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Welcome back, everyone today on 
the Joseph Carlson Show. 

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We've had a busy week over the 
weekend. 

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Of course, we've had the huge 
news of the United States 

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launching Operation Epic Fury. 
That's the name of it. 

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But what it really is is a 
direct attack on the Iranian 

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government, an effort to 
overthrow the regime. 

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Now, this has caused the market 
to start off a little bit shaky,

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but it looks like we're actually
entering into the green. 

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We have some opinions on this as
well. 

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Steve Eisman believes that 
investors should continue to 

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buy. 
He thinks that this isn't going 

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to be a problem for the markets 
long term. 

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We also have Tom Lee giving his 
his take on this. 

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We'll be looking at his as well.
And then we also have a lot of 

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other big news that happened 
just recently. 

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For example, Duolingo reported 
their earnings. 

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Many investors were hopeful, but
the stock did what it's known to

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do. 
It dropped and it dropped 

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significantly, 20% in a single 
day, and it continues to go 

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down. 
What is going on with Duolingo 

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and where is the bottom for this
stock? 

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After all, it was as high as 
$500 plus a share. 

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It dropped to $300 and then to 
$200, and now it's below $100 

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per share. 
Where is Duolingo headed? 

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Why is it dropping? 
Is it being disrupted by AI? 

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We're going to be looking at all
of that with this latest 

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earnings call. 
And then we also have Netflix 

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that just recently had a major 
move upwards. 

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The same day that Duolingo 
dropped, Netflix went up 14 plus

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percent. 
It's not plus 27% from the 

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bottom because Ted Sarandos said
that they're walking away from 

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buying Warner Brothers 
Discovery. 

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That's right. 
They had the deal signed and 

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agreed upon at one point. 
Now they've walked away. 

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What does this mean for 
Netflix's future? 

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What does it mean for my 
position? 

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What does it mean for Paramount?
There's a lot going on with 

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this. 
And why did Netflix walk away 

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from the steel in the 1st place?
We're going to be looking at all

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of it in this episode as well. 
And of course, we have the fail 

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of the week, which in this case 
is the CEO of McDonald's doing a

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taste test review of this new 
Big Arch burger. 

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We get to see his reaction to 
eating McDonald's, which it 

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appears that this is the first 
time he's ever done it, and 

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we'll be going over that 
together in the fail of the 

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week. 
Now to start things off again, 

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we have this big news. 
We have a conflict between the 

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United States, Israel and Iran 
and it's taken off with a lot of

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airstrikes trying to change the 
regime and change the government

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in Iran. 
Now, one of the people that I 

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like getting the opinion on this
when they have him on is Steve 

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Eisman because he's typically 
level headed in most cases like 

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this. 
He has a pretty long term 

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perspective. 
So go ahead and listen to what 

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he says that he believes 
investors should do with this 

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news. 
President Trump is a polarizing 

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figure. 
There are things that he does 

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that I completely agree with. 
There are things that he does 

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that I disagree with, like like 
any president. 

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But on this, he's 1000% correct.
And I, I'm befuddled by, by 

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anyone who who thinks that what 
he's doing is, is not right. 

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The the Iranian regime is a 
death cult and that a death cult

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can't be allowed to have nuclear
weapons, ballistic missiles. 

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It can't be allowed to go and 
kill thousands of Americans over

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40 years. 
And what he's doing is 100% 

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correct. 
The only, the only thing I would

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just say which, which I don't 
think a lot of people recognize,

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is that this is going to take 
some time because a a normal 

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regime in the face of the might 
of the United States of America 

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would have surrendered already. 
But this regime is capable of 

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absorbing a lot more pain than a
normal regime, because they view

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pain and death of their own 
people as a sign of their own 

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righteousness. 
So this is the right move 

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according to Steve Eisman, but 
it will take time because of how

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ideological the Iranian regime 
is. 

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He continues on giving his 
opinion that specifically what 

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investors should do knowing 
what's going on right now as far

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as the markets. 
Go would, would would you? 

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Change anything based on. 
Based on this, yeah, not a not a

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not a single trade. 
I think long time this is very, 

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very positive because it means 
the Middle East will be a a lot.

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I think it eventually a lot, not
a negative even with oil. 

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And and and. 
Volatility react because of 

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what's happening. 
Oil prices are obviously up, but

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if it goes well, you know, two 
months from now oil prices will 

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be back to where they were. 
He wouldn't do a single trade 

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based on the events going on, 
which again is a very level 

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headed view, especially 
considering that Steve Eisman is

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someone that will exploit 
systemic problems. 

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He did so with the banks failing
in the United States. 

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So if you thought that there was
something that could be 

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exploited for investors that we 
could make an easy trade based 

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off of this, he would give it. 
But he just doesn't see 1 here 

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and the market seems like it's 
treating it the same way. 

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Tom Lee also expressed a similar
sentiment today. 

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That's right. 
I mean, nobody likes to see 

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headlines and images of 
explosions and war. 

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And so we know risk premium 
jumps. 

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That's why the VIX jumps. 
But it's not really going to 

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change the fundamentals of the 
US So in the past, markets kind 

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of sell off into the build up 
and then they tend to do better 

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once the battle begins. 
And I think this is going to be 

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similar. 
This isn't going to change much 

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with the United States, but he 
did mention that this does 

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increase risk premiums. 
It increases the chance of a 

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greater global conflict. 
Yeah. 

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I mean, I think a lot of experts
are going to worry that this 

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could, you know, encompass a 
larger conflict, you know, 

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something that would be, you 
know, World War three or 

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something, right. 
But in the absence of that, I 

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think the worst of the sell offs
going to happen this week and 

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you know, I, I would expect 
actually March to be an up month

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for the stock market. 
And I agree with both of them. 

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Even though this is huge news 
internationally, I don't believe

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it's going to impact U.S. stocks
in the long term to any 

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meaningful degree. 
And I I think that investors 

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should just stick to their plan.
These type of events are 

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expected. 
The world is chaotic. 

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There's going to be more of 
them. 

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We saw what just recently 
happened in South America. 

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Now we see things happening in 
the Middle East. 

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Next month it's going to be 
something different. 

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There's always something chaotic
going on in the world. 

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My investment strategy remains 
the same. 

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I'll continue to build positions
and high quality companies. 

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Part of my investment philosophy
already encompasses the idea 

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that there's going to be global 
conflict, so nothing about that 

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changes how I view My Portfolio 
now. 

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Overall, this portfolio has been
moving up over the past week. 

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We're back to $320,000 of gains 
in the passive income portfolio 

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if we switch over to the story 
fund. 

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The story fund is also made a 
big move upwards from around 

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$90,000 in the green to around 
119,000. 

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The reason why it's moving back 
up is primarily because of 

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Netflix. 
We have two stocks moving in 

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different directions. 1 of them 
is Duolingo. 

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Duolingo's going down and we 
have Netflix and Netflix is 

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going up, but overall, the 
portfolio is moving up big 

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because of the weighting of 
these stocks. 

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If we look at just the 
weighting, I want to illustrate 

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this because I think it's an 
important principle. 

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Let me zoom in here and you can 
see it right there. 

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This was my weighting of My 
Portfolio in total prior to the 

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Duolingo 20% sell off. 
So as you can see, prior to 

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Duolingo selling down the most 
recent 20%, it was a 1.2% total 

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weighting in My Portfolio. 
So even though that one's moving

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down, which is unfortunate, it's
not a massive position. 

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It's a couple $1000 down of the 
the whole portfolio. 

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Duolingo is a smaller market 
cap, more speculative company 

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with the lesser proven Moat than
the majority of My Portfolio. 

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Because of that, I intentionally
weighted it as a smaller 

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position. 
That's why I controlled for 

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risk. 
I never made Duolingo a top five

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position. 
It's never been one that's going

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to be like the size of Amazon or
Meta or MasterCard. 

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Now the reason for that again is
because the dispersion of 

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possible outcomes, the 
probability distribution is much

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wider for a smaller, more 
speculative company, one that 

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has a a much smaller market cap.
There's also a smaller amount of

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capital to be able to move the 
stock in either direction. 

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Short sellers can push it down. 
Any actives investor can push it

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up. 
There's so many things can 

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affect Duolingo stock price 
dramatically that it's a 

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dangerous one to put as a top 
position. 

