1 00:00:00,040 --> 00:00:04,160 If you've invested well in 2024, your portfolio has done well. 2 00:00:04,440 --> 00:00:07,160 In fact, a lot of our portfolios have done well. 3 00:00:07,160 --> 00:00:09,280 So it's great to know that the market's going up. 4 00:00:09,560 --> 00:00:12,360 Many of us are reaching all new highs with our portfolio and 5 00:00:12,360 --> 00:00:14,480 investing. This is what investing's all 6 00:00:14,480 --> 00:00:16,079 about. It's about the bull markets, the 7 00:00:16,079 --> 00:00:18,840 times where stocks go up, where we make money, where we make 8 00:00:18,840 --> 00:00:22,120 progress. But over this market over the 9 00:00:22,120 --> 00:00:25,240 past 12 months, there have been some companies that have done a 10 00:00:25,240 --> 00:00:28,440 bit better than the rest. There's some that have done 11 00:00:28,440 --> 00:00:30,600 exceptionally well. And today we're going to be 12 00:00:30,600 --> 00:00:33,960 looking at five of them, five of the best performing stocks in 13 00:00:33,960 --> 00:00:37,240 2024. And what made these stocks go so 14 00:00:37,240 --> 00:00:41,360 nuts, what made these stocks just explode in 2024? 15 00:00:41,360 --> 00:00:43,600 And we're going to be going over all five of these stocks that 16 00:00:43,600 --> 00:00:45,280 have gone up hundreds of percentages. 17 00:00:45,600 --> 00:00:47,680 Now, we also have a bunch of other news to get to. 18 00:00:47,680 --> 00:00:50,680 It's been a very busy week. Spotify reported their earnings. 19 00:00:50,680 --> 00:00:52,760 They blew away their expectations. 20 00:00:52,760 --> 00:00:55,200 The stock is up huge this year. We're going to be looking at 21 00:00:55,200 --> 00:00:58,600 this one and why I still think that Spotify is a decent bet. 22 00:00:58,640 --> 00:01:01,400 Apple's next big device, an AI wall tablet. 23 00:01:01,480 --> 00:01:03,720 Will this be successful? We'll be discussing. 24 00:01:03,800 --> 00:01:07,040 Amazon just debuted their new competitive storefront to TAMU 25 00:01:07,040 --> 00:01:09,320 and Sheen. It's called Amazon Hall. 26 00:01:09,320 --> 00:01:10,720 We'll be taking a look at it here. 27 00:01:10,720 --> 00:01:13,520 And tomorrow morning, we have Disney reporting earnings. 28 00:01:13,800 --> 00:01:15,920 I'll be going over my expectation of what I think will 29 00:01:15,920 --> 00:01:18,560 happen with their earnings. Now we start off with 30 00:01:18,560 --> 00:01:21,760 20/24/2024. So far has been an incredible 31 00:01:21,760 --> 00:01:24,240 year for the market. There's been opportunity, 32 00:01:24,360 --> 00:01:26,240 opportunity to make a lot of money. 33 00:01:26,520 --> 00:01:29,040 If you're not making money in this market, you're doing 34 00:01:29,040 --> 00:01:32,080 something wrong. It's not the market's fault. 35 00:01:32,080 --> 00:01:35,000 It's not other investors fault. You're doing something wrong if 36 00:01:35,000 --> 00:01:38,040 you're not making a lot of money because there has been ample 37 00:01:38,040 --> 00:01:41,080 opportunity. The major indices are up mid 20 38 00:01:41,080 --> 00:01:43,520 percentages. That's good in and of itself, 39 00:01:43,520 --> 00:01:45,960 but there's been many even better opportunities with 40 00:01:45,960 --> 00:01:48,000 individual companies. Now. 41 00:01:48,000 --> 00:01:50,800 I've had a great year between both of my portfolios. 42 00:01:51,120 --> 00:01:54,200 I have a list of companies I consider big winners this year. 43 00:01:54,240 --> 00:01:57,200 Holding on to Texas Roadhouse all year long has been a great 44 00:01:57,200 --> 00:01:59,680 decision. It's up around 67%. 45 00:02:00,240 --> 00:02:03,040 Buying more into Netflix at the start of the year has been one 46 00:02:03,040 --> 00:02:06,560 of the better decisions I made. That one's up close to 80% this 47 00:02:06,560 --> 00:02:09,039 year. Buying into Booking Holdings has 48 00:02:09,039 --> 00:02:11,840 also worked out really well. It's surging to all time highs. 49 00:02:12,160 --> 00:02:15,440 Even Salesforce is now surging to all time highs. 50 00:02:15,440 --> 00:02:17,920 So I have a list of companies that I've made big concentrated 51 00:02:17,920 --> 00:02:20,520 bets into and I'm proud of the way that they've turned out. 52 00:02:20,520 --> 00:02:23,680 They've performed really well so far, but they're not the very 53 00:02:23,680 --> 00:02:26,320 best performing in the market and that's rarely the case. 54 00:02:26,560 --> 00:02:29,320 As an individual stock picker, you can't expect to pick the 55 00:02:29,360 --> 00:02:32,280 best stocks in the market every single year. 56 00:02:32,280 --> 00:02:34,720 That's just a bit unrealistic. But the stocks that we're going 57 00:02:34,720 --> 00:02:38,360 to highlight here are five of the best performing stocks in 58 00:02:38,360 --> 00:02:40,800 the entire world. The first one we're going to go 59 00:02:40,800 --> 00:02:44,520 into is CAVA. This is one that has been a 60 00:02:44,560 --> 00:02:48,400 shockingly good performer. Now this is in my wheelhouse. 61 00:02:48,440 --> 00:02:50,360 I cover quick service restaurants. 62 00:02:50,600 --> 00:02:52,720 I invest in quick service restaurants. 63 00:02:53,000 --> 00:02:55,440 I made a bunch of money investing in Chipotle for a 64 00:02:55,440 --> 00:02:58,520 relatively short amount of time. Kava's one that I always looked 65 00:02:58,520 --> 00:03:02,360 at when I was covering Chipotle. It was a company that I saw as a 66 00:03:02,360 --> 00:03:05,680 smaller competitor. But Kava lacks scale. 67 00:03:05,720 --> 00:03:07,400 It's not a highly scaled company. 68 00:03:07,680 --> 00:03:10,440 It's a little bit more of a newer company, but they are 69 00:03:10,440 --> 00:03:13,760 rapidly expanding now. The share price here has 70 00:03:13,760 --> 00:03:21,080 increased by 295% year to date. In 2024, it's gone up nearly 71 00:03:21,080 --> 00:03:24,320 300%. What is CAVA doing? 72 00:03:24,360 --> 00:03:27,400 What is going on here? The CEO of CAVA was asked about 73 00:03:27,400 --> 00:03:29,520 the surging stock price. What do they think of it? 74 00:03:29,520 --> 00:03:31,720 They're watching the stock go up 300%. 75 00:03:31,960 --> 00:03:34,360 What is his thoughts? We tell the team stocks are 76 00:03:34,360 --> 00:03:35,720 going to go up and down every day. 77 00:03:35,760 --> 00:03:38,520 And the the night before the IPO actually said to the team, look, 78 00:03:38,760 --> 00:03:41,120 this is not the destination. It's the next chapter in our 79 00:03:41,120 --> 00:03:43,000 journey. And if we keep our heads down, 80 00:03:43,000 --> 00:03:45,080 focus on our mission to bring heart health and humanity to 81 00:03:45,080 --> 00:03:48,480 food, that over time that stock price will go up and it will 82 00:03:48,480 --> 00:03:50,760 take care of itself. That's a very mature answer. 83 00:03:50,760 --> 00:03:53,040 Don't focus too much on the stock price, focus on the 84 00:03:53,120 --> 00:03:56,080 business and the fundamentals. But secretly he has to be very 85 00:03:56,080 --> 00:04:00,080 happy that the stock is up 300%. That's something to celebrate. 86 00:04:00,080 --> 00:04:02,320 Now, for those of you that may not be aware, Cava is a 87 00:04:02,320 --> 00:04:04,760 Mediterranean food company. They sell the Mediterranean 88 00:04:04,760 --> 00:04:07,880 bowls, so they're like another healthy bowl company. 