference so far, it just, it seems to be a bit underwhelming, particularly on the AI side. Right? I mean, AI has been the point of focus for so many companies over the course of the Last couple of years here, really, and we're not getting a whole lot of information there either. But what are you taking away from this so far?
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Matt Frankel
Well, I mean, the liquid glass thing, I. I think you might be a little more excited than you're leading on about that. But having said that, I'm not an Apple guy. I have my Galaxy right here. One of the big themes, when I was reading through the summaries of the wwdc, especially when you mentioned all their AI rollouts that they're doing, and I was thinking to myself, it sounds like Apple's behind the curve. And pretty much every recap or review of the conference that I read confirms that. They said Apple is behind its peers when it comes to AI innovation. For example, they're rolling out a way to automatically separate spam texts through their AI technology. My phone's done that for two years. They're doing an automatic language translation of phone calls and texts. Galaxies have been doing that. So they are kind of behind the curve on AI. Really hasn't been a focus. I almost feel like Apple because they have such a loyal user base. My wife's an iPhone user and wouldn't take a Galaxy phone if it was free. They have such a loyal user base that they got a little complacent when it came to the pace of AI innovation, I think would be fair to say. It's not that it's like nothing. They're bringing their product up to speed, but they're behind the rest of the market. So it feels really underwhelming.
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Jason Moser
Well, I was going to ask you. I wonder why that complacency exists, because I agree with you. I think that makes sense. They do feel like they're a little bit behind the curve there, and I'm wondering why that is. I mean, you said it. I mean, they have obviously very loyal user base. I mean, I think most people, once you get used to using one of their devices or any kind of technology, I mean, you kind of stick with it for the most part. So maybe they took that a bit for granted. Or do you feel like maybe. Do you feel like there's a little bit of hype there in regard to AI? They don't necessarily feel like they need to be out there shouting from the mountain top that we're doing all of this with AI? I don't know. I know that they just haven't made that progress that people were expecting, but I wonder if they just feel like it's not perhaps necessary at this point, at least from the consumer Perspective.
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Matt Frankel
Yeah, and you make a really good point. Apple definitely has the deep pockets to compete on AI if they really wanted to. So that's really the head scratcher here, I guess you would say. But I think it boils down to a cost benefit analysis. In their mind, they don't need to be the leader in AI if they think some of the features aren't going to be widely used. I mentioned the thing that automatically translates your phone calls into a different language with the touch of a button. I've never used that. I mean, there's a lot of stuff that. There are a lot of AI features on my phone. I have the new Galaxy S25 and no phone has more AI features than that. And I don't really use many of them that often. I love the. I love the spam text screener that comes in handy, but a lot of the AI features I have, like, you know, especially when it comes to, like, photography and things like that, I just don't use. And so maybe they feel like investing in building those out is not as important of an expense as some of their peers feel it is.
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Jason Moser
Yeah, I think that makes sense there. I mean, they just. It's kind of a marathon, not a sprint. They're doing their job, they're working, they're building that stuff. And I mean, obviously AI is tremendous value. Add in so many different regards. They don't feel like it's a sprint there. And so they're just going to take their time and. And hopefully do it right. And it's like Tim Cook has always said, we're not trying to be first, we're just trying to be best. And I think that obviously time will tell where Apple goes next, but they've certainly done a good job thus far. So I'm going to give them credit where credit's due and hopefully, hopefully, investors will do the same. Well, next up, we're digging into Opendoor's reverse split and the stocks we just bought.
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Jason Moser
That open door was one of the most popular momentum stocks in 2020 and 2021. I mean, obviously the investing landscape was far different for many reasons during that time frame. But now you look at the company, I mean, it's essentially at penny stock prices and the news is that they are planning a reverse split. As a reminder for listeners, tell us exactly what Opendoor does and then let's also dig into exactly what went wrong.
