Jason Moser (3:25)

Yeah, well, this seems to center around compounded drugs which, as you said, these are not FDA approved. Dave Moore, the EVP of Novo's US operations, said regarding the decision, I quote, we expected that the efforts towards compounding personalization would diminish over time. When we didn't see that we had to make a choice on behalf of patients, end quote. So I guess the question I have been the bear on hims would would say they're just out to make a quick buck and then the bull would say that they are looking out for the patient's best interests in making certain medications more widely available. So do you feel like, I mean, is this becoming a bigger risk for HIMS and hers, at least the perception? I'm not necessarily saying it's the case, but the perception that they're not really looking out for their patient's best interests?

Matt Frankel (4:14)

Yeah, I mean, just, I mean, honestly, selling a compounded non FDA approved drug just doesn't sound very like something like I would want to get involved in in the first place.

Jason Moser (4:25)

I think I'd want FDA approval personally, but who am I? Right.

Matt Frankel (4:29)

But it's also a big cost difference and things like that. So I understand it. Like I said, it's just a real big open question of how much these companies are going to be fighting with each other. But HIMS and her, it's not that they're not looking out for people, it's just that they're telling people this is not an FDA approved product, but you can get it cheaper and things like that. But the general push was toward their own product and away from real version.

Jason Moser (4:56)

Yeah, they seem to be at least somewhat clear on that front. Now we know valuation always matters. And while HIMS and hers isn't off the charts expensive, even after this run, the stock has had. It does have a pretty rich multiple at around 60 times earnings or so even after the sell off. So does this start looking like an opportunity here, or do you feel like there could be more shoes to drop?

Matt Frankel (5:18)

Personally, I stay away from heavy legal risk like this. It seems like there's a lot of future growth priced in. Even after they're losing this partnership. It seems like a bet on this stock would be betting on that all these weight loss drugs are going to get even more popular and that they're going to be able to successfully continue to sell their own compounded version without any legal intervention. To me, it's a big risk factor right now. Legal risk is one of the there's like three things that I won't go near a stock for, and big legal risk is one of them.

Jason Moser (5:51)

Well, next up, Waymo and Uber's big debut in Atlanta.

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Jason Moser (7:01)

D Matt I know you all talked a little Tesla on yesterday's show. It seems like Tesla's Robo taxi debut was not met without criticism, and the technology seems far from perfect. But you know what they say, you got to start somewhere, right? Well, on Tuesday, Waymo Robo taxis became available to Uber users in Atlanta and they cover approximately 65 square miles around the city. And it should be noted, these Waymo vehicles, they're currently used for Uber passenger rides Only not Uber eats deliveries, Matt. Uber shares up about 8% on the day, so there's some positive reception there. There's been a lot of conversation about Tesla disrupting Uber and Uber's best days maybe behind it, but it doesn't seem like Uber and Waymo are going away anytime soon.

Matt Frankel (7:49)

We can get into the Tesla disruption in a little bit if you want to. It's a small scale rollout. They're starting with a dozen vehicles that are available on the Uber app. It's limited to surface streets. That's another big restriction. They can't go on highways. And it's just the latest in what Waymo is doing. They already have over 1000 vehicles nationwide on the road. You know, San Francisco, Austin, there's a few other places. They have over 100 in Austin right now selling Uber rides. It is a big step in the right direction. It shows that their rollout is going well. They still aim to launch in D.C. next year, so maybe you'll be able to take a ride. The rollout's going really nicely. Waymo definitely has the first mover advantage here. And I mean, when you think about some of the disasters that have happened, Waymo with other wannabe robo taxi services like Cruise, like uberzone, that have had pretty bad incidents, Waymo really hasn't had any to that extent. Like, you know, Uber ran over somebody in 2018, you know, cruise did. That was a death sentence for GM's cruise when one of their cars ran over somebody. So Waymo's doing the rollout and they're getting it right.

Jason Moser (8:59)

Yeah, you mentioned that part about the cost side of it. Yeah, I think Waymo's clocking it's something like three times as expensive as Tesla's technology. I mean, like I said, we did see some criticism of the robo taxi rollout. It seems like it's very early days or. I don't know, I mean, maybe you just, maybe you get what you pay for in this case. And I suspect as time goes on, those costs will continue to come down. At one point, Uber looked to partner with Tesla and Tesla said, no thanks. Now, what we've seen in the ride hailing space is this may not really be a winner take all market. I think early days, we kind of thought it might be. But I tell you, Lyft has shown a lot of resiliency that's hanging in there and it's actually growing. So what do you make of this competitive landscape here today?

Matt Frankel (9:43)

Like I said, Waymo has the big first mover advantage. But don't count Tesla out. Tesla has two big competitive advantages. One is their infrastructure. They have over 60,000 superchargers throughout the country. It wouldn't be that hard to retrofit them to charge cars that don't have drivers. That would be something that's hard to replicate even for a company as deep pocketed as Alphabet. And they also build their own cars. Tesla does. Waymo's fleet is built by Jaguar. Right now it's Jaguar I pace cars. So they have their own vehicles, their own infrastructure. It does have cost advantages. So I'm not surprised they didn't really want to partner with all that going on. But I mean even in the early days Cruise said that this could be a multi trillion dollar market 20 years from now. But when we're all just using self driving cars, it could be a massive opportunity long term. You're absolutely right that there's room for multiple winners in this space. It'll be really interesting to evolve. I think the real golden age of this isn't going to happen for another few years and I'm fine with that. I'm fine with slow rollouts when it's cars without drivers that could hit people. I'm fine with taking your time and getting it right.