89 00:04:08,080 --> 00:04:11,400 There's a number of them, and there's questions as to why Cava 90 00:04:11,400 --> 00:04:14,760 demands such a high valuation. The company's currently at an 91 00:04:14,800 --> 00:04:19,240 $18.4 billion valuation, and they're only doing revenues of 92 00:04:19,240 --> 00:04:24,040 around 900 million. So the price to sales is 20 for 93 00:04:24,040 --> 00:04:27,080 COPPA, a price to sales of 20. If we look at this compared to 94 00:04:27,080 --> 00:04:29,680 Chipotle, which is not cheap, Chipotle's not cheap. 95 00:04:29,680 --> 00:04:31,800 I sold the company because it was too expensive. 96 00:04:32,120 --> 00:04:36,320 The price to sales for Chipotle is 7.5 S Consider the fact that 97 00:04:36,320 --> 00:04:39,480 I sold Chipotle believing that it's more on the expensive side 98 00:04:39,480 --> 00:04:41,920 of things and it's trading at a price to sales. 99 00:04:41,920 --> 00:04:46,400 That's 1/3 of COPPA. Cava's not just expensive, it's 100 00:04:46,400 --> 00:04:49,720 extraordinarily expensive when you consider almost any piece of 101 00:04:49,720 --> 00:04:52,440 data. It's expensive on a store basis. 102 00:04:52,880 --> 00:04:56,920 A normal Chipotle store on average is around $12 million. 103 00:04:57,200 --> 00:05:00,600 Cava's are now being valued at around 30 plus $1,000,000. 104 00:05:00,600 --> 00:05:04,600 To justify a 30 + 1,000,000 dollar valuation per each cava 105 00:05:04,600 --> 00:05:08,800 location requires a lot of forward growth assumptions, and 106 00:05:08,800 --> 00:05:11,080 the CEO talks about his growth assumptions here. 107 00:05:11,520 --> 00:05:15,320 Our goal is 1000 restaurants by 2032, which basically implies a 108 00:05:15,320 --> 00:05:18,000 15% plus compound annual unit growth rate. 109 00:05:18,240 --> 00:05:20,160 This year we've been able to exceed that a little bit. 110 00:05:20,400 --> 00:05:24,240 We raised our guidance to 56 to 58 new restaurants, so closer to 111 00:05:24,240 --> 00:05:27,640 1718%. And we gave preliminary guidance 112 00:05:27,640 --> 00:05:31,120 for next year of at least 17% plus given the health and 113 00:05:31,120 --> 00:05:32,400 strength of our real estate pipeline. 114 00:05:32,600 --> 00:05:36,120 He said that his goal is 1000 restaurants, but when did he say 115 00:05:36,120 --> 00:05:38,000 that goal was for? Let me let me rewind there. 116 00:05:38,320 --> 00:05:44,280 By 2032 which basically. 2032 so Cavas ambitious growth goal is 117 00:05:44,280 --> 00:05:48,800 to have 1000 locations by 2032. If we look at Chipotle as just a 118 00:05:48,800 --> 00:05:51,600 reference here again because the companies are very similar with 119 00:05:51,600 --> 00:05:55,680 the products they sell, Chipotle has a total location count of 120 00:05:55,680 --> 00:05:58,920 3600. So by 2032, COV is projecting to 121 00:05:58,920 --> 00:06:02,400 have around 1/4 or a little bit more than 1/4 the locations of 122 00:06:02,400 --> 00:06:06,000 Chipotle, while it's around 1/4 the market cap. 123 00:06:06,320 --> 00:06:08,480 So what investors are doing here is pretty simple. 124 00:06:08,800 --> 00:06:11,760 They're just projecting out Chipotle like growth over the 125 00:06:11,760 --> 00:06:15,640 next six or seven years. Now this may work for COV 126 00:06:15,640 --> 00:06:18,000 investors. I can see the logic here. 127 00:06:18,160 --> 00:06:21,200 They're just projecting that it will have the same success as 128 00:06:21,200 --> 00:06:24,120 Chipotle. Now, keep in mind, Chipotle has 129 00:06:24,120 --> 00:06:28,040 had astronomically good success. So you're benchmarking Cava 130 00:06:28,040 --> 00:06:31,680 today, pricing in the success of a company that's had 131 00:06:31,680 --> 00:06:34,960 astronomically good success. Investors in Cava are convinced 132 00:06:34,960 --> 00:06:38,000 that this is the next Chipotle. Now, whether it turns out to be 133 00:06:38,000 --> 00:06:39,640 one or not, we'll have to wait and see. 134 00:06:39,640 --> 00:06:42,840 Now, moving on to the next one, we get to a stock that has had a 135 00:06:42,840 --> 00:06:45,760 rise that is truly striking. This is one of the most 136 00:06:46,040 --> 00:06:50,080 incredible performances of any stock of any year, and it's 137 00:06:50,080 --> 00:06:52,400 Carvana. Don't be fooled by it being down 138 00:06:52,400 --> 00:06:57,120 1% on the day. Carvana is up 400% year to date. 139 00:06:57,640 --> 00:07:02,600 That's correct, 400% flat. Now this is a stock that I have 140 00:07:02,600 --> 00:07:04,960 to rewind a little bit and give some perspective here. 141 00:07:05,320 --> 00:07:09,400 Carvana has done the EU turn. If we look over the past five 142 00:07:09,400 --> 00:07:11,800 years, you see they had an epic 2021 rise. 143 00:07:11,800 --> 00:07:14,480 It was in a bubble during that time period and then the stock 144 00:07:14,480 --> 00:07:18,040 came cratering down as they had really no cash flows. 145 00:07:18,280 --> 00:07:20,000 A lot of people thought they were going to go bankrupt. 146 00:07:20,280 --> 00:07:22,600 I was amongst one of them that thought that this is a business 147 00:07:22,600 --> 00:07:25,120 model that strikes me as one that very well could go 148 00:07:25,120 --> 00:07:26,520 bankrupt. Not one that I think is 149 00:07:26,520 --> 00:07:29,280 predictable at all, but Carvana pulled it off. 150 00:07:29,360 --> 00:07:32,240 Their team really turned this thing around, which is 151 00:07:32,240 --> 00:07:34,960 incredible to see. It's doing a bit of 1/2 pipe 152 00:07:34,960 --> 00:07:36,720 formation here. I don't know if that's really a 153 00:07:36,720 --> 00:07:39,160 thing. I'm not a technical analyst, but 154 00:07:39,160 --> 00:07:42,160 it's surging back up to the price it was in 2021. 155 00:07:42,160 --> 00:07:43,880 So I look at a company like Carvana. 156 00:07:43,960 --> 00:07:48,440 This is one that almost everyone just a couple years ago thought 157 00:07:48,440 --> 00:07:50,880 was going bankrupt. They thought it was a fake 158 00:07:50,880 --> 00:07:52,800 company. The thing that I saw highlighted 159 00:07:52,800 --> 00:07:56,520 time and time again were the vending machine for cars that 160 00:07:56,520 --> 00:07:58,880 Carvana built. These towers full of cars. 161 00:07:58,880 --> 00:08:00,760 This isn't just a concept. These are real. 162 00:08:00,960 --> 00:08:03,880 Carvana really built these. I have one in a neighboring 163 00:08:03,880 --> 00:08:06,920 city, and some of them, they have more stories than others. 164 00:08:06,920 --> 00:08:09,280 They're taller than others. They're actually kind of cool, 165 00:08:09,280 --> 00:08:11,760 but it looks like a vending machine for cars. 166 00:08:11,920 --> 00:08:14,040 The company was crashing in 2022. 167 00:08:14,320 --> 00:08:16,840 A lot of traders made bets against the company that were 168 00:08:16,840 --> 00:08:18,880 successful. And there's a lot of talk about 169 00:08:18,880 --> 00:08:20,760 Carvana. The company's not even real that 170 00:08:20,760 --> 00:08:23,800 it's a fraud, that it's made-up, that their profits aren't real, 171 00:08:24,360 --> 00:08:27,360 but they are audited. And the company so far seems 172 00:08:27,360 --> 00:08:30,240 like it's making real money. The revenue has halted its 173 00:08:30,240 --> 00:08:32,799 downward trend. It's now trending back upwards. 