Motley Fool Money: S&P 500 Shakes Liberation Day Loss Release Date: May 8, 2025 Host: Ricky Mulvey, Dylan Lewis, Mary Long

Overview

In this episode of Motley Fool Money, hosts Ricky Mulvey, Dylan Lewis, and Mary Long delve into a bustling array of topics affecting stock investors. From macroeconomic developments and significant trade deals to in-depth analyses of standout companies like Axon and Shopify, the episode offers a comprehensive look at the current financial landscape. Additionally, the episode features an insightful interview with Jared Barron, CEO of a pioneering metals company involved in deep-sea mining, addressing both environmental concerns and business prospects.

1. Macro-Economic Update

a. Federal Reserve Meeting Insights (00:00 - 03:36)

The episode kicks off with a discussion on the recent Federal Reserve meeting. Ricky Mulvey highlights the Fed Chair Jerome Powell’s cautious stance on the economy, emphasizing the potential risks associated with sustained tariff increases. Mulvey paraphrases Powell’s concerns:

Ricky Mulvey [01:32]: "I think Jerome Powell is basically saying please, please, please let this be a bluff or else we're getting stagflation."

Import and export expert Jason Moser concurs, noting Powell’s balanced approach:

Jason Moser [01:32]: "He's not saying that they necessarily will go higher, but he's just saying the risks are higher."

The hosts interpret Powell’s remarks as a signal to remain vigilant amidst economic uncertainties, including inflation and unemployment risks.

b. US-UK Trade Deal Announcement (03:36 - 06:04)

Ricky Mulvey shifts focus to the newly announced trade deal between the United States and the United Kingdom. The deal maintains the 10% tariff rate but introduces reciprocal agreements in sectors like beef and aluminum, opening up new export opportunities for American producers. Mulvey underscores the market’s positive reaction, noting:

Ricky Mulvey [05:48]: "The S&P 500 is now back to the level it was on the day before Liberation Day 3. Things are bouncing back and investors seem very optimistic that more trade deals are coming as well."

Jason Moser highlights the broader investment strategy, emphasizing long-term value over market volatility:

Jason Moser [06:04]: "We do not trade in and out of the market. We just aim to find good businesses, buy them at reasonable prices and just hang on to them a la Warren Buffett."

2. Market Insights

a. S&P 500 Recovery (05:00 - 06:04)

The S&P 500’s rebound to pre-Liberation Day levels signals investor optimism. Mulvey connects this recovery to the anticipation of additional trade deals, reinforcing the sentiment that the economic outlook is improving despite existing challenges.

3. Company Analyses

a. Axon: Public Safety Innovator (06:04 - 14:42)

Performance Highlights: Axon reported impressive quarterly results with revenue soaring by nearly 33% year-over-year and a net revenue retention rate of 123%. Operating and free cash flows have turned positive, marking a significant turnaround.

Key Insights: Jason Moser details Axon's consistent growth trajectory:

Jason Moser [07:29]: "This was their 13th consecutive quarter of 25% or better revenue growth there. And that was really, I mean you saw top line growth of 31%..."

Moser draws parallels between Axon and Apple, emphasizing the company’s dual strength in hardware and software:

Jason Moser [10:02]: "It's the Apple of public safety."

Valuation Concerns: Ricky Mulvey raises concerns about Axon’s soaring valuation, noting it has doubled its forward earnings multiple:

Ricky Mulvey [11:53]: "But now Jamo, after this latest quarter, we are at like 118 times forward earnings. We're more than 100 times forward forward earnings. So compared to Palantir, this is a value stock, man. But compared to almost any other company in the market. This is growthy, growthy, growthy."

Jason Moser acknowledges the high valuation but justifies it with Axon’s dominant market position and expansive growth opportunities:

Jason Moser [12:39]: "This is a company that really dominates its market... It's a tremendous business, I think, with a lot of opportunity ahead."

b. Shopify: E-Commerce Giant (14:42 - 17:05)

Quarterly Performance: Shopify delivered a solid quarter with approximately 20% revenue growth and a remarkable 50% increase in free cash flow, reaching $363 million.

