1 00:00:00,040 --> 00:00:01,920 Welcome back, everyone. Today on the Joseph Carlson 2 00:00:01,920 --> 00:00:06,080 Show, we have Duolingo, a stock that I first started buying just 3 00:00:06,080 --> 00:00:08,480 this week. I highlighted on my YouTube 4 00:00:08,480 --> 00:00:10,720 channel a few days ago. We're going to be looking at 5 00:00:10,720 --> 00:00:14,040 Duolingo, kind of revisiting this stock and the timeline of 6 00:00:14,040 --> 00:00:15,440 events. We'll be looking at things like 7 00:00:15,440 --> 00:00:17,840 when I first started doing research on this company, what 8 00:00:17,840 --> 00:00:20,800 characteristics caught my attention, when did I first 9 00:00:20,800 --> 00:00:23,520 start making videos on it, as well as responding to some of 10 00:00:23,520 --> 00:00:25,240 your comments on my previous video. 11 00:00:25,520 --> 00:00:28,440 A lot of users left some interesting feedback, some of 12 00:00:28,440 --> 00:00:30,640 its criticism, some of it's just nice comments. 13 00:00:30,720 --> 00:00:32,600 I'll be responding to some of those comments as well. 14 00:00:33,040 --> 00:00:34,800 Now, of course, we have some other news to get into. 15 00:00:35,080 --> 00:00:37,800 We have Uber that also reported earnings this week. 16 00:00:37,920 --> 00:00:42,320 The CEO of Uber also went on to CNBC to talk about Waymo, and he 17 00:00:42,320 --> 00:00:45,880 mentions one particular statistic about Waymo that is 18 00:00:45,880 --> 00:00:47,720 incredible. We'll be going over that. 19 00:00:47,760 --> 00:00:49,800 And then we have Texas Roadhouse, one of my larger 20 00:00:49,800 --> 00:00:51,800 positions, reporting earnings this evening. 21 00:00:52,120 --> 00:00:54,280 I'll give some thoughts going into this earnings of whether or 22 00:00:54,280 --> 00:00:57,080 not I think the cinnamon butter rolls will continue to 23 00:00:57,080 --> 00:00:59,240 outperform. So like always, we have a lot to 24 00:00:59,280 --> 00:01:01,080 do in this episode, a lot to go over. 25 00:01:01,080 --> 00:01:03,160 And we start things off with Duolingo. 26 00:01:03,560 --> 00:01:06,800 Duolingo is a stock that I highlighted in a recent episode, 27 00:01:07,240 --> 00:01:09,480 and it's the newest holding in My Portfolio. 28 00:01:09,560 --> 00:01:12,600 I bought $10,000 of this stock just this past week. 29 00:01:13,080 --> 00:01:15,720 Now the holding resides in the Story fund, which is the smaller 30 00:01:15,720 --> 00:01:17,640 of my 2 portfolios. It's a little bit more 31 00:01:17,640 --> 00:01:22,120 concentrated and growth focused. And this portfolio has overall 32 00:01:22,120 --> 00:01:24,840 just had outstanding performance, outperforming the 33 00:01:24,840 --> 00:01:30,080 QQQSCHG, the S&P 500, mostly because of Netflix. 34 00:01:30,280 --> 00:01:32,800 I put a lot of effort and energy into this holding. 35 00:01:33,280 --> 00:01:35,560 It's compounded like crazy. That's where the majority of 36 00:01:35,560 --> 00:01:37,960 games come from. But there really hasn't been any 37 00:01:37,960 --> 00:01:41,280 slackers in it. Amazon, I think has done the the 38 00:01:41,280 --> 00:01:43,960 weakest of the bunch and it still hasn't done bad. 39 00:01:43,960 --> 00:01:47,640 We're up $42,000 in Amazon and the rest of the holdings have 40 00:01:47,720 --> 00:01:48,920 they've they've held their weight. 41 00:01:49,320 --> 00:01:52,680 When we look at Duolingo, I looked at a lot of different 42 00:01:52,680 --> 00:01:56,720 companies of what I wanted to enter into this portfolio and I 43 00:01:56,720 --> 00:01:59,480 decided upon, out of all the different ones that I was 44 00:01:59,480 --> 00:02:03,120 looking at, that Duolingo was my favorite risk adjusted reward 45 00:02:03,520 --> 00:02:06,120 addition. So I bought $10,000 of that 46 00:02:06,120 --> 00:02:08,840 stock this past week. Now to a lot of people, this may 47 00:02:08,840 --> 00:02:12,760 have came across as out of left field or out of the ordinary. 48 00:02:12,800 --> 00:02:15,360 In fact, one of the most common pieces of feedback I got after 49 00:02:15,360 --> 00:02:18,680 buying Duolingo, making a video about it, was that a lot of 50 00:02:18,680 --> 00:02:21,320 viewers didn't understand why I was buying the company. 51 00:02:21,720 --> 00:02:24,080 Even after explaining the thesis, many people were just 52 00:02:24,080 --> 00:02:25,760 perplexed by it. They're confused. 53 00:02:26,240 --> 00:02:27,760 There's many comments like this one. 54 00:02:28,200 --> 00:02:32,920 This is the first pick I truly don't understand with 260 thumbs 55 00:02:32,920 --> 00:02:35,600 up. So lots of people seemingly very 56 00:02:35,600 --> 00:02:37,720 confused by my purchase of Duolingo. 57 00:02:37,800 --> 00:02:40,000 And I think it's important before we jump into the earnings 58 00:02:40,000 --> 00:02:42,960 that I can help explain this purchase a bit more and the 59 00:02:42,960 --> 00:02:46,240 timeline of me buying it. When we look at recent videos, 60 00:02:46,240 --> 00:02:48,120 we have one going back three months. 61 00:02:48,360 --> 00:02:50,400 This is May 5th, so three months ago. 62 00:02:51,000 --> 00:02:54,560 I have a video highlighting top five quality growth stocks to 63 00:02:54,560 --> 00:02:57,720 buy now. Now the fifth one on this video 64 00:02:58,040 --> 00:03:00,080 is Duolingo. This is what I say about 65 00:03:00,080 --> 00:03:02,360 Duolingo in this video a few months back. 66 00:03:02,680 --> 00:03:05,360 Now, this one may seem like a weaker company. 67 00:03:05,360 --> 00:03:08,400 A lot of people have their opinions on the application, 68 00:03:08,400 --> 00:03:11,480 whether or not they like using it, a lot of anecdotal and 69 00:03:11,480 --> 00:03:14,080 various opinions on it. But keep in mind those are the 70 00:03:14,080 --> 00:03:16,800 same type of opinions and anecdotes that you get for 71 00:03:16,800 --> 00:03:19,720 companies like Spotify and like Netflix. 72 00:03:20,200 --> 00:03:23,280 Some people say I don't like Netflix shows or I don't like 73 00:03:23,280 --> 00:03:25,120 Spotify. I'd rather have Ale Music. 74 00:03:25,520 --> 00:03:28,400 Very similar situation with Duolingo and similar to those 75 00:03:28,400 --> 00:03:31,600 companies as well. This one works with millions and 76 00:03:31,600 --> 00:03:34,040 millions of people. It's a subscription company, 77 00:03:34,360 --> 00:03:36,880 it's a bit of entertainment, but it's mostly focused on the 78 00:03:36,880 --> 00:03:39,760 educational side. In that video, I go over just a 79 00:03:39,760 --> 00:03:42,160 few minutes of Duolingo and express my interest in the 80 00:03:42,160 --> 00:03:45,320 company, how it actually fits a lot of my investment criteria. 