Autonomous Vehicles Hit an Inflection Point & GPT-5 Is Here

Summary

Motley Fool Money: Autonomous Vehicles Hit an Inflection Point & GPT-5 Is Here
Release Date: August 8, 2025
Host: Travis Hoyam with Guests: Lou Whiteman and John Quass

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Introduction

In this episode of Motley Fool Money, host Travis Hoyam engages with investment analysts Lou Whiteman and John Quass to delve into two major topics: the burgeoning field of autonomous vehicles and the arrival of GPT-5. They also discuss recent earnings from companies like The Trade Desk and Crocs, providing actionable insights for investors.

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Autonomous Vehicles: Reaching an Inflection Point

Key Discussion Points:

• Industry Momentum: The hosts highlight that autonomous driving has become a central theme across major mobility companies, including Tesla, Uber, Lyft, Mobileye, and Zoox.
• Growth Indicators: John Quass points to Waymo's rapid increase in driverless rides as evidence of this inflection point. “Waymo completed 5 million rides in four years, then another 5 million in just five months, which seems like an inflection point” (01:21).
• Business Models: The discussion emphasizes the diverse business models being tested, with companies like Lyft focusing on Fleet Management to support autonomous ride-hailing services.
• Competitive Landscape: Lou Whiteman notes that traditional automakers like GM and Ford are not entirely sidelined but are cautiously observing the market. “These companies know better than we do the cost and what goes into autonomous technology” (03:42).

Notable Quotes:

• John Quass: “There is indeed concrete data that supports the statement that we are at an inflection point” (01:27).
• Lou Whiteman: “I was downtown not too long ago, early in the morning, and it was just me and a bunch of Waymos driving. It really freaky.” (06:24).

Insights:

• The rapid scaling of autonomous rides indicates growing consumer acceptance and technological maturity.
• Traditional automakers are leveraging their manufacturing expertise and existing infrastructure to integrate autonomous technologies.
• The potential commoditization of autonomous tech could lead to broader adoption and new revenue streams for companies like Alphabet and Uber.

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GPT-5: The Next Generation of AI

Key Discussion Points:

• Release and Capabilities: The episode marks the release of GPT-5, touted by Sam Altman as a significant advancement akin to the leap from pre-retina to post-retina iPhones.
• Performance Evaluation: While GPT-5 shows promising benchmarks, both hosts mention encountering minor flaws during early use.
• Market Impact: Lou Whiteman expresses skepticism about whether GPT-5 will overshadow competitors like Google’s Gemini or integrate effectively into Microsoft’s productivity tools.

Notable Quotes:

• Travis Hoyam: “Sam Altman compared this to the difference between the iPhone pre-retina display and post retina display, which kind of made me chuckle because I couldn’t tell you which version of the iPhone that was.” (11:22).
• John Quass: “AI can only do as well as the input that it's been trained with. If you get a wrong input, you're going to have a wrong output.” (11:52).

Insights:

• GPT-5 represents a substantial step forward in AI capabilities but is not without its limitations.
• The competitive landscape in AI remains fierce, with major players like OpenAI, Google, and Microsoft continuously innovating.
• Investors are cautious about OpenAI’s valuation and long-term profitability despite technological advancements.

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Earnings Highlights: The Trade Desk and Crocs

Crocs' Earnings Drop

Key Discussion Points:

• Stock Performance: Crocs saw a significant stock drop of 29% following earnings reports.
• Underlying Issues: The primary cause is a goodwill impairment charge related to the acquisition of Hey Dude, which did not meet profit expectations.

Notable Quotes:

• John Quass: “The big story here is that Crocs acquired Hey Dude back in early 2022 and it still really isn't living up to expectations.” (18:06).

Insights:

• The impairment charge signals overvaluation of acquisitions, impacting investor confidence despite non-cash nature.
• Management’s prior disclosure of worst-case scenarios for tariffs provided some consolation, indicating proactive risk management.

The Trade Desk's Revenue Growth Deceleration

Key Discussion Points:

• Earnings Performance: The Trade Desk reported a 19% increase in revenue year-over-year but guided for a modest 14% growth in the upcoming quarter.
• Market Reaction: Shares plunged by 38%, reflecting investor concerns over declining growth rates amidst increasing competition.

Notable Quotes:

• John Quass: “Investors are starting to question whether The Trade Desk can compete in the age of artificial intelligence.” (22:09).
• Lou Whiteman: “The competition looks fierce… Given the factors, is 19% growth worth 50 times forward earnings?” (23:22).

Insights:

• Rapid revenue growth is vital for maintaining high valuations in the ad tech space.
• The transition to AI-driven platforms poses both opportunities and challenges, with increased competition potentially eroding market share.

