Chit Chat Stocks - EMERGENCY SpaceX S-1 Breakdown! Plus, More Earnings Coverage $NU $NVDA $ABNB

Episode Date: May 22, 2026

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: (00:00) Introduction (02:59) Financial Overview of SpaceX (06:12) Revenue Streams and Business Segments (09:16) Elon Musk's Compensation Package (12:03) Starlink's Growth and Profitability (18:15) Concerns and Red Flags in Financials (22:04) Market Valuation and Investor Sentiment (24:58) Related Party Transactions and Governance (27:51) Final Thoughts and Predictions (38:01) Navigating Musk's Business Moves (40:00) Insights from Constellation Software's Shareholder Meeting (44:53) Wix's Earnings and Market Reactions (49:11) Airbnb's Growth and Booking Trends (50:56) Intuit's Market Challenges and Stock Performance (54:51) Nvidia's Impressive Growth and Valuation Dilemma (57:57) New Bank's Performance and Market Position ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.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.  ********************************************************************* Check out Value Spotlight: Stockwriteup.com  ********************************************************************* 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  ********************************************************************* 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

For the past three years, IBKR individual clients averaged 24.3% annually, beating the S&P 500's 23.1%. Lower costs and 170-plus global markets matter. Interactive brokers, member SIPC, visit ibkr.com slash performance. Welcome to Chit Chat Stocks, the podcast that helps you find your next great investment. Today we have an emergency podcast episode. We rarely use that term, but we've been waiting for this episode. SpaceX dropped their S1, so we've got a full look at their financials, and there was a lot to unpack here.

A lot of pretty images, a lot of interesting numbers, a lot of surprise numbers, some crazy compensation hurdles, and a whole bunch more. But we will get to that in a second. We're going to talk for the majority of this episode about SpaceX because it's a massive topic, but we've also got some other news. We've got NVIDIA earnings, which only on a week when SpaceX releases their S1 would NVIDIA earnings fly under the radar right now. But we've also got Constellation Software's annual shareholder meeting, which I attended

and we missed last week. So we've got a couple other earnings reports that we can get to. But before we do, I want to introduce my co-host here, Brett Shafer, the one and only, and remind listeners that if you enjoy these episodes, please, please, please give us a review. It helps a ton and it helps the show grow. Brett, first thoughts. What was the first thing you thought when you saw the SpaceX S1? First thing I thought was clear my schedules. We had 200 pages to read.

There's a lot of not nonsense, but busy words for individual investors in these S1s. So if you look at the document, there's certain places you want to go and there's a lot of repetition. For whatever reason, they have to state their overview of their business three times.

I think we can clear up that formatting, SEC people. Looking at the thing though, looking at the document, I thought ambition, I thought 20 different business lines that they're planning, like three or four actually in business right now or are making significant revenue. And then I thought they're losing a lot of money. I guess I won't bury the lead. The last note I have here for

my section, we both made notes, is that they had, and this is buried in the bottom, is to go to the Q1 cash flow statement that I think was in the footnotes. I mean, it's not like it's a mystery. It's in the document. I'm sure everyone has seen it, but they're not prominently displaying this they had negative free cash flow or a free cash burn however you wanted to describe it of nine billion dollars last quarter they're spending like crazy let's dig through this i think i think some of the most recent quarters results my guess is that they knew they were going to go public. They knew they were going to raise money. It may have changed the way they ran their business in the last couple of quarters. But let's dig through this. I'm going to start with sort of

eating our veggies and going through just some of the overall numbers. And then we can talk about maybe some of the interesting finds or things that surprised us. So first off, for anyone who hasn't read the document, the S-1 starts with just 14 pages of pictures of rockets, which I guess that's kind of to be expected because you got to do something to get people excited since it's such a boring sec document and as brett mentioned very repetitive but as far as the business goes spacex is broken into three parts so there's space which is their rocket launching business there's connectivity which is starlink and then there's ai which is at the moment still basically just twitter there's also it's twitter grok and ai infrastructure so basically providing