174 00:08:33,120 --> 00:08:36,640 The free cash flows also went from heavily in the red, losing 175 00:08:36,640 --> 00:08:40,120 billions of dollars per quarter, to now actually being positive 176 00:08:40,120 --> 00:08:43,240 on a free cash flow basis. They really turn this thing 177 00:08:43,240 --> 00:08:45,080 around. So how did Carvana pull this 178 00:08:45,080 --> 00:08:46,240 off? How did they go from being a 179 00:08:46,240 --> 00:08:49,120 company that lost money every single day, every month they're 180 00:08:49,120 --> 00:08:51,680 burning cash to now one that's profitable? 181 00:08:52,080 --> 00:08:55,040 And especially how did they get to a point where their margins 182 00:08:55,040 --> 00:08:58,720 per car sale around double the average car dealership? 183 00:08:58,720 --> 00:09:01,920 And the CEO of Carvana was asked this very question, how are they 184 00:09:01,920 --> 00:09:04,440 so profitable? And he answers it here. 185 00:09:04,440 --> 00:09:06,640 About execution, your profit per vehicle. 186 00:09:06,640 --> 00:09:10,400 Gross profit per vehicle is greater than $7400, well above 187 00:09:10,400 --> 00:09:14,720 what analysts were expecting. $7400.00 of gross profits per 188 00:09:14,720 --> 00:09:17,560 vehicle, the most a car dealership tries to make. 189 00:09:17,960 --> 00:09:22,240 It's like $2000 twenty $500.00. So Carvana is either doing 190 00:09:22,240 --> 00:09:25,320 something fraudulently or they figured something out. 191 00:09:25,400 --> 00:09:26,280 Sure. Well, I think you know, the 192 00:09:26,280 --> 00:09:28,360 fancy word we use for that is vertical integration. 193 00:09:28,360 --> 00:09:31,120 But I think you and most consumers go to a dealership and 194 00:09:31,120 --> 00:09:32,760 buy a car. You know, probably the car 195 00:09:32,760 --> 00:09:35,120 they're buying was was traded in at a different dealership. 196 00:09:35,120 --> 00:09:36,520 It was transported to an auction. 197 00:09:36,520 --> 00:09:37,560 There was an auction that made money. 198 00:09:37,560 --> 00:09:40,360 It was transported to a dealer. It sat there for a while. 199 00:09:40,360 --> 00:09:42,200 The dealer made money. It was financed with a third 200 00:09:42,200 --> 00:09:45,320 party finance company. There's maybe 10 to 30 different 201 00:09:45,400 --> 00:09:47,880 software providers that are making money in the transit 202 00:09:47,960 --> 00:09:50,120 transaction. So there's a lot of, you know, 203 00:09:50,120 --> 00:09:52,000 hands in the transaction. I think what we've built over 204 00:09:52,000 --> 00:09:53,800 the last 11 years, a totally new system. 205 00:09:54,320 --> 00:09:56,520 Generally we're buying cars directly from our customers. 206 00:09:56,520 --> 00:09:57,720 We're doing all the work ourselves. 207 00:09:57,720 --> 00:09:59,040 We're selling it to our customers. 208 00:09:59,040 --> 00:10:01,600 We're the finance company. It's all our own systems. 209 00:10:01,600 --> 00:10:03,760 And that means, you know, simpler experiences for our 210 00:10:03,760 --> 00:10:05,680 customers, It means a great deal for them and it means we have 211 00:10:05,680 --> 00:10:06,760 the opportunity to make more money. 212 00:10:06,760 --> 00:10:10,080 So it's a, it's a true win win. But it's it's been a lot of work 213 00:10:10,080 --> 00:10:12,040 to get to this spot and we're proud to see it showing up in 214 00:10:12,040 --> 00:10:14,160 the numbers. He doesn't duck this question, 215 00:10:14,200 --> 00:10:17,400 he just gave a very thorough answer as to why their margins 216 00:10:17,400 --> 00:10:19,640 are higher than the average car dealership. 217 00:10:19,640 --> 00:10:22,400 Now even with that answer, people are not so convinced. 218 00:10:22,400 --> 00:10:25,200 A lot of people still stating that it's a fraud in the YouTube 219 00:10:25,200 --> 00:10:27,760 comments. The only comments that exist are 220 00:10:27,760 --> 00:10:29,920 accusing Carvana of being a fraud. 221 00:10:29,960 --> 00:10:33,080 But when I listen to the CEO's answer, to me that passes the 222 00:10:33,080 --> 00:10:36,080 smell test, I don't sense anything fraudulent about his 223 00:10:36,080 --> 00:10:38,160 answer. And in fact, I think it's just 224 00:10:38,480 --> 00:10:41,520 the most sensible answer. He explains that normal car 225 00:10:41,520 --> 00:10:44,640 dealerships are completely ineffective. 226 00:10:44,840 --> 00:10:47,000 They're not efficient. There's lots of software, 227 00:10:47,000 --> 00:10:49,800 they're paying for different vendors, different lenders, all 228 00:10:49,800 --> 00:10:52,360 with different terms. The slowness of the entire 229 00:10:52,360 --> 00:10:55,880 process makes the whole ordeal more expensive, so car 230 00:10:55,880 --> 00:10:58,760 dealerships in the end aren't earning as much money as they 231 00:10:58,760 --> 00:11:01,240 could be otherwise. With Carvana, what they've done 232 00:11:01,240 --> 00:11:04,160 is they've basically removed a ton of middle men, making it so 233 00:11:04,160 --> 00:11:05,960 that they have more margins in the process. 234 00:11:06,440 --> 00:11:08,720 And this is the blueprint that many great companies follow. 235 00:11:08,960 --> 00:11:11,640 They don't reinvent the wheel, they just do something in a more 236 00:11:11,640 --> 00:11:14,520 efficient manner. O When I look at Carvana, I 237 00:11:14,520 --> 00:11:17,160 think a lot of people are complaining that they missed out 238 00:11:17,160 --> 00:11:20,120 on the gains or the complaining that their short thesis isn't 239 00:11:20,120 --> 00:11:23,520 working so they just reverted to calling the company fraudulent 240 00:11:23,720 --> 00:11:27,640 with no evidence to back it up. But so far, what I see is a 241 00:11:27,640 --> 00:11:30,800 great recovery from a company that's finally proving its 242 00:11:30,800 --> 00:11:33,080 business model. And as a result, they're now up 243 00:11:33,080 --> 00:11:36,640 400% year to date. An incredible thing to see. 244 00:11:36,720 --> 00:11:40,600 Now the next one is one that has gone up even more than Cava, 245 00:11:41,000 --> 00:11:45,360 even more than Carvana. Yes, more than 400% year to 246 00:11:45,360 --> 00:11:48,240 date. It's in fact gone up 600% year 247 00:11:48,240 --> 00:11:50,720 to date. It's called App Lovin. 248 00:11:50,880 --> 00:11:54,200 App Lovin is a company that I haven't heard too much about. 249 00:11:54,360 --> 00:11:57,160 I don't hear it discussed all that often, and I think part of 250 00:11:57,160 --> 00:11:59,640 the reason why is because the product they sell is rather 251 00:11:59,640 --> 00:12:02,120 vague. Basically what they do is they 252 00:12:02,120 --> 00:12:05,760 help developers, specifically mobile developers, connect to 253 00:12:05,760 --> 00:12:08,040 customers. They basically just help them 254 00:12:08,040 --> 00:12:11,480 find customers and advertise. Now this is a market that was 255 00:12:11,480 --> 00:12:15,280 clearly underserved because app 11 went into this category and 256 00:12:15,280 --> 00:12:19,280 they helped game developers and specifically gaming apps make a 257 00:12:19,280 --> 00:12:23,320 bunch more money by finding different customers through AI. 258 00:12:23,640 --> 00:12:29,160 Now again, this stock is up 642% year to date. 259 00:12:29,920 --> 00:12:32,520 Just just incredible. When we zoom out five years, 260 00:12:32,800 --> 00:12:35,640 this is also one that hasn't gone through a a big U-shaped 261 00:12:35,640 --> 00:12:37,520 recovery. It's had a little bit of one, 262 00:12:37,960 --> 00:12:39,720 but no, it's just up a lot this year. 263 00:12:39,720 --> 00:12:43,120 The company's simply growing and compounding almost in orders of 264 00:12:43,120 --> 00:12:44,920 magnitude. Now, when I was trying to search 265 00:12:44,920 --> 00:12:47,520 what App 11 actually does, I went to the website, I read 266 00:12:47,520 --> 00:12:50,120 about the products, and everything was described very 267 00:12:50,120 --> 00:12:52,320 vague and simple marketing terms. 