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Buy, Sell, or Hold: Analyst Recommendations

Crocs

• John Quass: Buy for long-term investors due to strong profit margins and undervaluation despite stagnating sales. (25:03)
• Lou Whiteman: Sell or avoid due to challenges in consumer retail and unpredictable trends. (25:42)

Shift 4

• Lou Whiteman: Sell citing high competition and operational uncertainties. (26:18)
• John Quass: Buy intrigued by strategic acquisitions and robust customer base despite recent setbacks. (26:50)

Hims and Hers

• Lou Whiteman: Sell or wait longer due to valuation concerns and potential legal battles. (28:11)
• John Quass: Hold due to disruptive potential in healthcare despite current financial strains. (28:56)
• Travis Hoyam: Hold recognizing long-term healthcare disruption potential. (28:56)

Palantir

• Lou Whiteman: Sell reluctantly due to extremely high valuations and slow-growing government revenue. (30:23)
• John Quass: Sell because of unsustainable valuation relative to growth prospects. (30:57)

Axon Enterprise

• John Quass: Buy noting strong backlog growth and expanding addressable markets despite high valuation risks. (32:00)
• Lou Whiteman: Buy emphasizing customer expansion and product diversification. (32:41)

Figma

• Lou Whiteman: Hold intrigued by potential but hesitant due to AI disruption risks. (33:57)
• John Quass: Sell citing uncertainties around AI's impact on design platforms. (34:36)

Reddit

• John Quass: Buy driven by strong user base and under-monetization. (35:34)
• Lou Whiteman: Sell skeptical about solving monetization challenges. (36:23)

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Stocks on Radar: Future Investment Opportunities

Universal Display (OLED)

John Quass's Insights:

• Business Model: Licensing OLED technology with a strong patent portfolio providing a competitive moat.
• Growth Potential: Development of next-generation OLED products anticipated to drive future upgrades in the device space.
• Financial Health: Robust balance sheet with over $500 million in cash, no debt, and a modest dividend.

Notable Quotes:

• John Quass: “It holds a ton of patents in the OLED display space, giving it a competitive moat.” (38:23)

Travis’s Query:

• “What does OLED stand for?”
  John Quass: “Organic Light Emitting Diode.” (39:24)

Montrose Environmental

Lou Whiteman's Insights:

• Business Strategy: Rolling up small local environmental cleanup and monitoring companies to create a national presence.
• Recent Performance: Stock down 20% due to operational issues and a non-stringent political climate on environmental regulations.
• Future Prospects: Possession of patents for microplastics removal and potential benefits from federal environmental regulations standardizing processes.

Notable Quotes:

• Lou Whiteman: “They have a ton of patents here, including patents to take microplastics out of water.” (39:52)

Travis’s Query:

• “Do you really think in the next five years this is going to return on anyone's investment?”
  Lou Whiteman: “Federal government activity could remove uncertainty, speeding the process in their favor.” (40:45)

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Conclusion

Travis Hoyam, alongside Lou Whiteman and John Quass, provides a comprehensive analysis of the current state and future prospects of autonomous vehicles and advanced AI technology like GPT-5. They navigate through recent earnings reports and offer nuanced buy, sell, or hold recommendations across various stocks, reinforcing the importance of due diligence and patience in investment strategies. The episode underscores the dynamic nature of technology and its profound impact on investment landscapes, urging listeners to stay informed and adaptable.

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Disclaimer: The views and opinions expressed in this summary are those of the podcast participants and do not constitute financial advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.

Transcript

[Travis Hoyam]

We are in the heart of earning season. But autonomous vehicles have caught our attention. Motley Fool Money starts now.

[John Quass]

Everybody needs money.

[Travis Hoyam]

That's why they call it money. But you can give them to the present bees.

[Lou Whiteman]

From Fool Global Headquarters, this is Motley Fool Money.

[Travis Hoyam]

I'm Travis Hoyam, joined by Lou Whiteman and John Quass. Today we're going to cover earnings from the trade desk and Crocs get our pulse on the economy. But first, autonomous vehicles have reached something of an inflection point. We've heard from nearly all the mobility companies over the past two weeks, and the theme is autonomous driving. It's not just Tesla that's talking about autonomy. Uber and Lyft made it a central piece of their earnings releases and conference calls. Mobileye seems to be gaining some traction with Volkswagen. Zoox got an approval. It needed to roll out kind of its mini bus design to more places. John, it seems like we're at an inflection for autonomy. Is that really the case today?

[John Quass]

Listen, Travis, is it okay for me to say that I don't really like the idea of autonomous vehicles? I think you're always going to find.

[Travis Hoyam]

Of course, that's on brand for you, John.

[John Quass]

Yeah, I mean, I'm going to be behind the wheel of a car with the open road. But I do want to be really fair to your point here about the industry reaching an inflection point. There is indeed concrete data that, that supports that statement. So if you look at Waymo, for example, the driverless car division of tech giant Alphabet. In late 2020, Waymo launched driverless rides to the general public. By the end of last year, it had completed 5 million rides. But in May of this year, it announced it had already completed 10 million. So it took four years to get to 5 million rides and then five months to get to another 5 million. That seems like an inflection point. Yeah. And I like the fact that you mentioned Uber and Lyft here, Travis, because I think that these companies are just looking ahead, seeing the future for what it is and trying to position themselves accordingly. And I like Lyft's vision approach here, in particular with Fleet Management. It's Fleet Management Business Flex Drive. I think that if ride hailing truly moves more and more autonomous, I think it's likely that there's going to be large fleets of vehicle businesses that run fleets of these autonomous vehicles. And if you're going to do that, if you're going to put your fleet on a ride hailing app, you're still going to need Fleet Management, you're still going to need somebody who's cleaning the cars, making sure the tires are inflated, things like that. Lyft's flex drive business addresses that potential need in the future. And so that's one of the reasons I do like Lyft here.

