Welcome back everyone. We've had some big news over the
past couple of days. We've had two companies really
talk about different developments they're doing with
AI. The first one is Open AI.
Open AI scheduled for their developer conference to be one
day in advance of Google's and they showed off their
capabilities. And of course, the very next day
we had Google's developer conference.
That was yesterday where they showed off their capabilities
and of course these two companies are going back and
forth. It's the battle over AI over
ChatGPT and Gemini over artificial assistance.
Now what I want to do in this episode is go over a little
highlight of both of them and kind of compare and contrast.
We have two different companies here taking two different
approaches, but they're really competing over the same thing.
We'll go over who's actually winning in the Say I race.
Now, of course, we also have a lot of other news to get to.
The former SEC chair Jay Clayton Win on a CNBC, and he expressed
his disappointment and frustration over the meme stock
craze. We have news that Walmart is on
track of being taken over as the largest retailer by Amazon.
We also have a report that Amazon is pushing further and
further into traditional media, taking advertiser dollars from
cable TV. Another headline is that Netflix
is officially streaming live sports.
They've entered into this category from their own blog
posts. They say Netflix will be the
home of live NFL games this Christmas Day.
And then finally, does Polet give you 2 small serving sizes?
Well, there is currently an online trend of very frustrated
people that aren't getting big enough burrito bowls and they're
taking their frustration to TikTok.
They're actually calling for boycotts on the company.
We'll be discussing this and of course much more.
Now, as I'm sure most of you have observed, there's major
themes that drive the market over time, things that people
want to invest in because it's the new driving, innovative
force in the market this time period.
That theme is artificial intelligence.
We know that it's a buzz term. Some companies try to put
themselves in the artificial intelligence bucket when they're
really not. But it is a major thing.
And artificial intelligence is real.
It's present. It's actually generating
revenue. That's how you tell something's
actually a real product when it's generating sales and
profits. And artificial intelligence is
far past that point. We know from companies like
NVIDIA that there is massive demand for AI.
Now, I'm invested in a couple companies that have a lot to do
with artificial intelligence. In my main portfolio, the
passive income portfolio. I'm invested in tech companies
like Salesforce, which is a big AI company.
They have AI interwoven into everything they do, but I'm also
invested into Microsoft. Microsoft has a partnership with
Open AI. They're a major investor in Open
AI. They allow Open AI to train on
their Azure cloud. So they're also giving
infrastructure and support to Open AI.
So I'm invested in Microsoft, still very bullish on the
company and all these other companies that are big players
in AI. Again, Salesforce is 1, but you
also have Apple that may be partnering with Open AI to
integrate it into their devices. In my financial category, if you
listen to the earnings call of every one of these companies,
S&P Global is a big data company and they talk at length of
artificial intelligence into it's a tech company that builds
upon artificial intelligence. So all of these companies are
trying to move into AI as fast as they can, but one of the
companies that's had the biggest head start, the biggest lead and
some of the biggest talent is Google.
They're a company that I'm invested in, in my secondary
portfolio called the Story Fund. I track both of these publicly
every single week. Now in the Story Fund, I have
Google as the third largest position.
I invest in this company primarily because of Google
Cloud, but I also like their core business, Google Search.
I don't think their market shares being eroded, but I also
believe that Google's one of the biggest competitors in the
forefront of AI. They've been working on this
stuff for years now. Out of this battle, you have all
the players, you have all the kind of secondary companies, you
have the ones like this, sales forces and intuits that are
using AI, but they're not really at the forefront of developing
it. And then you have the companies
really developing artificial intelligence that is Open AI and
Google. These are two of the companies
that are at the very forefront of that.
And both of them just had their developer conference.
Let's start off by looking at an example of Open AI demoing their
artificial intelligence assistant.
And this is what they focused on.
An assistant that can really just help you do all these
tasks. Hello there, I'm here with my
son and I love you to tutor him on this math problem, but don't
give him the answer. You can ask questions and nudge
him in the right direction, but I really want to make sure he
understands it himself. And he's here in the room so you
can talk to him directly. See the amount of context he
gave the artificial intelligence, explaining that
it's his son he wants not not just for you to give him the
answer, but to help him learn. And he's in the room right now,
so you can speak directly to him.
A lot of context. And it's it's insane that this
artificial intelligence can take in all of that context and use
all of it appropriately. And then you listen to the
answer the opening eyes Assistant gives.