268 00:12:52,480 --> 00:12:54,960 We help you connect the customers, but what does that 269 00:12:54,960 --> 00:12:56,920 actually mean? Where I found the actual best 270 00:12:56,920 --> 00:13:00,600 description of what this company does is from the CEO himself in 271 00:13:00,600 --> 00:13:02,960 the earnings transcript. This is on an earnings call. 272 00:13:03,200 --> 00:13:05,160 If you're not aware, on Qualtrim, we have all the 273 00:13:05,160 --> 00:13:06,520 earnings calls of different companies. 274 00:13:06,800 --> 00:13:08,480 You just type in the ticker symbol, it brings up the 275 00:13:08,480 --> 00:13:11,840 quarters, and then you have the text format of what happened 276 00:13:11,840 --> 00:13:14,760 here. When I read through the CEO here 277 00:13:15,040 --> 00:13:18,480 responding to a question, the question was basically, how are 278 00:13:18,480 --> 00:13:21,000 you guys different than The Trade Desk? 279 00:13:21,320 --> 00:13:24,280 The Trade Desk is a company that helps you sell advertisements, 280 00:13:24,280 --> 00:13:27,120 helps you set up advertisements and optimize them. 281 00:13:27,720 --> 00:13:31,040 App 11 seems like it does the same thing, but the CEO here 282 00:13:31,040 --> 00:13:34,040 outlines that they really don't, they're not doing the same thing 283 00:13:34,200 --> 00:13:36,800 because of key differences in their strategy, he says. 284 00:13:36,800 --> 00:13:38,520 Yeah. I guess more specifically you're 285 00:13:38,520 --> 00:13:41,120 referencing Trade Desk versus our business models. 286 00:13:41,600 --> 00:13:43,720 Like it's just two different approaches to the market. 287 00:13:43,960 --> 00:13:47,240 They've targeted big agencies and taken a very smart software 288 00:13:47,240 --> 00:13:50,160 as a service type of approach and we've targeted brands and 289 00:13:50,160 --> 00:13:53,120 direct to consumer and e-commerce gaming game 290 00:13:53,120 --> 00:13:55,280 developers. And what these companies care 291 00:13:55,280 --> 00:13:58,080 about is not media dollars or percentage markups. 292 00:13:58,200 --> 00:14:01,200 They care about optimization and automated advertising to a 293 00:14:01,200 --> 00:14:03,240 revenue goal. And that's really like what our 294 00:14:03,240 --> 00:14:06,720 systems predicated on is that we take all the risk on the media 295 00:14:06,720 --> 00:14:08,920 side. We have to deliver really 296 00:14:08,920 --> 00:14:11,240 compelling performance on the technology side. 297 00:14:11,600 --> 00:14:14,280 I guess like what's most exciting for me on what we've 298 00:14:14,280 --> 00:14:18,400 built and where we are in terms of, like you said, market cap on 299 00:14:18,400 --> 00:14:22,360 the scale of the Business Today is we're on top of 1.4 billion 300 00:14:22,360 --> 00:14:24,760 daily actives. We've got the largest mediation 301 00:14:24,760 --> 00:14:27,320 solution in the sector and our teams have built maybe the most 302 00:14:27,320 --> 00:14:30,520 innovative advertising technology that the world's yet 303 00:14:30,520 --> 00:14:32,680 seen. And we're now scaling it out. 304 00:14:33,040 --> 00:14:35,960 And so if you're sort of just fast forwarding over the 305 00:14:35,960 --> 00:14:39,040 quarters and years from here, we're going to be able to offer 306 00:14:39,040 --> 00:14:42,240 services to 10s of thousands to hundreds of thousands to 307 00:14:42,240 --> 00:14:46,120 millions of advertisers on our platform to access this audience 308 00:14:46,120 --> 00:14:47,840 that they've never accessed before. 309 00:14:48,160 --> 00:14:51,480 And now mobile devices, you think about four hours to five 310 00:14:51,480 --> 00:14:55,720 hours a day of time spent. This is a 45 minute component of 311 00:14:55,720 --> 00:14:58,560 that, four hours that is untapped for most of these 312 00:14:58,560 --> 00:15:01,200 advertisers. Our technology can now unlock it 313 00:15:01,200 --> 00:15:03,040 for them. There's the sales pitch for App 314 00:15:03,040 --> 00:15:04,440 Lovin. That's the reason that these 315 00:15:04,440 --> 00:15:06,760 companies are using them. If you spent a bunch of time 316 00:15:06,760 --> 00:15:09,560 developing a game and you want to get exposure to it, you want 317 00:15:09,560 --> 00:15:12,040 to get people signed up to it and connect to customers, 318 00:15:12,520 --> 00:15:15,440 they're using artificial intelligence and using models 319 00:15:15,440 --> 00:15:18,520 that nobody else has access to, and they claim that their models 320 00:15:18,520 --> 00:15:20,280 are way more advanced than other companies. 321 00:15:20,280 --> 00:15:22,680 Other companies aren't even close, and that's the reason 322 00:15:22,680 --> 00:15:24,840 that they can offer these different type of payment plans 323 00:15:24,840 --> 00:15:26,720 that are based purely on performance. 324 00:15:27,240 --> 00:15:31,120 So App Lovin has quickly raced up to a $100 billion company, 325 00:15:31,280 --> 00:15:34,640 now up 642% on the year. So I think this is one that 326 00:15:34,640 --> 00:15:36,480 deserves a bit more attention. Now. 327 00:15:36,480 --> 00:15:39,080 Next up, we have a stock that hasn't had quite the year that 328 00:15:39,080 --> 00:15:41,760 App Lovin has, but it's been a great year for Reddit. 329 00:15:42,160 --> 00:15:45,040 Reddit's a company that's rather new to the market and they're 330 00:15:45,040 --> 00:15:48,080 already up 160%. So Reddit investors are doing 331 00:15:48,080 --> 00:15:50,280 great this year. When I look at Reddit overall, 332 00:15:50,280 --> 00:15:52,400 it feels like one of these companies that's been around 333 00:15:52,400 --> 00:15:54,920 forever but somehow is still not mature. 334 00:15:55,200 --> 00:15:57,680 For example, Reddit has been around for for at least a 335 00:15:57,680 --> 00:16:02,400 decade, maybe 1520 years, and it has a $23 billion market cap, 336 00:16:02,720 --> 00:16:05,120 making you believe that it's probably a mature company, 337 00:16:05,320 --> 00:16:07,280 probably generating steady cash flows. 338 00:16:07,680 --> 00:16:11,560 That's not really the case. the PE ratio is 224 because they 339 00:16:11,560 --> 00:16:13,240 don't generate really any earnings. 340 00:16:13,640 --> 00:16:16,600 The free cash flow yield is negative because of course, 341 00:16:16,600 --> 00:16:18,600 they're, they're losing cash flow over the trailing 12 342 00:16:18,600 --> 00:16:20,640 months. Now if we look at this, the cash 343 00:16:20,640 --> 00:16:22,840 flows are starting to head back up in the positive. 