81 00:03:45,400 --> 00:03:48,320 Everything that I saw when I was doing deeper and deeper research 82 00:03:48,680 --> 00:03:50,120 raised my conviction in the stock. 83 00:03:50,120 --> 00:03:51,720 It didn't lower it. When I looked over the 84 00:03:51,720 --> 00:03:55,200 characteristics of this company, this is how I summarized it the 85 00:03:55,200 --> 00:03:58,040 way that I saw it. Duolingo is the undisputed 86 00:03:58,040 --> 00:04:00,600 leader in digital language learning with unmatched brand 87 00:04:00,600 --> 00:04:03,840 recognition and global scale. You know about Duolingo? 88 00:04:04,080 --> 00:04:07,000 You probably don't know about even the second or third place 89 00:04:07,000 --> 00:04:09,880 or 4th place options. Most people don't even know what 90 00:04:09,880 --> 00:04:12,720 they're called. So at least with Netflix, you 91 00:04:12,720 --> 00:04:16,480 know about Amazon Prime Video or Peacock or Paramount? 92 00:04:16,720 --> 00:04:19,920 With Duolingo, most people don't even know the competitors. 93 00:04:20,200 --> 00:04:23,280 They are the the by far dominant one in their industry. 94 00:04:23,800 --> 00:04:27,280 It is a gamified freemium model that drives massive user 95 00:04:27,280 --> 00:04:30,600 acquisition at a low cost, converting efficiently to paid 96 00:04:30,600 --> 00:04:33,000 subscribers. It follows in a very similar 97 00:04:33,000 --> 00:04:36,160 structure as Spotify. You have the free tear that just 98 00:04:36,160 --> 00:04:38,360 allows people to sign up frictionless. 99 00:04:38,360 --> 00:04:40,760 You can Join Now and get an account for free. 100 00:04:41,160 --> 00:04:43,640 Then when you get into the ecosystem, you really like it. 101 00:04:43,880 --> 00:04:47,120 You might get converted to the paid tear if you're convinced 102 00:04:47,120 --> 00:04:50,960 enough and a certain percentage of their free tear users are 103 00:04:50,960 --> 00:04:53,200 continually convinced to upgrade the paid tear. 104 00:04:53,600 --> 00:04:57,800 So you have this nice funnel of first free, then paid. 105 00:04:58,040 --> 00:04:59,640 Paid are what really makes some money. 106 00:05:00,280 --> 00:05:03,760 User data fuels AI driven personalizations, reinforcing a 107 00:05:03,760 --> 00:05:05,920 self improving loop of engagement and learning 108 00:05:05,920 --> 00:05:08,200 outcomes. User retention is near social 109 00:05:08,200 --> 00:05:10,200 media levels. This is something that people 110 00:05:10,200 --> 00:05:13,320 don't understand about Duolingo is that they look at it as 111 00:05:13,360 --> 00:05:17,640 basically like just a video game or a random app. 112 00:05:18,000 --> 00:05:22,240 But Duolingo has some of the highest retention of any app in 113 00:05:22,240 --> 00:05:25,640 the world. It's not quite what social media 114 00:05:25,640 --> 00:05:28,440 is, but it's getting closer and closer to those levels. 115 00:05:28,680 --> 00:05:32,160 Social media levels means that you log on and use it every 116 00:05:32,160 --> 00:05:36,600 single day, and Duolingo now has 10s of millions of daily users. 117 00:05:37,160 --> 00:05:41,160 Daily use is social media levels that becomes an ingrained part 118 00:05:41,160 --> 00:05:42,880 of your life when you use something every day. 119 00:05:43,040 --> 00:05:46,400 It is a very large addressable market with an estimated 2 120 00:05:46,400 --> 00:05:48,520 billion people currently learning English. 121 00:05:48,720 --> 00:05:51,240 They're growing into these massive verticals that have 122 00:05:51,320 --> 00:05:53,720 long, long runways of potential growth. 123 00:05:54,040 --> 00:05:55,760 The total addressable market is huge. 124 00:05:56,280 --> 00:05:59,480 And then just an added bonus, the company's still led by the 125 00:05:59,480 --> 00:06:02,360 founder of the company. He's very, he's certainly not 126 00:06:02,360 --> 00:06:04,560 focused on the short term. He's not going to squeeze 127 00:06:04,560 --> 00:06:06,760 profits out of it, out of the short term. 128 00:06:06,760 --> 00:06:09,280 When I looked at the overall investment thesis of Duolingo, I 129 00:06:09,280 --> 00:06:12,160 really liked what I saw diving in more to the financial 130 00:06:12,160 --> 00:06:14,200 metrics. I also saw it as a very high 131 00:06:14,200 --> 00:06:18,040 retention, high margin, very good cost structure subscription 132 00:06:18,040 --> 00:06:19,800 business. Those are the type of companies 133 00:06:19,800 --> 00:06:22,400 that I typically focus on, ones that have huge amounts of 134 00:06:22,400 --> 00:06:24,840 reoccurring revenue. They're very reliable, they're 135 00:06:24,840 --> 00:06:27,360 scalable, they have huge total addressable markets. 136 00:06:27,600 --> 00:06:29,480 And of course, selling at a reasonable price. 137 00:06:29,480 --> 00:06:32,080 Now when we look at the price, a lot of people will squabble or 138 00:06:32,080 --> 00:06:35,160 be hung up on the PE ratio. And while it's true that 139 00:06:35,160 --> 00:06:38,600 Duolingo had a very high PE ratio, it's also true that 140 00:06:38,600 --> 00:06:40,480 Duolingo is growing incredibly fast. 141 00:06:40,640 --> 00:06:44,040 And anytime I look at a PE ratio, you have to match it with 142 00:06:44,040 --> 00:06:46,600 the growth rate of the company, with the cost structure, with 143 00:06:46,600 --> 00:06:49,840 the operating leverage. Those things are part of the 144 00:06:49,840 --> 00:06:52,640 price to earnings growth ratio. They're part of the long term 145 00:06:52,640 --> 00:06:54,440 expectations. When I looked at the overall 146 00:06:54,440 --> 00:06:56,840 valuation of Duolingo and looked at the overall growth 147 00:06:56,840 --> 00:07:00,160 assumptions, I saw is undervalued, not overvalued 148 00:07:00,560 --> 00:07:03,440 because if we look at it here, just making a couple assumptions 149 00:07:03,880 --> 00:07:07,160 at $440.00. So this is $100 more than I 150 00:07:07,160 --> 00:07:10,320 bought it. If we plug in a 20% free cash 151 00:07:10,320 --> 00:07:13,360 flow per share growth rate over the next five years, which I 152 00:07:13,360 --> 00:07:16,360 believe is completely achievable, the company's 153 00:07:16,360 --> 00:07:20,840 growing it's top line revenue above 30%, around 35%. 