Chit Chat Stocks - Buying OpenAI With Robinhood's Tokenized Trading; Figma's S-1 Drop; Tesla's Dire Situation?

Episode Date: July 4, 2025

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (03:00) Figma's IPO and Market Position (13:10) Tesla's Delivery Numbers and Market Challenges (28:03) Robinhood's Tokenized Trading and Market Implications (30:59) Understanding OpenAI Tokens and Their Implications (33:30) Concerns Over Special Purpose Vehicles and Investor Rights (36:47) The Role of AI in Workforce Dynamics (37:55) AI Hiring Trends and Scandals (42:07) The Impact of AI on Company Hiring Practices (46:29) The Race for AI Talent and Its Financial Implications (51:56) Evaluating AI Hype: Over or Under? (59:30) Coupang's New AI Cloud Initiative ***************************************************** JOIN OUR NEWSLETTER AND CHAT COMMUNITY: https://chitchatstocks.substack.com/  ********************************************************************* Chit Chat Stocks is presented by TSOH Investing Research. Long-term equity research with 100% portfolio transparency.  Subscribe Today: https://thescienceofhitting.com/  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM Media Group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. welcome to chit chat stocks i am one of your hosts ryan henderson and i am joined as always by the one and only brett schaefer we have plenty to discuss this week i guess i should preface this and say this is the chit chat stocks power hour we do these every week on thursdays at five o'clock 5 p.m eastern time live on youtube they go out friday morning so if you listen to listening to

them on pod in podcast format and you want to ask questions you can also do that on youtube look up chit chat stocks and tune in on thursdays but we've got plenty to discuss this week tesla delivery numbers figma files for ipo which is probably one of the most notable ipos of the last two or three years uh there's uh robin hood tokenizing trading there's plenty of i guess scandal and questions being raised with that. And then we have a whole bunch of AI topics. We are talking about maybe Meta and Mark Zuckerberg's exorbitant payments for employees, some automation going on at Amazon and a number of other topics as well. But before we get to that, we want to talk about our friends at Interactive Brokers.

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head on over to IBKR.com. Interactive Brokers is a member of SIPC. Brett, where do you want to kick things off today? One sec, was typing something to the chat there. Let's talk Ryan either tesla figma or robin hood i liked your topics this week so dealer's choice you go ahead let's start with figma i think this is pretty big news this is one of the companies that has i imagine a lot of public markets public market investors have been clamoring for this one to go public i think sort of the big bucket is like open ai stripe spacex and maybe you could lump canva anthropic in there as well i guess there's a number of them yeah but figma pretty look pretty good looking s1 if you recall a couple years back i think this was must have been two years ago now

adobe tried to acquire them i can't remember the exact price tag on it i think it was around 20 billion dollars 20 i see uh brett mouthing it there he's currently on mute you said 20 billion 20 billion yeah yeah so it was a premium price tag i would i would call it a premium price tag but the numbers do look pretty good let me give a little bit of context on what figma actually does though. Figma is a collaborative design platform. So companies can go from design to development a lot quicker using Figma. Previously, those segments were pretty siloed. So you'd have designers come up. If we go back 10 years, even 15 years, you would create a design, you download the file you'd send it to someone it wasn't even like this co-working digital space

it was actually very siloed you'd send over independent work from one another and then you could edit it from there now you can do that all in one place it's like google docs except for graphic design essentially and then once you had a design that you actually liked you could this is the old days you would send it to the development teams and you typically say like, make this, like, I want you to make something like this. Now Figma eases that transition. So here's a quote from the S1 says dev mode, which is one of the features of their platform. Dev mode organizes information and surfaces data like design specifications and measurements in ways that are both useful and intuitive for developers. So 30% of their monthly

active users are devs. It's a pretty slick platform. Fiscal AI uses it. We use it on our own personal teams. 95% of Fortune 500 companies use it. And it really does reduce friction for enterprises going from design to development. To go through some of the numbers, they had $821 million in trailing 12-month revenue. They're growing 46% year over year. I believe that was trailing 12-month figures, 18% non-gap operating margin. And then here are the two numbers that stood out to me, really. The first one, I already mentioned it, 95% of Fortune 500 companies use Figma. That's really good penetration rate for enterprise adoption. The second one, 132% net dollar retention rate. So the majority of growth, the majority of revenue growth today is coming

from existing customers. And it really starts to spread within an organization once there's adoption. So say one designer picks it up, really likes it. You can add multiple seeds. At this point, a lot of people know what Figma is, but say you don't, a single person who really likes Figma can adopt it in an organization and it can start to spread. And you're seeing that in the net dollar retention rate. Now, if you're looking at the gap figures, like if you're going through the s1 yourself the numbers are going to look a little strange for two reasons one they got a one billion dollar payment from adobe for the merger breaking it was blocked by antitrust not bad phenomenal for their cash flow for 2023 i believe uh yeah margins fantastic

um but the other part is they expensed a lot of employee options last year which makes profitability look horrible. I think their margins look like minus 100%. That's not really what's going to happen moving forward. As a public company, margins should look a lot better. There was one weird thing that stood out to me from the S1. In general, I thought it was a really solid S1. And I thought it looked like a pretty well-run company. I thought the founder letter looked pretty good and he was pretty pretty frank about basically we're going public in a world when a lot of private companies are staying private and we're going to try to basically keep maintain the same attitude which is we're going to continue to invest in the platform and the product this