344 00:16:23,440 --> 00:16:26,360 It is $104 million. When we look at the free cash 345 00:16:26,360 --> 00:16:28,480 flow compared against the stock based comp. 346 00:16:28,840 --> 00:16:31,880 To generate this free cash flow, they have to dilute the 347 00:16:31,880 --> 00:16:34,440 investors like crazy. And this is something a lot of 348 00:16:34,440 --> 00:16:36,440 these companies try to pretend they're not doing. 349 00:16:36,680 --> 00:16:39,320 They try to say that free cash flow isn't really cash. 350 00:16:39,320 --> 00:16:41,000 So you don't have to worry about that. 351 00:16:41,120 --> 00:16:43,080 Just put it out of your mind, don't worry about it. 352 00:16:43,400 --> 00:16:46,080 But that stock based compensation is a real expense 353 00:16:46,080 --> 00:16:49,320 to the shareholder. So the company is headed in a 354 00:16:49,320 --> 00:16:52,400 right direction, but it still feels like it has a long ways to 355 00:16:52,400 --> 00:16:55,440 go before it gets to that mature cash flow position. 356 00:16:55,920 --> 00:16:59,480 Now in terms of Reddit, qualitatively, I can see why The 357 00:16:59,480 --> 00:17:03,360 company's valued at $20 billion. It is a staple of the Internet. 358 00:17:03,360 --> 00:17:05,880 It's always there in the Google search results. 359 00:17:06,119 --> 00:17:09,560 People look at Reddit as an authentic place to go amidst a 360 00:17:09,560 --> 00:17:13,280 bunch of AI results, so I can see it being leveraged and 361 00:17:13,280 --> 00:17:16,200 monetized over time. It doesn't sound crazy to me 362 00:17:16,200 --> 00:17:19,640 that investors are paying mid $20 billion for this stock. 363 00:17:19,960 --> 00:17:22,280 Maybe they'll be wrong, but if Reddit doesn't figure out how to 364 00:17:22,280 --> 00:17:24,760 make a lot of money, that's on Reddit's management. 365 00:17:24,800 --> 00:17:27,200 Now finally we get to a stock that has rocketed up this year, 366 00:17:27,200 --> 00:17:29,040 especially with the news of a Trump victory. 367 00:17:29,040 --> 00:17:32,680 This one's really taken off in line with the price of Bitcoin. 368 00:17:32,880 --> 00:17:36,080 But even more, we have micro strategy. 369 00:17:36,400 --> 00:17:39,520 Michael Saylor pulled it off. He has pulled it off. 370 00:17:39,520 --> 00:17:44,200 He's really done it. Microstrategy's up 423% year to 371 00:17:44,200 --> 00:17:45,800 date. This company doesn't really make 372 00:17:45,800 --> 00:17:47,920 any revenue. I mean, it makes $100 million, 373 00:17:47,920 --> 00:17:49,800 but that's been flat for years and years. 374 00:17:50,120 --> 00:17:52,720 It's not being valued off of the revenue it makes or the cash 375 00:17:52,720 --> 00:17:55,440 flows it makes. This is being valued off of 376 00:17:55,440 --> 00:17:58,960 their ownership of crypto. Basically, all that Michael 377 00:17:58,960 --> 00:18:03,200 Saylor has done is strategically taken out debt to leverage up on 378 00:18:03,200 --> 00:18:06,400 Bitcoin, and Bitcoin is the only thing that he buys. 379 00:18:06,880 --> 00:18:09,560 So whether or not he makes a fortune or whether or not he 380 00:18:09,560 --> 00:18:12,280 loses a fortune is simply based off the price of Bitcoin. 381 00:18:12,280 --> 00:18:15,000 Now I was warned about this. Michael Saylor did give us a 382 00:18:15,000 --> 00:18:17,320 heads up after all. Here is a video of him 383 00:18:17,320 --> 00:18:19,800 explaining that this is going to happen which. 384 00:18:19,800 --> 00:18:22,280 One's the best crypto asset. Well, Bitcoin's the best crypto 385 00:18:22,280 --> 00:18:23,920 asset. OK, What's the second best? 386 00:18:24,240 --> 00:18:27,440 There is no second best. There's no second best crypto 387 00:18:27,440 --> 00:18:29,000 asset. There's a crypto asset. 388 00:18:29,000 --> 00:18:30,840 It's called Bitcoin, right? Right. 389 00:18:30,840 --> 00:18:32,240 There's no second best. OK. 390 00:18:33,240 --> 00:18:36,000 But take all your money, buy Bitcoin, then take all your 391 00:18:36,000 --> 00:18:38,960 time, figure out how to borrow more money to buy more Bitcoin. 392 00:18:38,960 --> 00:18:41,440 Then take all your time and figure out what you can sell to 393 00:18:41,440 --> 00:18:44,360 buy Bitcoin. And if you absolutely love the 394 00:18:44,360 --> 00:18:47,680 thing that you're that you don't want to sell it, go mortgage 395 00:18:47,680 --> 00:18:49,720 your house and buy Bitcoin with it. 396 00:18:49,720 --> 00:18:52,000 And if you've got a business that you love because your 397 00:18:52,000 --> 00:18:54,920 family works for the business that's in your family for 37 398 00:18:54,920 --> 00:18:59,320 years, and you can't bear to sell it, mortgage it, finance 399 00:18:59,320 --> 00:19:03,560 it, and convert the proceeds into the hardest money on earth, 400 00:19:03,560 --> 00:19:06,440 which is Bitcoin. That was his advice years ago 401 00:19:06,480 --> 00:19:07,960 and I don't know why I didn't listen to him. 402 00:19:07,960 --> 00:19:10,640 Seems like a very trustworthy, not crazy person. 403 00:19:11,280 --> 00:19:13,600 But either way, he did warn us ahead of time. 404 00:19:13,640 --> 00:19:17,200 If you followed his advice to just sell everything, everything 405 00:19:17,200 --> 00:19:19,520 that's important to you, just sell it and buy Bitcoin like a 406 00:19:19,520 --> 00:19:23,040 year ago, you'd probably have a lot more money than you do right 407 00:19:23,040 --> 00:19:24,640 now with your investing strategy. 408 00:19:25,000 --> 00:19:27,840 So just think about that. If you just only bought Bitcoin, 409 00:19:28,080 --> 00:19:30,120 you'd be doing better. Every time I look at this 410 00:19:30,120 --> 00:19:33,960 company with MicroStrategy and Bitcoin, I'm happy it's doing 411 00:19:33,960 --> 00:19:35,920 well. I have nothing against Bitcoin, 412 00:19:36,480 --> 00:19:39,160 but I still feel better about buying productive assets. 413 00:19:39,160 --> 00:19:42,280 I don't like the asset that I hold, the value being determined 414 00:19:42,280 --> 00:19:44,720 by other people's ability to pay for it or not. 415 00:19:45,000 --> 00:19:48,520 In the case of crypto or Bitcoin, really any of them, 416 00:19:48,800 --> 00:19:52,160 that's most of the use case is simply a trading item, something 417 00:19:52,160 --> 00:19:53,640 that people buy. If they think it's going to go 418 00:19:53,640 --> 00:19:55,880 up, they think they're going to make money, they sell. 419 00:19:55,880 --> 00:19:57,400 If they think it's going to go down, they're going to lose 420 00:19:57,400 --> 00:19:59,400 money. None of it's based off of cash 421 00:19:59,400 --> 00:20:00,880 flows. There's no business model, 422 00:20:00,880 --> 00:20:02,960 there's no product they're selling, they don't have 423 00:20:02,960 --> 00:20:05,720 employees, they're not generating net income. 