compute to ai companies the largest piece of that puzzle on the ai side is advertising which is the core legacy twitter business that elon acquired combined the three businesses generate just under $19 billion in revenue. That's at least what their revenue figures were in 2025. That was growing 33% compared to 2024. So 33% top line growth, $19 billion in revenue. Most of that revenue comes from Starlink at the moment. So Starlink accounts for 61%, more than half of the overall sales. Space accounts for 22% and AI accounts for 17%. On that $19 billion in revenue, SpaceX generates about $9 billion in gross profit. From there, they spend $8.6 billion on R&D, $2.6 billion on sales general and administrative expenses. So no real surprise there, but they are

in the red and at basically negative 26% operating margins. As Brett mentioned, they are also burning a lot of cash at the moment because number one, all their businesses are pretty capital intensive. so ai is the most capital intensive but even space and satellite business and starlink are going to have a lot of purchases of property and equipment let uh we have a comment here i was talking in our sub stack chat which people should join uh it's much more fun than twitter these days i know we're actually talking about technically twitter's business right now but it's a lot of slop over there you can read ryan's charts which go viral from time to time of the fiscal ai account but a lot of our discussion for the show stocks we follow something that will be in our sub stack

chat which the link is in the show notes we have a james emmanuel that brought up this interesting point on the rnd we're not sure if this is exactly uh kosher it could be the right word he says i mentioned they're spending 8.6 billion dollars in rnd he said over three and a half billion in first quarter of 2026, but they are burying depreciation in R&D, which is deceptive. They're hiding their capital burn rate. Quote, research and development increased to blah, blah, blah. This increase is primarily due to higher costs in our AI segment of $1.5 billion for depreciation of GPU hardware. So should that be in cost of revenue? It's kind of the first, I mean, of course, there's going to be yellow flags. It's an Elon Musk company, but

maybe that's the first accounting thing that stood out when looking at the income statement. I mean, we could. There's going to be so many accounting red flags throughout this document. Honestly, I think we'll get to the related party. Yeah. I think you got to take every number with a grain of salt that the absolute hoops and hurdles that they had to go through that the investment bank had to go through to get their adjusted EBITDA line to where it was. I can only imagine. But let's keep going. Let's take these numbers at face value and just see where we get to uh the on the ai side they it accounts for 17 of revenue and 76 of total capex so it's a a drain on the capex good stat good stat side of things free cash flow for 2025

minus 21 billion q1 minus 9 billion i guess one last thing on the veggies side of things before we get into some of the i guess random findings and some positives starlink growing quickly right yeah yeah no doubt it's not it's not it's not entirely we're not saying this is we were branding things but we're trying to dissect the s1 look at things that are interesting to us yeah yeah there were i've got a negative tone to some of the things i'm saying because it was you know there were some red flags in this s1 but yes i thought starlink overall was a very solid and and space is going to be somewhat lumpy uh based on what they're able to provide but people are probably wondering how are they sustaining

the burn rate at least prior to this big issuance uh that they're going to have and i thought this was interesting they raised 16 private funding rounds over the years they got to a series n brett have you ever seen a series n no i think this is the first one i've been private forever so yeah right i think they were founded in 2002 so i guess that's somewhat to be expected the other part here is they do have a decent chunk of debt so 29 billion dollars in long-term debt most of that is coming due in 2029 they've only got 16 billion or so in cash some long-term investments in there as well i think they have like some uh crypto holdings if i'm not mistaken so i don't see a little crypto yeah doesn't in the bitcoin although i guess that

doesn't play anymore no one no one really cares that i don't know if we mentioned this it was in the subscriber chat or on the show but the bitcoin doesn't doesn't really do it for the the retail crowd the the hype crowd it's not doing it for them anymore it's become boring The so I guess my takeaway here is that they kind of need to raise the money, you know, in a way I'm sure they could have gone and done, you know, series M or O or whatever. But I think with with a net debt position of 15 billion and plans to try to invest in the infrastructure and continued investments in space and and Starlink, they're going to need some cash. So $75 billion, I think, is what they're planning or hoping to raise in this IPO, which would be larger than the three highest previous IPOs behind them. I think I can't remember all the what the two, three and four were. Three highest combined.