[Travis Hoyam]

Yeah, it's interesting. All these companies are trying to figure out the business model. Even Waymo has a different business model in Atlanta than it does in Austin, than it does in San Francisco, for example. So we're really in this testing phase. But speaking of testing, the Chinese automakers seem to be kind of pulling ahead in a lot of different ways. They're going to be launching or launch partnerships at least with companies like Lyft. In Europe, Volkswagen is partnering with Mobileye. They've got a hundred vehicles, over 100 vehicles on the road. You have may Mobility. Well, the names that we haven't brought up here are the names like General Motors, Ford, Stellantis, the US Detroit auto companies. Lou, are they getting left in the dust or are they waiting in the wings with some sort of brilliant strategy that we just haven't seen yet?

[Lou Whiteman]

So, yeah, for better or worse, Detroit is sitting on the sidelines to kind of letting this play out. And to be clear, this could be for the worse. I don't think anyone has a real sense of where things will be a decade from now. It could be they are way behind. But I'm inclined to give the benefit of the doubt here. For one, these companies know better than we do the cost and what goes into autonomous. It isn't like they've had their head in the sand. Ford with Argo, GM with Cruise. They looked at the costs, they looked at the benefits, and they made a choice. I think their calculus here is that their manufacturing footprint makes them relevant. We will still need vehicles whether they have steering wheels or not. And look, automakers for the last century have done a good job incorporating new technologies from third parties into their vehicles. They know how to do this. Travis, you know, all of these players, all these potential options, I think there's at least a chance the actual tech will be somewhat commoditized. That bet will pay off. And just like they used to, like, add cruise control or add all sorts of things from other vendors, one day they'll just add autonomy.

[Travis Hoyam]

It does seem like everyone is at least trying to lay the groundwork. You, Lou, you mentioned that it isn't like GM and Ford have been completely asleep at the wheel. They did have acquisitions that they made that just kind of decided to go a different direction. Than companies like Tesla have. But look, Elon Musk has been thinking that we could fall asleep in LA and wake up in New York City for over a decade at this point, and we aren't there yet. But, you know, as we think about this potentially being an inflection point, Uber launched in 2010, and it was unheard of to get into a stranger's car at that point for a ride. A decade later, 110 million people were using Uber. The company was doing 7 billion trips a year. Five years from now, will we be seeing a similar explosion in adoption for autonomy? John?

[John Quass]

You know, I don't think that we're going to see that same level of explosion and adoption. I think that Uber was addressing something with a wider use case personally. You know, a couple of weeks ago, Tesla CEO Elon Musk said, I think we'll probably have autonomous ride hailing in probably half the population of the US by the end of the year. Personally, I would be surprised if it got to half of the US population in five years. The reason being, and Musk did allude to this, there's red tape involved here. And for better or for worse, there needs to be consensus on the regulatory front. And in a polarized political environment, sometimes that can be hard to come by. And so I think where we're going to see autonomy taking off most is where we see ride hailing thriving right now. The, the denser the city, the better it is for this kind of adoption.

[Lou Whiteman]

So I'm not going to be the luddite here because I'm in Atlanta. Waymo is all over Atlanta. I was downtown not too long ago, early in the morning, and it was just me and a bunch of Waymos driving, positioning themselves for the day, and it really freaky. And you know what? I'm starting to get used to it. I'm starting to be a believer. And Travis, I do think, yes, we are going to see an explosion in adoption in the coming years. But I think John's right. It's not going to be everywhere. It's not going to be ubiquitous. I think the use case will remain limited, or at least not unlimited, if that makes sense. I don't think we're just going the way of everybody right now. We're still a long way from, you know, riding around with vehicles without steering wheels. But yeah, I think just looking at what's going on in Atlanta, I think that that can be transferred to other cities. And I think we are going to see just these numbers go, go up big time very quickly from Here.

[Travis Hoyam]

Yeah, I'm in Minnesota and I saw a May mobility vehicle driving around last week, so that was a shock to me. Is not usually the kind of place where you're going to be adopting autonomous vehicles first with the winters that we have here. So I mean it sounds like there's an opportunity, especially if, if. Lou, if you're seeing this, you know they've only been in Atlanta for a few weeks now. Yeah. And if you're already kind of getting used to it, I think that shows the, the how quickly our attitudes can change about technology. So look, this is an investing podcast and as we're looking at autonomous vehicle stocks and what people may want to be putting on their watch list. What stocks are you looking at and what metrics are you looking at for success over the next decade? Lou?