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So I've tried to control for 
that risk and I think in a good 

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way by making it a smaller 
position, I still have upside if

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Duolingo does go up 4 or 5X. 
If it's a stock that really 

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compounds well, I can still make
some returns with it, but it's 

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always been one that I've 
respected the unpredictability 

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of it by putting it as a smaller
position. 

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Now, one of the companies that 
did move up massive just over 

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the past week was Netflix. 
Netflix is an 8.68% position 

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before that move, and it moved 
up another 15% since then. 

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Because Netflix is such a large 
position, that move upwards had 

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a big proportionate impact. 
When we look at Netflix, the 

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reason that the stock is moving 
up is of course because Ted 

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Sarandos, the Co CEO of the 
company, said that he's no 

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longer buying Warner Brothers 
Discovery. 

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They're walking away. 
They're letting Warner Brothers 

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Discovery sell their company to 
Paramount after they submitted 

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what they consider to be a 
superior offer. 

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Now, I'll admit, I was a little 
surprised that Netflix didn't 

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match the offer or raise their 
bid at all. 

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They could have certainly raised
it another 5 or 10%. 

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Netflix has the financial 
strength to do that. 

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But like I've always said, 
Netflix is going to do what's 

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disciplined. 
They're going to do what they 

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believe is the best for the 
shareholders in the long term, 

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and they showed that in this 
response. 

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This is an incredible display of
a disciplined management team, 

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one that had a framework for 
what they thought the asset was 

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worth and what they thought it 
wasn't worth. 

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They didn't have greed overtake 
them. 

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It wasn't a buy at all costs. 
It wasn't a buy now and figure 

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00:09:58,320 --> 00:10:01,120
it out later. 
No, they modeled it out. 

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They did a discounted cash flow 
analysis. 

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They looked at what it would be 
worth and what they're willing 

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00:10:06,760 --> 00:10:10,440
to offer, and when it went past 
that point, even by a penny, 

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they stepped out. 
That is the reason that the 

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00:10:13,280 --> 00:10:16,200
stock is up so big. 
That is the reason that Netflix 

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00:10:16,200 --> 00:10:19,520
is now traded back up to $96 per
share. 

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00:10:20,960 --> 00:10:23,480
Before they even announced 
they're buying Warner Brothers 

203
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Discovery, Netflix was only 
$103.00 per share. 

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00:10:26,840 --> 00:10:28,440
It's almost back to that stock 
price. 

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00:10:28,440 --> 00:10:30,680
And keep in mind, the market has
been crushed over this time 

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00:10:30,680 --> 00:10:34,440
period, so Netflix has held up 
proportionately very well. 

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00:10:34,840 --> 00:10:37,640
And that is because of this new 
confidence that investors have 

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in Netflix's management. 
Again, I can't stress this 

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enough. 
When I looked at the different 

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00:10:41,920 --> 00:10:45,080
possibilities of what may happen
in the future with Netflix 

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buying Warner Brothers 
Discovery, I thought it was a 

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00:10:47,600 --> 00:10:52,640
win win and well, a win win win.
But the third option wasn't as 

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00:10:52,640 --> 00:10:54,920
good. 
The first win is that Netflix 

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00:10:55,040 --> 00:10:57,720
ends up with the asset. 
Netflix would have done great 

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00:10:57,720 --> 00:11:00,120
with Warner Brothers Discovery 
because they have the financial 

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00:11:00,120 --> 00:11:03,480
support to be able to support 
that asset in that scenario that

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00:11:03,480 --> 00:11:05,320
Netflix owned them. 
I think that would have been a 

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00:11:05,320 --> 00:11:07,640
win for the shareholder long 
term. 

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00:11:08,200 --> 00:11:12,800
The other win was that Netflix 
gets out competed after they've 

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00:11:12,800 --> 00:11:16,040
already signed the deal and that
the company that out competes 

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00:11:16,040 --> 00:11:20,080
them has to pay a no shop fee of
$2.8 billion. 

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00:11:20,560 --> 00:11:24,160
That is exactly what happened. 
The deal had already been signed

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00:11:24,160 --> 00:11:26,800
by Netflix, so they were 
supposed to have the asset. 

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00:11:27,240 --> 00:11:30,280
But they said you can entertain 
other offers as long as you pay 

225
00:11:30,280 --> 00:11:32,880
us that breakup fee if you go 
with a different offer. 

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00:11:33,320 --> 00:11:35,240
And that is exactly what they 
did. 

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00:11:36,280 --> 00:11:39,400
Warner Brothers Discovery said 
that Paramount's offer was 

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00:11:39,400 --> 00:11:42,040
superior. 
Netflix decided that they didn't

229
00:11:42,040 --> 00:11:44,920
want to match it. 
That means that Paramount and 

230
00:11:44,920 --> 00:11:48,240
Warner Brothers Discovery, one 
of them, they owe Netflix $2.8 

231
00:11:48,240 --> 00:11:51,320
billion. 
And Paramount already sent the 

232
00:11:51,320 --> 00:11:52,960
check. 
They've already paid it. 

233
00:11:53,560 --> 00:11:57,560
So Netflix got to walk away from
this, not take on the 

234
00:11:57,560 --> 00:12:00,520
complexity, not take on the 
debt, not take on the regulatory

235
00:12:00,520 --> 00:12:03,360
burden or the hassle, the year 
and a half of it being dead 

236
00:12:03,360 --> 00:12:07,400
money, not take on any of that 
and get as a consolation price, 

237
00:12:07,400 --> 00:12:11,320
$2.8 billion that will be 
immediately returned back to the

238
00:12:11,320 --> 00:12:16,520
shareholders through buybacks. 
That's equivalent to a $0.65 per

239
00:12:16,520 --> 00:12:18,600
share dividend given to the 
shareholders. 

240
00:12:19,480 --> 00:12:21,440
So Netflix wins in that 
scenario. 

241
00:12:21,720 --> 00:12:26,000
They just won just by bidding on
it, winning the asset, pushing 

242
00:12:26,000 --> 00:12:29,080
up the price for a competitor, 
making it so that Paramount has 

243
00:12:29,080 --> 00:12:32,480
to pay literally billions of 
dollars more for the asset, plus

244
00:12:32,480 --> 00:12:34,960
Paramount has to pay billions of
dollars more to Netflix 

245
00:12:34,960 --> 00:12:38,880
investors directly. 
Netflix killed two birds with 

246
00:12:38,880 --> 00:12:41,400
one stone. 
They won in multiple ways in 

247
00:12:41,400 --> 00:12:44,360
this scenario. 
The worst scenario for Netflix, 

248
00:12:44,520 --> 00:12:48,760
the worst outcome, was that they
go through with this all the way

249
00:12:48,760 --> 00:12:51,000
through the end. 
They get to the regulatory 

250
00:12:51,000 --> 00:12:53,600
process and it gets blocked by 
regulators. 

251
00:12:54,080 --> 00:12:57,320
Then they have to pay a massive 
$5 billion breakup fee. 

252
00:12:57,840 --> 00:13:00,880
That would be a lose because 
Netflix wouldn't get the asset 

253
00:13:01,320 --> 00:13:04,760
and Netflix would have to pay 
money directly to a competitor, 

254
00:13:04,760 --> 00:13:07,240
which is Warner Bros. 
So that would have been the 

255
00:13:07,240 --> 00:13:09,760
worst case scenario. 
Even then, they would have 

256
00:13:09,760 --> 00:13:12,280
blocked Paramount from having 
the asset for a year, 

257
00:13:12,280 --> 00:13:15,040
presumably, but again, that one 
was a toss up. 

258
00:13:15,040 --> 00:13:16,640
That would have been the worst 
case scenario. 

259
00:13:16,800 --> 00:13:19,520
That didn't happen. 
In any case, when I look at 

260
00:13:19,520 --> 00:13:23,120
Netflix and what happened over 
the past couple of months, it 

261
00:13:23,120 --> 00:13:28,240
gave investors an opportunity to
exploit the short term view of 

262
00:13:28,240 --> 00:13:31,480
the market. 
Investors look at stocks very 

263
00:13:31,480 --> 00:13:33,560
short term. 
They try to say that they're 

264
00:13:33,560 --> 00:13:36,880
long term, but investors were 
looking at Netflix and calling 

265
00:13:36,880 --> 00:13:39,600
this stock dead money just a 
couple of months ago. 