And it feels very human like, very, very human like.
Of course, I'd be happy to help. Let's look at the problem
together. Can you first identify which
sides of the triangle are the opposite, adjacent and
hypotenuse? Relative to angle alpha.
All right, so I'm pretty sure this is the angle alpha right
here, right? Perfect, correct.
Now, looking at the triangle, which side do you think is the
hypotenuse? That's the basic example, and it
it seems magical, just like Sam Altman described.
It's kind of magical because it feels like there's a tutor
sitting in the room with you, and this has huge implications.
It has, it has huge possibilities.
We already have a situation where there's not enough
teachers and there's more people needing one-on-one tutoring, so
this could come in very handy. It wouldn't replace teachers, it
would just help them do their job, help kids catch up, and it
would help kids accelerate that are exceptionally smart.
So obviously there's a mass amount of opportunities, and
this is basically what Open AI demoed.
They demoed the strength of their artificial intelligence
assistant. It did a lot of other things,
like live language translation. You could talk in one language,
it would spit it out in a different language in a live
conversation. It did things like photo
recognition. It would show you that it
recognizes your surroundings and it would talk to you.
And overall, the entire demo from Open AI felt a lot like one
particular movie. It felt like her the movie with
Joaquin Phoenix where he falls in love with an operating
system. It really felt a lot like that
movie. But overall, Opening Eyes demo
was live. It was incredibly impressive and
it was focused specifically on artificial intelligence
assistance, like having a very smart secretary, someone that
really knows a lot about everything, follow you along
throughout the day and converse with you and answer your
questions. It's almost like having a super
advanced Siri that just is with you in your pocket and will
answer any question you want. That was opening Eyes, major
selling point in this demo, and they're pushing a lot of these
updates out right now. Now, if we contrast that with
what Google did, they took a different approach in Google's
developer conference. They showed off a lot wider
breadth of capability. Let's go ahead and just take a
look at some of the highlights. The first thing they showed off
is an advanced photo search. It knows the cars that appear
often, it triangulates which one is yours and just tells you the
license plate number. You can even follow up with
something more complex. Show me how Lusia's swimming has
progressed. Here.
Gemini goes beyond a simple search, recognizing different
contexts from doing laps in the pool, the snorkeling in the
ocean. Google's leveraging their Google
Photos integration with Gemini so that it can give you further
context into your photo history, something that Open AI can't do
because they don't have a million photos of you.
Google was also very quick to demonstrate their infrastructure
advantage, how they're not just an AI company, but they have
everything vertically integrated.
They have the AI software on top of the huge infrastructure to
power it. So today we are expanding the
context window with two million tokens.
This represents the next step on our journey towards the ultimate
goal of infinite context. They show how it's not just a
thing on your phone that you aim at different things to try to
ask questions, but since they have such a huge breadth of
different software and services, they have the advantage of
putting Gemini into all of this, like Gmail for example.
Is an hour long. If it's from Google meet, you
can ask Gemini to give you the highlights.
There's a parents group looking for volunteers.
You're free that day. Of course, Gemini can draft a
reply. They also went on and showed off
something called Notebook LM. So this is a new thing from
Google where it it looks like a notebook where you can have
conversations, but it actually takes notes from meetings and
different notes on different subjects and it has an AI
conversation with it and you can actually interject with this AI
conversation. He also gives the example of
teaching something to his son. And what's amazing is that my
son and I can join into the conversation and steer it
whichever direction we want when I tap join.
Hold on, we have a question. What's up, Josh?
Yeah. Can you give my son Jimmy a
basketball example? Hey.
Jimmy, that's a fantastic idea. Basketball is actually a great
way to visualize force and motion.
Let's break it down. OK, so first imagine a
basketball just sitting there on.
Both of those voices, both the male and female voice, are AI.
They sound so realistic, just like Open AI.
They sound really good, but they're both AI voices now.
They also showed off the lens where you can look through on
your video camera. Similar to Open AI, it'll give
you context about what you're looking at.
It obviously understands on the fly everything that you're
pointing the camera AT and it will talk with you and explain
what it is. When I I was watching this, I
thought that Open AI is a little bit better.
Honestly, it sounded a little bit more fluid, but it's
basically the same idea. Both Google and Open AI are
trying to do the same thing here.
Google also showed off that they have this in glasses form.
