Ricky Mulvey (3:38)

So this is an idea that I've been wrestling with for a little bit. Investing was not supposed to be political. I used to work at a financial advising company on their radio show and there was this chart that a lot of financial planning firms like to trot out that shows market returns under Democratic presidents and Republican presidents. And the idea is, doesn't really matter who's in office. The market is bigger than whoever the president is. Starting to think that that's changing. I think that it is becoming increasingly difficult, maybe even impossible, to separate your political ideas from your investing philosophy. If you own Tesla stock right now, there's a political idea behind that. If you're short Tesla stock right now, there is a political idea behind that. And if you're watching the announcements yesterday, you may think that this is going to lead to a renaissance in American manufacturing and that the lowered income tax rates, lowered corporate tax rates, will more than make up for the trade tariffs that are coming from the Trump administration. Or you might think that a global trade war is going to be materially destructive to the American economy and the, the macro economy, the world at large. So all of that is to say, that's a long wind up for this question. Has investing become political?

Nick Seiple (4:51)

I wouldn't say that investing is any more political than it's ever been. And I think we should kind of separate it into two buckets. I don't think investing should be political in the sense that I don't think you should be buying or selling stock in a car company based on the political stance you think the brand or its management represents. Especially when that can change really quickly. There's a different group of people buying and selling Tesla stock for political reasons than there were five years ago. And I just think that's a great way to make decisions. However, you should base your investing and your expectations about companies on how the world is today and how the world is likely to change in the future. And the political environment is always a part of that. And it's always going to be part of how you analyze the world that a company has to operate in. I think we're super comfortable having that conversation when we're talking about Chinese companies or a company that's based in South America or someplace outside of the US but it's just as real for companies in the United States. And we've seen it in the past when you look at changes in taxes or the regulatory environment. Now, obviously we're seeing it with tariffs. You could argue, and I think it could win that argument, that the US has been among the lowest political risk jurisdictions in the world. But to your point, you could also make the argument that maybe, maybe that's, that's changing and that that difference in political risk between the US and other countries is not quite as stark as it was in the past. Again, all this is subject to change. We could be back here next year and, and this tariff thing could, could, could have been behind us and it was just a negotiate negotiating tactic. We'll see. But anytime you invest, you're implicitly making some predictions or using some expectations about what you think the political environment will be, the regulatory environment, the tax environment will be for, for the companies you're investing in. And that is always subject to change. We're just reminded of it in times when it does.

Ricky Mulvey (6:32)

All right, here's, here's the part where I pull back the curtain a little bit. Here's where I'm at right now. I'm trying to, trying to think about this stuff and it's, it's difficult, it's complicated, it's, it's messy. And you know, I want the government to promote American enterprise. I want the American Government to stand up against unfair trade practices. Canada imposing more than a 200% tariff on American butter if it's above a certain quota. That's not right. We got it. We got to slow that down. I'm looking at the report where Laotian presidential decree raised excise taxes on six categories of products selling gasoline vehicles. Meaning if you got a big gasoline engine, you're subject to a tax rate of 220%. That's not right. And I'm also glad to see that American government leaders are thinking about in potentially taking real actions to reduce the national debt. You know, I'm in my late 20s. That's a real problem. And especially as I get older, that can create real long term economic problems for our economy. It already has. But I'm also thinking I think it's a bad idea to maybe impose economic sanctions on 180 countries at one time. You're a WWE fan. This is the Royal Rumble approach to economic sanctions. Maybe it's better to go after a couple, figure out a couple things versus everybody at once and then you create a common enemy for the entire world to gang up on you and then create problems and outcomes that you may not expect. All that is to say there's a lot of stuff I agree with, but the practice is something where I have a lot of issues with it and I think it can create bad outcomes for the market. Flooding the zone. It's been a great strategy for the Trump administration on media, on political parties. We're going to flood the zone with so many things. You can't keep up with what we're doing and we're going to push through the things we want. Maybe that doesn't work as well with foreign actors though, especially when they can collectively go after you on one thing. I don't know, that's a word salad. What do you think? Where are you at on all this?