Yeah. Saudi Aramco, maybe Alibaba. I think Meta might have been in there. Facebook could be wrong on that one. But it probably didn't have to raise much money. No, maybe I'm getting it wrong. But nonetheless, it's a massive IPO, the largest in history. Let's go through some of the standouts from the S-1. I'm going to start with maybe what I found to be the most insane part of the S-1, which was Elon's compensation package. i'm just going to read the quote directly people can uh take it how they will on january 13th 2026 so start of the year our board approved the grant of 1 billion performance-based

restricted shares of class b common stock to mr mr musk the restricted shares vest upon one our achievement of specified market cap milestones across 15 equal tranches so the market cap milestones i think go from 500 billion to around seven oh sorry yeah seven trillion basically as he hits those tranches the shares begin to vest and two the company's establishment of a permanent human colony on mars with at least one million inhabitants in in each case subject to mr musk's continued employment with us through the date on which achievement is certified by our board for any tranche of the award to vest both the applicable market cap milestone for such tranche and the human colony milestone must be met and it's very strange because the market gap one seems

fairly easy given the hype here they're going to hit some of them already and then this mars colony thing i guess that's an interesting obviously it's an interesting uh milestone own but is that really what's going to be creating shareholder value uh i don't know sounds expensive sounds very expensive to me yeah uh yeah the other part was just below this it basically said like this compensation policy can be revoked at any time uh essentially it was like we you know this can be changed so he controls 80 of voting i believe so it's really up to him He's talking to himself. It's deals with himself, deals with Tesla by himself. XAI merging with SpaceX. It's him shaking his own hand. It's all that. I did think it was funny in the commentary of like, it would say like, in our negotiations with Tesla. It's like, what negotiations are going on here? But nonetheless, yeah, I thought that was a standout. Any big standouts from the S1 for you?

oh well the cash burn uh the anthropic deal we can talk about that maybe i can give you time to take a sip of water that was fascinating i didn't maybe i was on vacation when this happened i don't know if it got announced last week formally but it seems pretty new it says here quote in may 2026 we entered into cloud services agreement with anthropic for our colossus data centers pursuant to these agreements, the customer has agreed to pay us $1.25 billion per month through May 2029 with capacity ramping in May and June of this year. That's quite a bit. On the one hand, yeah, it's going to be a lot of revenue inflecting in their AI segment. Good timing on the IPO because they're going to go from, I think, $1.3 billion for the AIX AI segment for, again, which was a

valuation of 250 billion dollars that spacex had to eat and it's going to grow to what uh was 1.25 times 12 like 16 16 billion dollars in revenue pretty quickly just from this anthropic deal so on the one hand that's going to be great for their i i don't know now are they a neocloud are they a reseller sort of like a core weave and nebius it's hard to tell but then on the other hand this kind of shows that they built all this infrastructure and they don't have much use for it for their internal chatbot grok it doesn't seem like many people are using it no the subscription revenue is quite limited i'll also give a shout out here all the data all the kpis and financials are up on fiscal ai already for spacex which of these i don't know if you saw this but there's a segment

called future markets which of these stands out to you as the most as the nearest term possibility so here are the future markets point to point terrestrial travel space tourism in orbit manufacturing passenger and cargo transport to the moon and mars energy production on the moon and mars manufacturing capabilities on the moon and mars asteroid mining as tourism and uh orbital manufacturing and transport to the moon would be the most realistic but i'm not sure those are even that good of businesses maybe space tourism can be okay but you look at blue origin it's not really taken off at all with that it seems cool if you're very rich to do that but how much is that going to move the nail for a company like this in orbit manufacturing

potentially but the key here what i kind of was picking up on is that they need this starship the next generation larger rocket to succeed and it hasn't really gotten through final testing yet to you know ramping commercially and if it doesn't they're going to be kind of supply constrained on their own to getting all this mass into orbit to try to build these ai data centers in space, which again, sounds a little bit far-fetched. Maybe, you know, there's a lot of smart people out there saying that they've kind of solved the technology here. So if a lot of companies are saying they can do it, maybe they can, but still going to be very expensive. They need kind of that payload capacity to get up there. It's going to be quite