So she's wearing glasses now with a camera and it's giving
her context. Google went over the
advancements in their photo generative tools like Imagine 3.
Today I'm so excited to introduce Imagine 3.
Imagine Three is more photo realistic.
You can literally count the whiskers on its snout with
richer details like this incredible sunlight in the shot
and fewer visual artifacts or distorted images.
They also shifted over. From images to music with a
music AI sandbox. A suite of professional music AI
tools that can create new instrumental sections from
scratch. Transfer styles between tracks.
They talked about VO, the new generative video tool where it
can take text prompts like a fast racing car, and it makes
videos from it. Now they say that you can extend
the amount of time you can change the context, and it's in
1080, so the actual resolution is pretty high for generative
video. The thing that impressed me the
most about Google's capabilities was not how good it was at one
particular thing, but how many things they're working on at
once. That was the overall feeling I
got from it. With Open AI, you had a super
well polished tool that was really good at like one thing,
which is being an artificial intelligence assistance.
Now I think that's a good strategy from Open AI because
that's a very good thing to be good at.
So they're going in a good direction trying to specialize
in this artificial intelligence assistance.
But I compare it to what Google's doing and they're just
taking different approaches. Google's breadth of things
they're working on is so much wider.
They're auto answering emails, auto returning products, they're
generating different videos. They also have the artificial
intelligence assistance and then it continues on.
They're wrapping AI into their search engine.
The advancements in their search engine are what I believe are
the most important part of this meeting.
Find the best yoga or Pilates studios in Boston and show you
details on their intro offers and The Walking time from Beacon
Hill. You get some studios with great
ratings and their introductory offers and you can see the
distance for each like this one. It's just a 10 minute walk away.
This is like Google. Search on Hyperdrive Google
search where you can add in a ton of different contexts and
you can make really elaborate questions and it will understand
the advanced context. Think of more examples of this
advanced Google search where you can ask it to create meal plans
or trip plans and it does it for you.
And you can export your meal plan or get the ingredients as a
list. There's been a lot of chatter
about LLM's like proximity or ChatGPT taking market share from
Google search, and I just don't see that happening.
Especially with this advanced Google search that interwees
Google search with artificial intelligence giving it these
advanced capabilities. I think it's now becoming even
less likely that Google search loses market share.
Google continues to add on all these little AI advancements to
Gmail, which are things that they couldn't do without these
investments in AI and their infrastructure.
And again, no one else can replicate this because no one
else has Gmail. It's just Google that owns these
properties. Gemini now has an advanced trip
planning tool. Or if you're focusing on a
vacation or traveling somewhere, you can lay out exactly where
you're going, how long, the type of money you want to spend on
this trip, and it will give you an entire itinerary tailored to
the exact thing you're typing in.
In some ways, it looks like Google's actually expanding
their lead in search and information.
They're not losing it. And this conference continued on
with more examples of AI being used with different applications
in different contexts. And I believe that's the biggest
differentiator between Open AI and Google.
Open AI is a very highly polished artificial intelligence
used for very specific reasons. Google is a massive
infrastructure company with massive amounts of different
properties and context to wrap their AI into.
So when we look at these two companies next to each other,
Google's narrowing the gap with its AI capabilities, but it also
has this massive infrastructure advantage.
Open AI is going to have to partner with bigger companies to
continue to develop like they are.
So I look at them in different categories and as far as I'm
concerned, when I look at Google and my investment in the
company, I currently have a $41,000 position.
This has been a company that I've owned for some time, and as
of right now I really just have no concerns owning them.
As far as we can see right now, Google's still on track.
Now moving on, we get to the continued news developing of
GameStop. We know that Roaring Kitty made
his epic return by tweeting an ominous meme of a gamer leaning
forward in his chair, even though it didn't even reference
GameStop it. Caused the stock.
To immediately go up 100% as many people got excited that it
was the first time that Keith Gill or Roaring Kitty had
tweeted in over three years. Now, if we look at GameStop
today, of course like you would expect, it's a bit of a roller
coaster. The stock is down 32% on the day
after going up like 120%. And then it's having its ups and
downs during the day. You have day traders, meme
stirs. People like Dave Portnoy betting
on the stock using leverage and options, and they're trying to
get ahead of it, trying to get out of it.
The stock has been halted repeatedly over and over again
by the SEC, and as always, this draws a lot of media attention,
a lot of highlights, a lot of headlines.