we're not going to optimize for margins in the short term we're going to make long-term investments they said they're making a lot of investments around ai right now which i like the candor however one weird thing that stood out to me there was a basically when you get down to the compensation segment i'm not sure what they call that in the s1 says we awarded each of our named executive officers a one-time cash bonus in recognition of their efforts with respect to the abandoned merger so they gave it when figma got a billion dollars from adobe for the merger not going through they just the ceo just took a five million dollar bonus does it does that seem weird is the ceo the founder yes do you know yes yeah that is weird i assume he has a

large stake in the business so any sort of bonus payment and stuff like that frustrates me when say you have a company valued at 10 billion dollars the guy owns 10 of it he is worth a billion dollars and we need to just keep paying him out of our capital structure and all the money we've gotten. Yeah, that's never great. It seems like they got a good head on their shoulders. I don't know if we need to pat ourselves on the back for going public when you almost have a billion dollars in revenue. Not sure. I really think that's going to make your company any sort of any special or anything like that. I think this business is good. The one thing is, and you mentioned the AI investments with software, with design software,

Especially we talked with Brayden last week, founder of Fiscal AI. There's so much uncertainty in this market right now. And it makes me nervous about investing in these companies, which I'm assuming Figma is going to come out at probably 10, 15, 20 times sales. Not too attractive for me. Yeah, a little. This was kind of fascinating to Adobe stock dropped 4%. just purely on the s1 coming out which doesn't didn't really make any sense honestly i would have expected i was kind of expecting bigger revenue figures i would have thought this had

crossed a billion in revenue by now um purely based on the fact that when they were uh when the acquisition was announced initially i knew they were doing like half a billion i knew they were growing really quickly so i just assumed they were doing a billion by now but yeah adobe stock dropped four percent on the when the s1 came out adobe for context has 23 billion dollars in revenue figma has 821 million dollars in revenue it i did not realize how i guess big adobe is relative to some of these uh competitors like figma and canva so i guess two questions if you had to guess, what market cap do you think Figma will come out at?

And then second question, do you think there's the Adobe drop was warranted? I think Adobe and some like I can understand the Adobe stock drop. I can also understand why people are getting long today because they believe it's a

historical compounder, a really fantastic business just in a vacuum. You know, those unit economics, recurring cash flows, really large market opportunity. And now it's trading at a reasonable valuation. So I can understand both sides. The stock's not really for me, but I definitely see it being warranted because of those risks.

Now, Figma, when it comes out, I would guess $20 billion. I don't think the market is that aggressive right now for this type of company. I could be wrong. I think it maybe has a chance of coming out at $20 billion and then seeing some stuff that's happened with Circle and those ones where you have the restricted float and then maybe it doubles from there. Who knows? That seems to be the type of market we're in.

Are we buying? No. But yeah, that's what I think. What about you? Yeah, I would guess. My initial thought is like 20 times sales, but that means you're looking at what? $16 billion market cap?

Yeah. Adobe offered to buy them for $20 billion a year and a half ago. my suspicion is that it's going to fetch a premium to that i i don't know why i i just think people will anchor to that so i would not be surprised if this came out at 25 or even 30 billion dollar market cap do you have interest in buying this well obviously depends on the price But yeah, I think the business is really solid and the enterprise adoption has been great. A lot of the numbers just look fantastic. It's a really well-run software company and a really useful product to a lot of teams. So yeah, I would certainly – it's in my wheelhouse I think in terms of I can understand it and the numbers look good. I'd be up for it.

But I – if we assume this does trade at 20 times sales, I'd be a buyer of Adobe relative to Figma. Yeah, makes sense. Makes sense. All right, we have a question from the chat here. Do you guys think the Fed will cut in July and should they? I don't know if they should, but I actually – given the jobs report, I don't think they will because that's what they've been signaling. That's about all I got there. And then do you guys – Ryan, do you have any thoughts?

No thoughts on whether or not they will or should lower interest rates. I personally trust Powell's judgment. but i just i think it's so gross what's happening with the political like pressure on him and i believe the son of the founder of pulte group homes which has maybe like the of course they want interest rates to drop which yeah a that's flawed that he runs it i assume he has ownership in pulte group which is one of the biggest home builders in america the of course he wants it to drop but he's like we need to investigate powell for being for having some sort of a political agenda and then the other thing was this like

trump trying to name his replacement in advance like before powell's even out of the seat that stuff just irritates me like it's so it feels so short-sighted and kind of self-serving i guess i don't know if that's to be unexpected but it feels short-sighted and self-serving to put all this pressure to have interest rates at one percent which is what they want like they want them at one percent no that's not happening did you see the table there was like drafted message from the president that's it was like a list of all the uh federal interest rates and by country and it was like the the lowest ones i think were like switzerland and some others maybe norway um there it was all the countries but he basically pointed pointed to the lowest

ones and he's like we should be here like you're too late it's just yeah like why I don't get it. Yeah, Switzerland, Japan, yeah, know the growth economies. Yeah, not great. I'd say that investors should all want independent federal reserves and independent central banks. Seems to be historically looking the best model out there. And that about sums up my thoughts. Another one that we want to talk macro from a question here.