266
00:13:40,280 --> 00:13:42,480
It's dead money. 
Who's going to want to invest in

267
00:13:42,480 --> 00:13:44,000
this? 
They're going to have to go 

268
00:13:44,000 --> 00:13:46,960
through a years of regulations. 
They're going to be scrutinized 

269
00:13:46,960 --> 00:13:49,240
by politicians in the Department
of Justice. 

270
00:13:49,920 --> 00:13:51,680
Even when they're done with 
that, they're going to be paying

271
00:13:51,680 --> 00:13:53,760
off debt and integrating 
businesses. 

272
00:13:54,160 --> 00:13:57,640
It's going to be dead money now.
It's not dead money All of a 

273
00:13:57,640 --> 00:14:01,400
sudden, a couple weeks later, 
Netflix is alive and well, up 

274
00:14:01,400 --> 00:14:05,880
27% in two days. 
The stock's surging now. 

275
00:14:05,880 --> 00:14:07,640
It's one of the better 
performers here today. 

276
00:14:07,680 --> 00:14:11,360
It's in the green by 6% and it 
still has momentum. 

277
00:14:11,960 --> 00:14:14,720
Netflix immediately went from 
dead money to not dead money 

278
00:14:14,720 --> 00:14:18,000
very quickly. 
And the investors that bought in

279
00:14:18,000 --> 00:14:20,840
during these time periods, of 
which I hope you're all one of 

280
00:14:20,840 --> 00:14:23,760
them, you got in a deal on 
Netflix. 

281
00:14:23,760 --> 00:14:26,360
You're already up nearly 30% on 
this stock. 

282
00:14:26,480 --> 00:14:28,040
And I did take advantage of 
this. 

283
00:14:28,040 --> 00:14:30,480
I did buy more Netflix during 
this time period. 

284
00:14:30,840 --> 00:14:33,640
There's a $5000 buy at $85 per 
share. 

285
00:14:33,880 --> 00:14:35,880
That was one of the the most 
recent ones that I've done. 

286
00:14:36,360 --> 00:14:38,600
So we have Netflix here moving 
back upwards. 

287
00:14:38,880 --> 00:14:42,440
We have Ted Sarandos saying that
they're going to step away, and 

288
00:14:42,440 --> 00:14:45,280
I think that this speaks very 
positively of both Netflix and 

289
00:14:45,280 --> 00:14:47,880
their management. 
Again, overall, part of the 

290
00:14:47,880 --> 00:14:51,240
reason that I'm I'm so confident
in Netflix is because I have 

291
00:14:51,240 --> 00:14:54,520
confidence in their management. 
I do think that they look at 

292
00:14:54,520 --> 00:14:58,880
what's best for the shareholder.
They gave up a lot and not 

293
00:14:58,880 --> 00:15:02,000
bidding for Warner Bros. 
The management could have owned 

294
00:15:02,360 --> 00:15:05,680
Netflix plus Warner Bros 
together. 

295
00:15:06,160 --> 00:15:08,960
Can you imagine the power that 
you would feel owning all of 

296
00:15:08,960 --> 00:15:13,160
that, the esteem, going to red 
carpet events, knowing that you 

297
00:15:13,160 --> 00:15:15,840
control all of HBO and all of 
Netflix? 

298
00:15:16,440 --> 00:15:18,280
I mean, you must feel like 
you're like the most powerful 

299
00:15:18,280 --> 00:15:20,520
person in all of Hollywood, 
basically the whole world at 

300
00:15:20,520 --> 00:15:22,840
that point, right? 
You control so much media. 

301
00:15:22,840 --> 00:15:26,880
That's how it would fill to some
people and their greed would 

302
00:15:26,960 --> 00:15:28,480
make it so that they would want 
that. 

303
00:15:29,120 --> 00:15:31,920
And the shareholders that would 
come second place. 

304
00:15:32,040 --> 00:15:35,320
That's what many management 
teams do, but not Netflix's 

305
00:15:35,320 --> 00:15:37,560
management. 
When it didn't make sense, they 

306
00:15:37,560 --> 00:15:39,320
immediately stepped out of the 
deal. 

307
00:15:39,600 --> 00:15:41,240
And that's what Ted Sarandos 
highlights here. 

308
00:15:41,240 --> 00:15:44,440
Let's go ahead and just take a 
look at this interview with Ted 

309
00:15:44,440 --> 00:15:47,760
Sarandos where he he goes 
through some of the reasons and 

310
00:15:47,760 --> 00:15:50,600
some of the questions of why 
they stepped away and the 

311
00:15:50,600 --> 00:15:53,480
motivations behind it. 
First, he mentions that we had 

312
00:15:53,480 --> 00:15:56,760
done all the scenario planning 
so we didn't have to go back to 

313
00:15:56,760 --> 00:15:58,880
the board. 
We knew what we wanted to do. 

314
00:15:58,880 --> 00:16:02,040
Sarandos says that we had a very
tight range of what we'd be 

315
00:16:02,040 --> 00:16:05,440
willing to pay and made that 
offer back when we close the 

316
00:16:05,440 --> 00:16:07,600
deal. 
We hadn't moved much from that 

317
00:16:07,600 --> 00:16:10,960
except for moving to cash, which
served to move the deal faster. 

318
00:16:11,520 --> 00:16:15,240
I'm happy that we got where we 
we are in and happy where we got

319
00:16:15,240 --> 00:16:16,920
out. 
Now there's some speculation 

320
00:16:16,920 --> 00:16:19,800
that it was the meeting with 
Trump that caused Netflix to get

321
00:16:19,800 --> 00:16:22,960
out of the deal, and Ted 
Serranos addresses this. 

322
00:16:23,120 --> 00:16:25,760
He says that he doesn't believe 
there was any growing political 

323
00:16:25,760 --> 00:16:28,320
resistance. 
It was a growing narrative of 

324
00:16:28,320 --> 00:16:31,960
political resistance, but we 
were on a normal regulatory 

325
00:16:31,960 --> 00:16:34,200
path. 
I was in DC on Thursday for a 

326
00:16:34,200 --> 00:16:36,560
scheduled meeting with the 
Department of Justice from a 

327
00:16:36,560 --> 00:16:39,280
couple weeks ago to go through 
some questions about the deal. 

328
00:16:39,520 --> 00:16:42,480
It was very productive meeting. 
Nothing out of the ordinary. 

329
00:16:42,600 --> 00:16:45,640
Nothing had shifted or changed 
dramatically that hauled me to 

330
00:16:45,640 --> 00:16:48,320
DC. 
So he's basically saying that 

331
00:16:48,320 --> 00:16:50,800
the meeting in DC had nothing to
do with this. 

332
00:16:51,080 --> 00:16:53,920
It was an already pre planned 
meeting from weeks earlier. 

333
00:16:54,240 --> 00:16:56,320
There is nothing that shifted or
changed the deal in that 

334
00:16:56,320 --> 00:16:58,560
meeting. 
When asked about what he thinks 

335
00:16:58,560 --> 00:17:01,920
will happen with the business, 
Warner Bros after being owned by

336
00:17:01,920 --> 00:17:05,200
Paramount, he says that there's 
going to be a lot of firings, a 

337
00:17:05,200 --> 00:17:08,359
lot of layoffs. 
The deal is dependent on a lot 

338
00:17:08,359 --> 00:17:11,040
of cost cutting. 
We were in the books of Warner 

339
00:17:11,040 --> 00:17:13,720
Bros and the biggest cost 
centers are people and 

340
00:17:13,720 --> 00:17:16,560
productions. 
There will be cuts in excess of 

341
00:17:16,560 --> 00:17:20,319
$16 billion. 
They are telling people who lend

342
00:17:20,319 --> 00:17:23,920
them money, That's going to 
happen within 18 months. 

343
00:17:24,280 --> 00:17:27,160
It'd be less production, less 
people working. 

344
00:17:28,000 --> 00:17:31,480
So a lot of people that were 
concerned about Netflix buying 

345
00:17:31,680 --> 00:17:34,360
in the media industry, now they 
have to contend with the fact 

346
00:17:34,360 --> 00:17:37,760
that a far less profitable 
companies buying Warner Bros. 