And we have here the SEC chair, or at least the former SEC
chair, making an appearance on CNBC to show his disdain of
what's going on. Let's go ahead and listen to
some of this. It bothers me.
It bothers me on on many levels. I I think your last guess got it
right. It's it's a lot closer to
gambling than it is to trading, and it's certainly not
investing. And you know, is a is a tweet
really investment advice? The first thing he says out of
out of the gate, the first thing he says in this interview, it
bothers me. It it bothers.
It bothers him. People are are doing these
things trading. They're they're gambling.
How dare that happen in his stock market?
How, how dare people gamble and do dumb things in my stock
market bothersome. Let's go ahead and listen in on
why it bothers him so much. I think we've learned over the
last five, 6-7 years that a tweet is really never investment
advice it. Never even mentions that the
companies involved. I mean, that's what's so
phenomenal to see massive moves like this, when really it was
just the implication that he may be setting up and taking notice.
That's the tweet we're talking. About yeah and and we can, we
can debate. That is exactly what Roaring
Kitty tweeted. A picture a a pen drawing
picture of a gamer leaning forward in a chair.
And that's what bothers the SEC the the former SEC chair is
roaring Kitty having this type of power that he can tweet one
meme and it will cause a a random stock, at least not
random, but one associated with him to go up 100%.
They whether that's, you know, let's put it this way, whether
it's legal or illegal or it's manipulation or not.
But I have a question for Keith Gill, which is why not tell
people why you did, why not come on the show and say, are you
saying that that that GameStop is now a good investment
opportunity? I think here we we just have
another illustration of how incredibly detached and out of
touch the SEC is with regular investors.
He acts like Keith Gill committed some crime by tweeting
out a picture of a meme that literally has nothing to do with
the stock. Didn't mention it, didn't have
any hidden meaning. There's no call to action of any
kind. He just tweeted.
And the former SEC chair is bothered by his tweet, by one
person tweeting a meme and he's calling on him like like he has
some type of power come to me, appear to me in front of my
congressional committee here on CNBC as if CNBC is the authority
leader in the stock market and anybody that has any type of
influence has to come on a CNBC. You just see the level of
detachment, how how out of touch these SEC members are.
What did he actually do here? You notice that Jay Clayton here
says we can have this debate over what's legal and illegal,
but why don't we just have him on?
No, why don't you just say it, Jay?
Nothing he did was illegal. It wasn't illegal.
That's why you don't want to have the debate, because the
debate would be this quick. Was it illegal?
No, it wasn't. What he did was completely
legal, and that's why you don't want to talk about it.
Did he do something illegal, Tweeting out a picture of
someone leaning for it in a chair?
That's not even a debate, Jay. There's nothing even remotely
close to illegal there, he continues on with this
interview. We don't know.
What we know is that triggered what I would say is euphoric and
speculative buying among the retail community, which is never
a great thing. So this was a really interesting
proposition put up by Matt Levine from Bloomberg yesterday.
Just what about the idea if Keith Gill, Warren Kitty, who
tweeted this, were to have gone on and bought options ahead of
time, tweeted this and then made a lot of money based on
everybody going into this and the price going up, is that
illegal? Now the question being posed
here. Is if Keith Gill, Roaring Kitty
went on to his brokerage and bought call options before
tweeting, knowing that the tweet would cause the stock to go up,
would that be illegal? So we have Keith Gill buying a
stock ahead of time before releasing it publicly.
And this is hypothetical. We don't even know if he
actually did this. But just assuming he did,
assuming he did buy the stock hypothetically, and then it
caused the stock to go up when he tweeted, would that be
illegal? That is exactly what Warren
Buffett has done his entire career.
He secretly buys stocks without anyone knowing, and then once
it's released that he bought into the stock, it causes the
stock to go up by billions of dollars.
They're posing questions to a retail investor that they don't
post a billion dollar hedge funds and people like Warren
Buffett. In fact, Warren Buffett got
special approval to hide one of his purchases for eight months
now because he's still accumulating shares and he
doesn't want the knowledge of him buying it to cause a stock
to go up. He wants to have his entire
position already purchased. Before anyone else finds out
about it, because he knows when other people find out about it,
the stock will go up. So again, you have this type of
dichotomy. You have this unfair biased look
where the SEC looks with far greater scrutiny on retail
investors. Then they do some of the biggest
hedge funds in the. World, when it should be the
complete opposite. They should look with far
greater scrutiny on bigger hedge funds than they do with people
like Keith Gill. And we have his answer here.