expensive. Yeah. I mean, terrestrial travel sounds awesome. I'd love to get around the world in 30 minutes or less probably a quite expensive ticket but i think that's far-fetched we don't we're not gonna have starship flying over new york city it's just not happening no sonic booms are gonna be allowed blah blah blah but that's that's not important to the actual business what i think is really important starlink starship and this these ambitions to connect the ai data centers in space which really brings everything together it's gonna be expensive it's quite risky but you gotta love the vision the man has a vision you can give him that much let's see if i can pull up the starlink subscriber numbers because i thought these were pretty this this was

probably the highlight of the um s1 i think if you're if you're looking to buy shares spacex has gone from it looks like let me change the units here so at the end of 2025 so a quarter ago they were at 8.9 million subscribers today they're at 10.3 million they've doubled more than doubled subscribers year over year and i think what kind of caught me off guard is the bulk of their connectivity revenue actually comes from the consumer space not the enterprise and government side so it seems like the residential is growing really quickly any i guess were you surprised by the profitability on starlink because it was generating almost 40 operating margins on a segment level granted there might be some costs being redistributed you research your investments

you analyze markets, you manage risk, but did you research your broker? For the past three years, IBKR individual clients averaged an annual return of 24.3% compared to 23.1% on the S&P 500. IBKR's lower trading costs, competitive rates, efficient execution, and access to more than 170 global markets helped investors keep more of what they earn and put more capital to work. Over time, the broker you choose matters. Interactive Brokers member SIPC. If you care about performance, find out why the best informed investors choose Interactive Brokers at IBKR.com slash performance. I was about to say that, Ryan. Yeah, it's not surprising when you understand how they define this. They are technically getting a free ride into space from the space segment. So

i would like to look at that in a combined business because it's kind of assuming that all right if we're going to run this operation without our space launch segment well we could just get up into orbit for free and that's not true at all so excluding those costs feels a bit disingenuous but um but on the whole it seems like a solid business i don't think 40 operating margins is saying what it actually is again because of those those launch costs that that maybe are being included but uh what are we adding revenue wise i think it was said 11 billion in revenue 2025 was 11 billion yeah uh yeah there's probably a path to 20 30 billion dollars in revenue in the future here they're doing direct to mobile stuff they believe there is a 1.6

trillion dollar tam i kind of doubt that maybe in 2090 there would be but if you look at today like How much revenue do Verizon, AT&T, and T-Mobile generate? Like, it's not near $1.6 trillion. And, yeah, direct-to-mobile, also interesting, kind of trying to target what AST Space Mobile is going after. Maybe AST Space Mobile is going to get there first, but something I'd watch out for if you're an investor in that. Bring it back.

You have a potential for Starlink to get to, what, $20, $30 billion in revenue. In a couple of years, three to five years from now. Maybe the true margin on that can get to 20, 30%. So it's five, six billion in earnings. Feels reasonable. Maybe say five to ten billion dollars, depending on how it plays out. What are you going to value that at? A couple hundred billion?

Like, we're nowhere near the two trillion dollars here. So that's just where I just get hung up. Yeah. It's going to take some optimistic work to warrant a $2 trillion valuation from investors. Here was something that stood out to me. Revenue for Twitter, which they break it out. Well, I can't remember if Twitter had any sort of subscription element prior to Musk taking over, but you could assume that it was primarily advertising revenue. In 2025, advertising revenue from SpaceX AI, which is basically Twitter, I can't think of any other area where they're generating ad revenue, was $1.8 billion. dollars in 2021 twitter was generating five billion dollars in in revenue so it looks like twitter's revenue has dropped by more than 50 percent since the takeover i guess maybe is this a testament to just all the other advertising players because you you look at meta you look

at amazon you look at google they've just continued to grow revenue i guess they were never really quite in the same ballpark but it kind of surprises me they took out all their employees and i guess they pivoted to this ai thing so i'm not too surprised but yeah they gave up on that not it's not going to move the needle again for two trillion dollars so it all hinges on the xai they will say that they can use twitter or all the posts on there as a database for training the model maybe that helps they're moving pretty quickly in that regard they have the closest data center they brag about it being the fastest one being built but again there's not much usage it seems on the ai side of things which is why there's a huge hole