347
00:17:38,360 --> 00:17:40,320
And because of that, they're 
going to have to cut costs 

348
00:17:40,320 --> 00:17:44,440
aggressively. 16 billion is an 
astronomical amount of cost to 

349
00:17:44,440 --> 00:17:46,640
cut. 
So we'll see what happens, but 

350
00:17:46,640 --> 00:17:48,200
that does not look good for the 
industry. 

351
00:17:48,720 --> 00:17:50,840
In any case, it's not Netflix's 
problem now. 

352
00:17:51,040 --> 00:17:54,720
Now, in this interview, Ted 
Serranos does take one big shot 

353
00:17:54,720 --> 00:17:58,280
at Paramount, and that is with 
the question of an unusual 

354
00:17:58,280 --> 00:18:01,120
buyer. 
He says unusual. 

355
00:18:01,120 --> 00:18:03,840
Yeah. 
Unusual or irrational? 

356
00:18:04,040 --> 00:18:07,400
Whatever word you want to use in
that, it'll be fascinating to 

357
00:18:07,400 --> 00:18:10,320
see the next steps. 
I have been on the record a lot 

358
00:18:10,320 --> 00:18:12,920
in the last two weeks talking 
about what I think the future 

359
00:18:12,920 --> 00:18:15,960
looks like. 
I'm confident in our future that

360
00:18:15,960 --> 00:18:18,400
we're not impacted by by this at
all. 

361
00:18:18,720 --> 00:18:21,640
In fact, maybe it's to our 
advantage, but I hope I'm wrong 

362
00:18:21,640 --> 00:18:25,240
for the sake of the industry. 
He is obviously concerned about 

363
00:18:25,240 --> 00:18:27,720
the industry. 
He believes that Paramount is 

364
00:18:27,720 --> 00:18:30,800
way over their skis. 
They're paying way too much. 

365
00:18:31,240 --> 00:18:34,040
They are at 7 times EBITDA 
leverage. 

366
00:18:34,560 --> 00:18:37,400
Seven times is at the point 
where you're so leveraged at 

367
00:18:37,400 --> 00:18:40,560
that point you have to cut costs
like crazy. 

368
00:18:40,880 --> 00:18:45,440
You have to optimize for years. 
It'll be a a decade of Paramount

369
00:18:45,440 --> 00:18:47,760
trying to just get their costs 
under control. 

370
00:18:47,800 --> 00:18:50,480
One of the questions or one of 
the potential impacts of 

371
00:18:50,480 --> 00:18:54,600
Paramount owning Warner Bros is 
maybe they could bully Netflix 

372
00:18:54,600 --> 00:18:57,160
now and no longer license them 
content, right? 

373
00:18:57,160 --> 00:18:59,920
Netflix likes licensing content 
from Warner Bros. 

374
00:18:59,920 --> 00:19:02,760
You in some cases will have HBO 
shows on Netflix. 

375
00:19:02,760 --> 00:19:05,360
And that's really good for 
Netflix consumers time to time. 

376
00:19:06,000 --> 00:19:09,440
And the thought process is maybe
they they box Netflix out, make 

377
00:19:09,440 --> 00:19:11,600
it so that they can't have 
access to any of their content. 

378
00:19:12,120 --> 00:19:14,480
But he says that that's not 
likely specifically because of 

379
00:19:14,480 --> 00:19:18,200
their financial position. 
If they are 6 or 7 times 

380
00:19:18,200 --> 00:19:21,400
levered, they need to make some 
money and we're buyers. 

381
00:19:21,440 --> 00:19:23,560
So I can't imagine that's going 
to be a problem. 

382
00:19:23,880 --> 00:19:25,480
He's basically calling Paramount
broke. 

383
00:19:26,000 --> 00:19:28,480
He's saying that they're too 
broke to not license content to 

384
00:19:28,480 --> 00:19:29,920
us. 
We're a good buyer. 

385
00:19:30,000 --> 00:19:32,120
They're going to license content
because they have to. 

386
00:19:32,320 --> 00:19:36,160
Now the reaction from employees,
apparently at Netflix, a lot of 

387
00:19:36,160 --> 00:19:38,200
the employees are simply just 
relieved. 

388
00:19:38,560 --> 00:19:41,120
It was going to be a very 
difficult challenge to try to 

389
00:19:41,120 --> 00:19:43,040
integrate the two businesses and
make it work. 

390
00:19:43,040 --> 00:19:45,280
So they're a little bit relieved
that they can continue to just 

391
00:19:45,280 --> 00:19:48,120
build out from their own 
business and not take on this 

392
00:19:48,120 --> 00:19:50,840
huge endeavour. 
I I've heard from a lot of 

393
00:19:50,960 --> 00:19:53,440
employees the the vibe there is 
just one of relief. 

394
00:19:54,040 --> 00:19:57,920
And from Warner's side, theirs 
is 1 where they're not happy 

395
00:19:57,920 --> 00:20:00,600
about this. 
I've heard rumors from a lot of 

396
00:20:00,600 --> 00:20:04,080
employees that they'd preferred 
Netflix as a buyer, which of 

397
00:20:04,080 --> 00:20:07,160
course makes sense because 
there's far less likelihood of 

398
00:20:07,160 --> 00:20:09,040
them getting fired if Netflix is
the buyer. 

399
00:20:09,480 --> 00:20:11,520
But ultimately the market 
speaks. 

400
00:20:11,960 --> 00:20:14,600
Paramount is the buyer. 
They've already signified that 

401
00:20:14,600 --> 00:20:17,800
they're going to be combining 
both services, Paramount and 

402
00:20:18,080 --> 00:20:19,840
HBO. 
So you'll have those under the 

403
00:20:19,840 --> 00:20:21,920
same login, the same service in 
the future. 

404
00:20:22,560 --> 00:20:25,240
So we'll see what happens in the
future in terms of Netflix 

405
00:20:25,240 --> 00:20:27,080
investors, things are back on 
track. 

406
00:20:27,360 --> 00:20:29,040
They'll continue to build out 
their business. 

407
00:20:29,040 --> 00:20:31,560
They'll continue to compound. 
We'll see if they try to pick up

408
00:20:31,560 --> 00:20:34,120
any smaller studios in the 
process or what their strategy 

409
00:20:34,120 --> 00:20:36,480
is going forward. 
Because I believe Netflix does 

410
00:20:36,480 --> 00:20:39,120
need to try to build out their 
own cinematic universes, their 

411
00:20:39,120 --> 00:20:40,800
own Westeros, those type of 
things. 

412
00:20:41,120 --> 00:20:42,800
And we'll see how they do that 
in the future. 

413
00:20:43,480 --> 00:20:46,160
Now moving on from Netflix, we 
get to another stock that went 

414
00:20:46,160 --> 00:20:49,840
the total opposite direction, 
which is Duolingo. 

415
00:20:49,840 --> 00:20:51,440
Let's go ahead and talk about 
Duolingo Hair. 

416
00:20:51,600 --> 00:20:54,040
Duolingo's earnings report has 
two major parts to it. 

417
00:20:54,400 --> 00:20:57,120
There's the guidance, which is 
the primary reason that the 

418
00:20:57,120 --> 00:21:00,840
stock dropped 20% was because of
the guidance that they gave. 

419
00:21:01,320 --> 00:21:03,960
The other aspect to it is 
everything else, the questions 

420
00:21:03,960 --> 00:21:06,760
about the Moat, the questions 
about market saturation, the 

421
00:21:06,760 --> 00:21:08,680
questions about their growth and
their future. 

422
00:21:09,160 --> 00:21:10,960
So when we look at Duolingo, 
let's go ahead and just take a 

423
00:21:10,960 --> 00:21:12,080
look at some of the numbers 
here. 

424
00:21:12,520 --> 00:21:15,560
We have the revenue which it it 
grew rather fast year over year,

425
00:21:15,840 --> 00:21:18,160
35%. 
So that's still very fast 

426
00:21:18,160 --> 00:21:20,720
revenue growth, slight 
deceleration, but somewhat 

427
00:21:20,720 --> 00:21:23,080
expected. 
The problem is in the guidance 

428
00:21:23,080 --> 00:21:26,320
they're guiding for growth 
around 18 to 20%. 

429
00:21:27,040 --> 00:21:28,800
Earnings per share growth around
the same. 

430
00:21:28,800 --> 00:21:31,600
So this is much slower growth, a
deceleration. 