424 00:20:06,000 --> 00:20:08,760 And I like that side of things. I like doing analysis on actual 425 00:20:08,760 --> 00:20:12,160 businesses, not on speculation on whether something is going to 426 00:20:12,160 --> 00:20:14,000 go up or down in value, but that's just a personal 427 00:20:14,000 --> 00:20:16,240 preference either way. Michael Saylor right now is 428 00:20:16,240 --> 00:20:18,840 making a. Fortune with Bitcoin and his 429 00:20:18,840 --> 00:20:22,080 stock micro strategy, which is leveraged Bitcoin of course, is 430 00:20:22,080 --> 00:20:25,360 up 400% this year. So that wraps up five of the 431 00:20:25,360 --> 00:20:26,880 most explosive stocks of the year. 432 00:20:26,880 --> 00:20:28,600 Let's go ahead and move on to some news. 433 00:20:28,760 --> 00:20:31,200 Now the first bit of news we have is that Spotify just 434 00:20:31,200 --> 00:20:35,440 reported their earnings and the stock is up big, up 12% after 435 00:20:35,440 --> 00:20:37,520 earnings. They beat on their subscribers. 436 00:20:37,520 --> 00:20:41,280 This one's also one that's doing fantastic this year, up 145% 437 00:20:41,800 --> 00:20:44,440 when we look at Spotify and what I see is a great company. 438 00:20:44,680 --> 00:20:46,240 I continue to see a great company. 439 00:20:46,600 --> 00:20:49,120 This is actually one that I held in My Portfolio for a short 440 00:20:49,120 --> 00:20:51,560 time. It's one that I, I really had a, 441 00:20:51,600 --> 00:20:54,440 a thought that this is going to be a great asset in the future. 442 00:20:54,440 --> 00:20:56,400 It's going to be worth so much money because they have such a 443 00:20:56,400 --> 00:21:01,320 sticky product that it appeals to so many users, 600 million 444 00:21:01,320 --> 00:21:03,760 plus users, and they're continuing on. 445 00:21:03,800 --> 00:21:06,760 They just had another subscriber beat and the stock continues to 446 00:21:06,760 --> 00:21:08,880 compound. Mark Mahaney lays out what he 447 00:21:08,880 --> 00:21:10,720 sees as the biggest factors this quarter. 448 00:21:10,760 --> 00:21:13,200 Well, the six subscriber beat was, was nice. 449 00:21:13,200 --> 00:21:15,040 It was solid. It was somewhat modest though. 450 00:21:15,040 --> 00:21:18,160 I, John, I think the real outlier here and why the stock's 451 00:21:18,160 --> 00:21:22,000 up 7% is we just got record high gross margins and the guidance 452 00:21:22,000 --> 00:21:23,880 it's 31%. This is a low gross margin 453 00:21:23,880 --> 00:21:26,760 business to begin with, but 31% gross margins, that's a record 454 00:21:26,760 --> 00:21:29,960 high and the guidance implies that it's sustainable, IE the 455 00:21:29,960 --> 00:21:32,920 next quarters gross margin guidance is kind of roughly in 456 00:21:32,920 --> 00:21:35,440 line with this quarter. Like that's been the overhang 457 00:21:35,440 --> 00:21:38,840 issue on Spotify shares since their second area of this since 458 00:21:38,840 --> 00:21:41,920 their offering, since their, since their listing, you know, 459 00:21:41,920 --> 00:21:45,840 whatever five years ago, the business doubled in revenue, but 460 00:21:45,840 --> 00:21:47,960 gross margins never moved. The stock didn't work. 461 00:21:48,040 --> 00:21:49,920 Then when the gross margins moved the stock work. 462 00:21:49,920 --> 00:21:51,360 He got more evidence of it today. 463 00:21:51,640 --> 00:21:53,560 So I we continue to like the stock. 464 00:21:53,560 --> 00:21:55,480 So he continues to like the stock. 465 00:21:55,560 --> 00:22:00,080 It's still one of his top picks even after the huge surge this 466 00:22:00,080 --> 00:22:01,920 year. And that is someone that doesn't 467 00:22:01,920 --> 00:22:04,720 have increasing bias. He's not concerned about taking 468 00:22:04,720 --> 00:22:06,480 gains. He's concerned about looking at 469 00:22:06,480 --> 00:22:09,040 the current valuation and what's going to drive the stock further 470 00:22:09,040 --> 00:22:11,400 in the future. Like I said, at one point I did 471 00:22:11,400 --> 00:22:14,600 have Spotify in My Portfolio, but I decided to move out of 472 00:22:14,600 --> 00:22:18,200 Spotify and put everything into Netflix because my opinion was 473 00:22:18,200 --> 00:22:21,200 that Netflix and Spotify are very similar, but Netflix will 474 00:22:21,200 --> 00:22:23,040 have higher margins. They're a company that has more 475 00:22:23,040 --> 00:22:25,680 control over their margins because they make so much. 476 00:22:25,680 --> 00:22:29,320 Netflix made content. Most of the content on Spotify 477 00:22:29,640 --> 00:22:32,240 is owned by other people. It's owned by the music labels. 478 00:22:32,520 --> 00:22:34,480 So their margins have continual pressure. 479 00:22:34,480 --> 00:22:37,080 Now Spotify continues to overcome these challenges of the 480 00:22:37,080 --> 00:22:40,960 lower margins by growing organically and doing things to 481 00:22:40,960 --> 00:22:43,400 adjust their margins upward even though they don't own their 482 00:22:43,400 --> 00:22:46,480 music, for example, they moved into podcast and they 483 00:22:46,480 --> 00:22:49,800 immediately begin to grow their podcast substantially. 484 00:22:50,080 --> 00:22:53,440 They brought on Joe Rogan, they brought on a lot of top podcast 485 00:22:53,440 --> 00:22:56,680 creators, but now there's such a big podcast platform. 486 00:22:56,960 --> 00:22:59,080 They don't need Joe Rogan. They don't really need these top 487 00:22:59,080 --> 00:23:00,880 creators. They're just big in and of 488 00:23:00,880 --> 00:23:03,240 themselves without the draw of these top creators. 489 00:23:03,240 --> 00:23:06,640 So Spotify has moved into a category that's a lot higher 490 00:23:06,640 --> 00:23:09,880 margin with podcast. They also have some audiobook 491 00:23:09,880 --> 00:23:13,040 stuff they're doing, and they're pushing more advertisements to 492 00:23:13,040 --> 00:23:15,720 have a little bit better deals with the music labels. 493 00:23:16,000 --> 00:23:17,760 And I think this is going to continue now. 494 00:23:17,760 --> 00:23:21,040 Even though right now the company still has margins that 495 00:23:21,040 --> 00:23:23,920 are less than half of Netflix, they're still moving them 496 00:23:23,920 --> 00:23:26,320 upwards, which is positive movement for Spotify. 497 00:23:26,840 --> 00:23:29,120 I still view this company positively as well. 498 00:23:29,240 --> 00:23:31,720 It has traded up a lot. The market cap has grown a lot, 499 00:23:31,960 --> 00:23:33,840 but I still think Spotify has more to go now. 500 00:23:33,840 --> 00:23:37,440 Next up, we have news of Apple's next big device. 501 00:23:37,440 --> 00:23:40,920 This is the AI wall tablet. And Mark Gurman goes over this 502 00:23:40,920 --> 00:23:43,520 new device here. So Apple's next big device is a 503 00:23:43,560 --> 00:23:47,000 smart home command center, a smart home panel, something you 504 00:23:47,000 --> 00:23:51,480 might stick on your wall like a security system from ADT, 505 00:23:51,760 --> 00:23:54,560 something you may put on your desk, something that you can use 506 00:23:54,560 --> 00:23:59,160 to control your locks, your lights, your your sprinklers, 507 00:23:59,680 --> 00:24:02,400 anything that's in your home that's connected to home Kit or 508 00:24:02,400 --> 00:24:04,400 Matter. That's the new smart home system 509 00:24:04,400 --> 00:24:07,600 that works across Apple, Amazon, and Google devices. 