Nick Seiple (8:30)

I don't really have a strong opinion. We'll see what happens. You laid out a lot of the game theory here of the US does one thing. What can we expect that other countries will do? How will they react? Will folks come to the table and you know, we get deal making or do we see, as we've seen in the past, where there will be escalating tariffs back and forth between countries and depending on how things go and what those knock on effects are, we'll determine whether or not this is a good strategy. This is not a game you get to play over and over again. You only get to play it once. I think it is certain that in the near term there's going to be some pain. Whether or not there's any long term game is going to shape the political will of the country going forward and whether the same people will be making decisions two and four years from now. And that, that's, that's how the system works. And you know, it'll to be determined how, how popular it will be and how successful it will be. But we're, we're seeing the effects in real time.

Ricky Mulvey (9:19)

If you've got long form thoughts on this, and hopefully you've got arguments made in good faith, you can always email us at podcasts@full.com that's podcasts with an S@full.com one of the categories Getting Caught up by this. You mentioned Vietnam earlier, where a lot of clothes are made. It is every retailer getting hammered today. It seems like, because I'm looking for opportunities on behalf of the listener. I did not make this stock purchase today. But here's one that makes absolutely no sense to me and that is a foolish favorite. Winmark. It is a retailer retail franchisor of gently used clothing, sports equipment, even musical instruments, Plato's closet played against sports. The stock is down 8% today because retailers are getting hammered. But here's the thing. They sell used equipment, they're not manufacturing things. And you would think that if people are buying fewer new clothes, this could actually benefit a company like Winmark. But it is being swept up in all of this tide. If I weren't talking about it on the show, if I weren't telling listeners, I'd probably pick up a couple of shares. I already, I already have a position, but it seems like this could be a buying opportunity. I don't know. I know this is a company. You follow? Seems like now would be a good time to sell used clothing in the United States.

Nick Seiple (10:27)

Sure. I think this is definitely an example of a company getting caught up with the broader selling in retail. This isn't a company that's manufacturing goods in foreign countries and importing them. Actually, their customers bring their goods right into the store and sell them to them. Winmark will buy them for a dollar, sell them back to other customers at $3. It's really a beautiful business model that's really agnostic to inflation when it comes to the underlying goods. You just keep your spread the same. I think Winmark, maybe there's an opportunity there. If there's. If there really is a high quality company out there that you know well and you've got some cash laying around now could be a time to nibble a little bit. I will. As I said earlier, I don't think it's time to go out here and be a hero. I think a pretty high likelihood that in this kind of consumer product, retail area, especially if tariffs aren't ultra long lasting, that the prices that you see today in the market could look pretty silly here a year from now.

Ricky Mulvey (11:16)

I want to do another story, but anything else on tariff day you want to hit before you move on? There's 180 tariffs. Do you maybe have a personal favorite?

Nick Seiple (11:25)

No personal favorite in the tariffs. I do think it is noteworthy. What's not included, big carve outs for all energy imports which they're already carved out from. The Canada and Mexico tariffs also now carved out for just about everybody. Also carve outs for important commodities, uranium, it's important for the nuclear industry, things like that. Maybe that tells you something about, I guess the administration's thoughts on the ability to influence those, those commodities. It also just maybe tells about areas that were more sensitive to potential inflation in them. We'll see where these tariff goes. Remember, all of this is subject to change. Hopefully this is the peak of the uncertainty here today.