154 00:07:21,040 --> 00:07:23,600 A company growing top line revenue with great cost 155 00:07:23,600 --> 00:07:27,120 structure and margins can certainly achieve 20% free cash 156 00:07:27,120 --> 00:07:30,320 flow per share growth. Then if we just assume a 2% free 157 00:07:30,320 --> 00:07:34,840 cash flow yield, we get a 13% annualized return for the next 5 158 00:07:34,840 --> 00:07:36,600 years. Now let's say our desired return 159 00:07:36,600 --> 00:07:39,560 is 19%. That moves us to a starting 160 00:07:39,560 --> 00:07:43,320 price of $330, meaning that when I plugged in the same 161 00:07:43,320 --> 00:07:47,880 assumptions just a couple days ago at a price of $330 per share 162 00:07:48,120 --> 00:07:51,600 with 20% free cash flow per share growth and a 2% yield, 163 00:07:51,920 --> 00:07:56,280 that gave me a 19% compounded return over five years. 164 00:07:56,800 --> 00:08:00,480 Even after it moving up 27% today or whatever, it's moved 165 00:08:00,480 --> 00:08:04,520 up, that still gives me a 12 to 13% return. 166 00:08:05,120 --> 00:08:08,400 So even after this move, I still don't believe by the numbers 167 00:08:08,400 --> 00:08:11,840 that Duolingo's overvalued. I think it's less undervalued 168 00:08:11,840 --> 00:08:14,520 than it was before, but I still believe it's undervalued. 169 00:08:14,600 --> 00:08:16,280 When you dive into the fundamentals of the company, 170 00:08:16,280 --> 00:08:17,680 especially this most recent quarter. 171 00:08:17,960 --> 00:08:20,760 When we look at this, for example, on a quarterly basis, 172 00:08:20,880 --> 00:08:25,320 this is just last quarter, the revenue was $252 million. 173 00:08:26,240 --> 00:08:28,280 Again, this is like a $20 billion company. 174 00:08:28,280 --> 00:08:34,120 So we have revenue growing 41.4%, so about 42% revenue 175 00:08:34,120 --> 00:08:37,280 growth and revenues of $252 million. 176 00:08:37,559 --> 00:08:39,799 If we look at this on a trailing basis, this is what it looks 177 00:08:39,799 --> 00:08:44,720 like, 40% growth, $885 million of revenue. 178 00:08:45,240 --> 00:08:49,840 Now the amazing thing is out of that 885 million, if we look at 179 00:08:49,840 --> 00:08:52,960 subscription revenue, this is just the part that's from 180 00:08:52,960 --> 00:08:56,320 subscribers, not advertisements or anything that's not 181 00:08:56,320 --> 00:09:00,520 reoccurring. This is now at $734 million. 182 00:09:01,080 --> 00:09:04,160 So the huge majority of their revenue is coming from 183 00:09:04,160 --> 00:09:07,320 subscriptions. This number grew by 47% year 184 00:09:07,320 --> 00:09:09,080 over year. Massive growth. 185 00:09:09,080 --> 00:09:12,120 On a mostly subscription based company, you can see these 186 00:09:12,120 --> 00:09:14,680 growth curves and this is part of the valuation. 187 00:09:14,960 --> 00:09:18,280 So when you're factoring in the price to sales or the PE ratio 188 00:09:18,280 --> 00:09:21,120 or the free cash flow, you have to factor in the rate of growth. 189 00:09:21,400 --> 00:09:23,720 Most companies are not growing by 40%. 190 00:09:23,960 --> 00:09:25,800 Most companies are not subscription based. 191 00:09:26,040 --> 00:09:28,680 Most companies don't have 70% gross margins. 192 00:09:28,920 --> 00:09:30,920 All of that should be factored into the valuation. 193 00:09:31,280 --> 00:09:33,800 When we look at the daily active users, this is another metric 194 00:09:33,800 --> 00:09:37,120 that is just incredible. Now this is the one that they 195 00:09:37,120 --> 00:09:40,960 focus on possibly the most is getting people to use the app 196 00:09:40,960 --> 00:09:43,280 every single day because that's the engagement. 197 00:09:43,280 --> 00:09:47,160 That's similar to a social media company is using it every single 198 00:09:47,160 --> 00:09:48,720 day. Having it be part of your habit, 199 00:09:49,240 --> 00:09:51,720 it went up even after a great Q1. 200 00:09:52,040 --> 00:09:55,360 So from Q4 of last year to Q1, they gained a lot of daily 201 00:09:55,360 --> 00:09:59,480 active users, about 6,000,000. The growth rate from Q1 to Q2 202 00:09:59,480 --> 00:10:01,440 wasn't as much, but it still grew. 203 00:10:01,760 --> 00:10:05,360 And year over year it grew 39%, almost 40%. 204 00:10:05,360 --> 00:10:08,200 Once again, one of the only weaknesses in this report was 205 00:10:08,200 --> 00:10:10,160 the monthly active users. These are people that have 206 00:10:10,160 --> 00:10:13,960 logged on at least once in the past 30 days, and it had a 207 00:10:13,960 --> 00:10:16,240 sequential decline quarter over quarter. 208 00:10:16,240 --> 00:10:18,640 After looking into this, there's a couple things that explain 209 00:10:18,640 --> 00:10:21,720 this. First of all, the Q1 jump to Q2 210 00:10:21,720 --> 00:10:23,720 is often the smallest throughout history. 211 00:10:23,920 --> 00:10:28,520 That's typically been the smallest jump is Q1 to Q2Q4 to 212 00:10:28,520 --> 00:10:32,080 Q1 is typically a big step up and that's how it is throughout 213 00:10:32,080 --> 00:10:34,160 history. So naturally you have these 214 00:10:34,160 --> 00:10:37,760 bigger jumps from Q4 to Q1 as people are starting the new 215 00:10:37,760 --> 00:10:40,320 year, they want to learn a new language, you know, they sign up 216 00:10:40,320 --> 00:10:43,120 for Duolingo. So a lot of that happens in Q4 217 00:10:43,120 --> 00:10:46,760 to Q1 now in 2025. Q One in particular, that was a 218 00:10:46,760 --> 00:10:49,560 massive step up because they had a very unique marketing 219 00:10:49,560 --> 00:10:52,920 campaign. The Duolingo bird died and 220 00:10:52,920 --> 00:10:56,080 everyone had to revive it. It went super viral. 221 00:10:56,160 --> 00:10:59,680 It got so many new users in a single quarter because it was by 222 00:10:59,680 --> 00:11:02,000 far their most successful marketing campaign. 223 00:11:02,080 --> 00:11:04,600 It was just an ultra viral social media campaign. 224 00:11:05,000 --> 00:11:08,400 So they gained an unnaturally large amount of users in this 225 00:11:08,400 --> 00:11:11,040 quarter to quarter and then they gave up a few of those users 226 00:11:11,040 --> 00:11:13,560 that were less committed. This is a very healthy thing. 227 00:11:13,560 --> 00:11:16,440 We've seen it happen with Netflix before during COVID when 228 00:11:16,440 --> 00:11:19,360 they had unnatural growth, they shed off some users, but then 229 00:11:19,360 --> 00:11:22,040 the long term trend took over. They continued to gain 230 00:11:22,040 --> 00:11:24,520 subscribers over time. You can see the same type of 231 00:11:24,520 --> 00:11:27,760 trend over time. This was an unusually good Q1 232 00:11:27,760 --> 00:11:29,120 because of that marketing campaign. 