in the budget yeah twitter i see ads for a walter white memorial fund it's not a serious ad platform have you ever seen that one i haven't seen that no uh well they're not targeting you i guess with that what do you think they fetch the valuation that they're going for do you think they're going to be able to pull it off at a two trillion dollar that yeah maybe that can lead i can answer a question with a question here on a rating of one to we work well 10 being we work what do you give for this s1 as being the potential for it for anyone that doesn't remember the story we were put at an s1 it's absolutely horrendous the financial media turned on them twitter turned on them everyone seemed to turn on their business and say it was a joke they were going to get

valued at, I believe, $60 billion on $2 billion in revenue, which, put that into a little reference, that's 30 times sales for a low margin business. We're talking 100 times sales. I think it's maybe a six on that. There's some exciting things about this business. You can see the unit economics take shape. They have a huge narrative that they can sell. Elon's made a ton of money for investors. I would say that through a lot of overvaluation of Tesla and, frankly, spacex now looking at things but i think they get out two trillion i do not think it's going to pop on ipo i can't be wrong but if it does i mean that's going to be one of the largest companies in the world top top five um but yeah i'd say on a scale of one to we work i give it a six

because it's not a good financial statement no but it's run like it's run like it's run by somebody who can raise money at will, which he can't. True, true. So I kind of, I almost say the financials don't matter that much. The pictures might matter more than the financials for who they're selling it to. They're rendering them ours.

Come on, these are investment bankers. It's going to be a little different than the VC community. But you're right to a point. The $9 billion quarterly cash burn, if they raise $80 billion, that's what? Pretty much just two years. so can they raise 80 billion dollars every two years i don't think so i mean that they got to make some progress here and quickly if things are gonna happen i mean they're booking revenue

quickly uh it's from the sounds of it with anthropic so sure on a scale from one to we work i think this is i'm probably in the same ballpark as you somewhere between a five and a salmon the financials don't look good so you wouldn't be you're saying if it got pulled you wouldn't be shocked but it'd be unlikely because that's a we work i don't think it would automatic pull i don't think it would get pulled i i do not think it will get pulled this musk has done this before i mean tesla's raised so much money that i think people just give him investments blindly so i don't see what's stopping that from happening here the and as far as narratives go i don't think there's a better narrative in the history of capital markets

there's this is like the sci-fi dream for sold sold in an s1 i mean let me let me read the mission statement the mission for space exploration technologies which is the full company name first of all i never really knew that was the full name thought that was kind of funny is to build the systems and technology necessary to make life multi-planetary to understand the true nature of the universe and to extend the light of consciousness to the stars you cannot have a bigger addressable market it's i guess what is the what is that addressable market for money making i get it's cool it's cool i want i want the world to go to mars obviously who wouldn't want that but i'm trying to be optimistic here but we're speaking from an investment lens i mean

that's going to be a lot of money and what is it going to be some sort of like musk owns mars type thing i mean it's not going to work or the moon that's also not going to work the united states is going to own it see here's the thing i think the financials could look better if musk wanted them to or if musk wasn't involved sure but look at the space business it's not that great the gross margins are kind of low it's not growing that much i know but they're given free rides to their own like starlink in the space business should be sort of lumped together honestly sure sure that's fair that's fair it the the ai acquisition may be sort of a bailout here But I think people are going to look at revenue numbers every quarter as this thing starts filing once it's public and they're just going to cheer it on. So I think it's likely that they're able to raise the money they want.

and the big question it's like the same question with the rest of big tech it seems is what is this return going to be on their ai capex because that's where all the money's being poured and they seem to think they have an advantage with this ai data this data centers in space um and again it all hinges on starship being successful because then they can get their own satellites up in a cost-efficient manner i will remind listeners it is not fully operational yet so we're banking on the engineers getting something that really hasn't happened before happening uh if the starship is supposed to have over 100 tons of payload capacity versus 23 tons on the falcon 9 again that's just mass that or weight that you can get into orbit they spent 15 billion

dollars on the project and this is what they say which i find pretty interesting i can get behind this about their ai compute quote because ai compute satellites represent an evolution of spacecraft engineering already demonstrated through Starlink, we believe development of AI compute satellites will be easier for us than for anyone else. Our existing Starlink constellation is another crucial enabler of orbital AI compute as its global network allows data from our AI compute satellites to reach ground stations anywhere on Earth. That makes sense. It's going to be expensive to put these racks into space, but they do have a lead. I can give them that.