It's not insider trading that's that's that's clear unless he
and he's trading on his own information.
That's why it's not an insider trading.
But is this, is this something that we should be tolerating in
our markets? He goes on to acknowledge right
away that there's nothing illegal about it.
So technically, if we're enforcing the law like we're
supposed to do as the SEC, we're supposed to enforce the laws on
the book. Well, there's nothing actually
illegal about it. But should we tolerate it?
Should we have this type of action in our market?
This should be frowned upon. I find this type of Country Club
attitude that the SEC has on these topics very amusing.
They act like they have disdain for poor investors that are
going into a meme stock. Should we tolerate this type of
behavior? Well, forget all the rich people
that move stocks around like crazy and advertise their
positions like crazy, but this is what we should focus on.
This whole thing is just silly. Why is a former SEC member
coming on to CNBC and acting incredulous over a couple
investors doing legal things, doing things that he, by his own
acknowledgement, say are completely legal?
He continues on with this, saying that this should be
looked at with greater scrutiny. You know, whether it's legal or
legal, I don't think so. And that's why I say, why
doesn't it, you know? What does that mean not to
tolerate? So the idea I would think is you
look at this more in the context of market manipulation, right.
And the question is, are you allowed to manipulate the
market? People, by the way, publish
things all the time and they say, hey, I like this stock and
they, you know, hope that other folks follow them.
Is that market manipulation? Generally not.
Maybe, maybe, maybe not. So what?
So you have Andrew Sorkin here explaining the pure hypocrisy of
this SEC former SEC member saying that many people come on
and they give their case for a stock and it causes in many
cases the stock to go up in price.
Is that market manipulation? And he says right away, no, it's
not. It's not most of the time, but
just with Keith Gill, just with these meme investors, that's
when we should look at it. Is the distinction in your mind
as somebody who ran this department and who's looking at
and cares about the integrity of these markets?
Well, that's why. That's why I'm saying, OK, we
can we can discuss what are exactly the facts and
circumstances around the publication of this tweet and
the like. But in but in the meantime, if
you care about the markets and you care about investing, come
on this program. Tell people.
Tell people why you did this. From your lips, God bless you.
We hope he does. So this is a big problem,
according to the SEC chair, a problem that should be looked at
because we want to protect the integrity of our markets.
Of course, with this problem, he doesn't actually illustrate that
there's any victims. No one's being victimized by
this. No one's being hurt by it.
You can invest in it and either gamble your money or not, just
like anyone else investing money into highly speculative assets
so it doesn't affect anyone else and there's no victims.
But for some reason this is a big problem, and it's only a
problem when small retail investors do this.
That's an important part of this equation.
If we look at other examples of wealthy people that have gone on
to CNBC like he says, you see a much greater problem that the
SEC refuses to look at. Let me take you back to October
of 2020. We're here on CNBC and we have
Andrew Ross Sorkin and Chamath Polyhopatia.
He's going to talk about one of his specs called Clover.
Let's go ahead and hear what he has to say about Clover.
Call a spade a spade right now. This is a money losing company.
It does not make money today, correct?
It's still losing money. On a per unit basis, on a
operating margin basis, it is almost at break even in
profitability. By 2023, we will have overall
profitability. You have Chamath Polyhopatia
pitching one of his specs that he's being paid for to promote.
So we have certain agreements with different parties, but he's
basically a sales person for these SPAC's.
Now, SPAC has a way of taking a company public where you don't
have to go through the normal route.
You can avoid all those, you know, annoying things like
making sure the company actually has its accounting together.
But either way, he's promoting this company called Clover,
which is a health company and he says right off the bat that it's
close to profitability. It's really close.
It's right on the brink of profitability and it will be
overall profitable by 2023. Well, it's 2024, so let's go
ahead and take a look at that forward-looking statement from
Chamont. We have the EBITDA of the
company In 2023 it lost $180 million.
If we look at the free cash flow, it lost $116 million in
free cash flow while paying the executives employees a nice
stock based compensation bonus of $140 million.
So it actually paid the employees more money than they
actually lost in cash. If we look at the net income of
the company, it lost 213 million.
If we look at the earnings per share, it lost $0.44 per share.