510 00:24:08,000 --> 00:24:11,360 It'll have FaceTime, it'll have audio and video intercoms for 511 00:24:11,840 --> 00:24:14,280 use across your home. If you have multiple things like 512 00:24:14,280 --> 00:24:18,120 this, you'll be able to tap into Apple Music to control the music 513 00:24:18,120 --> 00:24:20,040 playback on your speakers throughout the home. 514 00:24:20,280 --> 00:24:22,400 So it's basically a command Center for everything you might 515 00:24:22,400 --> 00:24:24,160 want to do in your house. Anything you might want to 516 00:24:24,160 --> 00:24:27,120 control in your house, there's going to be a home security 517 00:24:27,120 --> 00:24:30,240 element to it, a content consumption element to it. 518 00:24:30,520 --> 00:24:33,280 And this is something that can drive Apple hardware sales, but 519 00:24:33,280 --> 00:24:36,960 also Apple services sales and sets the stage for further 520 00:24:36,960 --> 00:24:38,480 entrance from Apple into the home. 521 00:24:38,760 --> 00:24:41,680 So we have the description there a command Center for your home 522 00:24:42,040 --> 00:24:45,000 and apparently Apple's looking to launch this as early as May 523 00:24:45,000 --> 00:24:47,960 of next year. Now when I when I hear this, I 524 00:24:47,960 --> 00:24:50,560 think it's cool. I think that this might be used 525 00:24:50,560 --> 00:24:54,320 by a handful of people, control their devices, have a nice 526 00:24:54,320 --> 00:24:57,080 little tablet on your wall that has, you know, you can turn on 527 00:24:57,080 --> 00:24:59,920 your your lights and your lock your doors, sprinklers, all 528 00:24:59,920 --> 00:25:01,640 that. That could be cool. 529 00:25:01,640 --> 00:25:03,960 But this isn't going to be a game changer. 530 00:25:03,960 --> 00:25:06,440 It's just not something that's going to game change Apple. 531 00:25:06,800 --> 00:25:10,080 And the unfortunate truth is, if you're an Apple investor at this 532 00:25:10,080 --> 00:25:14,040 point, there's nothing they're ever going to do that's better 533 00:25:14,040 --> 00:25:16,560 than the iPhone. And really starting to believe 534 00:25:16,560 --> 00:25:19,440 that there's just nothing that will beat the iPhone as a 535 00:25:19,440 --> 00:25:21,880 standalone device. Apple's moving into different 536 00:25:21,880 --> 00:25:23,960 categories where they know they're never going to make as 537 00:25:23,960 --> 00:25:25,520 much money as they did with the iPhone. 538 00:25:25,520 --> 00:25:28,120 Now, hopefully this could enhance their services business 539 00:25:28,160 --> 00:25:31,440 a little, but even then, I think it's going to have minimal 540 00:25:31,440 --> 00:25:33,080 impact. Now, we've heard stories over 541 00:25:33,080 --> 00:25:36,760 the past couple of years that Temu and Sheen are both 542 00:25:36,760 --> 00:25:40,680 competitors to Amazon and Amazon is very threatened because of 543 00:25:40,680 --> 00:25:43,080 these companies. When I looked at the numbers, I 544 00:25:43,080 --> 00:25:45,120 didn't see that threat showing up in the US. 545 00:25:45,120 --> 00:25:48,360 But regardless, at least Amazon considers them a threat and 546 00:25:48,360 --> 00:25:50,160 they're they're adjusting to them. 547 00:25:50,160 --> 00:25:54,560 Amazon has debuted a discount store with everything under $20 548 00:25:54,840 --> 00:25:58,760 to take on TAMU and Sheen, the Amazon Hall storefront. 549 00:25:58,760 --> 00:26:02,800 So it's called Amazon Hall, is accessible through the company's 550 00:26:02,800 --> 00:26:06,200 mobile app and promises crazy low prices on a plethora of 551 00:26:06,200 --> 00:26:08,800 goods. Shoppers can buy $1.00 eyelash 552 00:26:08,800 --> 00:26:12,440 curlers and oven gloves or a $3 nail dryer. 553 00:26:12,640 --> 00:26:16,120 The company is offering free shipping on orders over $25 or 554 00:26:16,120 --> 00:26:18,640 $4.00 on shipping for orders below that threshold. 555 00:26:19,160 --> 00:26:22,200 So this is basically the opposite of what Amazon normally 556 00:26:22,200 --> 00:26:24,040 does. Normally you have their Prime 557 00:26:24,040 --> 00:26:27,080 membership, you have free shipping, but you don't have 558 00:26:27,080 --> 00:26:31,640 this super cheap Chinese prices for these low quality, low 559 00:26:31,640 --> 00:26:34,040 priced items. That's something that Tamu and 560 00:26:34,040 --> 00:26:37,720 Qin really came into the US and they shipped directly from China 561 00:26:37,720 --> 00:26:40,680 over to the US. It took weeks to get your items, 562 00:26:40,760 --> 00:26:43,760 but it appealed to people that wanted the cheapest prices 563 00:26:43,760 --> 00:26:46,240 possible. Now, this article from CNBC says 564 00:26:46,240 --> 00:26:49,160 that Amazon is betting shoppers will wait longer for products in 565 00:26:49,160 --> 00:26:52,760 exchange for rock bottom prices. This isn't something that 566 00:26:52,760 --> 00:26:55,040 they're betting on. There's no gamble here. 567 00:26:55,320 --> 00:26:57,640 Amazon has simply looked at what Tamu's done. 568 00:26:57,960 --> 00:27:01,680 Tamu's already proven that there is a big group of customers that 569 00:27:01,680 --> 00:27:04,320 are willing to wait a lot longer, a couple weeks for 570 00:27:04,320 --> 00:27:06,680 product if they can get it at a lower price. 571 00:27:07,040 --> 00:27:09,000 So Amazon's not betting on anything. 572 00:27:09,000 --> 00:27:11,560 This isn't a gamble. This business model has already 573 00:27:11,560 --> 00:27:13,320 been proven by Chinese competitors. 574 00:27:13,560 --> 00:27:16,120 What Amazon's doing here is copying them. 575 00:27:16,520 --> 00:27:19,600 They're copying Chinese competitors like Tamu, they're 576 00:27:19,600 --> 00:27:22,400 copying the business strategy, and they're using their massive 577 00:27:22,400 --> 00:27:25,280 distribution and network to put it in their app that everyone 578 00:27:25,280 --> 00:27:27,600 already has downloaded and they already have all your 579 00:27:27,600 --> 00:27:31,000 information. So the transition from shopping 580 00:27:31,000 --> 00:27:34,440 on Amazon.com, their normal website, shopping for normal 581 00:27:34,440 --> 00:27:38,720 products, or shopping on Amazon Hall is virtually seamless. 582 00:27:38,800 --> 00:27:40,880 There's no different flipping from app to app. 583 00:27:41,120 --> 00:27:43,920 It's right in your Amazon app. In this development further 584 00:27:43,920 --> 00:27:47,280 follows the blueprint of Amazon where they compete with everyone 585 00:27:47,280 --> 00:27:51,080 from every part of the world. They try attack every business 586 00:27:51,080 --> 00:27:53,640 everywhere. It is the most capitalistic 587 00:27:53,800 --> 00:27:56,440 competitive business I think that exists on earth. 588 00:27:56,440 --> 00:27:59,080 So it'll be interesting to see how Amazon Hull does. 589 00:27:59,080 --> 00:28:02,760 I'm guessing that even if Amazon Hull negates or slows down the 590 00:28:02,760 --> 00:28:05,480 growth of TAMU, they'll consider it a success. 591 00:28:05,600 --> 00:28:08,440 Now finally, tomorrow morning we have Disney reporting their 592 00:28:08,440 --> 00:28:09,800 earnings. If we look at the weekly 593 00:28:09,800 --> 00:28:12,800 calendar here, we can see a number of familiar companies. 594 00:28:13,120 --> 00:28:14,920 This is the earnings calendar on Qualtrim. 