Do you guys have any thoughts about the July trade deal deadline coming up next week, Ryan? the chaos might be returning i'll say i don't know what's going to happen but if you're talking about any risk over and we're not talking about risk the day after for your stock prices i'm talking about risk over an 18 to 24 month period the risk seems to skew to the downside i'd say yeah yeah uh nothing good can happen but i think not much good can happen i'm always surprised how good news that i always already thought was priced in can make markets sore even more like when uh sort of the war was breaking out or the u.s involvement in the israel and iran conflict or iran i saw somebody post this is good for markets because now you have a positive catalyst

which is the end of the war it's like yeah everything gets turned into a positive catalyst i don't i know i know it's like oh who were getting rid of tariffs on vietnam and he's like well you put them on the same group of people put them on six weeks ago so does it change much of my mind no i really try to invest without that stuff in mind or investing in things where i don't believe any of this macro changing of the guard or whatever all this political stuff matters for example and maybe this is a good segue into your tesla segment within the bill that passed the the spending bill it looks like the 7500 ev tax credit is no more and that could affect tesla deliveries which and you can go through the numbers ryan are already pretty ugly it's not

looking good. Yeah. I'm going to go through all those Tesla numbers here in a second. I do want to give another shout out real quick to one of our new sponsors, the TSOH Investment Research Service. TSOH is run by recurring guest. I'm sure our listeners have heard him a number of times. He's a friend of ours, Alex Morris. Inside his research service, subscribers get access to six high quality stock research reports per month, including initiation reports, as well as regular updates on current TSOH holdings and watchlist stocks. There is 100% portfolio transparency on the service. The coverage includes companies like Airbnb, Celsius, Roblox, Netflix, many others. And I will say, TSOH, I personally lean on him a lot for a number of my holdings for the quarterly

coverage. I probably shouldn't. It's kind of lazy on my part, but he does such a good job that I kind of wait for his analysis on any of the overlapping companies that we have. it is a premium research service if you're serious about investing this is like outsourcing a professional analyst if you're interested head on over to the science of hitting.com the link will be in the description again that is the science of hitting.com check out if you're interested in a preview and how he thinks one there's some stuff on there that is free but he's come on the show before and you can get a full look at how we analyze and stuff how he does things and i read weekly. So I'd recommend it as well. All right, Ryan, I'm gonna let you get into the numbers. But

here's a quote, I think it must have been from the investor call back in April. This is from a Wall Street Journal article just pulled it earlier this morning. This is a quote from Elon Musk about not focusing on the cars. That is our whole business, but the future of our business. He goes, quote, I'd encourage people to look beyond the bumps and the potholes of the road immediately ahead of us. Lift your gaze to the bright, shining citadel on the hill. Now, does that get you bullish or bearish? Because this seems like to be a guy that's really, really got a good hand on his shoulders at the moment. Seems to be, you know, not going through a chaotic breakdown.

He's got to be so – maybe I'm wrong, but he's got to be so uninvolved in the day-to-day operations of the business. Yeah, I agree. Honestly, a human only has so much time in his day, and for someone with a lot of family and two other companies or three other companies that he's running on a daily basis, I would bet that a lot of the day-to-day he's not as privy to. But let's talk about the numbers. Tesla delivered 384,000 vehicles this quarter. That was down 13.5% compared to the same period a year ago and was below analyst estimates of 387,000 vehicles. So basically 3,000 vehicles below estimates. they're still producing more than 400 000 a quarter now they can kind of temper that down if they choose to but there's a lot of fixed costs involved in running a you know running these big manufacturing facilities so theoretically if you're producing less of those facilities the margins come down and they're supposed to open new capacity soon right or they just have yeah

Now, the delivery numbers in general, total deliveries, 384,000, that's the biggest decline they've seen I think in 10 years, basically 13.5% decline year over year. They haven't seen that in at least five years, and that's so far all the data that I have going back. it's looking really rough from a demand perspective but something i thought in particular was weird is deliveries of the non-model 3 model x were down 50 year over year the which i believe at this point is primarily uh cyber truck i read some headlines that it looks like they're going to be canceling the cyber truck i think it's fair to say that's been probably an unsuccessful It may be successful in terms of garnering attention, but unsuccessful product line in terms of moving the needle financially. And then to make matters worse, yes, as you mentioned, the new bill that I believe just passed the Senate is axing the electric vehicle and solar tax credits, which have both been very helpful for Tesla demand.

So I guess my question to you, it looks like there's, like he said, the potholes and bumps ahead. Zoom out 24 months. How does this get much better? The bull case keeps getting, if you have one, more pie in the sky by the day. I mean, if you look at just the existing numbers, declining deliveries that from the forward looking indicators are going to just keep getting worse, you are supposed to be increasing capacity, you have no new models on the horizon. So you basically shuttered R&D within any sort of new automotive stuff that isn't related to the cyber cab, autonomous driving or humanoid robots. The cyber truck was a total bust. I remember people telling me they would sell 250,000 to 500,000 Cybertrucks a year.