233 00:11:29,440 --> 00:11:32,400 But if you factor that in, it looks like good organic growth 234 00:11:32,640 --> 00:11:34,920 from Q4 of last year to Q2 of this year. 235 00:11:35,080 --> 00:11:37,560 The most financially important part of this company is the paid 236 00:11:37,560 --> 00:11:39,680 subscribers. Over time, they make up for 237 00:11:39,680 --> 00:11:42,680 around 80 to 90% of the total revenue of the company. 238 00:11:42,920 --> 00:11:46,360 So the huge majority of money, free cash flow, earnings per 239 00:11:46,360 --> 00:11:49,200 share, everything is driven by these paid subscribers. 240 00:11:49,520 --> 00:11:52,000 When you subscribe to Duolingo, typically you sign up for like a 241 00:11:52,000 --> 00:11:54,040 whole year. You just do an annual plan. 242 00:11:54,040 --> 00:11:56,760 They have family plans as well. You can have multiple people use 243 00:11:56,760 --> 00:11:58,760 them so they have a lot of lock in. 244 00:11:58,760 --> 00:12:00,680 Once you sign up, you have it for a full year. 245 00:12:00,880 --> 00:12:02,640 It's not that expensive of a membership. 246 00:12:02,840 --> 00:12:05,440 Most people renew it over time and the paid subscribers 247 00:12:05,440 --> 00:12:08,400 continues to grow at an incredibly fast pace going up 248 00:12:08,400 --> 00:12:12,800 36,000,000, going to 10.9 million where the last quarter 249 00:12:12,800 --> 00:12:15,920 was 10.35. Around every 30 days are gaining 250 00:12:15,920 --> 00:12:18,840 200,000 subscribers and these are some of their most dedicated 251 00:12:18,840 --> 00:12:22,280 people using the app everyday. All the KPIs and business 252 00:12:22,280 --> 00:12:25,680 fundamentals look really good. You see continued growth, strong 253 00:12:25,680 --> 00:12:29,200 engagement, increases in daily active users increases and paid 254 00:12:29,200 --> 00:12:31,840 subscribers. There's overall some shedding in 255 00:12:31,840 --> 00:12:34,560 the monthly active users, but the growth trend continues. 256 00:12:34,840 --> 00:12:37,200 When we look at some of the financials, this also looks 257 00:12:37,280 --> 00:12:39,800 better and better. Now the free cash flow growth is 258 00:12:39,800 --> 00:12:42,440 really fast. It's growing at 55%. 259 00:12:42,840 --> 00:12:45,320 So again, when we're looking at free cash flow yields, we're 260 00:12:45,320 --> 00:12:47,040 making growth assumptions of the future. 261 00:12:47,280 --> 00:12:49,720 You have to factor in what you think this company will do over 262 00:12:49,720 --> 00:12:53,120 the next five years. It's growing 55% today. 263 00:12:53,600 --> 00:12:56,520 I believe it can grow above 20% per year for the next five 264 00:12:56,520 --> 00:12:58,000 years. In fact, I think those 265 00:12:58,000 --> 00:12:59,480 assumptions are rather conservative. 266 00:12:59,480 --> 00:13:03,600 The earnings per share is also growing super fast, up 73% year 267 00:13:03,600 --> 00:13:05,400 over year. If you look at it just on a 268 00:13:05,400 --> 00:13:07,880 quarterly basis, it's up around 78%. 269 00:13:08,160 --> 00:13:11,160 So you have earnings per share just shy of doubling year over 270 00:13:11,160 --> 00:13:13,520 year. That cuts down the PE ratio from 271 00:13:13,520 --> 00:13:18,160 100 to 50 to 25 really fast if you keep growing at these rates. 272 00:13:18,560 --> 00:13:21,520 And then to add on to that, this is a company that has no debt. 273 00:13:22,040 --> 00:13:24,720 They just have cash piling up on their balance sheet. 274 00:13:24,760 --> 00:13:27,200 All the efficient free cash flow they're generating has to go 275 00:13:27,200 --> 00:13:28,840 somewhere. They're just putting it in cash 276 00:13:28,840 --> 00:13:31,080 for the time being. Now, this was one where there is 277 00:13:31,080 --> 00:13:33,400 a lot of, I would say mixed reception. 278 00:13:33,720 --> 00:13:37,000 A lot of people confused if I was buying it, leaving kind of 279 00:13:37,280 --> 00:13:39,760 comments where they're like perplexed and I wanted to go 280 00:13:39,760 --> 00:13:41,600 through and just respond to some of them. 281 00:13:41,600 --> 00:13:43,960 So I have a little bit of AQ and a here I'll respond to some of 282 00:13:43,960 --> 00:13:45,520 these comments. One of the comments that I 283 00:13:45,520 --> 00:13:48,680 received a lot and I decided to just screenshot this one because 284 00:13:48,680 --> 00:13:52,200 it it exemplifies a lot of the thoughts people had after 285 00:13:52,200 --> 00:13:55,240 watching that video Is this is the first pick? 286 00:13:55,240 --> 00:13:59,560 I truly don't understand my reaction to the people that are 287 00:13:59,560 --> 00:14:01,560 saying this is did you watch the video? 288 00:14:02,080 --> 00:14:05,280 I made a pretty in depth video going over the entire summary of 289 00:14:05,280 --> 00:14:08,520 the company and why it fits in with my investing philosophy and 290 00:14:08,520 --> 00:14:10,120 just saying that you don't understand it doesn't really 291 00:14:10,120 --> 00:14:12,960 give me anything to work with. You don't understand what part 292 00:14:12,960 --> 00:14:15,920 of it? Duolingo is a subscription based 293 00:14:15,920 --> 00:14:18,160 company. It has a huge total addressable 294 00:14:18,160 --> 00:14:20,320 market. It's growing very fast, has 295 00:14:20,320 --> 00:14:22,280 great cost structure, very high margins. 296 00:14:22,680 --> 00:14:26,400 It has a product that has a big total addressable market, big 297 00:14:26,400 --> 00:14:30,000 verticals to grow into, founder LED, and it was selling at a 298 00:14:30,000 --> 00:14:32,600 valuation that if you incorporate growth was 299 00:14:32,600 --> 00:14:34,920 completely reasonable. So I don't know what people are 300 00:14:34,920 --> 00:14:36,680 saying when they don't understand it, like they're 301 00:14:36,680 --> 00:14:40,320 completely baffled by this pick. What is so bad about Duolingo? 302 00:14:40,320 --> 00:14:43,040 What what is the problem here? We have some other comments here 303 00:14:43,040 --> 00:14:45,960 that are a bit more specific. Steven says, I think people are 304 00:14:45,960 --> 00:14:49,000 surprised because it doesn't fit well with what companies you 305 00:14:49,000 --> 00:14:51,240 buy. You have the sort of portfolio 306 00:14:51,240 --> 00:14:53,120 that Dev Kantasaria wouldn't mind. 307 00:14:53,400 --> 00:14:56,240 He'd make his changes, no doubt, but he'd approve of a lot of it. 308 00:14:56,640 --> 00:14:59,840 Ask Dev the first thing he'd change, probably the language 309 00:14:59,840 --> 00:15:02,200 game thing or bicycle game thing. 