431
00:21:31,880 --> 00:21:34,920
Bookings growth of 20% is a huge
deceleration. 

432
00:21:35,320 --> 00:21:37,920
It shows that they're, they're 
growing their revenue aspect 

433
00:21:37,920 --> 00:21:40,960
much slower than previously. 
And we'll get into that in just 

434
00:21:40,960 --> 00:21:42,400
a minute. 
But when we look at the rest of 

435
00:21:42,400 --> 00:21:44,880
these numbers, we look at the 
daily active users. 

436
00:21:45,360 --> 00:21:49,840
This came into 52.7 million, 
which was actually above where 

437
00:21:50,160 --> 00:21:53,160
the expectations were. 
So they gained daily active 

438
00:21:53,160 --> 00:21:55,880
users a little bit above their 
guidance, which is good. 

439
00:21:56,200 --> 00:21:59,480
And you can see overall they're 
still gaining a lot of daily 

440
00:21:59,480 --> 00:22:01,080
users. 
This is a lot of users using 

441
00:22:01,080 --> 00:22:05,120
Duolingo everyday, 52.7 million.
When we look at the monthly 

442
00:22:05,120 --> 00:22:07,840
active users, a lot of people 
point to this to show that 

443
00:22:07,840 --> 00:22:10,920
there's problems with Duolingo 
because the monthly active is 

444
00:22:10,920 --> 00:22:15,960
down quarter over quarter. 
It's up 14% year over year, but 

445
00:22:15,960 --> 00:22:18,600
the monthly active has flat 
lined now. 

446
00:22:18,840 --> 00:22:20,480
They're not as concerned about 
this. 

447
00:22:20,480 --> 00:22:23,240
They've kind of shifted away 
from even really being too 

448
00:22:23,240 --> 00:22:26,360
concerned about monthly. 
They're primarily focused on the

449
00:22:26,360 --> 00:22:29,280
daily active users. 
Overall, the biggest problem 

450
00:22:29,280 --> 00:22:32,600
that they highlighted on the 
earnings call was that they're 

451
00:22:32,600 --> 00:22:35,960
seeing a deceleration in daily 
active user growth. 

452
00:22:36,440 --> 00:22:39,360
This number which they do care 
about, they care about this one 

453
00:22:39,360 --> 00:22:41,080
deeply. 
This is their primary number 

454
00:22:41,080 --> 00:22:44,120
that they look at is 
decelerating and they believe 

455
00:22:44,120 --> 00:22:46,440
it's going to further decelerate
in 2026. 

456
00:22:47,080 --> 00:22:51,160
And the CEO of the company is 
doing everything he can. 

457
00:22:51,200 --> 00:22:54,720
He's re changing everything in 
the company to make this number 

458
00:22:54,720 --> 00:22:57,800
re accelerate. 
And they launched a new goal. 

459
00:22:58,360 --> 00:23:05,720
Their goal is to get above 100 
million daily active users, 100 

460
00:23:05,720 --> 00:23:09,240
million, which is roughly double
where it is now by 2028. 

461
00:23:09,720 --> 00:23:13,160
So in three years they want to 
double the amount of users that 

462
00:23:13,160 --> 00:23:17,000
would be very strong growth and 
they gave some numbers of what 

463
00:23:17,000 --> 00:23:20,400
will happen if they get there. 
For example, if we look at the 

464
00:23:20,400 --> 00:23:24,360
EBITDA, if they don't go across 
this path, if they don't try to 

465
00:23:24,360 --> 00:23:27,920
get to 100 million, then their 
EBITDA will probably be at 

466
00:23:27,920 --> 00:23:32,880
around $400 million by 2028. 
So they believe they'll have 

467
00:23:32,880 --> 00:23:36,560
$400 million EBITDA 2028 under 
like a normal path. 

468
00:23:36,560 --> 00:23:39,120
If they continue what they're 
doing today, they continue on 

469
00:23:39,120 --> 00:23:43,920
along the same path. 
If they get to 100 million daily

470
00:23:43,920 --> 00:23:47,760
active users in 2028, then they 
believe that EBITDA is more 

471
00:23:47,760 --> 00:23:52,480
around the ballpark of 700 
million by 2028. 

472
00:23:53,360 --> 00:23:56,680
So significantly higher. 
The company's much bigger at 

473
00:23:56,680 --> 00:23:59,600
that point, which if that 
happens, it's just a bigger 

474
00:23:59,600 --> 00:24:01,680
company, more profits, higher 
market cap. 

475
00:24:02,120 --> 00:24:05,160
So they're going for what they 
believe is the bigger prize. 

476
00:24:05,440 --> 00:24:08,800
They're, they're focusing on 
user growth, quality of teaching

477
00:24:09,040 --> 00:24:11,600
and taking advantage of this big
opportunity. 

478
00:24:12,160 --> 00:24:15,240
And because they're doing that, 
they're less focused on 

479
00:24:15,240 --> 00:24:18,080
monetization today. 
They're less focused on 

480
00:24:18,080 --> 00:24:20,840
converting people from the pro 
tear to the Max tear. 

481
00:24:21,240 --> 00:24:22,720
That's really not what they're 
doing. 

482
00:24:22,720 --> 00:24:25,080
In fact, what they're doing is 
they're getting a lot of the 

483
00:24:25,080 --> 00:24:28,720
benefits from the Max tear down 
to the pro tear. 

484
00:24:29,240 --> 00:24:31,120
They're just increasing the 
quality of their service. 

485
00:24:31,120 --> 00:24:33,440
They're giving more of the AI 
benefits, more of the one-on-one

486
00:24:33,440 --> 00:24:35,720
teaching. 
They're giving that to everyone.

487
00:24:36,200 --> 00:24:39,040
They're making it so that 
Duolingo is a far more 

488
00:24:39,040 --> 00:24:41,400
personalized tutor than it's 
ever been before. 

489
00:24:41,800 --> 00:24:44,800
Typically Duolingo's been looked
at as like advanced flash cards,

490
00:24:45,200 --> 00:24:47,680
and now it's going to be a 
highly interactive AI tutor 

491
00:24:47,680 --> 00:24:50,480
combined with flash card 
elements, which increases the 

492
00:24:50,480 --> 00:24:53,960
quality of teaching, the 
engagement, and the daily active

493
00:24:53,960 --> 00:24:56,640
users, because the more they get
value, the more they'll use the 

494
00:24:56,640 --> 00:24:58,080
app. 
So that is the route they're 

495
00:24:58,080 --> 00:24:59,760
going. 
They're focusing solely on this 

496
00:24:59,760 --> 00:25:01,800
DAU. 
They're trying to grow it as 

497
00:25:01,800 --> 00:25:03,960
much as possible. 
They want to get to that 100 

498
00:25:03,960 --> 00:25:06,280
million mark. 
They want to make Duolingo an 

499
00:25:06,280 --> 00:25:09,920
incredibly powerful, 
personalized tutor, better and 

500
00:25:09,920 --> 00:25:12,120
more engaging and more 
interactive and more fun than a 

501
00:25:12,160 --> 00:25:15,720
real life tutor. 
And that requires some short 

502
00:25:15,720 --> 00:25:17,600
term pains. 
So when we look at Duolingo, 

503
00:25:17,600 --> 00:25:20,000
there's still a big 
misconception of what's going on

504
00:25:20,000 --> 00:25:22,040
here. 
Many bears on the stock will 

505
00:25:22,040 --> 00:25:25,640
insist that the reason the stock
is going down and the reason 

506
00:25:25,640 --> 00:25:29,120
that Duolingo's struggling to 
grow is because of competitive 

507
00:25:29,120 --> 00:25:31,400
forces. 
They'll say that competition is 

508
00:25:31,400 --> 00:25:33,560
caught up. 
The Duolingo can't compete. 

509
00:25:33,560 --> 00:25:37,200
In a world with AI tutors with 
chat, GBTS, with Gemini's, with 

510
00:25:37,200 --> 00:25:39,640
vibe coding, you can easily 
replace Duolingo. 

511
00:25:40,080 --> 00:25:42,600
And of course, that's the reason
the stock's going down and the 

512
00:25:42,600 --> 00:25:45,680
revenue's decelerating. 
A lot of investors are having 

513
00:25:45,680 --> 00:25:49,360
their biases confirmed looking 
at Duolingo's revenue slow down.