[Lou Whiteman]

So this is kind of boring. I'll give you two though. For me, the big winner here, the one I'm interested in is Alphabet, partially because seeing is believing and what Waymo is doing is really remarkable. So I'm kind of biased by that and partially because, look, I don't know what's going to happen. I am not convinced. I know what the future is with kind of how we get around. And with Alphabet you have so many non transportation ways to win. It feels like that Waymo is kind of just the icing on the cake of a good stock and it feels like cheating. So that I like that. Second for me is Uber because again, as I said before, I do think the actual tech could end up commoditized. Just kind of like with Apple and their control of the consumer and what that gives them. With the phone space, having the customer already, the customer might be what everyone fights over. And Uber has it already.

[John Quass]

Yeah. You know Travis, for me, I don't know which direction this space is going to go. So I do like something that's a little bit more automaker agnostic, platform agnostic. I do like businesses that have large first party data sets. For me, mobileye does check a lot of boxes in that regard. And in 2022 it said it had over 200 petabytes of driving data. I'm not sure exactly where that number is today, but that's a lot of data that it can use to train these models that are so needed for really widespread adoption in the space.

[Travis Hoyam]

Yeah. And the companies that are talking about collecting a lot of data, the Teslas, the Rivians of the world, mobileye is just kind of hiding there in plain sight. They are on millions of vehicles today. Their technology may be on the vehicle that you're driving. If you have something like smart cruise control or lane assist, that probably comes from mobileye. So it'll be interesting. You know, the other one that we brought up here that I think on that demand side is going to be interesting to watch, if I can just add one is Lyft. You know, I think Uber and Lyft, aggregating that demand and trying to commoditize those supply. Uber is investing a lot of money in partnerships to effectively make sure there's a dozen suppliers for autonomous vehicles and autonomous technology. So this will be fascinating to see play out. But don't be surprised if this is bigger than we all think. A decade from now when we come back, GPT5 is here. This is Motley fool money.

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[Travis Hoyam]

The day we've all been waiting for is here. GPT5 has arrived. Sam Altman compared this to the difference between the iPhone pre retina display and post retina display, which kind of made me chuckle because I could couldn't tell you which version of the iPhone that was. And we're early in chat GPT5. I've already found a few flaws in the few questions and I've been able to answer, but the benchmarks that they're comparing themselves against tell us that this is a huge step forward. John, do you believe it?

[John Quass]

I would love to answer with a simple yes or no here, but I think that an answer requires a little bit more nuance than that. So in the GPT5 demo, one of the things that the presenters did was have it explain the Bernoulli effect that's something important for aerodynamics. In GPT5's answer, it wasn't completely accurate. Now, the parts that were inaccurate weren't necessarily GPT5's fault. It's a common repeated wrong answer out there. And so AI can only do as well as the input that it's been trained with. And so if you get a wrong input, you're going to have a wrong output. That would seem to be the case. There's just minor thing, but I don't want to undersell this tech either. So while they were doing this demo, they created a language learning app for French kind of on the fly, made like a little game and Duolingo stock actually took a hit during this demonstration because it was so fast, it was so effective. And so yeah, in some regards I would say that GPT is a, is a step forward here, but it's not necessarily a game changer, you know.

[Lou Whiteman]

Travis, I chuckled too at Altman's kind of comparison because I do think it's telling that we're using vague kind of other product comparisons and that's what we're gunning at because look, he's marketing the product. He's trying to capture the imagination as he should be. Do I believe it? I mean, I believe it's better than what came before and I believe the next iteration will be better than this. The important thing is that do customers believe it? Because OpenAI needs customers. As a consumer, I personally have found models that I like better. As an investor, I can't buy into OpenAI even if I want to. So I'm not going to waste too much of my personal processing power trying to figure out the rate of progress. I think everybody's making progress here and we're all just kind of racing towards, towards the unknown. So it's better and it will continue to get better. End of story.

[Travis Hoyam]

There are a dozen companies or more that this is relevant to. One that we've talked about recently is Alphabet. Google Cloud grew 32% in the most recent quarter. They're actually running some of ChatGPT GPT now. Gemini, which is their competing app, is up to 450 million monthly active users. ChatGPT said they were at 700 million weekly active users. So we can't ever have apples to apples numbers. But is this the kind of improvement that is going to stop a product like Gemini or maybe make a impact on Microsoft's productivity tools as they sort of make their way into enterprise?

[Lou Whiteman]

Louis, first of all, I don't know what to make of these user Numbers. I have to be honest, for OpenAI or anyone. I am constantly getting nagging pop ups when I'm in Excel telling me to use Copilot. Does that make me an active user? Every Gmail I get, I get a summary that I basically ignore. Am I an active Gemini user because of that? These numbers, I believe, again, are made for effect. That said, there's definitely stuff going on here. What I would say is, I know we are very early in this race. There is no winner yet. I don't think anything OpenAI did this week makes them a winner. Yes, Chat GDP has some really impressive numbers, but Microsoft and Alphabet have what OpenAI can only dream of, reliable conduits to the end users. All those things that I said are annoying today, they can get a lot better and they are sitting there right in front of me. They don't have to market that. It is already right there. I'm not going to predict the doom of Copilot or Gemini. Even if this is as amazing as Altman says it is, we're still early in the race and Microsoft and Alphabet have advantages that OpenAI just, just don't.