310 00:15:02,200 --> 00:15:05,320 If you still owned it. It's no FICO, that's for sure. 311 00:15:05,520 --> 00:15:10,640 Hope it does well for you. So this is kind of a, a feedback 312 00:15:10,640 --> 00:15:15,360 that Duolingo is not as high quality as companies like FICO. 313 00:15:15,360 --> 00:15:17,880 It's not as high quality as the type of companies that Dev 314 00:15:17,880 --> 00:15:20,560 Kantasaria own. The first thing I want to 315 00:15:20,560 --> 00:15:23,520 highlight is I don't I like Dev Kantasaria. 316 00:15:23,680 --> 00:15:25,120 I do like him. I respect him a lot. 317 00:15:25,120 --> 00:15:27,400 I think he's a great thinker. He does great analysis on 318 00:15:27,400 --> 00:15:29,560 companies and I like his philosophy. 319 00:15:29,880 --> 00:15:32,920 There's certainly a lot of similarities, but I'm not Dev 320 00:15:32,920 --> 00:15:36,800 Kantasaria and in fact, I have a lot of disagreements with Dev 321 00:15:36,800 --> 00:15:41,080 Kantasaria. He did sell Amazon at the lowest 322 00:15:41,080 --> 00:15:44,040 point over the past five years and I thought that was a huge 323 00:15:44,040 --> 00:15:45,880 mistake. I bought more of it at the exact 324 00:15:45,880 --> 00:15:50,080 time that he was selling Amazon. Although Dev Kantasaria and I 325 00:15:50,080 --> 00:15:52,720 agree, I think that into it's a great company. 326 00:15:52,720 --> 00:15:55,840 MasterCard, S&P Global, the credit rating agencies. 327 00:15:56,400 --> 00:15:59,200 There's also some companies that I think we just disagree on. 328 00:15:59,640 --> 00:16:03,320 Dev Cantisari has gone on the record saying that Costco is not 329 00:16:03,320 --> 00:16:05,080 a quality company in his opinion. 330 00:16:05,640 --> 00:16:07,400 I would argue the exact opposite. 331 00:16:07,400 --> 00:16:10,600 I think Costco is going to be around longer than most 332 00:16:10,720 --> 00:16:13,760 companies on planet earth generating enormous amounts of 333 00:16:13,760 --> 00:16:15,440 money through their membership model. 334 00:16:15,880 --> 00:16:19,120 I think Costco is is one of the most flawless, best business 335 00:16:19,120 --> 00:16:22,400 models in the world. Dev does not and he said it in 336 00:16:22,400 --> 00:16:25,400 in different podcasts. And then some of the companies 337 00:16:25,400 --> 00:16:28,000 that I've made the most amount of money on, ones that I I 338 00:16:28,000 --> 00:16:31,560 really made about half the gains in my total portfolio or more. 339 00:16:32,200 --> 00:16:38,560 Netflix, Google, Amazon, Texas Roadhouse are all ones that Dev 340 00:16:38,560 --> 00:16:41,440 has said that he hasn't owned or wouldn't own. 341 00:16:41,920 --> 00:16:44,200 Those are all companies that fit outside of the mold of Dev 342 00:16:44,200 --> 00:16:47,080 Kantasaria companies. He would never buy a Netflix. 343 00:16:47,080 --> 00:16:48,640 I don't think he's ever going to buy that company. 344 00:16:48,880 --> 00:16:51,520 He's outwardly spoken against big tech saying they spend too 345 00:16:51,520 --> 00:16:53,800 much on CapEx. So he's not buying Google and 346 00:16:53,800 --> 00:16:55,680 you're not going to catch him buying Texas Roadhouse. 347 00:16:56,080 --> 00:16:58,520 Which Texas Roadhouse has been one of my best performing 348 00:16:58,520 --> 00:17:01,440 positions. I think it's far underrated as a 349 00:17:01,440 --> 00:17:03,800 compounder. The company is incredibly well 350 00:17:03,800 --> 00:17:08,319 positioned and Texas Roadhouse many people may criticize as 351 00:17:08,319 --> 00:17:11,640 having a lot of competition, having a smaller Moat, but Texas 352 00:17:11,640 --> 00:17:14,400 Roadhouse doesn't have regulatory issues like FICO. 353 00:17:14,920 --> 00:17:18,200 It doesn't have disruption issues like Google with LLMS 354 00:17:18,640 --> 00:17:21,920 Texas Roadhouse has been an incredibly insular company 355 00:17:22,280 --> 00:17:24,920 focusing on executing its business model and growing 356 00:17:24,920 --> 00:17:26,760 rapidly. But again, these are the type of 357 00:17:26,760 --> 00:17:29,640 companies that don't fit well with the Devcantasaria type of 358 00:17:29,640 --> 00:17:31,920 portfolio. And then you mentioned that 359 00:17:32,400 --> 00:17:34,760 Duolingo's know FICO, that's for sure. 360 00:17:35,400 --> 00:17:38,720 Well, Fico's not immune to different disruptions or 361 00:17:38,720 --> 00:17:41,480 problems as well. Even though FICO has a dominant 362 00:17:41,480 --> 00:17:45,480 position in their market on credit rating, they did make a 363 00:17:45,480 --> 00:17:48,080 huge mistake. Management exercised too much 364 00:17:48,080 --> 00:17:51,400 pricing power too quickly and that has been a huge problem for 365 00:17:51,400 --> 00:17:54,080 the stock. If we look at FICO today, this 366 00:17:54,080 --> 00:17:56,520 is Devcantasari's largest holding by far. 367 00:17:56,520 --> 00:18:00,280 It was a 30% position, so over double the size of any holding 368 00:18:00,280 --> 00:18:03,800 in My Portfolio. It's down 31% year to date. 369 00:18:04,400 --> 00:18:06,680 In the past year, it's down 20.6%. 370 00:18:06,760 --> 00:18:09,560 FICO has been getting crushed recently because of regulatory 371 00:18:09,560 --> 00:18:12,360 scrutiny on the company that they asked for by their 372 00:18:12,360 --> 00:18:14,840 incredible price hikes in a short amount of time. 373 00:18:15,280 --> 00:18:18,520 So again, even though I I really like Dev Kantasaria, I've 374 00:18:18,520 --> 00:18:20,600 continually been very complimentary of them. 375 00:18:21,160 --> 00:18:23,200 It's not going to be the case where I buy every company that 376 00:18:23,200 --> 00:18:25,320 he buys. If he sells one, I sell it. 377 00:18:25,440 --> 00:18:28,120 That's not how I operate. I'll use his research, I'll look 378 00:18:28,120 --> 00:18:30,840 at what he does, but I'll have my own investing philosophy. 379 00:18:30,880 --> 00:18:33,480 Another commenter said, I was hoping you picked Shark Ninja. 380 00:18:33,920 --> 00:18:35,280 Shark Ninja is an awesome company. 