so does this all just accrue to nvidia again i mean we're still just going to be using gpus up there it's yeah yeah exactly well i mean others sure yeah it's i mean there is an advantage for sure in being the one that owns sort of the rails to space uh assuming that space is like a necessary frontier for data centers i was i spent some time uh in sort of in space no no no i spent some time in rural texas recently and there were a lot of signs that said say no to data centers you're not going to find those signs in in space yeah that's true that data center stuff is just i mean it's just a testament on the intelligence of the world but the do we want to take some questions here sure sure well uh yeah yeah i got some other stuff

that we did the related party things we can talk about to close out maybe okay tyler asks do you guys think the spacex ipo will be the final straw to break the camel's back of passive index investing let me ask a follow-up here do you think there's any big knock-on effects that we're not that the market maybe isn't thinking about of handing spacex 80 billion dollars 70 billion dollars potentially like any hidden beneficiaries from that uh real estate in redmond washington that's where all the satellites are produced although they're already one of the that that's uh that's very niche but that's one thing i thought of wow redmond keeps keeps going keeps doing well as a city uh says that rocket lab is going to be someone that's deemed very

necessary you can see their stock just going absolutely crazy it also trades at 100 times sales and i think it's at absolutely ridiculous valuation but people are going to look at it and say this is one of the potential alternatives out of the spacex monopoly and that's how secondary players competitors are going to compete right uh does that make sense yeah i think it's i agree with the line of thinking might already be priced in probably definitely priced in the yeah my thinking here is like where does the money come from where does the 75 billion in investor dollars come from i feel like it's got a flood out of other assets there's 75 billion in dry powder just waiting yeah yeah there's a lot out there there's so

much money out there but of the people that would actually invest in spacex yes i feel like i i can't remember who brought it up but someone's saying that this could catalyze some of the dollars that flown into tesla i think that's probably accurate sure but i think that's more narrative where the narrative is all in spacex hype there this is the sexy company and that can just bleed money out of it because again it's if someone sells a stock someone's buying it so there's no net like no no free dollars are being created cash on the sideline gets built through people make more money debt buybacks coming back out of those businesses and dividends like it doesn't come from buys and sells like mathematically it's not possible but i think narrative wise

yeah it could take attention away from tesla similar to like bitcoin it if it's not the shiny object anymore and we get open ai and anthropic sure another thing though like tyler mentions, do you think it crashes the markets in a liquidity vacuum? I don't really think that's going to happen. I would be mad if I was an index fund holder and it's going to be stuffed at like 3% of my holdings. There's a lot of people that seem upset about that. If Anthropic and OpenAI do the same thing at extreme valuations, I would be concerned. For me, it seems like in general, when the hot companies of the age of when they IPO genuinely sign the top is near.

Is that going to happen this time? Not sure. But look, they both raise $100 billion each. That's a lot of money flowing to these companies. It's going to give them a long runway to grow, but it's going to also be after that. All right, prove it to me you can make money. this would be what a five six percent weight in the sp500 if it's at a two trillion dollar market

cap maybe a little lower but yeah it might be ballpark that's uh that is high it yeah wow um all right maybe we shift gears unless you want to talk anything else yeah i got a couple other things spacex let's see what else didn't we not talk about they have the right to acquire cursor for 60 billion dollars let's just toss that into the mix um you know that's just a small acquisition coming into their ai business they only grew revenue 15 last quarter what do you think of that total revenue yeah that's it well same as wix same as wix yeah slightly different scale but yeah the i mean not that much 10 times larger okay yeah but no you're right i was i was surprised by the top line growth uh that was probably one of the

things that stood out to me the most and i i guess one of the quickest ways to do to boost the top line is to book some of these ai infrastructure deals sure honestly even if they're low margin yeah sure and heck i mean you could even lose money you're gonna see great revenue growth i saw someone recently that's like i'm i'm building a startup that's i can't remember what it's called but it's like you give us a hundred dollars we give you a hundred dollars back now we both have a hundred in oh yeah i saw someone that said i saw twenty dollars on the ground i picked it up in five seconds they must have done the math now i have 10 billion dollars in arr yeah it is i mean we're getting a little nutsy with this even the one of the smartest guys