I mean, that was entirely fanciful. I mean, I would be shocked if they're selling one a year in two years from now. It's a total bust. They probably burnt a ton of money on it. The Model 3 and Model Y are losing market share in all three of their big markets, China especially, Europe especially. The U.S. not as bad, but the legacy players such as General Motors are catching up in market share rapidly. What is there to like? Yeah, and the head of their –

What's the PE, 100? I don't know. I mean there's a lot of variability in the E for their PE. What? Variability in one direction. At the moment, yeah. yeah there's i think a lot of people cling to the margin expansion opportunity of level five full self-driving when that arrives let me know yeah the other part is aren't they

doing it in a way at the moment that isn't applicable to the rest of the fleet like the rest of the fleet doesn't have the equipment to like the pilot program that they tried running they might still be running it in austin those vehicles did you get any local was there any crashes did it do okay i don't know i i have no idea the aren't those cars specialized for this purpose yeah so they essentially admitted that waymo is right for years they said waymo is wrong don't use lidar don't do this geofence thing we're going to do it global and have more scale because we have all these cars that are going to have the software there and then this testing facility testing run which is essentially something that waymo has done for the last 10 years that

you know are 10 years ahead at this moment they decided to do a small geofest area with supervised cars they actually still have humans in the in the cars at the moment and i think they are just admitting that waymo is 10 years ahead of them and at the moment waymo seems to be experiencing exponential exponential growth across the country i do not think that is a good position to be in if this is where your entire market cap is getting based on and the humanoid robots maybe i don't sure yeah the head start they had in evs is the head start that waymo has in avs it's at this point it's they've done not only were they early but they've been able to iterate on and learn from basically all that they've gathered using this approach and the idea

that well once level five is unlocked full self-driving totally capable it's just going to we're going to give it to everyone and it's going to be applicable to every tesla that's not possible or at least that seems to be what tesla's tesla's approach is stating that that is not the direction they're heading so i don't see where the operating leverage comes from i don't see where they have any margin expansion unless demand really starts to pick up again so anyway and the credits are gone that was huge for their margins good luck that's all i'm saying good luck look they're they're valued at i know i'm preaching to the choir with our audience they're valued at a trillion dollars so if all this stuff works out it's not like you're gonna

have that much upside. And the downside is the risk here at the moment is huge, huge. If things go, if the numbers keep worsening in China and Europe, like they are, they're going to need to raise money within the next 18 months. It's that dire. They just, I just saw today that registrations like demand for new uh i think unit sales in the month of june in germany we're down 60 percent year over year for the brand i mean it's they will probably have an easy time raising money would be my guess and it'll be spun as like investments in growth uh but you want to hear my hot take go for it they're gonna do an all-stock deal for xai i can see that yeah very easily happening keep dangling the carrot yep okay in other news

robin hood which had had a big event this week that was eerily similar to that of succession if you've ever seen the show i love vlad uh he's got interesting style i liked his suit kind of funny yeah i actually thought it was a pretty impressive marketing stunt anyways they are offering tokenized trading to european customers uh so here's a quick quote from i believe a cnbc article more than 200 tokenized stocks and etfs are now tradable 24 hours a day five days a week with no commissions or spreads the big news here beyond the extended trading hours is that they are offering tokenized shares of private companies so two in particular and i shouldn't say shares that that's a bit of a loose term uh tokenized tracking value contract

potentially yeah two in particular open ai and spacex they are doing this in europe because it's technically illegal to do this in the u.s still and there are a couple of ways to kind of look at this some people think that this is democratizing finance and i can i can see the theoretical argument for that i'll talk about that in a second but they are giving or they are trying to give the general public the ability to invest in a private enterprise the reason this is illegal is really because of what happened in the 1920s in the united states where this this pretty much was a thing uh essentially in the u.s in in the 1920s and really before that too there wasn't much laws governing this in terms of what was required to disclose to investors so companies could say

we're building the next railroad and tell a beautiful story and they didn't have to report any financials no disclosures no audits no three financial statements every quarter right and so So ultimately, a ton of people got hurt by this. Obviously, the crash of 1929, the Great Depression that followed. And because of that, in 1933, they passed the Securities Act and they also passed the Exchange Act of 1934, Congress did, which basically just stated that if you're going to sell stock or ownership to the public, you have to disclose certain things. You have to have certain audits. You have to – basically all the things we see today was started by this. So what Robinhood is actually doing is they are offering the general public the ability to invest in contracts or I guess call it shares if you want, but they're not, in companies without those companies having to disclose their financials. And here's what OpenAI had to say. They put out a tweet that said – as soon as this got announced, they said, these OpenAI tokens, in quotes, are not OpenAI equity.

We did not partner with Robinhood. We're not involved in this and do not endorse it. Any transfer of OpenAI equity requires our approval. We did not approve any transfer. Please be careful. So at first I was like, okay, I'm honestly very confused what this is backed by. So here's the technical description of what's happening. It says in quotes, these tokens are financial derivative contracts that, quote, track the value of open AI stock, not real shares.