381 00:18:35,280 --> 00:18:37,240 I really, I really like this one. 382 00:18:37,240 --> 00:18:39,480 I respect the CEOA lot. I think it's really cool what 383 00:18:39,480 --> 00:18:41,720 they're doing. Just innovating over and over 384 00:18:41,720 --> 00:18:43,840 again, coming out with really creative products. 385 00:18:44,320 --> 00:18:46,440 But there's just no subscription model there. 386 00:18:46,480 --> 00:18:49,440 There's no recurring revenue. They have to continually 387 00:18:49,440 --> 00:18:51,360 innovate and innovate and innovate. 388 00:18:51,840 --> 00:18:53,600 I'd rather own the Costco that they sell. 389 00:18:53,600 --> 00:18:57,040 Shark Ninja. Think about Costco's job and 390 00:18:57,040 --> 00:19:00,120 Shark Ninja's job and think about who has an easier job. 391 00:19:00,720 --> 00:19:04,040 Costco that just takes whatever products are popular and puts 392 00:19:04,040 --> 00:19:06,840 them on their shelves and has really good customer service, 393 00:19:07,480 --> 00:19:10,640 treats their members well. Or Shark Ninja that's constantly 394 00:19:10,640 --> 00:19:13,880 engineering, doing new designs, refining, manufacturing, and 395 00:19:13,880 --> 00:19:15,720 dealing with all sorts of returns. 396 00:19:15,920 --> 00:19:18,760 Whenever Costco has a return, they just send it over to the 397 00:19:18,760 --> 00:19:22,120 manufacturer. Costco has a much easier job 398 00:19:22,120 --> 00:19:25,280 than Shark Ninja and Costco has a recurring revenue through 399 00:19:25,280 --> 00:19:28,400 their membership model. So I I just rather own a company 400 00:19:28,400 --> 00:19:30,720 that's at steady instead of 1 like Shark ninja. 401 00:19:31,320 --> 00:19:34,720 The reason I buy Duolingo over Shark Ninja Again, if Duolingo 402 00:19:34,720 --> 00:19:37,720 had no recurring revenue, no subscribers, I wouldn't own the 403 00:19:37,720 --> 00:19:39,760 stock. Another common one, this one had 404 00:19:39,760 --> 00:19:43,320 over 100 up votes. Says Duolingo has APE ratio of 405 00:19:43,320 --> 00:19:45,000 169. It's a lot. 406 00:19:45,280 --> 00:19:47,480 Perhaps you see the value of it, but for me, it's a pass. 407 00:19:48,200 --> 00:19:49,720 Again, I think these comments are fine. 408 00:19:49,720 --> 00:19:52,480 If you look at the company and you think it's expensive, that's 409 00:19:52,480 --> 00:19:54,080 fine. And it's never my goal to 410 00:19:54,120 --> 00:19:56,440 convince everyone to buy the companies that I do. 411 00:19:57,000 --> 00:19:58,760 I don't care if you buy them or not. 412 00:19:58,760 --> 00:20:02,400 Frankly, it's not a sales pitch. If I wanted to buy just the most 413 00:20:02,400 --> 00:20:06,080 popular stocks to get an audience through them, I'd be on 414 00:20:06,080 --> 00:20:09,720 the Tesla bandwagon or on the Palantir bandwagon, right? 415 00:20:09,720 --> 00:20:11,520 I'd be buying the companies that I think have the biggest 416 00:20:11,520 --> 00:20:13,760 audience. There's very little content ever 417 00:20:13,760 --> 00:20:16,160 made about this company. I simply bought it because I 418 00:20:16,160 --> 00:20:18,040 wanted to buy it. Now when we look at Duolingo's 419 00:20:18,040 --> 00:20:20,920 valuation in particular, again, it's easy to get hung up on 420 00:20:20,920 --> 00:20:25,040 these Nosebleed PE ratios. You look at it and you go, wow, 421 00:20:25,040 --> 00:20:30,840 the trailing PE is 173, but APE ratio without the corresponding 422 00:20:30,880 --> 00:20:34,360 growth rate is giving you one part of the recipe. 423 00:20:34,920 --> 00:20:40,000 It's like saying, hey, I want to sell you a car for $50,000 and 424 00:20:40,000 --> 00:20:42,680 you say What Car is it? And I say, I'm not going to tell 425 00:20:42,680 --> 00:20:46,200 you it's just $50,000. Can you make a good decision 426 00:20:46,200 --> 00:20:48,800 with only knowing what you're paying but not knowing what 427 00:20:48,800 --> 00:20:50,680 you're buying? That's what you're doing. 428 00:20:50,680 --> 00:20:53,760 If you just look at APE ratio, you know the price tag, but you 429 00:20:53,760 --> 00:20:55,680 don't know whether or not you're getting a good deal. 430 00:20:55,960 --> 00:20:58,720 You don't know if you're getting a good deal or a bad deal just 431 00:20:58,720 --> 00:21:01,200 by the price tag alone. You have to know what you're 432 00:21:01,200 --> 00:21:04,680 buying, how fast it goes, what is the car you're buying for 433 00:21:04,680 --> 00:21:06,560 50,000? If you're buying a used Toyota 434 00:21:06,560 --> 00:21:08,080 Corolla, that's probably not the best deal. 435 00:21:08,080 --> 00:21:10,280 If you're buying a Lamborghini, it's probably a decent deal. 436 00:21:10,520 --> 00:21:12,360 So knowing what you're buying is important. 437 00:21:12,560 --> 00:21:15,360 When we look at the trailing PE ratio, that's true that it looks 438 00:21:15,360 --> 00:21:19,440 expensive, but the PE is growing by roughly double year over 439 00:21:19,440 --> 00:21:23,760 year, meaning that the PE ratio will get cut in half in 12 440 00:21:23,760 --> 00:21:25,320 months. And with this type of company 441 00:21:25,320 --> 00:21:27,360 that has a lot of operating leverage, even though the 442 00:21:27,360 --> 00:21:30,200 revenue growth is growing really fast, the earnings growth is 443 00:21:30,200 --> 00:21:32,200 likely to grow at a much faster pace. 444 00:21:32,600 --> 00:21:36,160 So if Duolingo grows 40% revenue growth, the earnings growth is 445 00:21:36,160 --> 00:21:40,000 probably going to be closer to 60% or 70% because they have 446 00:21:40,000 --> 00:21:42,800 that nice operating leverage. So I think the earnings growth 447 00:21:42,800 --> 00:21:45,800 is going to be well in excess of 50% over the next couple of 448 00:21:45,800 --> 00:21:47,600 years. That'll make the high PE ratio 449 00:21:47,600 --> 00:21:49,240 today look very cheap in the future. 450 00:21:49,360 --> 00:21:51,120 Finally, the last thing that I'll highlight is a lot of 451 00:21:51,120 --> 00:21:52,520 people had a very similar thought. 452 00:21:52,520 --> 00:21:54,200 And I think it's one of the first things you think about the 453 00:21:54,200 --> 00:21:58,440 company is that AI translation tools like a Zoom translating 454 00:21:58,440 --> 00:22:00,760 you or having your phone translate to you into different 455 00:22:00,760 --> 00:22:03,280 languages is going to kill Duolingo. 