Ricky Mulvey (12:06)

Let us remember Trump likes to make deals. You can imagine there may be some foreign leaders that would like to say, hey, we're going to hit back as hard as we can and that could create a trade spat. You could also have a foreign leader that goes to Mr. Trump like the late Shinzo Abe that says, sir, no one has seen this before you and we were able to get away with it for so long. But you know what, you caught us and we're ready to work together. We're ready to lower trade barriers because we want access to your big beautiful country. Let's move on. Nick, there is no clean segue for this, but there's another story I wanted to talk to you about and that is Match Group just struggling to get back to growth. The Decline began in 2023 for this company and management told investors, basically if you believe in hinge in tinder, do not expect growth until 2027. But in the meantime, they do have a solution, Nick, and that is an in app game. More bots on dating apps. This is a game where users can flirt with AI bots. According to Bloomberg, users can accumulate points for warmth and curiosity, receive real time feedback on their responses and ultimately win the game if the AI character verbally agrees to a date. Here's the catch. Plays are limited to five per day and about three minutes at a time. You better get to that date quickly. So I know you're married with children, but I'm going to take you back to your single days. Are you, are you ready to play this game? Do you want to flirt with some AI bots for points?

Nick Seiple (13:31)

You know, not going to be for me, Ricky, more of a college football video game guy myself. You know, maybe in the age of AI the Gen Z and Gen Alpha are going to, are going to, you know, chat it up in a different way, but I prefer to do my flirting in real life.

Ricky Mulvey (13:45)

There is a surprising amount of people who are interested in AI girlfriends. It is not good and it makes me very sad to think about the longer I think about it. But this is a business show is this game How Match gets Back to.

Nick Seiple (13:56)

Growth well, they've got to do something. Just change. The CEO at Match Group, former CEO at Zillow, Spencer Raskoff has joined the company under the previous CEO Bernard Kemp. Companies talk for past few years about ways it could reinvigorate payer growth at tender and it just hasn't happened. That said, Hinge continues to grow rapidly and Tinder historically has been able to increase monetization on the users that it has. It is a very cash flow generative business. Management has though pledged to prioritize user experience over monetization in the near term which is going to hurt growth when it comes to revenue but hopefully can return payers to growth. Match is really a company that you know, has been in a turnaround for, for the past few years. There's some concerns that maybe the interest in online dating isn't as high as it was a couple years ago. Running clubs are the new hip way to, to, to, to meet somebody, somebody to date out there. But Match Group still, still a business that generates lots of cash flow and management's going to try what they can to generate the growth that they can.

Ricky Mulvey (14:56)

You know, Algeria can tariff concrete, Japan can tariff cars. We can tariff a lot of things back. But you know what you can't tariff? Nick can't tariff love, you can't tariff love. And Match Group right here trades at about 14 times earnings. On the historically lower side. Management at the same time seems to be aggressively repurchasing shares. I believe last year was above $700 million in share repurchases. This is a mid ish small cap company that ain't nothing. It'll also pay about a 2 1/2% dividend to wait. There's a lot of negative sentiment about this company. You mentioned running groups. People are getting tired of dating apps. Yeah. But the people who are tired of dating app are also kind of still on dating apps. And there's a lot of people rotating in, even though there's a high churn. All of this is to ask, when you're looking at Match Group here, we see in a value play value trap, wait and see what you think.

Nick Seiple (15:49)

You know, I own some shares. I've owned it all the way from growth stock all the way to value stock. I do think it looks cheap here. Right now, we're in an environment, as you say, where the company is returning all the cash it generates back to shareholders, you know, bringing down its share count over time. Just approved a $1.5 billion share repurchase program back in December. This is a company that has a $10 billion enterprise value and about a $7 billion market cap. So, I mean, that's a pretty chunky buyback if they're able to kind of carry it all through at current prices. Long term, I think, or at least medium term, I think this is a company that's had some issues on the public market that I think is probably going to end up going private. They've got some debt come due the next couple of years that they're going to need to refinance, generates lots of cash. I think this is the type of company that makes sense in a private portfolio. And given the valuation in the public market, I think that's how it ends up exiting. And you know, selfishly, as a shareholder who's had a really tough journey with this, with this stock, I wouldn't mind, wouldn't mind, you know, having it taken away from me at a higher price than it trades out.

Ricky Mulvey (16:51)

We've got plenty more to talk about, but we'll leave it there. Tariff news and chunky buybacks, that's a good place to end it. Nick Sipal, thanks for being here. Appreciate your time and your incident.