514
00:25:50,040 --> 00:25:53,520
The problem with that is that 
none of the actual data supports

515
00:25:53,520 --> 00:25:56,840
that. 
And that is exactly what the CEO

516
00:25:56,840 --> 00:26:00,200
of the company says in the 
earnings call with real data 

517
00:26:00,200 --> 00:26:01,600
points. 
OK. 

518
00:26:01,600 --> 00:26:03,440
So your first question is about 
market saturation and 

519
00:26:03,440 --> 00:26:05,520
competition. 
We're worried about neither one 

520
00:26:05,520 --> 00:26:07,680
of those in terms of 
competition, if you look at 

521
00:26:08,160 --> 00:26:12,160
language learning apps, we have 
about 85% of the daily active 

522
00:26:12,160 --> 00:26:16,000
uses of language learning apps 
in the world and that number has

523
00:26:16,000 --> 00:26:19,160
remained, you know pretty flat 
over over over a while. 

524
00:26:19,160 --> 00:26:21,800
But basically we're we're just 
not particularly concerned about

525
00:26:21,800 --> 00:26:25,480
that you. 
Just addressed AI competition in

526
00:26:25,480 --> 00:26:27,240
one sentence with one data 
point. 

527
00:26:28,040 --> 00:26:29,880
He completely destroyed the 
whole narrative. 

528
00:26:29,880 --> 00:26:32,880
The Duolingo's being out 
computed by AI with a single 

529
00:26:32,880 --> 00:26:36,240
data point. 
The data point is that Duolingo 

530
00:26:36,240 --> 00:26:41,880
has 85% of the daily active 
language learners in all of the 

531
00:26:41,880 --> 00:26:43,960
market. 
They hold around 85% market 

532
00:26:43,960 --> 00:26:46,320
share. 
That percentage of market share 

533
00:26:46,320 --> 00:26:50,280
has remained consistent for a 
long time now. 

534
00:26:50,280 --> 00:26:53,560
How could their market share 
hold the same if they're being 

535
00:26:53,560 --> 00:26:56,440
out competed? 
How does that make any sense? 

536
00:26:56,800 --> 00:26:59,600
The way that you see if you're 
being out competed is by your 

537
00:26:59,600 --> 00:27:03,120
market share of users going 
down, by users leaving your 

538
00:27:03,120 --> 00:27:06,160
application, leaving whatever 
you're doing and going somewhere

539
00:27:06,160 --> 00:27:07,760
else. 
And that they're growing is a 

540
00:27:07,760 --> 00:27:11,440
bigger proportion of the pie, 
but that's not happening. 

541
00:27:11,880 --> 00:27:14,720
They're maintaining the same 
market share while growing. 

542
00:27:15,160 --> 00:27:18,080
So the revenue growth or the 
daily active user growth going 

543
00:27:18,080 --> 00:27:21,120
down is for different reasons. 
And he highlights the different 

544
00:27:21,120 --> 00:27:23,960
reasons in this call. 
Another concern is market 

545
00:27:23,960 --> 00:27:26,400
saturation. 
He also says that he's not 

546
00:27:26,520 --> 00:27:28,680
concerned about market 
saturation at all. 

547
00:27:28,680 --> 00:27:30,400
Why is he not concerned about 
saturation? 

548
00:27:30,400 --> 00:27:31,680
Let's go ahead and listen to him
here. 

549
00:27:32,520 --> 00:27:37,080
In terms of market saturation, 
you know, we're for example, we 

550
00:27:37,080 --> 00:27:41,840
look at things like the, the, 
the percentage of daily active 

551
00:27:41,840 --> 00:27:44,800
users in a given country 
compared to the size of the 

552
00:27:44,800 --> 00:27:47,000
Internet base of that country. 
So for example, in the United 

553
00:27:47,000 --> 00:27:51,280
States, 2% of all Internet users
on a given day use Duolingo. 

554
00:27:51,280 --> 00:27:55,880
So 2% penetration in the US for 
daily users in the UK that's 3%,

555
00:27:56,200 --> 00:27:58,520
in Germany that's 4%. 
And Germany is not the highest 

556
00:27:58,520 --> 00:28:01,280
country we have, we actually 
think we can get much higher 

557
00:28:01,280 --> 00:28:03,160
than that. 
But even if we only assume that 

558
00:28:03,160 --> 00:28:08,680
every country got to 2%, which 
is the US penetration, we would 

559
00:28:08,680 --> 00:28:10,360
more than double our daily 
active users. 

560
00:28:10,720 --> 00:28:14,080
So I I just don't think we're, 
we're near saturation at all. 

561
00:28:14,240 --> 00:28:16,080
That answers the saturation 
question. 

562
00:28:16,640 --> 00:28:20,000
In the US they're at 2%. 
That's that's how many people 

563
00:28:20,000 --> 00:28:23,880
use use Duolingo everyday is 2% 
of people with Internet access 

564
00:28:23,880 --> 00:28:26,680
in the United States. 
They use that same benchmark in 

565
00:28:26,680 --> 00:28:29,400
all the countries that they 
operate in based on the 

566
00:28:29,400 --> 00:28:31,480
proportion of Internet enabled 
users. 

567
00:28:32,080 --> 00:28:35,120
If they got to 2%, they would 
over double their market size, 

568
00:28:35,120 --> 00:28:37,240
they'd over double their amount 
of daily active users. 

569
00:28:37,720 --> 00:28:41,160
So there's also ample room for 
this company to grow ample user,

570
00:28:41,160 --> 00:28:44,160
50 million plus users just to 
get to 2%. 

571
00:28:44,400 --> 00:28:45,920
And they believe that they can 
get higher than that. 

572
00:28:46,600 --> 00:28:49,440
Countries they have right now, 
like Germany are at 4%. 

573
00:28:49,720 --> 00:28:51,840
So obviously it can get higher 
than that. 

574
00:28:52,360 --> 00:28:56,440
Think about it, if we get more 
people on math, on music, on 

575
00:28:56,440 --> 00:28:59,320
chess, there's lots of 
opportunities to grow that daily

576
00:28:59,320 --> 00:29:02,280
active user. 
And then he gives one additional

577
00:29:02,280 --> 00:29:06,920
data point to actually explain 
where these users go when they 

578
00:29:06,920 --> 00:29:10,360
stop using Duolingo, and it's 
not to a competitor. 

579
00:29:10,680 --> 00:29:13,080
You know, in general, we're not 
seeing anything different. 

580
00:29:13,080 --> 00:29:17,640
For example, we survey our our 
our churned users, and the 

581
00:29:17,640 --> 00:29:20,600
answers to the surveys of return
users haven't really changed in 

582
00:29:20,600 --> 00:29:22,280
years. 
And the most common answer, by 

583
00:29:22,280 --> 00:29:24,800
the way, when people stop using 
Duolingo about where they go is 

584
00:29:24,800 --> 00:29:28,080
that they stop learning. 
People quit Duolingo and they 

585
00:29:28,080 --> 00:29:30,640
just stop learning. 
They don't go to an alternative 

586
00:29:30,640 --> 00:29:32,600
service. 
They don't go to a different 

587
00:29:32,600 --> 00:29:35,240
language learning tool. 
In some cases they can. 

588
00:29:35,240 --> 00:29:37,960
I'm sure that that happens. 
But the most common reason is 

589
00:29:37,960 --> 00:29:40,280
people just quit. 
They just give up. 

590
00:29:40,600 --> 00:29:42,160
That's the problem they're 
addressing. 

591
00:29:42,560 --> 00:29:44,840
They're competing in a race of 
their own. 

592
00:29:44,880 --> 00:29:48,280
They have 85% market share. 
They maintain that market share 

593
00:29:48,280 --> 00:29:51,440
for a long time. 
They have a huge total 

594
00:29:51,440 --> 00:29:55,360
addressable market to grow into.
Duolingo needs to figure out how

595
00:29:55,360 --> 00:29:57,240
to make their service a bit more
engaging. 

596
00:29:57,480 --> 00:30:00,560
They need to make the teaching 
more personalized and AI 

597
00:30:00,560 --> 00:30:03,800
enabled, and they can offer 
tremendous value to users. 