456 00:22:03,280 --> 00:22:05,680 We have different people saying the future will have people 457 00:22:05,680 --> 00:22:09,000 speaking whatever language they want and having AI translated 458 00:22:09,400 --> 00:22:13,200 for them in real time. And it's already happening now. 459 00:22:13,400 --> 00:22:15,880 I think right there in this first sentence, you highlighted 460 00:22:15,880 --> 00:22:20,200 a problem with this thesis. This is already happening and 461 00:22:20,200 --> 00:22:22,920 Duolingo's still growing. Right now we have more AI 462 00:22:22,920 --> 00:22:25,640 translation tools, more language translation tools. 463 00:22:25,840 --> 00:22:28,240 We have it on our phone. We've had it for a long time. 464 00:22:28,440 --> 00:22:30,280 There's things that will immediately translate you into a 465 00:22:30,280 --> 00:22:33,000 different language. Yet Duolingo's still growing in 466 00:22:33,000 --> 00:22:36,640 number of users, daily active users and revenue growth by 40%. 467 00:22:37,040 --> 00:22:40,040 And they have for years. AI has been around for years and 468 00:22:40,040 --> 00:22:42,960 it continues to grow. And I believe the reason why is 469 00:22:42,960 --> 00:22:46,600 because if you asked most people why they're using Duolingo, why 470 00:22:46,600 --> 00:22:50,040 they're learning a new language, it's not because of a lack of AI 471 00:22:50,040 --> 00:22:52,760 translation tools. That's not why they're using it. 472 00:22:53,240 --> 00:22:55,560 People want to learn new languages, to exercise their 473 00:22:55,560 --> 00:22:58,520 brain, to expand their knowledge, to be able to live in 474 00:22:58,520 --> 00:23:01,200 a different culture, to be able to communicate themselves 475 00:23:01,440 --> 00:23:04,560 directly to people without a piece of technology or phone in 476 00:23:04,560 --> 00:23:06,920 between their face. So even though AI translation 477 00:23:06,920 --> 00:23:09,160 tools may have some effect on the margin, I don't see them 478 00:23:09,160 --> 00:23:11,800 having a meaningful impact on the company long term. 479 00:23:11,800 --> 00:23:14,360 They do not address the core reason the majority of people 480 00:23:14,520 --> 00:23:16,840 learn new languages. Now moving on, we get to a 481 00:23:16,840 --> 00:23:19,240 different subject here, which is Texas Roadhouse reporting 482 00:23:19,240 --> 00:23:20,760 earnings. Aftermarket closed today. 483 00:23:20,960 --> 00:23:23,080 The stock price is currently at 184. 484 00:23:23,480 --> 00:23:26,800 It's floated around just under $200 for quite some time now for 485 00:23:26,800 --> 00:23:29,240 about the past year. But overall, the performance of 486 00:23:29,240 --> 00:23:32,040 this one has been really good. We zoom out five years and you 487 00:23:32,040 --> 00:23:34,800 can see the full picture here. It's actually performed as well 488 00:23:34,800 --> 00:23:37,840 as FICO, in fact, beating FICO over the past five years now. 489 00:23:38,240 --> 00:23:42,520 So you have a restaurant company beating out FICO for five years. 490 00:23:42,920 --> 00:23:45,760 You also have a restaurant company beating out Google for 491 00:23:45,760 --> 00:23:48,360 the past five years. We look at Google's performance 492 00:23:48,360 --> 00:23:52,080 in five years, 163 versus 200% for Texas Roadhouse. 493 00:23:52,320 --> 00:23:53,720 That doesn't factor in dividends. 494 00:23:54,440 --> 00:23:57,440 We can go to Microsoft. Microsoft is another company. 495 00:23:57,560 --> 00:24:01,280 We zoom out five years, Texas Roadhouse has outperformed it. 496 00:24:01,880 --> 00:24:03,840 We go to let's take a look at Meta. 497 00:24:03,840 --> 00:24:05,840 Meta is a great company, great compounder. 498 00:24:06,120 --> 00:24:10,120 Let's take a look at this one. Past five years, 191, not quite 499 00:24:10,120 --> 00:24:12,640 as good as Texas Roadhouse, and again, not factoring in 500 00:24:12,640 --> 00:24:15,440 dividends, which Texas Roadhouse pays hefty dividends? 501 00:24:15,840 --> 00:24:17,280 What other ones are we leaving out here? 502 00:24:17,280 --> 00:24:18,880 Amazon. It's not even close. 503 00:24:18,880 --> 00:24:22,120 Amazon has been a laggard over the past five years, only going 504 00:24:22,120 --> 00:24:24,680 up 41%. If you bought it during the dip, 505 00:24:24,760 --> 00:24:27,720 you got a better deal. But Amazon isn't close to Texas 506 00:24:27,720 --> 00:24:31,080 Roadhouse. If we look at Netflix, did 507 00:24:31,080 --> 00:24:32,840 Netflix do well over the past five years? 508 00:24:33,160 --> 00:24:35,520 Again, this is one that if you bought it in the dip, it's done 509 00:24:35,520 --> 00:24:39,840 incredibly well, but buying it five years ago, it's up 140%. 510 00:24:40,400 --> 00:24:42,480 All these companies beat out the S&P 500. 511 00:24:42,720 --> 00:24:44,880 None of them beat out Texas Roadhouse. 512 00:24:44,960 --> 00:24:46,960 So when people look at this, they see it as highly 513 00:24:46,960 --> 00:24:50,160 competitive and they see it as having poor cost structure and 514 00:24:50,160 --> 00:24:52,240 low margins. But one of the things that they 515 00:24:52,240 --> 00:24:55,160 don't outline with this type of company is it's also highly 516 00:24:55,160 --> 00:24:57,040 insulated. For example, if you invest in 517 00:24:57,040 --> 00:24:59,840 Google, you're competing with disruptive risks like Chachi, 518 00:24:59,840 --> 00:25:02,960 BT, huge dynamic changes in technology. 519 00:25:03,240 --> 00:25:06,720 You have huge changes in servers and cloud hosting and security 520 00:25:06,720 --> 00:25:09,960 and all this stuff at Texas Roadhouse, you really have no 521 00:25:10,120 --> 00:25:12,880 technological disruption risk. It doesn't matter what 522 00:25:12,880 --> 00:25:15,880 technology, what AI, what model's going to get invented in 523 00:25:15,880 --> 00:25:18,600 the future. As long as people like tasty 524 00:25:18,600 --> 00:25:21,560 food and great service and a nice environment, this company 525 00:25:21,560 --> 00:25:24,520 will continue to thrive. And they do so continually by 526 00:25:24,520 --> 00:25:28,280 focusing on those basics. They call it legendary service 527 00:25:28,280 --> 00:25:30,760 and legendary food. They give you great service and 528 00:25:30,760 --> 00:25:32,520 great food. They have a great environment. 