Nick Seiple (16:58)

Anytime, Ricky.

Jane Perles (17:05)

As a longtime foreign correspondent, I've worked in lots of places. Nowhere as important to the world as China. But these days, few journalists are able to get the inside story. That's because China has shut the door to much of the media.

Rick Munaris (17:20)

Authorities have far more efficient tools to control the press and their far less reluctant to use them.

Jane Perles (17:28)

I'm Jane Perles, former Beijing bureau chief for the New York Times on Face Off. The US versus China. We're trying to break through. We'll talk about Trump and Xi Jinping, AI TikTok and even Hollywood. New episodes of Face off are available now. Wherever you get Your podcasts.

Ricky Mulvey (18:02)

Up next, we've got another big announcement from yesterday. Nintendo, it announced its first new device since 2017. Motley fool contributor Rick Munaris joined me to discuss the state of Nintendo in the new Switch 2. Nintendo announced its first first new device since 2017, the Switch 2, yesterday morning. And Rick, this is a massive bet for the video game giant, especially since the first Switch device generated about $100 billion in sales for the video game maker. So before we get started, I know you watched the announcement. Are you going to buy the switch 2?

Rick Munaris (18:40)

Short answer yes. Long answer Absolutely yes. I've owned Nintendo consoles since even back to the gaming clock days back in like the early 1980s, before they even had a console. I picked up some Nintendo devices so I'd have to add it to my collection. Of course my children, now adult children, they still play Nintendo. So it's a given.

Ricky Mulvey (18:59)

I mean one of the questions that observers were asking is what's going to make someone buy the new Switch? And one of the answers, well, a few answers from Nintendo, better graphics, new games, and also your friends are going to be there. So basically there's going to be a new built in microphone that can share the screen with friends while playing games. And it also has this like separately sold camera so you can appear on screen while you're playing, playing, much like people who stream on Twitch and YouTube. I thought that was probably the biggest innovation, biggest announcement from this morning. But how about you, what were your big takeaways from the Switch 2 announcement?

Rick Munaris (19:34)

That definitely was one of them. And when they had the teaser out a couple months ago, there was like the C button on the controller saying what is that? Is that Kinect? Is that cast, Is that chat? And it's all three really. So yeah, and another USB C charger. The word about that, yeah, that's where you can plug in the optional camera. So not only can you speak, but with the microphone you can also be visualing seeing your family and your friends as you play and stream and do all these things that they do on other consoles. So I think it's a very important part of the whole thing. But again, the specs are nice and obviously whenever Nintendo and it's been eight years, eight years since a new Nintendo console came out. It has never taken this long since they've been in the console game for 40 years now. So obviously every little thing is going to be watched. And yes, it's a little bigger now. There's a lot of cool features like, like you can actually share with one Game you can play with a couple of friends. That wasn't the case before. There's a virtual game car platform that's also rolling out to make it easier, just make it more portable. So there are a lot of neat little features, not just looking better on your tv. There's just a lot of cool little features that I think will make people pay up the much higher price. Now it's 450 versus 299 for the last generation eight years ago. So it is. It is a price hike, but I think people will pay up.

Ricky Mulvey (20:40)

And there's eventually a streaming subscription component if you want to continue to be able to talk to your friends. That kicks in in March of 2026. So the device comes with a free service subscription and then you got to pay up. There is this article before the announcement in bloomb Opinion piece basically saying that Nintendo needs this to be a hit. Yes, it's had the GameCube. It's also had the Wii U in addition to the Wii, which was a handheld device that seemed to be quickly forgotten by Nintendo players. All in all, this was an announcement that a lot of folks were waiting for. Sounds like you think the Switch 2 is going to be a massive hit for Nintendo.