Jason Moser (10:52)

Yeah, there's some serious implications that come with this technology. Okay, one last question. I'm going to ask you to choose here, Matt. I just got to do it. We know Waymo is owned by Alphabet, right? Uber is its own entity. Given the scale of both companies, they certainly have the ability to compete. I think you've made that very clear. How do, how do you view the picture going forward for Alphabet and Uber? Do you have is, does one of those two stand out as a better investing opportunity today, say looking five years out?

Matt Frankel (11:20)

Well, I mean I like Alphabet as the investment opportunity. It's essentially trading like a value stock at this point when you think like forward earnings. I know, and things like that. And that's really just based on the market's not even putting any value on the pre revenue parts of its business. Like Waymo, that's on Google and Google Cloud essentially. And so you're essentially getting the Waymo business for free when you buy Alphabet. I mean nothing against Uber, but I'm a value investor at heart and Alphabet really seems like the way to go.

Jason Moser (11:49)

All right, well next up, more on the proposed tax deduction on auto loans. And we'll take a closer look at a stock on Matt's radar.

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Jason Moser (12:27)

Matt House and Senate Republicans are looking at the idea of a $10,000 tax deduction on auto loan interest as part of the quote unquote big beautiful bill that's being debated in Washington. But when you dig into it, it almost seems like it doesn't really have much of an impact on consumers at all. So can you just quickly go over the nuts and bolts of this proposal?

Matt Frankel (12:51)

Yeah, I mean, as somebody who no longer has a car payment, I'm opposed to it. Seriously. They're proposing that up to $10,000 in auto loan interest per year would be deductible. And that's an above the line deduction. So anyone could take it even if they don't itemize. Now the average car buyer would not get that much. Unless you have a really expensive car, think like 130 or $150,000 vehicle, you're probably not paying $1,000 a year in interest. The average new car buyer pays about $3,000 in interest initially per year. And based on the average marginal tax rate, that's about $500 in tax savings. So it's not nothing. But the $10,000 headline doesn't tell the whole story phases out over certain income levels. So even rich people who can buy $150,000 cars probably wouldn't qualify. In order to qualify, a couple things need to be true. Most importantly, that the cars need to get their final assembly in the United States doesn't necessarily mean the parts need to be made here. Doesn't mean the company needs to be based here. For example, some BMWs are built in South Carolina, where I live, but the car needs to have its final assembly in the United States. Keep in mind that this could just offset auto tariffs. Right now there's a 25% tariff on even parts that come from other places. That is hurting a lot of vehicles that are built in the United States. This is more of an offset than a big benefit, but there's a lot of investing implications of it.

Jason Moser (14:23)

Okay, well let's get to that. If There are investing implications if this does make it through. Who do you feel like could be the potential winners?

Matt Frankel (14:30)

Automakers that build cars in the United States and auto lenders. Two that I own, General Motors, we know that they build some of their cars in Mexico and Canada. They're moving more and more of their production to the United States in response to tariffs. And. And who doesn't want a tax deduction? So people see $5,000 a year tax deduction if you buy a new Chevy Suburban. That could be an incentive to go to the dealership if you've been putting it off. And auto lenders like Ally Financial is one that I own. It's the largest bank that just specializes in auto lending. You can see a lot of people rush to buy new cars if this becomes a law.

Jason Moser (15:05)

Quickly to wrap up, we thought we'd go back to our roots and dig into a stock in the financial space that have our attention today. That has your attention. What's a stock in the financial space? We're talking banks, insurance, fintech, whatever. What's a stock in this space that you're looking a little bit more closely at these days?

Matt Frankel (15:26)

This is like a combination of real estate and financial. And it's Rocket Companies. Rkp. Oh, I love it because I'm going to be a shareholder. I'm a big Redfin shareholder and Redfin shareholders have just approved Rocket's buyout of the company. So it's an all stock acquisition. So I'm going to get Rocket stock in exchange for my Redfin shares. So I'm about to be a shareholder of that. I like this acquisition. I love what Rocket's trying to do. Build the all in one housing platform. They're very innovative. Right now. Today, for example, they just announced that they're creating what they call bridge loans that allows people who have a home to sell to make an all cash offer. Or not an all cash, but a, a nice offer on a new house that doesn't have a closing contingency. You know, really innovative product. I like their acquisition of Redfin because it really takes away the worst parts of Redfin, specifically its balance sheet and the fact that it's losing money. The business, the product itself is very great, very technological. But yeah, so I love this acquisition. They're also acquiring Mr. Cooper, a big mortgage servicer. They're really doing the best job in the market of becoming the all in one real estate platform. And Rocket's a company I've had my eyes on for a while and this is really bringing it into my spotlight.

Jason Moser (16:43)

Well, we'll leave it there. Matt Franklin, thanks again so much for being here today.

Matt Frankel (16:48)

Thanks for having me.

Jason Moser (16:49)

As always, people on the program may have interest in the stocks they talk about. And the Motley fool may have formal recommendations for or against. 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 content 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.