529 00:25:32,760 --> 00:25:34,400 They treat their staff really well. 530 00:25:34,640 --> 00:25:37,040 They have a great incentive structure for their staff and 531 00:25:37,040 --> 00:25:39,280 for their management. When I look at Texas Roadhouse, 532 00:25:39,280 --> 00:25:41,920 in the history of investing in this business, I bought around 533 00:25:41,920 --> 00:25:46,000 $35,000 into the position. Now it's an $80,000 position, 534 00:25:46,280 --> 00:25:49,280 $46,000 of it being gains. And it's paid a lot of dividends 535 00:25:49,280 --> 00:25:52,000 along the way as well. I don't expect explosive growth 536 00:25:52,000 --> 00:25:53,680 at this point, but I think they're going to continue 537 00:25:53,680 --> 00:25:55,800 expanding overtime. Now finally, we get to Uber, 538 00:25:55,800 --> 00:25:57,360 which also just reported earnings. 539 00:25:57,360 --> 00:26:00,960 The stock is flattish after earnings, but they're up 40% 540 00:26:00,960 --> 00:26:03,160 year to date. So still great performance from 541 00:26:03,160 --> 00:26:05,520 this company, and it's growing really quickly. 542 00:26:05,760 --> 00:26:09,400 We have the CEO of the company also going on the CNBC to give a 543 00:26:09,400 --> 00:26:11,760 comment specifically on autonomous vehicles. 544 00:26:12,200 --> 00:26:15,160 And I think this part's really applicable to not only the Uber 545 00:26:15,160 --> 00:26:17,640 investor, but also the Google investor with Waymo. 546 00:26:17,880 --> 00:26:21,920 We're working with Waymo in Austin where we expanded our 547 00:26:21,920 --> 00:26:25,800 operational domain. We launched in Atlanta and it's 548 00:26:25,800 --> 00:26:28,320 been a great launch. The average way MO in Atlanta is 549 00:26:28,320 --> 00:26:32,040 busier than 99% of drivers in Atlanta as well. 550 00:26:32,640 --> 00:26:38,000 And we're working with players like We Ride in Abu Dhabi, Wave 551 00:26:38,000 --> 00:26:43,320 in the UK, Baidu outside the US and Neuro and Lucid here in the 552 00:26:43,560 --> 00:26:45,640 US. So we're very excited about the 553 00:26:45,640 --> 00:26:48,160 autonomous trends. I think before I was on, we were 554 00:26:48,160 --> 00:26:52,240 talking about AI. This is physical world AI and we 555 00:26:52,240 --> 00:26:54,080 think it's going to be a huge trend going forward. 556 00:26:54,400 --> 00:26:56,520 Did you catch it? The statistic he gave out, We 557 00:26:56,520 --> 00:26:59,000 have Waymo's in the exact same area as Uber drivers. 558 00:26:59,080 --> 00:27:02,440 Waymo is outperforming 99% of Uber drivers. 559 00:27:03,040 --> 00:27:05,960 Now I'd like to know the 1% that's outperforming the Waymo. 560 00:27:05,960 --> 00:27:10,080 Like who is, who is that guy out there Ubering literally all day, 561 00:27:10,080 --> 00:27:12,560 morning and night, never taking a break, never eating. 562 00:27:12,960 --> 00:27:15,320 I, I want to know who that is because that's incredible. 563 00:27:15,680 --> 00:27:17,680 But it shows the effectiveness of Waymo. 564 00:27:18,040 --> 00:27:21,480 You have one Waymo vehicle and they're outperforming 99% of 565 00:27:21,480 --> 00:27:24,240 people because they can work any time period. 566 00:27:24,600 --> 00:27:27,120 They're not taking breaks. All they have to do is recharge 567 00:27:27,120 --> 00:27:29,360 or refuel. And you can just send them and 568 00:27:29,360 --> 00:27:31,960 you can just send them immediately from one ride to the 569 00:27:31,960 --> 00:27:34,600 next to the next. And right now in the US, Google 570 00:27:34,600 --> 00:27:36,440 has the lead on this Waymo has the lead. 571 00:27:36,440 --> 00:27:39,200 They're expanding the fastest both with and without Uber. 572 00:27:39,240 --> 00:27:42,440 Now, the CEO here, Dars, asked about Tesla and their efforts in 573 00:27:42,440 --> 00:27:45,120 the robo taxi. Here's his comments on Here's 574 00:27:45,120 --> 00:27:47,840 his comments on Tesla. Oh, I think it could be a 575 00:27:47,840 --> 00:27:50,760 competitor, could be a partner and and you know, when you're 576 00:27:50,760 --> 00:27:53,960 talking about trillion dollar tams, there will be no winner 577 00:27:53,960 --> 00:27:57,600 take all in this marketplace. It's great to see Tesla in the 578 00:27:57,600 --> 00:28:01,320 market. They're taking their time and 579 00:28:01,320 --> 00:28:04,240 they are making sure that they're expanding in a Safeway. 580 00:28:04,640 --> 00:28:07,280 So he says that we could be a competitor or we could be a 581 00:28:07,280 --> 00:28:09,400 partner. He's still open to partnering 582 00:28:09,400 --> 00:28:11,880 with Tesla. When you partner with Uber, 583 00:28:11,880 --> 00:28:15,360 you're handing over the direct control of the relationship of 584 00:28:15,360 --> 00:28:19,080 the customer to Uber, no longer to your technology, you're 585 00:28:19,080 --> 00:28:22,600 handing it over to Uber. And that way it pits you against 586 00:28:22,600 --> 00:28:24,880 Uber to some degree, even if you're a partner with them. 587 00:28:25,240 --> 00:28:29,120 For example, if Tesla partnered with Uber across the board and 588 00:28:29,120 --> 00:28:32,240 Uber found a better partner that could build vehicles cheaper or 589 00:28:32,240 --> 00:28:35,600 offered a better mix of how much revenue they share, then they 590 00:28:35,600 --> 00:28:37,200 could switch over to that supplier. 591 00:28:37,280 --> 00:28:40,160 By handing over that direct relationship with the customer, 592 00:28:40,440 --> 00:28:43,920 it makes the autonomous vehicle maker and designer, the Tesla 593 00:28:43,920 --> 00:28:46,840 and the Waymo, become more of a commodity that can easily be 594 00:28:46,840 --> 00:28:50,800 swapped out while Uber maintains the key relationship and they're 595 00:28:50,800 --> 00:28:53,480 the aggregator. The aggregator is the position 596 00:28:53,480 --> 00:28:55,960 you want to be in the position of having the direct 597 00:28:56,200 --> 00:28:59,040 relationship with the customer. And I believe over time, with 598 00:28:59,040 --> 00:29:02,680 Waymo trying out both ways of partnering with Uber and doing 599 00:29:02,680 --> 00:29:05,760 it alone, they may gravitate to also just running things 600 00:29:05,760 --> 00:29:09,000 themselves if they can, if they have the distribution, if they 601 00:29:09,000 --> 00:29:11,520 can make it work, that's in the end the more profitable route. 602 00:29:11,520 --> 00:29:14,200 So we'll see how this continues to work out for Uber as they try 603 00:29:14,200 --> 00:29:17,440 to aggregate everyone into their platform, while these technology 604 00:29:17,440 --> 00:29:20,000 companies are a little bit more reluctant to do so. 605 00:29:20,080 --> 00:29:21,360 That's going to be it for this episode. 606 00:29:21,480 --> 00:29:22,240 See you in the next one.