Rick Munaris (21:13)

I think so. They don't waste people's time when they roll out a new console. They try to be revolutionary, not evolutionary. So when they put something out, it's the kind of thing where, hey, they're doing something a little different. While this is Switch 2, just like Wii U was sort of like a step up from the original Wii, you do see this whole ecosystem when Nintendo comes out, then a new system comes out three years later, sales and software sales and console sales, everything is sort of just peaking at that point. The fact that we're now at the lower part of this upgrade cycle is very important right now. This does need to be a hit because the stock has already been moving higher just the past couple of years, despite the fact that revenue and profitability has declined during the last part of the original Switch cycle. Upgrade cycle.

Ricky Mulvey (21:50)

Yeah, you mentioned the upgrade cycle. What is Nintendo's playbook here from past device releases such as the GameCube, the first Switch, we'll even count the Wii in there.

Rick Munaris (21:59)

Yeah, so they obviously try to do something a little different. But I think what's really important here is, and this is. We didn't know. We sort of assumed there'd be title exclusivity. So there's a new Donkey Kong game and there hasn't been a new Donkey Kong 3D game since the old N64 days. So it's been something that a lot of people are waiting for. But I think the most important thing here is right now there's going to be Mario Kart world. It's been eight years since the original Mario Kart 8 came out. Sold 67 million cop he's over the past eight years. So clearly a big franchise title. And these are exclusive to Switch too. So if you have the Switch, if you have an old Wii and you're playing all these other games, you're going to need to upgrade if you want to join all your friends that are now playing the same game that they're all playing as they will come June and beyond when the system comes out.

Ricky Mulvey (22:39)

Yeah. One of the appeals of Mario Kart World is apparently you can drive off the track and then just adventure out. I don't know what that entails or how appealing that is to gamers, but if Mario.

Rick Munaris (22:50)

Who knows, who knows?

Ricky Mulvey (22:51)

If you want to go on aimless drives throughout the Mario Kart universe, then you will be able to do that with Mario Kart World. There's a larger trend in video games that has affected a lot of video game manufacturers and that's that video gamers like to play the hits you mentioned, Mario Kart 8, that came out a decade ago and sold 8 million copies last year. The Switch 2 seems to be trying to combat this by including older entries in franchises including Street Fighter, Final Fantasy. You cannot play those on the regular Switch. You can play them on the Switch too. But Nintendo is always trying to sell new games. It's always trying to innovate. And yet, you know, there is a, there is a demand from gamers to play the oldies. What does that trend mean for Nintendo now in 2025?

Rick Munaris (23:34)

I am not a young man, but I grew up in college, in high school, playing the old 8 bit Nintendo and then 16, then 64 bit Nintendo. So by getting out there, reaching out, like GameCube compatibility, which is something that no one thought would. Do you Even remember the GameCube cycle? I do. A lot of gamers do. And be able to play all these old games, an updated version of these games do reach out to a wider audience than just the young gamers and the early adopters. Some of us, you know, that were early adopters decades ago are going to be onto this and I think it's going to be selling that way. I think that's going to help.

Ricky Mulvey (24:04)

Nintendo also has a partnership with Universal Studios and Comcast to open Super Nintendo Worlds at their theme parks. We'll move away from the device release as Nintendo has other things going on. Movies, theme parks. The theme parks I know is something you pay attention to. But what are these lands, these Super Nintendo lands in coming to Epic Universe, close to you in Orlando, also open in Japan. I believe it's also coming to California. What do these lands mean for Nintendo?

Rick Munaris (24:28)

Yeah, Epic Universe opens this month, May 22nd. We have it opening Universal Studios Hollywood back in 2022. It opened in Osaka in Japan. Universal Studios Japan as well. Those three parks draw about 35 million guests a year. And this gives Nintendo year round access to tens of millions of people to their brand. And it's not just licensing and merchandising revenue which obviously it will happen. I've been to Universal Studios Hollywood three times. I had no reason to go until they opened Super Nintendo World three years ago. But you get there and everyone's at the park. But in Super Nintendo World it's a different level where everyone's playing games and that's a tiny little version of it. The new one in Epic Universe is going to have three times the rides. And because of that there's going to be more engagement and just Nintendo when they release something, a new game, a new title, a new anything have right there, the perfect platform for. So I think that this is going to be a great way to extend the brand beyond gamers and also give year round access. Not just when there's a new shiny system out there. People are going to be sending money to Nintendo all year long.