On an overall profitability basis, Clover lost money every
way you can. No matter what accounting way
you look at the company, it lost money.
Now of course, predictions are hard, and I don't think Chamath
believes he can predict the future.
So there's always a chance things go worse than expected.
But you have a 6 minute interview here where Chamath
answers every question in the most glowing terms possible,
promoting a stock that he's being paid to promote on live
television. He goes through in great detail,
talking up this company like it's the future, you have to
invest in it. He's directly selling this
company to the public in order to get the stock price to go up.
That appearance was in October of 2020.
The stock price from that point has dropped over 95%.
You can see the great decline over time.
Investors in this company lost almost all of their money.
Now maybe my memory is a little bit unclear.
Maybe I just forget. But I don't remember the time
where the SEC chair went on to CNBC soon after the interview
with Chamath and expressed his disdain for someone going on and
trying to sell a SPAC. Someone trying to go on and sell
something that's highly speculative with very poor
fundamentals. Do you remember that interview?
I don't. And this wasn't the only time
this occurred. In September of 2020, Chamath
once again went on to CNBC and this time he got an entire 15
minute segment with slideshows. He had slides accompanying his
appearance to sell another SPAC. If we look at this, this one was
called Open Door. Let's go ahead and listen to
some of it. Being what we love to call a
virtuous cycle. So how does this work?
You as a consumer, you can now go to opendoor.com and within 24
hours they will give you an all cash offer for your home.
And if you choose to sell within three days, you can sell your
home. It's a really incredible
experience. And so you can start to
understand how they can build a really powerful competitive Moat
because the more offers that they're able to make, the more
homes that they will buy and sell, which means the more
markets still dominate, which means the more value added
services that they can automate online.
For example, mortgages, title escrow, all these things where
you used to have hundreds of pages of documents they can
streamline through a mobile app. It also allows them to work with
banking partners to secure large pools of capital at cheaper and
cheaper rates. They can pass all these savings
on to you and all of that drives more demand to the business.
Now that's what got us really excited about the company.
But then we took a step back and sort of Buffett and Monger
language asked what's our margin of?
Buffett and Monger language this continues on.
It's just, it goes on and on for 15 minutes.
You have Chamoth and one box hair.
You have the virtuous cycle right here.
And you have Chamoth, glowingly, with his excellent communication
skills, selling this stock to investors, and CNBC knows it.
They're airing this whole thing. They get very little pushback to
him the entire time. And they know that he's being
paid to promote these specs, these companies that have very
unproven fundamentals. They have no robust history of
finances. Everything is built on these
narratives that people like Chamath are saying.
Now again, this was September of 2020, and we can take a look at
the outcome. If we look back five years, we
have September of 2020 right there at 10/20/20 is around
$24.00, right? So around $2425 and we can look
at the stock price right now, $2.42.
So investors once again got completely crushed and another
garbage company that Chamath promoted directly on CNBC for a
15 minute segment. Now you may have to jog my
memory because I must be getting very forgetful.
I don't remember the time. The SEC chair went on to CNBC
after these appearances by Chamath and offered his disdain,
calling Chamath out by name like he is now with Keith Gill.
Keith Gill, Roaring Kitty committed the crime of tweeting,
tweeting out a picture of a meme completely unrelated to a stock,
and according to the SEC, that is enough for him to appear on
CNBC. Call him out by name, say that
it's not appropriate and that it needs to be investigated.
But when people like Chamath go directly onto CNBC to promote a
stock they're paid to promote and dump it on retail investors
where it subsequently loses 95% of value.
What do you get from the SEC? Crickets.
You don't get anything. And therein lies the problem.
Now let's go ahead and move on to some headlines.
There's one big headline here, and I don't want to spend too
much time on this one. It's basically a story from the
Wall Street Journal that Walmart is on track to be overtaken by
Amazon. And this is like a similar story
that we hear for all different types of industries.
I remember hearing this about FedEx and USPS.
Amazon overtook them in logistics.
Now Walmart, the biggest retailers on track to be
overtaken by Amazon in retail sales.
Now I don't think this is actually that meaningful.
It's true that Amazon will eventually overtake Walmart.
It's just the dynamics of the industry.
Amazon has the dominant share of online marketplace and they're
growing much faster than Walmart.
But I don't think this actually serves Amazon that well.
The only thing I think this news will accomplish will make it
easier to have those catchphrases by regulators.