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Matt Frankel
Yeah, so Opendoor is what's called an ibuyer and they're really one of two that are left. An ibuyer is a company that directly buys homes from sellers, does a little bit of cosmetic repairs, things like that, and then directly sells them to home buyers. The goal is that the price, obviously the price that you buy the home for is significantly less than the price you end up selling it for. And the idea is to do this on a wide scale and essentially turn homes into a commodity, or not a commodity, but just something that is bought and sold like a retail item instead of the complex transaction that it is today. It's a great concept and it actually worked really well in that 20, 20, 21 period when money was free. The problem in today's environment is that interest rates on mortgages are 7% or 8% still. And the real estate market's very slow. So Opendoor is buying homes, holding them on its balance sheet for several months and paying interest on the money that it's borrowing to buy them. It really just changed the economics of it. The real estate market's really slow. Remember, this was the company that was largely credited with starting the big SPAC boom. This was after Covid hit was the first big SPAC deal that was announced. It was a chamath palihapitiya spac. It shot up higher. It was buying homes left and right. It was really helping fuel the big real estate boom that we saw in that time. The real estate market, not only did it really turn when 2022 happened and rates rose and things like that, but the agonizingly slow real estate market has persisted for a lot longer than anyone really thought it would, especially opendoor we saw the big companies with iBuying businesses like Zillow and Redfin get out of it and Opendoor is still trying to make it work.
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Jason Moser
Yeah, well, so that's a really good point there in regard to how sensitive a company like this is to interest rates. And it just makes me think of last Friday when we were talking about this stuff on bottlingful money, the jobs report that come out and there's, there's some thoughts out there at least that the jobs part that came out and sort of the wage growth that comes with that, it's starting to shape up, like maybe we'll see some rate cuts this, this back half of this year. Do you feel like that's enough for a company like this to be, to be able to kind of get it back on, on path or is this is the train kind of left the station here?
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Matt Frankel
Well, I mean Opendoor can definitely make money with this model in a very active real estate environment. They showed that in 2021. The question is this needs to be a sustainable business model. No matter what the real estate market's doing, you can't just count on the real estate being at 2021 exuberant levels all the time. It needs to work. When there's a slow real estate market, there needs to be a way to still make money and they really haven't shown that. So yes, the general direction of interest rates is expected to be lower over say the next two years. That is clearly a positive catalyst for the housing market. It should help Opendoor at least make money. On an adjusted basis. They're not going to be gap profitable anytime soon, but at least not be hemorrhaging money. But as far as the long term investment case, they really haven't proven it. And if anything, the slow real estate market has shown that they need a good real estate market to be profitable.
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Jason Moser
It sounds like you're saying that for folks who are perhaps interested in a company like this, maybe it's better to take a pass.
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Matt Frankel
To be perfectly clear, I've been rooting for Opendoor and the other one is OfferPad, that's still publicly traded. I've been rooting for these companies because, face it, buying and selling a home is clunky at best. It's a highly emotional and frustrating process. The mortgage process is in desperate need of improvement. I can walk into an auto dealership and buy a $100,000 car and get a loan in 10 minutes. But it takes me 30 days to get a mortgage for an appreciating asset that makes sense to me. So I've been rooting for a better way to do real estate, and I was really hoping that this was it, but it just maybe is too early or they haven't figured it out yet. But I don't want to say it's game over, but it's not really investable to me.
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Jason Moser
Yeah, I love the idea, but man, oh man, it clearly has some work to do. Well, Matt, let's wrap up today. We wanted to kind of get back to our roots. We've had a lot of fun doing this before, and we like talking about the stocks that we most recently bought and why. We enjoy asking listeners these questions as well. Hey, if you're a listener, you want to tell us the stock you bought last and why, hit us up on Twitter ottleyfulmoney. Let us know. But, Matt, let's talk about this. We've got two stocks and I'm going to go ahead and let you lead here. What is the stock you most recently purchased and why?