Ricky Mulvey (25:25)

Now at this point it looks pretty sweet. They got a Donkey Kong Minecart Madness ride where they have basically the illusion of going on and off track. That looks, looks, looks pretty cool. And I, I can imagine people, people like going there. Looks a little crowded. Looks a little crowded. I gotta be honest. You said it's a different level. Theme parks, Universal Studios crowded to begin, you close them into Super Nintendo Land. That sounds a little claustrophobic. We'll get back to the stock. Nintendo is a pure play is the largest video game company by market cap. You mentioned that it's cyclical. Right now the stock's also at a high. It's an $80 billion market cap. We'll split this question in two parts. First is does it deserve that kind of valuation? And then also for investors, are they buying a cyclical company at a high point? If they're putting money in Nintendo stock.

Rick Munaris (26:12)

At 80 billion, it's basically trading for almost 40 times trailing earnings, almost, nearly 10 times trailing sales. So a very high multiple for a stock that you would think is where revenue and earnings have sort of been declining the last couple years. But this is the most exciting thing about Nintendo when a new system comes out. When the Wii came out in 2006 and when the switch came out in 2017, their revenue and their earnings three to four years later had more than tripled and in some cases quadrupled, if not a little more than quadrupled in just three or four years. So while the valuation is high now, you have a company here that the system works if it gets people to upgrade. And again, right now we're talking about a system that's priced 50% more. Just the console itself is 50% more. Games are now a little more expensive than they were in 2017. So the potential for an increase, your dramatic increase is there. And I think that's why Nintendo has been moving higher despite the fact that its fundamentals haven't been keeping up with the stock price. Because you have a system where the system is proven it didn't have really happen at the Wii U. And I think that's important. It doesn't happen in every cycle. But if we get another Wii or a Switch, the Switch cycle to happen here, it's going to be a very good three, four years for growth for Nintendo.

Ricky Mulvey (27:21)

So I'll just add as we close out, one of my favorite things watching Nintendo releases is they do this sort of Blues Clues style question asking directly to the audience. You know, they'll show a preview of the Mario Kart game and say, what do you think will happen next? And then give it a pause and then they'll show you more about the Mario Kart thing. If any other company did it, it would be insulting. But with Nintendo, I find it endearing. For whatever reason. I like that detail. As we wrap up. Anything else on Nintendo? Little big, small, medium size that you want to hit?

Rick Munaris (27:49)

Yeah, it's not just the theme parks. Obviously we know the console. Let's talk the movies. Obviously, the Super Mario Brothers movie was the second highest grossing movie worldwide in 2023. There's another sequel. Jack Black, Chris Pratt, they're all back for a sequel that comes out in 2026. And there is a Legend of Zelda movie in development. So if this is going to become the Knicks franchise that actually becomes cinematic, and I don't mean the Marvel Cinematic Universe, but just something that becomes that kind of dramatic, this is a company that will be more than just a video game with theme parks, movies, all these things that maybe didn't work out initially back in the when the first Super Mario movie came out a millennium ago, but I think that now it's going to be working well for them. And I think it's a much more diversified company. Been profitable through the ups and downs of the cycles. But imagine now it with a much higher priced console, people willing to pay more for games, new features that make it stickier, and engagement ideally going higher. I think that the future is very bright for Nintendo as an investment and.

Nick Seiple (28:42)

Especially as a company.

Ricky Mulvey (28:44)

Omnichannel word of the day. We'll leave it there. Rick Minares, appreciate you being here. Thank you for your time and your insight.

Rick Munaris (28:49)

Thank you, Rich.

Ricky Mulvey (28:56)

As always. People on the program may have interests in the stocks they talk about. The Motley fool may have formal recommendations. For or against? 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. The Motley fool only fix products that I would personally recommend to friends like you. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.