You can't redeem them for actual equity or voting rights. Robinhood holds shares in something called a special purpose vehicle, which in turn holds actual open AI shares. The token represents an indirect exposure to that special purpose vehicle. So this is not direct ownership in the company itself. Now, sorry for all the technical jargon. But that is a big deal, A, because as a shareholder of a company, you have certain rights, you have certain votes, and that does actually at the end of the day still matter. But this is – you're basically buying the special purpose vehicle. You're not really buying OpenAI.

Now, they are technically mirroring it because it's basically just like investing in a VC fund but opening it up to anyone essentially. So there's kind of – the democratizing finance, I'm putting this in air quotes view, and maybe you could call it kind of a libertarian view, is that they are opening this up to anyone. And so it's freeing up markets. This has previously been only accredited investors that could access these types of investments. Now it's opening it up to anyone. You don't have to invest in it if you don't want to. The company doesn't have to disclose their financial statements if they don't want to. Look, I get that that's quote unquote democratizing finance, but we tried this. America has done this. And my guess is that I think people will take advantage of this and companies will take advantage of investors through this process. And there's a reason that these protections have been in place. And I personally think they've been good for capital markets. I guess I'll open the discussion up to you. What do you think about this? Do you see this as a good thing at all? Well, it sounds exactly like Alibaba's ADR. So can't be too different from that. Personally, will I be buying something like this? No. I worry. So the problem is, okay, you're buying exposure to a special purpose vehicle. so essentially you're buying an ownership stake in that and that's technically trying that vehicle is trying to buy an ownership stake in open ai but i worry if you're going to be able to perfectly

track okay i put this amount in and then open ais say their valuation doubled am i really going to track those returns when i get the money back to me that would be my number one concern i honestly have more sympathy for robin hood here than open ai open ai is complaining here's a thought you were one of the largest businesses in the entire world go public that's my thought do it i'm sorry see here's the thing and honestly maybe it's interesting to buy the tokens for this reason then they have to deal with the scrutiny of a stock or the pressure of a stock that doesn't just go up because they don't ever have to mark their valuation down as a private company until they're so if they're so worried about this go public like that's all i'm saying robin hood is

just they're trying to do it through the letter of the law and i agree with you the total downside here is scummy scammy companies taking advantage of this and defrauding investors there should be concerns about that but i i honestly think opening eyes got more of an issue than than Robin. Hey, Robin is just trying to build a business. And yeah, I understand small companies saying, look, we have to spend a couple million dollars a year on audits and all this stuff regarding SEC disclosures, Sarbanes-Oxley, the stuff that came out in 1933 that you were just mentioning, all the stuff that has led up to today. But if you're a large enough company, go public solves all your issues yeah and i've seen a lot of people saying hey i can buy zero

day out of the money call options i can buy meme stocks in america that have no requirements in terms of disclosure crypto i can make bets on what tie donald trump will wear it in his next speech like what color tie there's so much random stuff that random places that you can put your money why draw the line here but i i would say i i would prefer if markets went like the rest of those markets were regulated properly as opposed to well those aren't regulated let's make the stock market unregulated too so anyway i'll i'll leave it there yeah i do think you're right there There is – there's nothing wrong, I guess, with what Robinhood is trying to do, and they're trying to do it within the letter of the law. So they do worse things, and they're listing fart coins, just ridiculous stuff to make money because there's insanely high fees they can earn on – I'm trying to use a nice term – ignorant buyers that lose all their money, and then the fees roll to them.

This is not worse than that. Correct. All right. Before we move on, I want to talk about Blue Chippers Club real quick. Blue Chippers Club is a tight-knit community of stock-focused investors. Brett and I are a part of that community. And inside the community, you get to share and break down your portfolios, pitch stocks, receive feedback, and participate in weekly calls. I recently shared my report, I believe of Remitly on there, but Brett, you recently shared your report of the real brokerage as well as the Mexican airport. So you can look at them on there if you would like. There's a lot of great value that you can get out of a true tight knit online community, especially with those weekly calls.

I think it's just awesome to join every week. If you're interested in joining, head on over to bluechippersclub.com and hit apply. The link will be in the description. Again, that is blue trippers club.com. All right, let's jump to your topics. I feel like I've been monologuing this episode. So what do you have? Okay.

Circle banking licenses for stable coins or some interesting developments in AI hiring plus a funny anecdote. Let's talk AI hires. Okay. This one was more of a lot of different things are kind of forming together in this theme that people are talking about, which is more scrutiny around workers and people being productive, more executives talking about how AI is making their workers much more efficient and that they're going to need fewer total workers doing the same amount of productivity

as they're doing today, and some automation at Amazon Warehouse. So first one I have is some quotes around, and there's some good reporting out there now about CEOs saying AI will lower total need of workers. We had Ford CEOs saying AI will replace about half of their white collar jobs. Amazon and JP Morgan says their total headcount will fall. Now, those are two of the largest employers in the entire country. Microsoft just announced they're laying off another 9000 people. That's about 4% of their workforce. It seems like when even though the economy is doing just fine, a lot of these companies are reporting record earnings. they're growing in their like they're it would seem that when you grow like this when these