Amazon is the biggest retail company in the world.
That's what they'll say. No longer is it Walmart being
technically bigger than Amazon, but Amazon will be #1, which
they'll now be able to say. Amazon is the biggest retail
company in the world, which will almost always be exclusively
used against Amazon. Now there's other news for
Amazon. It's a little bit more positive.
They are growing in digital media and they're also growing
in traditional media. We have a headline here that
Amazon's appearance at Upfronts highlights its push beyond
digital ads into the traditional media.
They also mentioned that the company said its ad supported
streaming content now reaches 175 million US viewers every
month. So 175,000,000 is a lot.
The only company that really comes close to this is Netflix.
They say up from more than 120 million in 2021.
So this is growing quick and I think it's going to continue to
grow quick because Amazon is pushing out a lot of big content
on Prime. It also disclosed that Prime
Video counts 200 million global customers, 115 million of whom
are in the US So we know that Prime is growing closer to 300
million and Prime Video is now above 200 million.
I've said it many times before, I think Amazon is one of the
biggest advertising winners in the world.
They'll continue to consolidate ads and I think they're just
going to steal from cable TV. Cable TV advertising dollar
continues to go down as Amazon and companies like Netflix
continue to gain. Now we also had some surprising
news, but not that surprising if you've been following along news
from Netflix. There is news now that they are
going to live stream NFL on Christmas Day.
They say specifically that Netflix will be the home of the
live NFL games this Christmas Day and in 2025 and in 2026.
Netflix is one of the companies that does more strategy shifts
than any company that I ever have been invested in.
They change their direction and they evolve and they change what
they're doing seemingly overnight, and that's part of
their culture. If you're invested in Netflix,
you need to know that this is part of your investment, a
company that will change what they're doing on a dime.
This is both a good thing and a bad thing, but I think
overwhelmingly a good thing. We can look at certain examples
here. Netflix said that they were
first ADVD company and they transitioned to a streaming
company. They said that they're a company
that's going to license content and then they transition to a
production company where they produce their own content.
They said that they were a company that would never have
advertising and now they have advertising tears.
They said that they're a company that allowed for password
sharing and now they're doing a password crackdown.
They said that they're a company that wouldn't have live events.
Everything would be on demand. Now they have live events and
their company that said that they would never have sports
because it was too expensive. Now they have live sports, their
company that's constantly evolving and shifting.
Now you can take this the way of them not doing what they say and
sticking with the every previous statement they've ever made.
That's not really how I view healthy companies.
Healthy companies evolve and mold and what's best for the
company. In the current situation with
Netflix, their company notable for not having a lot of red
tape, when they make decisions, they can make decisions very
quickly. They can pivot into things very
quickly. You don't have layers and layers
of upper management to go through.
Netflix employees are given a lot of autonomy over their job.
So when I look at this news, it is surprising because Netflix
has stayed out of live sports for a long time.
They've reiterated that it's not lucrative, it's not economical,
and I still believe that that's a true statement.
The only reason that I believe Netflix made this decision to
broadcast these two NFL games is because it made financial sense,
because they believe they'll get a return on their investment.
There's no other way possible that I think they'd make this
decision, so they must have carved some attractive deal with
the NFL where the viewership and the additional subscribers and
the engagement will be worth the cost.
Now finally, we move on to the story of Chipotle being
boycotted by social media. We know that there's a lot of
danger with social media, especially these name brand food
companies. We've seen it happen before
where companies like Starbucks are being boycotted by a lot of
people because of their so-called participation in
supporting Israel over Palestine.
Now if you look at the data, that's not true.
Starbucks corporate has not supported either side
individually, but either way there's always going to be
boycotts and the risk of people gathering together on social
media to try to prove a point. And in this case, we see it with
Chipotle. People are upset that they're
not getting the portion sizes they deserve at Chipotle.
And here's an example. This is a viral TikTok of a
Chipotle employee under serving them, not giving them big enough
portions. Chicken.
Oh. Man, I'm.
I'm OK. I'm OK.
He gives them. He just walks out.
The problem here, of course, being that she's not giving him
a whole lot of food. These serving sizes, these
scoops he's getting are a little too small.
And this type of trend of showing Chipotle not giving
enough food is blowing up on TikTok.
We now have TikTok Vigilantes going after Chipotle in the most
devastating ways they can, first of which is taking down the
review star rating on their app breaking news.