598
00:30:04,280 --> 00:30:07,520
So a lot of the concerns that 
investors have, like AI 

599
00:30:07,520 --> 00:30:10,040
competition, are not showing up 
in the numbers, and it's not 

600
00:30:10,040 --> 00:30:11,560
what management is even worried 
about. 

601
00:30:12,040 --> 00:30:14,960
Now, of course, they're always 
trying to preempt competition 

602
00:30:15,000 --> 00:30:16,280
and make sure they're ahead of 
it. 

603
00:30:16,640 --> 00:30:18,920
And that's part of the reason I 
believe that they're releasing 

604
00:30:18,920 --> 00:30:22,440
all of these AI features. 
They're making Duolingo far more

605
00:30:22,440 --> 00:30:28,240
of an AI adaptive interactive 
learning tool where now you can 

606
00:30:28,440 --> 00:30:30,760
talk to the app and practice 
language and it will give you 

607
00:30:30,760 --> 00:30:34,040
feedback and it's bilingual, can
talk back and forth with you. 

608
00:30:34,520 --> 00:30:37,440
It can do that while having all 
the other mechanisms for 

609
00:30:37,440 --> 00:30:40,360
engagement. 
So this is a great direction to 

610
00:30:40,360 --> 00:30:43,560
go long term for the company. 
The big question is if you 

611
00:30:43,560 --> 00:30:46,800
believe that they have an 
opportunity to grow into a 

612
00:30:46,800 --> 00:30:49,480
bigger business here, or if you 
think that their growth will 

613
00:30:49,480 --> 00:30:52,000
continue to slow down and 
ultimately just stall. 

614
00:30:52,440 --> 00:30:56,240
If Duolingo's growth just 
stalls, if it really can't grow 

615
00:30:56,240 --> 00:30:59,800
100 million users, if they 
really can't become a highly 

616
00:30:59,800 --> 00:31:04,720
engaging AI enabled platform, 
then the stock will stall out. 

617
00:31:04,880 --> 00:31:07,880
It won't really bounce back, but
I still believe there's a chance

618
00:31:07,880 --> 00:31:11,520
that this one could bounce back 
very strong if they start 

619
00:31:11,560 --> 00:31:15,120
executing correctly on their 
plan of doubling their users 

620
00:31:15,120 --> 00:31:18,800
over the next three years. 
If they get to $700 million in 

621
00:31:18,840 --> 00:31:21,440
EBITDA in a year, that's 
massive. 

622
00:31:21,640 --> 00:31:24,560
The stock will move up if that 
happens, especially because over

623
00:31:24,560 --> 00:31:27,520
those three years, it will 
become clear whether or not AI 

624
00:31:27,520 --> 00:31:29,160
is really disrupting the company
or not. 

625
00:31:29,560 --> 00:31:32,880
Right now it's not, but we'll 
see over the next three years 

626
00:31:32,880 --> 00:31:35,120
and if investors become 
convinced that that's not much 

627
00:31:35,120 --> 00:31:37,800
of a problem, they may give the 
stock a better bid. 

628
00:31:38,200 --> 00:31:41,640
So as of right now, my plan is 
that I'm not buying more into 

629
00:31:41,640 --> 00:31:43,080
Duolingo. 
I'm not going to continue to 

630
00:31:43,080 --> 00:31:47,000
throw money into this position, 
but I will hold it because I 

631
00:31:47,000 --> 00:31:49,280
believe that there is huge 
potential upside here in the 

632
00:31:49,280 --> 00:31:51,320
future. 
I think there's still a chance 

633
00:31:51,320 --> 00:31:54,800
for growth and having the 
position be a 1% position. 

634
00:31:55,520 --> 00:31:57,280
It it just is an easy one to 
hold. 

635
00:31:57,520 --> 00:31:58,960
It's not difficult for me to 
hold. 

636
00:31:58,960 --> 00:32:02,640
My Portfolio isn't reliant on 
Duolingo performing. 

637
00:32:03,000 --> 00:32:05,440
So in the meantime, I'm going to
hold on to it and continue to 

638
00:32:05,440 --> 00:32:06,840
follow it. 
Now moving on, we get to the 

639
00:32:06,840 --> 00:32:10,320
fail of the week, which in this 
case is the CEO of McDonald's 

640
00:32:10,560 --> 00:32:14,560
doing a food review of one of 
their newer, apparently 

641
00:32:14,640 --> 00:32:16,120
impressive burgers that they 
made. 

642
00:32:16,120 --> 00:32:19,080
This is the Big Arch burger. 
It's a new burger from 

643
00:32:19,080 --> 00:32:21,920
McDonald's, and the CEO is 
supposed to give us a review of 

644
00:32:21,920 --> 00:32:24,320
it to show us how good it is. 
Here we have it. 

645
00:32:24,320 --> 00:32:28,880
Let's go ahead and jump in. 
Chris K here with you've heard 

646
00:32:28,880 --> 00:32:32,040
about it. 
Here it is, the big arch. 

647
00:32:32,320 --> 00:32:36,320
This is something that we have 
tested already in Portugal, 

648
00:32:36,480 --> 00:32:39,160
Germany, Canada. 
I love this product. 

649
00:32:39,160 --> 00:32:41,200
It is so good. 
I'm going to do a tasting, 

650
00:32:41,200 --> 00:32:43,760
right? 
He can't help it. 

651
00:32:44,000 --> 00:32:48,720
The guy's so corporate, like 
he's just, this guy is just like

652
00:32:48,720 --> 00:32:53,080
a walking spreadsheet of 
corporate vocabulary. 

653
00:32:53,880 --> 00:32:56,880
So you just can't even help it. 
It says that we've tested it, 

654
00:32:57,520 --> 00:33:01,040
We've already tested the product
and the product is tested well 

655
00:33:01,040 --> 00:33:03,280
and the geographies that we've 
tested it. 

656
00:33:04,920 --> 00:33:06,600
We've made some food that people
love. 

657
00:33:06,760 --> 00:33:08,280
I mean, why doesn't he talk like
a human? 

658
00:33:08,280 --> 00:33:11,480
He has to talk like corporate, 
but his whole mind is just 

659
00:33:11,480 --> 00:33:15,880
corporate jargon at this point. 
So instead of saying this is a 

660
00:33:15,960 --> 00:33:18,480
a, a burger that we've made, 
we've made it so tasty. 

661
00:33:18,480 --> 00:33:20,640
People around the world really 
love it when they get their 

662
00:33:20,640 --> 00:33:24,200
hands on it. 
They say this is a a well tested

663
00:33:24,200 --> 00:33:26,520
product. 
It's a well tested product. 

664
00:33:26,600 --> 00:33:31,240
That we have tested already in 
Portugal, Germany, Canada. 

665
00:33:31,440 --> 00:33:33,880
I love this product, it is so 
good. 

666
00:33:33,880 --> 00:33:34,960
I'm going to do a tasting, 
right? 

667
00:33:35,360 --> 00:33:38,720
Really good product, guys. 
He's going to taste this product

668
00:33:38,720 --> 00:33:41,120
that they've tested. 
Right now, But I'm going to eat 

669
00:33:41,120 --> 00:33:42,840
this for my lunch, just so you 
know. 

670
00:33:42,840 --> 00:33:47,240
So here we go first, Holy cow, 
God, that is a big burger. 

671
00:33:47,280 --> 00:33:53,560
We've got a very unique kind of 
sesame poppy sort of bun on it. 

672
00:33:54,800 --> 00:33:56,680
He opens it up. 
Wowzers. 

673
00:33:56,960 --> 00:34:00,200
Holy cow. 
Boy am I shocked to look at how 

674
00:34:00,200 --> 00:34:05,120
big this burger is. 
It's it just doesn't sound 

675
00:34:05,120 --> 00:34:09,639
natural. 
I don't know man, maybe just I 

676
00:34:09,639 --> 00:34:11,840
don't know why it's so difficult
for people to give a genuine 

677
00:34:11,840 --> 00:34:13,880
review. 
We could just open it up and say

678
00:34:13,880 --> 00:34:17,920
this is a a good looking burger 
but instead it's wow geez look 

679
00:34:17,920 --> 00:34:22,280
at how big it the the burger is.
Something about this whole 

680
00:34:22,280 --> 00:34:25,679
review just from the beginning 
feels incredibly unnatural, and 

681
00:34:25,679 --> 00:34:29,280
it keeps getting worse. 
We've got two quarter pound 

682
00:34:29,280 --> 00:34:33,679
patties, a delicious big orange 
sauce, and of course, some 

683
00:34:33,679 --> 00:34:35,840
lettuce. 
So, oh, there's so much going on

684
00:34:35,840 --> 00:34:38,360
with this. 
First of all, let's try to get 

685
00:34:38,360 --> 00:34:41,520
this thing I don't even know. 
How to attack it got? 