companies are growing revenue keeps growing for amazon the magnificent seven all of them usually that correlates with needing more headcount but they're actually saying we're lowering headcount this could be a that i i think people are underrating how this can affect these companies and their profitability and just the economy at large now the second one i want to see here is and maybe you heard this because you're kind of in you work in the startup world did you guys hire a man named so on correct uh hopefully not but okay i heard about this yes okay so there was a there's a man named so on correct apologies if i'm mispronouncing him but he seems to be kind of a criminal so not really feeling too bad about that but he got a

ton of remote jobs at ai startups and it turned into a bit of a scandal when all these executives and founders they kind of started messaging each other and asking if they employed him and an absurd amount employed him it's kind of an example of these uh there's a subreddit out there called are not unemployed it's over employed or double employed you'll be able to find it it has like 500 000 people that are on it there are probably thousands or tens of thousands of people that are these type of workers with multiple jobs working in remote. I have another tweet here. I actually don't know what it is. Oh yeah. There was one famous one on hacker news, a famous post on hacker news from a guy that said, I currently have 10 fully remote engineering jobs. The bar

is so low. Oversight is non-existent and everyone is forgiving for under performance. I can coast about 48 weeks before a given job fires me currently on a 1.5 million run rate per comp this year that was during covid which i that was a little while ago but this type of stuff from the scandal that happened today shows it still happened now the second thing related to this is north koreans getting hired at tech companies as spies this one maybe you've seen flying a little more under the radar uh here's a quote at first pemba sherpa seemed like a great employee eager to work he began as a 35 an hour coder who sharpened up an app for his boss, Marlon Williams. But a few years later, Williams fired him thinking he was

probably a crook. But on Monday, federal authorities accused him of being something even more nefarious. According to court filings and cyber investigators, the man claiming to be Sherpa was actually Kim Kwang-jin, a North Korean cyber criminals using a stolen identity. He was a part of a group of men who traveled the world looking for ways to make money for their heavily sanctioned government. Their methods of choice were drawing paychecks and stealing from employers. so for you kind of think what's the guardrails for hiring at these companies but the second order effect i think is shouldn't this actually make you bullish these companies are printing money and it seems like they have the hiring practices of a teenager i think this is probably

one of the downsides of ai oh well partly ai because at this point you have people creating ai resumes for ai filters in the hiring process and i think it's there are people like the uh one you talked about who's been in the news all week that are good at technical interviews and they can like thrive in the interview exactly what to say yeah exactly good at getting hired and then kind of coast in a startup type environment i don't know how you don't weed these out like well or personable sorry i could see how they slipped through the hiring process because they maybe seem qualified you don't do total thorough background checks great but you will quickly realize that they're unproductive in a startup environment like it's not enough

you don't have so many employees that someone could be really unproductive for six months and you not notice for most startups would be my guess but i i saw an interview with him apparently he said there are two sides to the story and he said i was in that's like spf saying there's two sides to the story yeah i watched the interview and he's like well i was in a really dire financial situation so this is what it called for i'm like okay you were broke that doesn't matter dude you can break the law uh or your your employment agreement's not the law but uh yeah anyway it is concerning you know what i thought you were going to mention here was the absurd signing bonuses from meta yeah have you seen some of these numbers yeah i wonder if the north koreans

are trying to get after this one as well that one might be more in person for the actual you know two percent of people that create the value of big tech uh from what from what people say yeah I've seen those. It looks to be a Zuckerberg money shoveling task, just like he did for the metaverse. He's unafraid to spend a boatload of money. It seems like he thinks that they're behind in AI and they need to get better. They need to get more researchers. If you believe this is a trillion-dollar opportunity, going after the researchers that matter for $100 million contracts, probably fair, but maybe they're not sports fans and don't realize the thing that everyone is thinking, which is you have to confirm that they have to stick around for multiple years.

Because in this world, a lot of people jump around and someone could take $100 million and then just go, well, I'm leaving in six months. Yeah. I saw – so basically for the actual numbers, apparently – so Meta acquired – what was the company called? I honestly can't remember. Scale AI. Scale AI basically is an acqui-hire to get their CEO to come run the AI department for Meta. And it was a, I believe, $30 billion valuation roughly on the acquisition. It was $15 billion, I think, for the stake in it, which is like a 48% stake, all to get the CEO.

And now they're going out and paying $300 million signing bonuses to recruit people over from companies like OpenAI and some of the other notable AI companies, including $100 million salaries. That was kind of the one that really stood out to me. I kind of agree with you. My hot take here is that I think this kind of makes sense. If these people are truly worth it, you think about them as the top athletes that are going to drive serious revenue, which at a company like Meta, when you can apply a lot of these AI features to a massive pool of users, there is pretty clear revenue unlocks that emerge quickly. And so if you have the talent in AI, I don't see anything wrong with paying up for it if you can see that the revenue contribution will be there. If they're doing this just to come out with the net, like make their Lama 4 better. Passive benchmark.

Yeah. That's what I worry is happening. And they seem – again, Meta seems to be admitting that they're behind. I think right now, well, some of the other AI startups are not an expert on it, but to me it seems like a two-horse race on the consumer side because I think Anthropic is more enterprise in OpenAI and Alphabet at the moment. Does Amazon's native stuff do anything? Does Microsoft's native stuff do anything? No. Microsoft signed a great deal with OpenAI and now they're feuding over it, but it feels to me like it's a Gemini chat GPT race at the moment.