[John Quass]

Yeah, I agree with Lou here. Look, even if GPT5 is an order of magnitude superior than everything else out there, these big tech giants aren't just going to take that lying down. They have already invested so much in their AI products that they're going to keep doing that. And so it's not going to derail the other tech companies as far as their own roadmaps, including Elon Musk's X AI. So I'm not sure in the end which platform is going to demand the most users, which one's going to make the most money? I think right now everyone's still just trying to build and push the envelope as far as they can.

[Travis Hoyam]

Yeah, the reports are that the next Gemini, which would be three, is kind of waiting in the wings for OpenAI to release this. Well, the other piece that we heard this week is that OpenAI's employees in a secondary offering are potentially going to be able to sell their stock at a $500 billion valuation. Now, we don't have all the financial information that you would get from an S1 that's just pre IPO, but based on what we know. John, are you a buyer at that price?

[John Quass]

Absolutely not, Travis. Mostly because I'm not 100% sure that it can deliver 500 billion in shareholder value. You think about these AI models, do all of these AI models out there kind of reach the same capabilities for the end user. If they do, then there is somewhat of a commoditization risk and consequently a lower profit margin risk over the long term. So OpenAI, congrats on everything you've done so far. I'll use GPT5 for things here and there, but I'll invest my money other places.

[Lou Whiteman]

Yeah, kind of what he said. I know. Kind of harping on valuation. Many of fortunes have been missed because you're too caught up in valuation. But I want to see more results and more what the meat is here and before I can look past evaluation. I believe in AI. I believe in the future. I believe there are so many ways to ride the coattails of AI and benefit from its continued process. Kind of like what we said about mobility. There are so many better diversified bets. I'm not going to pay up and pay a high valuation for a concentrated bet on one system. It's just too early for that.

[Travis Hoyam]

Let's get to an early look at earnings before our next break. As we've gone through earnings season, we haven't gotten a lot of warning signs about the consumer, but Crop Crocs reported earnings and the stock dropped 29%. Tariffs were part of the story. Crocs inventory was part of the story. But what was the takeaway that we need to take from Crocs big drop this week?

[John Quass]

John well Travis, I think the story here is really specific to Crocs. I don't think it's so much of a tariff issue. In reality. Management had laid out previously a worst case scenario for tariffs for the business and based on where the policy is at right now, the business isn't facing the worst case scenario. So that's good. Inventory is a little bit high for Crocs, but they were basically trying to get the inventory in before some of the tariffs took place and so it's not really a big concern. I think the big story here is that Crocs acquired a company called hey Dude a shoe brand called hey dude back in early 2022 for 2.5 billion. It still really isn't living up to expectations. Profits haven't improved as they've hoped and now Crocs had to take a goodwill impairment charge of $737 million. That stinks for shareholders because it means that Crocs overpaid for hey dude back in 2022. The silver lining here is that it's a non cash charge. It does impact the second quarter headline numbers and I think that investors were a little bit spooked by that. But in reality it didn't really make any money changes to the business, so there's at least a little bit of consolation in that.

[Travis Hoyam]

As always, people on the program may have interest in the stocks they talk about in 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. See our full advertising disclosure. Please check out our show notes. Next up, we are going to get to the Trade Desk, which is down almost 40% on Friday, and we're going to play buy, sell or hold. You're listening to Motley Fool Money.

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[Travis Hoyam]

The biggest news to end the week was the Trade Desk. As we're recording early on Friday, shares are down 38%. They reported a 19% increase in revenue from a year ago, guided to 14% growth for the third quarter. There's a lot going on and a tough comp to 2024, which included political ad spending. But the market obviously didn't like what it saw. So why is that?

[John Quass]

John, I've got a hot take for you, Travis. I believe that investors are starting to question whether the Trade Desk can compete in the age of artificial intelligence. I'm not saying it can't. I'm saying that the investing community is starting to question it. So for years this business has consistently delivered red hot growth above expectations. And it was consequently rewarded with one of the highest valuations ever for an advertising technology stock. Fast forward to now. The company is transitioning to its AI platform called Kokai. Now CEO Jeff Green says that 3/4 of its client spend is already on the Cokai platform and that it's delivering way better results for its customers. Green went on to talk about how much everybody loves it. But here's the problem. Revenue growth is slowing down big time. Meanwhile, there are other companies using AI in advertising, such as Applovin or Reddit, where the growth is still red hot. And so I think that investors are starting to wonder, is the trade Desk's AI really as good as management says? And so that ding in the confidence is bringing down the valuation.