As of last night, we have officially gotten Chipotle down
to a 4.6 star rating on the App Store.
Welcome to day four of trying to get Chipotle to change their
outrageously small portion sizes.
We're sick of it. First and foremost, keep the one
star reviews coming. We're starting to call it.
If you are willing to go to your nearest Chipotle, order your
normal stuff, and if the portion sizes aren't top tier, walk out.
So there you have him, instructing masses of people to
give Chipotle's app A1 star review and for them to visit
Chipotle's, Go through a meal, crate the whole thing, and then
walk out halfway so that Chipotle has to waste that food
and throw it away. And there's more of these.
There's just more and more of them never ending videos about
Chipotle and them not giving you enough food.
Hi, can I get a chicken burrito please?
OK. And white rice or brown rice?
White rice, white rice. OK, you want black beans, Pinto
beans. There you have it.
It gives them a tiny portion of rice.
You get the point. I've been sent these clips by
various people, members of the community, and viewers here with
great concern that this is this is emblematic of the downfall of
Chipotle. After all, what other evidence
do we need that the company's in serious trouble than people on
TikTok complaining? That's basically that's like the
the silver bullet. That's the one thing that really
crushes a company is when people online complain about the
company. Let me give you another example
of a company that people complain about in mass millions
of people. Just a couple years ago, here's
a highly critical video, another critical video of a large
established company. But this time it's not Chipotle,
it's Netflix, and this was released one year ago.
What does this mean for Netflix? Well, it means that they're
going to see a drastic decline in subscribers, I imagine,
because they fail to realize that this isn't some kind of
must have item. It's not some inelastic good
that everyone needs to own. It's a luxury, and it's an
expensive one and it's a catalogue of mostly dog, more
like net, am I right? So if they can't share an
account with someone that's already paying, it's not like
that person's going to go out and subscribe to Netflix.
The catalogue's not strong enough for that.
They'll just go to a different service or they'll start
pirating. So I imagine once this fully
goes into effect, Netflix stock price will be flushed straight
down this year and just sync to the depths of hell.
It's going to collapse. That video got 3 million views
and it was released one year ago.
And if you look through the comments, every single comment
agreed with them. Netflix was going to tank.
All the investors are going to lose all of their money.
Everyone was going to cancel Netflix because they're doing
something so dumb. In 2022, there's another video
released called The Rise and Fall of Netflix.
This is a documentary made by Cold Fusion.
For over a decade, the Netflix brand has been synonymous with
innovation and disruption. This competition, along with
creative choices and growth struggles, has LED Netflix into
dangerous territory. Netflix's stock price has
plummeted by 70% as of the timing of the production of this
episode. Staff are being let go and
hundreds of thousands of households are unsubscribing,
with even more expected to leave in the coming year.
That documentary, as you may suspect, goes over the rise and
fall of Netflix, how it rose to the top, and now it's basically
game over. And that again was released in
2022 when Netflix was at the absolute bottom stock price.
If we look today, fast forwarding only one year, we can
see the amount of subscribers that Netflix gained over the
trailing year. We can zoom in here.
Netflix gained last quarter 9.3 million subscribers.
The quarter before that, 13.18 point 76 and 5.8.
The exact year that people were complaining online about Netflix
was the year that they gained accumulatively the most
subscribers throughout their entire history.
Aside from COVID, this was one of their best years ever.
And in many cases, that's the best time to buy a stock when
sentiment is at the lowest. That's when I bought the
majority of my Netflix position in 2022 and early 2023.
That's when most people are saying that the company is over.
Now if we look at Chipotle, we see a lot of people here
complaining about the food and the portion sizes, but there's
nothing in the business that's actually causing concern.
We can look at the amount of locations they go up every
single quarter. We can look at the average unit
volume. This is how much each location
is selling every single quarter. It has gone up consecutively
every single quarter since 2020. There's always going to be some
cases where people complain online where they're unhappy
about a service, especially one like Chipotle, where it's not
perfectly consistent customer by customer.
There are some employees that do a bad job.
They don't give enough food. So there's going to be some
unhappy customers that go to those locations.
But overall, when we look at the broad breadth of data here, when
we look at the actual numbers, I don't see anything concerning
with Chipotle or their value proposition.
So despite what TikTok would have you believe, the
overwhelming majority of customers at Chipotle are happy.
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