Yeah. The wild stat that I found this week, Microsoft spends 47% – right now is spending 47% of its operating cash flow on CapEx. Pretty sure two decades ago, they were spending about 5% of their operating cash flow. Sounds about right. But GM, which is like one of the notoriously most capital-intensive businesses out there, spends 43%. Microsoft is more capital-intensive at this moment than GM. Now, maybe the return on that capital spend is potentially higher for Microsoft. But I think that paints a picture of just how capital-intensive big tech and the hyperscalers have become.

Yeah. It's another example. All of the AI topics we have discussed today, it only works in the, let's say, positive bullish direction. It only works investing-wise, stock market-wise, if the AI spending shows up. It is right now, but it's like going all in and keep going again. That's how I think of it. we have i want i want to talk about this stat too and i think this one again is something underplayed under the radar versus what other people are talking about just in regards to the open ai chat gpt versus the gemini race and it's amazon's warehouse automation here's a quote from an article one of amazon's newer robots called vulcan has a sense of touch that enables it to pick items from numerous shelves amazon has taken recent steps to connect its robots to its order fulfillment processes. So the machines can work in tandem with each other and with humans. And apparently they are very close to the full integration of robots in their warehouses.

If we look at the chart we have here, maybe I guess we don't have a newsletter directly attached to this episode, but you can find these online. Maybe we'll post it online. the number of Amazon employees per facility is lower than it was in 2015. And the package is handled by Amazon end to end per employee. So on their own delivery network has gone from essentially zero in 2015 to 4000 per employee. So the efficiency of the warehouse workers are getting much, much higher. And over the last decade, Amazon has invested a ton of money up front to build this robotics. And that's probably greatly impacted their margins. And I think now we're going to see the fruits come to bear here. And this type of automation

is going to lead to a lot of margin expansion across the e-commerce business. Okay. I will say, I'm going to raise a hand here on this first chart because Because number of Amazon employees per facility, it includes the corporate office employees, which had a big layoff. If I'm not mistaken, they had a big layoff, which maybe – which coincided with them adding a bunch of facilities and expanding fulfillment capacity. So either way, there is some efficiency here, but I think it might be a little bit exaggerated on this chart. Yeah, that is a weird chart if that is added into the definition. The second one, I think, tells the story. I don't understand that second chart.

How did it – was it zero? Because they used to use UPS and FedEx. So this is end-to-end. Oh, right. Yeah. Wow. Yeah, and the crazy part is this isn't showing up in the margins. They just continue to try to be the low-cost provider.

Actually, it is showing up a bit in the margins, but they continue to just lower costs and be the hardest company in the world to compete with. I'll also take this time to give a shout out to Fiscal AI, one of our sponsors. We mentioned the quarterly deliveries for Tesla earlier in the episode. Those were up within, I believe, 10 minutes of the report. And so you could automatically see Model X, Model 3, total deliveries, total production, all those stats, and tons more on thousands of companies using – if you have a Fiscal.ai subscription, which if you use our link, fiscal.ai slash chitchat, you'll get 15% off any of those subscriptions. We've kind of been beating around this topic a little bit, so I want to ask it. you asked on twitter what topic should we talk about this week and uh the dutch investors i believe it's called dutch investors is the twitter handle said do you think ai is currently

over or under hyped based on its potential so you and i have been somewhat skeptical especially in the early days we were definitely skeptical i'm curious when nvidia went up like 100 and we're like well but hey it was right people had the vision and i remember thinking like nvidia's at a 300 billion dollar market cap that's absurd it's 10 x that low maybe maybe it's like 700 billion but anyway what are your thoughts now i mean usage is growing and seems to be accelerating um there should be a difference in how you talk about look is the growth or more people going to be using gemini chat gpt what have you in five or ten years almost definitely it seems to i would have high conviction in saying yes but there's a difference in saying

that versus, oh, well, from an investing perspective, are we going to, are these stocks going to work? Because the internet was growing at, what, 100% year over year, 1999, 2000, 2001, 2002, a lot different than the stock price's performance. And there's also a difference between the picks and shovel play working or not versus ai usage there could be and i'm just talking about how i really don't know like under overhyped in what capacity like investing ai spending on data centers there could be efficiency gains that lead to much less spending flowing to the computer chip part there's so much we don't know there are companies claiming that we're going to have artificial general intelligence within a couple of years. That could either be

true or not. I'm guessing it's not. But if it is, that changes a lot of stuff as well. Anyone that has some sort of hot take on whether it's like from an investing perspective, what's going to happen, I think is way overconfident. But if someone said, do you think AI is currently over underhyped? I don't even lean either way. I think probably properly hyped. Everyone's using it. some stuff's overhyped some stuff's underhyped what do you think brian yeah it is i think people the bill gates quote of innovation tends to be overestimated in the short term underestimated in the long term i think it applies here but there there is a lot of hype for it but there is a lot of usage matching it and the the one thing that i find has been so encouraging