[Lou Whiteman]

So I'm one investor that is not ready to hit the panic button, not by a long shot. I still think the Trade Desk is set up really, really well to be a winner in this space. But look, not all as well. Clearly. I think we knew this was not going to be a winner take all category. The competition looks fierce. A little company called Amazon, I think we've heard of it, they are involved in making deals with some big trade desk partners. History shows Amazon isn't really that fun to compete with. So suddenly we're looking at a company in a highly competitive market, growing revenue at 19%. That's fine, 19% is good. But given the factors, is 19% growth worth 50 times forward earnings, which is where they were before today? That's a tough question. I think that's the question investors are asking themselves post earnings. As an investor, me personally, I'm holding on. But given the valuation, given the risks, given the kind of uncertainty about how big how many people will be in this market and how tough it'll be, I'm not in any rush to add to my position. Even down 30%, I'm still watching and waiting.

[Travis Hoyam]

They reported that dreaded word deceleration in growth. That that's one of the things that when you look at stocks that are kind of going out of favor with the market, it's often coincides with their revenue growth maybe still being positive but going down compared to what it was in their compound. Revenue growth was almost 50% over the past decade. So definitely a little lower than that. Now we do like to have some fun in this segment. And after a massive earnings week and some huge stock moves, I wanted to get an idea of where you're at with some of these companies. So we're going to just play buy, sell or hold. Let's start with a company that we've already talked about here. John, where are you at with crocs?

[John Quass]

Yeah, I think that croc stock is a buy if you're playing the long game, which I think you should be if you're an investor. The shoes are still very popular. The profit margins are down, but they're still quite good for a shoe company. And the stock is absolutely cheap. The company's paying down debt. It's buying back stock at these cheap stock levels. And so it's stagnating sales. Right. There are stagnating sales. This does point to maybe over the near term, over the medium term, the stock might not do much. But those strong profits, the cheap stock price bode well for holders who are willing to be patient.

[Lou Whiteman]

I'm a sell or really I'm more. I'm never. I would never have bought. I own pairs of crocs. I like crocs. But consumer retail is so hard. I'm not good at spotting trends. I have nothing bad to say about the shoes. I think John makes good point on the companies, but there's some games that I just rather sit out. For me, Crocs is one I'd rather just not get involved with.

[Travis Hoyam]

Yeah. Price to free cash flow for crocs now is at 5. So this is about as cheap as stocks get, you would think. But maybe that's a value trap in the the making. Let's talk about a company that I've had on my watch list for a long time but never actually bought. Shift 4 Lou, what do you think?

[Lou Whiteman]

I'm going to sell here too, Travis. And it's, you know, I can't figure out how any of these companies in this space can differentiate themselves. I get that they're sticky once they're installed because who wants to rip out one system and put in another? But a lot of their core customers, these are businesses with pretty high failure rates. So you still get churn even if they are sticky products. I feel like this could end up being one of these sectors and Shift for one of these companies where, you know, it always has potential and never quite lives up to it. So again, I hate to be boring here, but I'm just sitting this one out too.

[John Quass]

Wow. Our second stock and my second disagreement with my friend Lou. But I'm going to rate shift 4 as a buy here, down over 30% from its 52 week highs. I think that it's down right now because investors are a little bit spooked by some of the things that they saw. So it just made a two and a half billion dollar acquisition of an international fintech company called Global Blue. It seems that the recent quarterly numbers were kind of impacted by that. Investors also seem spooked that the chief financial officer abruptly resigned. That can be something to watch sometimes. That is a warning signal. But I think if you look at the quarter, if you look at the guidance, things actually looked great with its customers. I don't really see that high failure rate, especially with the ones that are very large venues. It really has focused in on those very large venues. Many of the NFL teams now are partners with Shift four, trading at just two times sales in spite of its very robust growth. I think this is a buy and hold.

[Travis Hoyam]

Next, let's go to one of the more controversial stocks in the market, hims and hers down about 20% this week after reporting earnings. Novo Nordisk, which was a former partner, filed a bunch of lawsuits, although not against Hims and Hers that we know of right now. Lou, what do you think of this one?

[Lou Whiteman]

So I'd really like to buy this at some point, but to be honest, down 20% is not enough for me. I am going to wait until we work out this GLP drama. Compounding pharmacies come with a lot of risk, but there really is an opportunity here to be part of a much needed transformation in healthcare. I get the appeal. I think Hims and Hers, if they do it right, can be part of the answer. But between valuation and the potential for long drawing out legal battles, I'm punting for now and it's on my radar list for one day.

[Travis Hoyam]

John, what about you?

[John Quass]

You know, the fear of missing out is strong with this one. But at the end of the day, Hims and Hers is a company that I don't really feel like I understand. I don't really follow the drug companies. So I know you have an opinion here, so I'd really be interested in what you have to say.