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Matt Frankel
It's going to surprise people. It's not a financial stock. It's not a real estate stock. The last stock I bought is AMD Advanced Micro Devices. A lot of people think of it as like, you know, Nvidia's distant second cousin, but it's a lot more than that. The company has done a great job of executing. They are the distant second when it comes to, like, data center accelerators and things like that. There's a lot more to the business. There's the PC business where, I don't know if you realize this, but AMD used to be like the cheap alternative to intel when it came to buying a laptop or a PC. They've more than doubled their share of that market over the past 10 years. They're roughly a quarter of the market now. They were about 10% 10 years ago. There's that. There's the embedded division, which has a lot of big opportunities, especially when it comes to autonomous vehicle chips. They make a lot of those. There's a lot to like about this business. The valuation is right. It's a lot cheaper than Nvidia and has a lot of similar opportunities. And it's just kind of. It really appealed to me from someone who wanted AI exposure but is also a value investor at heart. And that's really why I added it to my portfolio.
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Jason Moser
I love that. And, you know, I tell you, their CEO, Lisa sue, right. She is tremendous. Yeah, it's the exact same word. Right. It's just her track record with this business. I Mean, I think she's grown the company since she took over CEO. It was like back in, I don't know, 2003 or something like that. But she's grown the company, the market capitulation better than. Better than 80 times over. I mean, she's just done an amazing job. And I think to your point there, she's done a really good job of seeing sort of where things were going and understanding the opportunity in the AI space and is really positioned. I think this company, it's not all Nvidia, right? Nvidia is great. We all love it. But I think AMD often gets overlooked because of all the attention we give to Nvidia.
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Matt Frankel
Yeah, it's still gaining share in that PC market. I mean, you remember when AMD was considered like, the poor man's intel, and. And today amd, shockingly, has a market cap more than double that of intel under Sue's leadership. It's been really remarkable, and I'm excited to see the next few chapters of this company.
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Jason Moser
Yeah, well, absolutely. Hats off to her and hats off to you. That sounds like a wise purchase. You know what? Thank you, Matt. Trash is everywhere, and it's not going away. My most recent purchase, and I did this in my retirement portfolio and primarily focused on growing my dividend exposure, but about waste management, and it's a position that I intend to grow over time. When I thought about actually doing this, it took me back to that old David Gardner axiom, winners keep on winning. And you look at this company over really any stretch of time, and it's just been a terrific winner. It's. The stock has performed well. It just continues to outperform the market. It just. It's the market leader in its space. And again, whether it's recycling or trash, I mean, this is a company that is just doing something that we all absolutely need. You know, I got an email the other day from our trash collector here in Fairfax Station, Virginia, and he said, hey, you know, by the way, like, the. The county passed on this 13.5%, you know, increase to whatever, so we're going to have to increase your bill. You know what? I deleted the email, Matt. I didn't even think twice about it. You think I'm gonna. You think I'm gonna actually do anything about it? I'm like, okay, yep, sure, pass it.
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Matt Frankel
Cancel your trash service.
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Jason Moser
Nope, I'm not gonna. And I have a feeling that most people are going to behave the same way, and I love their commitment to the dividend. I like the fact, too, that you know, the sharing purchases actually bring the share count down. But those companies where I hope to own it indefinitely and add to this position as I continue to have the opportunity to do so. AMD and Waste Management, a couple of ideas, hopefully, that the listeners maybe can dig a little bit deeper into.
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Matt Frankel
But I will say Waste Management is one stock I can think of that is in no way disruptible by AI. Everyone's going to produce. Everyone's going to produce trash, no matter how automated our lives become.
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Jason Moser
I tend to agree. I tend to agree. Well, Matt will leave it there. Hey, listen, Matt Frankel, thanks again so much for being here.
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Matt Frankel
Yeah, it's been a blast from the past, and I hope we can do it again soon.
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Jason Moser
As always, people on the program may have interest in the stock 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 are not approved by advertisers. Advertisements or sponsored content are provided for informational purposes only. To see our full advertising disclosure, please check out our Show Notes. I'm Jason Moser. Thanks for listening. We'll see you tomorrow.