about it is the amount of businesses being built on top of it and and i'm not talking about oh look booking holdings added an a chat interface to help you come up with your way to book a flight or a hotel i'm talking about people powering really critical functions to their business using the reasoning of a foundational model and they can really strip out a ton of costs and do some powerful stuff under the hood using an llm i thought i was reading through nvidia's i was kind of skimming nvidia's uh annual meeting and there was actually a quote that really stood out to me here from, and this is particular to NVIDIA and some of the hype around that, but Jensen Huang says, Blackwell's rollout has been extraordinary. It debuted with $11 billion in

sales in the fourth quarter and went on to more than double the contribution in our first quarter this year, easily the fastest ramp in our history. And he says, today, nearly 100 NVIDIA AI-powered factory build-outs are in flight around the world. That's double what we saw a year ago, and they're getting larger and the average number of GPUs per factory has also doubled. That is... So it's not slowing down yet.

It's not slowing down yet, but people need to understand this is exact. I'm not saying it is, but this is exactly what a boom-bust cycle looks like. And usage on the end consumer, you know, say, for example, our sponsor, Fiscal AI, usage through a boom-bust

from the stock market and supply perspective will probably keep growing, as will the rest of these products. But this type of spending boom typically, and we don't know if we're here yet, but it typically leads to an eventual bust. That's just how it works. Happened to EVs, happened to telecom, happened to oil many, many times and different sorts of energy things, happened to the automotive business, happened to the railroad business. I could go on and on and on this infrastructure boom bust is going through the classic playbook and i would it would be hard for me to say it's not eventually going to happen even though usage is growing like a weed there are certainly the dot the pets.com versions of the ai revolution if we want to call it that

I mean, the quantum stocks are – I think you could call those sort of the pets.com. Well, that's like Big Bear AI. There's some ridiculous ones. I'm interested in what the WorldCom is. The WorldCom will show up, I think. Yeah. I don't – I honestly need to go back and study my dot-com history, the intels of the world. There were so many companies.

I'd say more telecom bubble history. Yeah. But the thing is, it's so concentrated. It's so concentrated in a few players. Well, maybe I shouldn't say that. The semiconductor industry broadly, there are a lot of companies that have seen huge tailwinds from this that I'm not thinking of. But Taiwan Semiconductor, NVIDIA, a huge concentration of the spend on AI infrastructure has been allotted to them. I feel like that wasn't the case during the dot-com. It was a little more spread out. Yeah, perhaps, perhaps. And I guess maybe it's because these were already the leaders in their field. If you get what I'm saying,

or as the other players were kind of sprung out of nowhere, look, it's, it's the only thing I'm confident in saying is, and without any timeline or any invest, I have no high conviction on anything besides this. It's going to go through a boom bus cycle. It doesn't mean I'm going to get long or short anything.

It's going to, this is quintessential technological boom. Eventually we built too much. Then it busts. Well, while we are on the topic of graphic processing units, my largest holding, Coupang, had an announcement. Do you want to go through this? Yeah, close to my largest holding as well.

I guess we're in the core weave business now, Ryan. Here's the quote, and it came out of nowhere. I asked some people that also are close to the stock. They said, and we had no idea, but maybe they just want to make something focused in Korea for this industry. Coupang today announced the rebranding of its AI cloud computing service, which I didn't know even existed.

They're a very secretive company, as Coupang Intelligent Cloud, CIC. CIC represents the evolution of Coupang's AI infrastructure over the years. Coupang has extensively utilized its AI computing infrastructure to enhance its services and operations and also provides GPU as a service,

including to external parties. Same thing, definition of CoreWeave. I guess it's nice that they have a lot of operating cash flow. They can pour into this. They're really going after, we're just going to copy everything that Amazon did just 15 years later. This is one, and I'll let you talk after this because we do have to wrap up,

where it reminded me how much or how important it is that you trust management. If this was a management team I didn't know much about, I would say, what are they doing? are they just trying to get on this hype but the fact that it's founder-led i really like bomb soup kim yeah i'm comfortable with this yeah i would be worried if it was just about ai hype the only thing is they're actually branding away from the ai hype kind of uh so if i kind of reconfirm i don't know they are it was the ai cloud computing service that's what it was which

sounds sexy for the era of ai now it's the coupon intelligent cloud so yeah i would be a little i bet 90 percent of shareholders were like wait they have a cloud division oh yeah i'd like to know how big it is yeah it's well i'm sure they'll ask in the conference call and then they'll say well we're working hard and yeah that's about it all right i uh i think that's about time so thank you to all our sponsors for advertising with us thank you to the science of hitting research service thank you to ibkr thank you to blue chippers club and fiscal ai thank you everyone for tuning in to this episode this power hour. And I know we've got a lot of new listeners as well. Listenership's been

pretty good here at Chit Chat Stock. So thank you for the new listeners for tuning in. The best way you can support the show if you like it is to give us a review wherever you listen. That really helps us grow. And yeah, that's going to do it. Anything Brett or I says is not formal advice or recommendation. We are not financial advisors. We may buy, sell, or hold any of the securities discussed in this podcast. Thanks again for tuning in. We'll see you next time.