595 00:28:14,920 --> 00:28:17,040 If you haven't tried it out, it's a new feature released to 596 00:28:17,040 --> 00:28:19,920 everyone right now, but if we click on Disney right here, 597 00:28:20,000 --> 00:28:23,320 click on the logo, it brings up their history of their earnings 598 00:28:23,320 --> 00:28:25,480 and their revenue. The red is when they've missed, 599 00:28:25,480 --> 00:28:28,160 the blue is when they've beat their earnings estimates by 600 00:28:28,160 --> 00:28:30,080 analysts. And we can see that on the 601 00:28:30,080 --> 00:28:32,680 earnings per share, most of the time they beat. 602 00:28:33,000 --> 00:28:34,800 In fact, they're on a win streak here. 603 00:28:34,960 --> 00:28:39,200 We have around 7 different earnings reports, around 2 years 604 00:28:39,200 --> 00:28:41,440 of constantly beating on their earnings per share estimate. 605 00:28:41,960 --> 00:28:44,160 If I had a guess, I think that streak is going to continue. 606 00:28:44,520 --> 00:28:46,440 We've seen strength from Netflix. 607 00:28:46,440 --> 00:28:49,800 We see strength internationally. I think Disney's going to do 608 00:28:49,800 --> 00:28:52,920 well on their subscriber count. They lost subscribers 609 00:28:52,920 --> 00:28:55,280 internationally on Disney Plus last quarter. 610 00:28:55,400 --> 00:28:58,120 So that's something to watch. We'll see if they can reverse 611 00:28:58,120 --> 00:29:00,440 that. But overall, I really think 612 00:29:00,440 --> 00:29:02,040 they're going to be on their earnings per share. 613 00:29:02,320 --> 00:29:05,240 Now when we flip over to the revenue here, this is where it 614 00:29:05,240 --> 00:29:08,000 can get a little bit dicey. They're projecting or at least 615 00:29:08,000 --> 00:29:12,120 the analysts estimates right now are for $22.44 billion. 616 00:29:12,520 --> 00:29:16,840 So it's going to be right around last quarter, 1/4 before. 617 00:29:17,320 --> 00:29:20,640 But we look at their history with their revenue and they miss 618 00:29:20,680 --> 00:29:24,080 around half the time. So this one is a toss up. 619 00:29:24,080 --> 00:29:27,760 Statistically, Disney has around a 50% chance of missing the 620 00:29:27,760 --> 00:29:29,800 revenue. Tom Rogers is someone that has 621 00:29:29,800 --> 00:29:32,560 been overall correct on the streaming world. 622 00:29:32,800 --> 00:29:35,600 He's predicted that Netflix has won this battle a long time 623 00:29:35,600 --> 00:29:37,880 period ago. But he also says that Disney's 624 00:29:37,880 --> 00:29:40,280 not out of this fight yet. Disney still may turn out to be 625 00:29:40,280 --> 00:29:42,960 a winner in this category. Well, just to set the table a 626 00:29:42,960 --> 00:29:47,800 little bit, Disney is number one in terms of viewership overall 627 00:29:47,800 --> 00:29:51,400 when you aggregate it streaming and it's traditional DTV 628 00:29:51,400 --> 00:29:56,440 services. So in a position to show some 629 00:29:56,440 --> 00:29:59,280 leadership here in terms of engagement. 630 00:30:00,200 --> 00:30:02,760 Having said that, it's hard to talk about Disney without 631 00:30:02,760 --> 00:30:07,120 talking about Netflix, and Netflix enterprise value now is 632 00:30:07,120 --> 00:30:12,360 actually bigger than Disney, Warner, Paramount and Fox 633 00:30:12,360 --> 00:30:17,440 combined just to show what the traditional TV world is up 634 00:30:17,440 --> 00:30:19,880 against in terms of Netflix growth. 635 00:30:20,600 --> 00:30:23,160 That's just incredible. Netflix is bigger than basically 636 00:30:23,160 --> 00:30:24,480 all of their competitors combined. 637 00:30:24,480 --> 00:30:26,520 In fact, all of their top competitors combined. 638 00:30:27,000 --> 00:30:28,520 I've been saying this for a while as well. 639 00:30:28,800 --> 00:30:32,480 Netflix is no longer really competing with Paramount or Max 640 00:30:32,480 --> 00:30:35,560 or even Disney. I think their true competitor is 641 00:30:35,560 --> 00:30:37,960 now Amazon. I really think that they look at 642 00:30:38,000 --> 00:30:41,040 Amazon and YouTube as their primary competitors. 643 00:30:41,480 --> 00:30:42,920 I think they've kind of looked past Disney. 644 00:30:42,920 --> 00:30:44,640 I think they've really, they've fought that battle. 645 00:30:44,640 --> 00:30:47,640 They beat them. They're on to Amazon and YouTube 646 00:30:47,640 --> 00:30:49,480 looking at them as the primary threats. 647 00:30:50,520 --> 00:30:54,320 Netflix free cash flow is presumably going to surpass 648 00:30:54,320 --> 00:30:58,040 Disney's next year. But the thing that I'm impressed 649 00:30:58,040 --> 00:31:01,560 with with Disney is they've gotten their streaming revenues 650 00:31:01,560 --> 00:31:06,440 up to about 2/3 of Netflix. And last quarter their streaming 651 00:31:06,440 --> 00:31:11,400 revenue was about equivalent to what their traditional linear 652 00:31:11,400 --> 00:31:14,960 television revenues are. No one else among the 653 00:31:15,760 --> 00:31:18,560 traditional media companies have have done that. 654 00:31:18,560 --> 00:31:20,200 So they're getting some revenue scale. 655 00:31:20,200 --> 00:31:23,040 The big question that everybody's going to be focused 656 00:31:23,040 --> 00:31:26,320 on is, yes, they've established their streaming, yes, it's 657 00:31:26,320 --> 00:31:31,320 scaling, but the big question is, can it be as profitable as 658 00:31:31,320 --> 00:31:33,640 their traditional television business was? 659 00:31:33,640 --> 00:31:36,840 That's a question of margins and the margins on the streaming 660 00:31:36,840 --> 00:31:40,040 business have a long way to go. So Disney has a lot of 661 00:31:40,040 --> 00:31:43,160 engagement, but a lot of their engagement still on cable TV, 662 00:31:43,160 --> 00:31:46,280 which is thinking overtime. Some of it's on the streaming, 663 00:31:46,280 --> 00:31:48,920 which is growing overtime. And they're in that battle where 664 00:31:48,920 --> 00:31:52,120 they have to grow the streaming to be more profitable than their 665 00:31:52,120 --> 00:31:54,600 legacy cable business, which is very difficult to do. 666 00:31:54,960 --> 00:31:57,240 Ultimately, I think that Disney's an OK bet. 667 00:31:57,440 --> 00:31:59,720 I think they will become a big streaming player. 668 00:31:59,960 --> 00:32:02,520 I think streaming is a very profitable thing if you're at 669 00:32:02,520 --> 00:32:05,000 scale, Scale's the most important thing. 670 00:32:05,280 --> 00:32:07,240 And I think that Disney's one of the companies that can reach 671 00:32:07,240 --> 00:32:10,280 scale on this specific earnings report tomorrow. 672 00:32:10,640 --> 00:32:12,800 My guess is that they'll be on their earnings per share 673 00:32:12,800 --> 00:32:15,320 estimate. And I think there's around a 60% 674 00:32:15,320 --> 00:32:17,360 chance they'll beat on their revenue as well. 675 00:32:17,720 --> 00:32:19,560 But I'd say the revenue's a bit more shaky. 676 00:32:19,920 --> 00:32:22,880 I think they're going to show good subscriber gain growth 677 00:32:23,120 --> 00:32:25,880 internationally and in the US. That's a question. 678 00:32:25,880 --> 00:32:29,160 So that one's a little bit of a toss up, but we saw what Netflix 679 00:32:29,160 --> 00:32:31,800 did and Disney is following the same blueprint. 680 00:32:32,240 --> 00:32:34,800 Now, of course, I think Netflix is still a better bet. 681 00:32:34,800 --> 00:32:37,080 It's still the one that I have all my money in, but I won't 682 00:32:37,080 --> 00:32:39,640 count Disney out just yet. That's all for this episode. 683 00:32:39,640 --> 00:32:41,240 Hope you enjoyed. See you in the next one.