[Travis Hoyam]

Yeah, this is one of the interesting earnings reports from the week. Because if you're a short term investor or a bear, there's something to like. If you're a long term investor and maybe a bull or a bear, there's something to grab onto there as well. The results weren't great. I mean, I think that goes without saying because their core business essentially dropped slightly in the quarter. But the long term story here, the disruption that Lou mentioned is I think stronger than ever. They're adding more and more products, they're bringing lab testing in, they brought up memberships, bringing in longevity next year. I think this is the kind of healthcare platform that's going to be very disruptive and the opportunity is just too big to ignore very high risk. That I think goes without saying because Lou is right. Compounding businesses are, you know, tend to kind of fall by the wayside every now and again. But the fact that Novo Nordisk has not sued Hims and hers, despite all the things that they have said about the company and their partnership and their operations, I think tells us that maybe that's not a battle they actually want to fight. So I'm a hold, but this is, you know, a stock that I have a pretty big holding in. So I would love to actually see it drop more and, and buy more. But speaking of expensive and popular stocks, let's get to Palantir. This, this one just always amazes me. I thought 100 price to sales multiple was going to be high, but we're well over that. Lou, what do you think about Palantir today?

[Lou Whiteman]

Yeah, sell reluctantly because I love the technology, I'm fascinated by the company, but the stock is up more than 500% in a year. Palantir is still about 50% government revenue. And look, government revenue just doesn't grow fast enough to justify that valuation. It just needs to be commercial. That's going to take a while. If they can sustain this pace, if they can keep doing what they're doing at this valuation, they will be in rare company again. I feel like such a Debbie Downer. But if you have these gains, sell and maybe get in later. I just can't be a type to chase this high valuation.

[John Quass]

Yeah, I mean it's up 1500% in the last three years. I agree with Lou. This is a opportunity to sell in my opinion. You look at the valuation over the last year, it's, it was already high and now it's up another 400% over just the past year. The thing for me really with Palantir is It's valued at 430 billion right now you gotta figure that the company needs to return what, 12%, 15% a year to outperform the S&P 500 over the next five years. I don't know if it has enough growth to do that over the medium term here. So yeah, for me it's a sell.

[Travis Hoyam]

Yeah. Palantir trading for 124 times sales. They have a five year compound annual growth rate of 31% right now. Those are backward looking numbers and we're expecting strong growth in the future. But let's go to another expensive stock trading for 29 times sales, but a higher growth rate of 32.3%. That's Axon Enterprise. This has been a phenomenal winner for a lot of fools. John, where are you at with this?

[John Quass]

Yeah, it's going to sound like I'm talking out of both sides of my mouth here. I said sell for Palantir and that's mostly valuation here. It's a high valuation, but I'm going to say buy Axon. There is valuation risk. Yeah, as you mentioned, maybe the highest valuation multiple it's traded at in over a decade. The difference here is that it's valued at 70 billion. Its backlog is growing faster than revenue. Its addressable market is expanding with government contracts, with international markets, with just even new opportunities such as drones. And it has few competitors, really few true competitors. So I say that Axon stock remains a buy at the high valuation. Just be aware that that is a risk.

[Lou Whiteman]

Yeah, I echo everything John says. I'm a buyer here too, kind of, despite my better judgment, just kind of to emphasize a couple things. Their ability to not only continue to reach out to new customers, and there's a ton of Every law enforcement agency in the world is a potential customer. So a huge number. But also to layer on products that used to be Tasers, then Tasers and Bodycan, then adding software and now street cameras. Just their ability to not only find new customers, but to sell more to each customer. It's a great business, it's highly valued, but I'm a buyer.

[Travis Hoyam]

Yeah, their growth has just astounded me. And it's one of those lessons in not selling your winners. I think I thought the stock was expensive at a hundred dollars per share. Right now we're almost at $900 per share. So just hang on to those winners as long as they're performing well. I want to go to a company that didn't report earnings this week, but we got a recent IPO. The stock is up over 100%. Since its IPO. At least the IPO price but the drawdown. So since its peak as a publicly traded company, down about 36%. Figma Lou, where is your head at with Figma? Is this a buy, sell or hold?

[Lou Whiteman]

So I'm happy to say as a policy I do not buy IPOs for at least six months. So I can sort of punt that way. But I'm very intrigued by this. The funny thing is, you know, figma is right now we kind of call it Adobe competitor figma. My gut is five years from now they will be highly successful and that part of the business. I don't know if it'll be an afterthought, but it would be so many other things. I like the optionality here. I like the way that management this is another Peter Thiel like Palantira Peter Thiel incubated company. They've already said we're going to use the proceeds to do whatever we think is best. It's kind of like just handing a pile of cash to smart people and seeing what becomes of it. I'm very intrigued.

[John Quass]

I'm going to call this a cell. And I'm reluctant to do that here because Figma to me does have Some really good numbers. 78% of the Forbes 2000 use its services. Revenue is growing at 48%. Its gross margin is over 90%. Those are fantastic. But what I can't do here is fully account for the risk that artificial intelligence presents to a platform like this as an investor. And so circling back to what we Talked about with GPT5, it just created something out of just some prompts and so is AI going to disrupt this kind of a business? I'm simply not tech savvy enough to know for sure. And so that uncertainty with the AI risk, I'm just inclined to stay away.