Market Reaction: Despite strong financials, the stock remained flat post-announcement. Moser suggests that macroeconomic uncertainties, such as tariff policies and potential impacts from the elimination of the de minimis tax exemption, may temper investor enthusiasm.

Jason Moser [15:21]: "This is one of those businesses where a headline could change everything... I look at the numbers they recorded, I mean I've got no concerns at all."

Mulvey and Moser discuss the nuanced challenges Shopify faces, balancing robust growth against external economic headwinds.

4. Guest Interview: Jared Barron on Deep-Sea Mining and Environmental Impact (17:09 - 31:04)

Introduction: Ricky Mulvey introduces Jared Barron, CEO of a metals company focused on extracting minerals from the Pacific Ocean's abyssal plains.

a. Environmental Considerations (17:44 - 27:44)

Barron’s Perspective: Barron presents a case for deep-sea mining, emphasizing minimal environmental disruption compared to traditional land-based mining. He argues that:

Jared Barron [19:05]: "We have carried out life cycle analyses... our impacts are a fraction and fraction compared to the land-based alternative."

Addressing Skepticism: In response to concerns about long-term ecological impacts, Barron contrasts his company’s advanced, less invasive technologies with outdated methods that caused significant disturbances:

Jared Barron [23:03]: "What we found with our own Trials... was that the foramin ferro in the tracks recovered to 30% of pre-disturbance levels. That's after one year..."

Balancing Act: Barron underscores the larger environmental battles, such as combating global warming and preserving carbon sinks, positioning deep-sea mining as a necessary component in securing essential minerals without exacerbating terrestrial environmental degradation.

b. Future Milestones and Commercialization (27:44 - 31:04)

Key Catalysts: Barron outlines critical milestones necessary for the company's growth, including:

1. Fast-Track Permitting: Securing swift regulatory approvals to commence large-scale operations.
2. Strategic Partnerships: Attracting reputable partners to bolster both offshore and onshore operations.
3. Economic Viability: Enhancing revenue per ton of extracted nodules through efficient processing and high-grade material yield.

Vision for the Future: Barron envisions his company playing a pivotal role in the global supply of critical minerals, leveraging mobility to transport resources to key processing facilities worldwide, including the United States. He aligns his company’s mission with national industrial goals, highlighting the support received from executive orders aimed at reindustrializing the U.S.

Jared Barron [28:16]: "This is a new industry. We happen to be in the preeminent position... I think there are great days ahead and it's going to be one hell of a journey."

Environmental Assurance: Emphasizing commitment to environmental stewardship, Barron assures that his company adheres to stringent regulatory standards and continuously invests in research to mitigate ecological impacts.

5. Conclusion and Final Thoughts (31:04 - End)

Ricky Mulvey wraps up the episode by reflecting on the dynamic discussions covered, from macroeconomic trends and significant trade deals to the nuanced evaluations of Axon and Shopify. The interview with Jared Barron provides listeners with a deeper understanding of emerging industries and their environmental implications.

Ricky Mulvey [31:04]: "Jared Barron, fascinating company to follow. He's the CEO of the metals company. Appreciate your time, your insight, and thank you for joining us on Motley Fool Money."

The episode concludes with standard disclaimers about stock interests and recommendations, reinforcing Motley Fool’s commitment to unbiased, informative content for its audience.

Key Takeaways:

• Economic Vigilance: With the Federal Reserve maintaining a cautious stance and new trade deals underway, investors should navigate the market with both optimism and vigilance.

• Valuation vs. Growth: High-growth companies like Axon and Shopify present attractive opportunities but come with substantial valuation considerations that require careful analysis.

• Innovative Industries: The deep-sea mining sector, as exemplified by Jared Barron’s company, represents a frontier in sustainable resource extraction, balancing economic benefits with environmental responsibilities.

For more detailed insights and stock recommendations, consider listening to the full episode of Motley Fool Money.