686
00:34:41,520 --> 00:34:44,280
So much to it. 
Oh, there's also some crispy 

687
00:34:44,280 --> 00:34:46,760
onion. 
What do you mean how to attack 

688
00:34:46,760 --> 00:34:48,880
it? 
It's a burger it with two 

689
00:34:48,880 --> 00:34:52,400
patties. 
What guy this is? 

690
00:34:52,480 --> 00:34:54,920
This is something everybody, 
every. 

691
00:34:54,920 --> 00:34:56,800
I've ate a million of these. 
Who hasn't? 

692
00:34:57,400 --> 00:34:58,880
How do you not know how to hold 
a hamburger? 

693
00:34:59,520 --> 00:35:01,840
It's not complicated. 
He's acting like this is such a 

694
00:35:01,840 --> 00:35:05,120
crazy burger, he can't even 
figure out how to hold it. 

695
00:35:05,560 --> 00:35:08,480
How do you hold the hamburger? 
How's that difficult? 

696
00:35:08,480 --> 00:35:11,000
It's just a hamburger. 
So, oh, there's so much going on

697
00:35:11,000 --> 00:35:13,480
with this. 
First of all, let's try to get 

698
00:35:13,480 --> 00:35:16,000
this thing. 
I don't even know how to attack.

699
00:35:16,000 --> 00:35:19,440
It got so much to it. 
Oh, there's also some crispy 

700
00:35:19,440 --> 00:35:22,160
onions on here as well. 
I see those kind of coming out. 

701
00:35:22,640 --> 00:35:29,680
All right, the moment of truth. 
That is so good. 

702
00:35:30,160 --> 00:35:34,120
That's a big bite for a big. 
That's a big bite, guys. 

703
00:35:34,840 --> 00:35:38,560
That that this is, this is what 
this is a big bite. 

704
00:35:39,240 --> 00:35:41,160
Now, just to put that in 
perspective, this is the big 

705
00:35:41,160 --> 00:35:44,120
bite he took. 
You can't even see where he bit 

706
00:35:44,120 --> 00:35:46,040
the burger. 
It looks almost completely 

707
00:35:46,040 --> 00:35:49,600
round. 
That is so good. 

708
00:35:49,840 --> 00:35:53,680
To him, that's a big bite of a 
burger nibbling on one. 

709
00:35:53,800 --> 00:35:56,040
One tiny part of the burger. 
Huge bite. 

710
00:35:56,680 --> 00:35:59,960
I, I this guy, I don't think 
he's, he's, he eats salads. 

711
00:36:00,080 --> 00:36:02,360
That's what he eats. 
He eats healthy. 

712
00:36:03,400 --> 00:36:08,960
He's eating really mixed greens,
healthy salads with avocado and 

713
00:36:09,120 --> 00:36:12,240
maybe some salmon. 
I mean, this guy is not eating 

714
00:36:12,240 --> 00:36:16,040
McDonald's every day. 
There's, there's just a million 

715
00:36:16,040 --> 00:36:20,400
giveaways pretending like this 
is a difficult burger to to 

716
00:36:20,400 --> 00:36:22,800
have. 
Most guys would be grabbing this

717
00:36:22,800 --> 00:36:25,120
burger with one hand on their 
way to work while driving, 

718
00:36:26,920 --> 00:36:28,640
pretending that it's incredibly 
unique. 

719
00:36:28,640 --> 00:36:31,120
Obviously he's doing for 
marketing, but just the whole 

720
00:36:31,120 --> 00:36:34,640
way that he's going about this 
feels like he's never actually 

721
00:36:34,640 --> 00:36:37,960
eaten a burger before. 
It's really, really quite odd. 

722
00:36:38,160 --> 00:36:42,120
It's distinctively McDonald's. 
Only McDonald's could do this 

723
00:36:42,120 --> 00:36:44,760
type of burger. 
But it also was unlike anything 

724
00:36:44,760 --> 00:36:47,640
else on our menu. 
So they didn't show him actually

725
00:36:47,640 --> 00:36:51,080
like chewing and swallowing it. 
Notice how they just cropped 

726
00:36:51,080 --> 00:36:53,160
that out. 
It went straight from the bite 

727
00:36:53,160 --> 00:36:55,400
that he took out and then no 
chewing it's. 

728
00:36:55,600 --> 00:36:59,360
Distinctively, McDonald's, only 
McDonald's could do this type of

729
00:36:59,360 --> 00:37:01,720
burger. 
But it also was unlike anything 

730
00:37:01,720 --> 00:37:04,240
else on our menu. 
It's a delicious product. 

731
00:37:04,240 --> 00:37:07,560
You know, you've got sort of. 
It's a delicious product. 

732
00:37:08,080 --> 00:37:12,200
The product is well tested. 
We had good, good return 

733
00:37:12,400 --> 00:37:15,080
estimates on the product and 
it's a delicious product. 

734
00:37:15,960 --> 00:37:18,720
It's a delicious product. 
You know, you've got sort of the

735
00:37:18,720 --> 00:37:22,120
cheeses and the gooeyness, but 
those crispy onions as well 

736
00:37:22,120 --> 00:37:24,120
gives a nice texture. 
And of course we've got the 

737
00:37:24,120 --> 00:37:26,720
Pickles. 
So I'm going to enjoy the rest 

738
00:37:26,720 --> 00:37:29,960
of my lunch. 
But big arch, try it when you 

739
00:37:29,960 --> 00:37:32,400
can get. 
It he's so happy, he can be done

740
00:37:32,400 --> 00:37:35,200
pretending to eat this and he 
can go back to eating his 

741
00:37:35,520 --> 00:37:38,080
extremely well balanced meal 
that he's going to eat after 

742
00:37:38,080 --> 00:37:41,320
this. 
And this of course has blown up 

743
00:37:41,320 --> 00:37:43,200
online. 
It's gone viral because it shows

744
00:37:43,920 --> 00:37:47,000
it's not good when you try to do
something and it's totally 

745
00:37:47,000 --> 00:37:50,400
inauthentic. 
He doesn't like McDonald's 

746
00:37:50,400 --> 00:37:52,640
burgers. 
It's easy to tell that. 

747
00:37:52,720 --> 00:37:54,240
You can just tell that watching 
it. 

748
00:37:54,320 --> 00:37:57,520
He doesn't like it. 
So I don't publish a a review of

749
00:37:57,520 --> 00:38:00,200
him eating a burger. 
It's not good for the brand. 

750
00:38:00,480 --> 00:38:02,800
They should pick McDonald's 
customers that are there eating 

751
00:38:02,800 --> 00:38:04,680
every day and say, what do you 
like about it? 

752
00:38:04,680 --> 00:38:07,040
They probably find people that 
genuinely just love McDonald's 

753
00:38:07,040 --> 00:38:09,440
burgers that eat it every day 
and their reactions would be 

754
00:38:09,640 --> 00:38:12,200
very natural. 
Not this. 

755
00:38:12,720 --> 00:38:16,480
This is not natural at all. 
The fake commentary, the fake 

756
00:38:16,480 --> 00:38:21,360
compliments, how insincere this 
review comes across, how 

757
00:38:21,400 --> 00:38:25,160
uncomfortable it is, how he's 
referring to it is a tested 

758
00:38:25,160 --> 00:38:28,440
product. 
All of it just comes across as 

759
00:38:28,440 --> 00:38:29,960
inauthentic. 
And if there's one thing the 

760
00:38:29,960 --> 00:38:33,400
Internet will see through 
immediately is inauthenticity. 

761
00:38:33,480 --> 00:38:36,880
And that is why this little 
review from McDonald's is the 

762
00:38:37,040 --> 00:38:39,040
fail of the week. 
That's it for this episode. 

763
00:38:39,040 --> 00:38:40,560
Hope you enjoyed. 
See you in the next one.