[Travis Hoyam]

Let's go over to social media. We heard from Reddit this week and the stocks has jumped. What do you John, are you at a buy, sell or hold with Reddit today?

[John Quass]

I'm surprisingly in the buy camp right now, Travis. This is one that I didn't expect to be here, but I was just looking into this company here recently. Again, one of the interesting things is it's one of the few social media platforms out there right now where pricing on its advertisements are going is going up. So it has over 100 million people visiting its site every single day. That's already a huge base of users, that very high potential. And if you look at its average revenue per visitor to the site, I would say that the platform is quite under monetized and so the demand for its ad slots are going up, as evidenced by the higher pricing in the most recent quarter. That can sustain a strong growth rate for a long time and also strong profitability. So I'm calling Reddit a buy.

[Lou Whiteman]

I just don't know about the. I agree with you, it's under monetized. But this strikes me. We saw it with Twitter, we saw it even with Pinterest. It's like I feel like solving the under monetization problem is harder than I think it is and so I'm probably a sell here. Love the platform, love what they're doing, but I don't know if they'll be able to solve that problem.

[Travis Hoyam]

This continues to be a key piece of data for a lot of the AI companies. If you look at the source data, whether you're looking at Gemini or ChatGPT, always comes from Reddit. So it seems like there is sort of a sustainable business there. But I, I agree this is a, this is a hard one. Next up, we are going to get an idea what stocks Lou and John have on their radar. You're listening to Motley Fool Money.

[John Quass]

Anytime he's in the jam, she'll be by his side.

[Travis Hoyam]

But he doesn't realize he hurts us so much.

[John Quass]

But all the praying just ain't helping at all?

[Travis Hoyam]

Cause he can't seem to keep himself out of trouble. So it goes out and he makes his money.

[Dan Boyd]

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[Lou Whiteman]

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[Dan Boyd]

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[Travis Hoyam]

We like to end the show with stocks on our radar. John, you're up first. What's on your radar this week?

[John Quass]

Yeah, on my radar is a company called Universal Display Ticker symbol O L E D. This company is really high up on my watch list right now. It holds a ton of patents in the OLED display space it has. So that gives it somewhat of a competitive moat. It has very strong profit margins because it does kind of have a monopoly on this technology right now. What makes it interesting is that it's developing the next generation of OLED products that should make everything better, looking more energy efficient. And you know, the device space is Somewhat cyclical, but eventually there should be a major upgrade cycle that should benefit universal displays business and consequently OLED stock. I'm not sure when that's going to happen though. So investors do need to be patient here. But here's the thing. It's a mid sized company and it has a great balance sheet with over 500 million in cash. Doesn't have any debt and it does pay a modest dividend. So there's plenty of reason that you can be patient with this one.

[Travis Hoyam]

And John, what does OLED stand for?

[John Quass]

Organic Light Emitting Diode.

[Travis Hoyam]

Dan, what do you think about Universal display? Okay, so John, quick question for you. Does this company actually make anything or are they really just a patent holding company?

[John Quass]

Yeah, so they're basically licensing the technology and selling the supplies needed to make the stuff.

[Travis Hoyam]

Okay, interesting. Thank you. Lou, what's on your radar this week?

[Lou Whiteman]

So I'm looking at a company called Montrose Environmental Ticker Meg. So this is a roll up of small local environmental cleanup and monitoring companies. ST stock is down 20% over the past year in part due to some company specific operational issues and in part. Look, the political climate right now, guys, it's not perceived to be more stringent towards environmental regulations, right? But here's the deal. The company reported this week a big top and bottom line beat. They said full year guidance at a range well above the consensus estimate. They have a ton of patents here, including patents to take microplastics out of water. So they have a lot of ways to win. And honestly, a national company instead of mon PA companies when you're dealing with national corporations that have environmental monitoring needs all over the country. I think there's a real appeal there. Sub billion dollars. Got to get it right. But I think this could be a big winner and a growth opportunity.

[Travis Hoyam]

Dan, what do you think? I mean, you made a good point in there, Lou. Environmental regulations aren't exactly on the upswing these days. It seems like we're about to go weapons free on water. So do you really think in the next five years this is going to return on anyone's investment?

[Lou Whiteman]

So Dan, let me give you the other side of that. Kind of the stripping away and kind of the federal government being active in trying to set environmental regulations actually could remove a lot of the uncertainty of every little small town trying to set their own hurdles. So it actually could speed the process. Maybe not in ways that environmentalists want, but if anything it could work out in their favor.

[Travis Hoyam]

All right, Dan, which one is going on your watch list? You know, as much as I think that environmental stuff is important and a good investment in the future. I just don't know about it in the next few years. So we're gonna go oled, baby.

[John Quass]

Oh, yeah.

[Travis Hoyam]

For Lou Whiteman, jonquast, Dan Boyd behind the glass, and the entire Motley fool team, I'm Travis Hoyam. Thank you for listening to Motley Fool Money. We'll see you tomorrow, Sam.