Motley Fool Money: "TikTok on the Clock" – January 17, 2025
Hosted by Dylan Lewis, Ricky Mulvey, and Mary Long
1. Introduction
In the episode titled "TikTok on the Clock," Dylan Lewis sets the stage by addressing the looming uncertainty surrounding TikTok's future in the United States. Joined by Motley Fool senior analyst Bill Mann and Matt Argersinger, the hosts delve into the implications of regulatory actions on major tech and financial entities.
2. The TikTok Ban: Implications and Potential Outcomes
[00:44 - 02:16]
The primary focus is on the impending ban of TikTok in the U.S., following the Supreme Court's decision to uphold the federal law that could force ByteDance to divest TikTok to an American owner or face restricted access for U.S. users.
Dylan Lewis highlights the urgency:
"We are nearing the January 19th deadline where federal law will effectively ban the app. [...] ByteDance will either need to divest the business to an American owner or lose access to a lot of users in the United States." [00:44]
Bill Mann humorously suggests the challenge ByteDance faces:
"Just throw it up on eBay and see what happens." [01:20]
The discussion covers the broader impact of the law, extending beyond ByteDance to giants like Apple and Google, imposing fines of up to $5,000 per user for violations. Bill Mann underscores the financial strain:
"170 million times five turns into a lot of money really quickly." [02:16]
3. Potential Buyers and Valuation of TikTok
[05:52 - 08:23]
The conversation shifts to potential buyers for TikTok if a sale becomes necessary. Matt Argersinger speculates on high-profile candidates, including Elon Musk, while Bill Mann mentions former figures like Frank McCourt and Steve Mnuchin as possible suitors.
Dylan Lewis probes the valuation of a standalone U.S. version of TikTok:
"How do you split out TikTok just in the United States?" [06:14]
Bill Mann provides estimates, valuing the U.S. user base alone at around $50 billion, potentially reaching $175 to $200 billion if the algorithm is considered.
4. Apple's Declining Market Share in China
[08:23 - 10:45]
The hosts turn their attention to Apple, noting its loss of the top-selling smartphone position in China, slipping behind Huawei and Vivo. Matt Argersinger expresses concern over Apple's strategic moves, particularly the underperformance of Apple Intelligence:
"There is no evidence of Apple Intelligence's ability to benefit hardware replacement cycles..." [08:42]
Bill Mann adds context, explaining that Apple Intelligence hasn’t been integrated into Chinese smartphones, contributing to a 17% shipment drop in 2024 compared to the previous year.
5. Financial Sector Performance and Outlook for 2025
[10:45 - 15:36]
After a brief commercial break, the discussion resumes with a robust analysis of the financial sector's performance in 2024 and expectations for 2025. Matt Argersinger highlights the sector's impressive 30% growth, second only to technology and communication services, coupled with strong shareholder yields.
Key points include:
- JP Morgan reported a 10% increase in fourth-quarter revenue, with non-interest revenue up 29%.
- Goldman Sachs saw net revenues rise by 23%, driven by investment banking and trading.
- Wells Fargo achieved a 47% year-over-year increase in net income through reduced expenses and lower credit loss provisions.
Bill Mann interprets these results as a testament to the sector's resilience, while Matt Argersinger emphasizes the potential for increased IPO activity and M&A under a possible Trump administration.
6. FDA Authorization of Zins Nicotine Pouches
[15:36 - 18:44]
The episode transitions to regulatory news, with the FDA authorizing Zins nicotine pouches for sale in the U.S., marking a significant development in smoking alternatives.
Bill Mann reflects on the regulatory stance:
"If it is to stop people from smoking something like a Juul or something like a Zinn seems like an obvious benefit... the FDA has come out and said it actually more is the former than the latter." [16:08]
Matt Argersinger connects this approval to Philip Morris, noting the stock's resilience and attractive 4.5% dividend yield despite flat or declining revenues.
7. Dividend Stocks and Altria's Performance
[16:54 - 18:26]
Matt Argersinger discusses Altria, formerly Philip Morris International, emphasizing its ability to generate returns through dividends and strategic investments like Zinn, despite a contracting cigarette market.
Bill Mann adds that while Zinn hasn't faced the youth appeal issues seen with Juul, the focus remains on adult smokers seeking alternatives.
8. Long-Term Market Outlook and Investment Strategies
[19:01 - 27:10]
The segment features Motley Fool Co-founder David Gardner, who joins for a discussion on long-term market expectations up to 2045. Dylan Lewis and Ricky Mulvey engage in a dialogue about market predictions, emphasizing the pitfalls of short-term forecasting.
David Gardner offers a balanced perspective:
"There will be two very bad bear markets over the next 20 years." [24:21]
He advocates for a long-term investment approach, aligning with Motley Fool's philosophy of holding high-quality companies over extended periods.
9. Optimism in Artificial Intelligence
[30:37 - 33:08]
Addressing concerns around Artificial Intelligence (AI), James Cameron expresses a rational optimism, highlighting AI's potential to enhance intelligence and automate lower-quality jobs, thereby freeing humans for more fulfilling endeavors.
James Cameron cites Stuart Brand:
"When a new technology shows up, an important one, a big one, you're either part of the steamroller or part of the road." [31:10]
He draws parallels with the evolution of e-commerce, underscoring AI as a transformative tool with both benefits and risks.
10. Stock Picks: Invitation Homes and Duolingo
[34:16 - 38:58]
Matt Argersinger and Bill Mann present their "Stocks on Radar" picks:
-
Invitation Homes (INVH):
- Matt identifies a valuation discrepancy, noting Invitation Homes' enterprise value suggests a per-home price significantly below the current median U.S. home price.
- Quote: "I think something's got to give and I don't think home prices in the US are going to drop 25% without some kind of economic calamity." [35:36]
-
Duolingo (DUOL):
- Bill points to Duolingo's surge in U.S. users learning Chinese due to TikTok's potential shutdown and the company's expansion into AI-powered video chat, enhancing its subscription model.
- Quote: "Duolingo has done an incredible job of being a default for casual language learners." [36:17]
Interactive banter ensues as the hosts discuss the effectiveness of Duolingo and the potential for these stocks, adding a personal touch with anecdotes about language learning.
11. Conclusion
Dylan Lewis wraps up the episode by encouraging listeners to stay engaged and consider Motley Fool's Stock Advisor for personalized investment recommendations. The hosts underscore the importance of long-term investing and staying informed amidst dynamic market conditions.
Notable Quotes:
-
Dylan Lewis:
"The clock is ticking on TikTok." [00:05]
-
Bill Mann:
"170 million times five turns into a lot of money really quickly." [02:16]
-
Matt Argersinger:
"Invitation Homes is really cheap." [35:36]
-
James Cameron:
"Stuart Brand said, when a new technology shows up, you're either part of the steamroller or part of the road." [31:10]
This episode of Motley Fool Money provides a comprehensive analysis of significant developments in the tech and financial sectors, offering listeners valuable insights and actionable stock picks to navigate the evolving market landscape.