in tech investing gavin baker was on the invest like the best podcast i says a lot of smart things keeps me thinking he's been a big elon musk fan been a lot right about a lot of things he was even saying like all right things you get a little bit nuts with these memory companies but i'm going to to quote, I have no comment on this. It's just, it's a meal on must things. I think it's kind of funny. Quote, together with Tesla, we are also developing MacroHard, an agentic AI platform designed to be capable of fully emulating digital workflows and augmenting human operations of computers using sophisticated autonomous agents. We believe MacroHard will have the potential to fundamentally transform how companies are structured and operate, thereby allowing

dramatic increases in human productivity what's with that name oh it's to make fun of Microsoft is it I assume macro oh yeah yeah yeah I mean horrendous name sounds like

does he have beef with Microsoft sounds like an ED pill company yeah anyway okay last thing related part of transactions they uh here's my xai spent 500 million dollars at tesla in 2025 506 million dollars in mega pack purchases were made from tesla by i assume that's i assume it's maybe the same thing 103 million dollars or 131 million dollars in cyber truck purchases by spacex remove money back a little

fourth here maybe to help the guidance get hit look if you're an elon fan i understand it he's made a lot of people a lot of money but just understand if this is any other ceo any listener would agree with us that this is a red flag when these are both fully controlled companies by a single man yeah uh especially when you're i mean the cyber truck purchases is like a prime example of just moving money where you need it because it helps hit whatever metrics you need to hit the yeah he's gotten a pass now it's it's almost like a certain politician where there's so much news about him that other news just stops mattering that would matter for anyone else that's fair yeah fair analogy yeah i kind of shrugged my shoulders all thanks musk i used

to get really worked up about it and now it's just like 131 million dollar related party transaction nah whatever well come on that's clearly self-dealing oh i know but is anyone i guess no one's anything gonna happen uh no but no i mean look that's not illegal it's just it's something that i would frown upon as an outside investor analyzing a business if if it was a business that musk wasn't running i would think the same thing i mean yeah but or what price is there a price that you would buy shares in spacex oh god this is gonna make it look stupid for a long time i think something like 100 billion makes sense there's still a lot of downside at 100 billion there's still a lot of downside

that is i think around 20 times heavily heavily adjusted ebada it's 10 times gross profit those are pretty those are decent growth multiples let's keep moving uh we've we've got plenty of comments here but we do have some topics that i want to get to there was some interesting stuff uh constellation software fairly popular stock i attended the shareholder meeting last week in toronto and there was it fun was it a hoot it was actually okay it was it's kind of like berkshire for me is too big you know so i think with some of those serial acquirers you get a lot of like just investors that are interested and it's it was a much more i guess palatable size of a meeting probably 500 people instead of whatever 15 000 or however many people

go to the berkshire one the thing that stood out was first of all every question was pretty much about ai which is kind of what you would expect but there was a point when like mark miller who's the ceo was like visibly like he didn't say anything but he seemed visibly agitated every time someone came up and asked basically the same question about ai and the other part and this will always grind my gears i hate it when someone comes up tries to say something really really smart and then asks a pointless question like they spit out some fact that they know and then ask the dumb question it's like we've already been over this you planned this whole question we've already talked about it whereas then sometimes you'll get just this happened at the consolation meeting

you'll get just like an individual shareholder it's like hey it's my first time here you guys are doing a good job uh what are you gonna raise my kids maybe not the the personal questions but But they'll leave it so open-ended that it's kind of like, you know, it allows CEOs to speak a little more freely. But here we have a question from Tyler. Who was more annoying, Berkshire shareholders or CSU shareholders? You're employed by a Canadian company, Ryan, so I would tread lightly here. I think I know what answer you need to make. i thought i think i'm not really like a fan of like worship type worship to ceo type of

situations which naturally there's a lot of at berkshire so there's probably less so uh that at constellation so i'd maybe say constellation but i actually like i've enjoyed both meetings. Berkshire, the actual meeting itself is long, too long, but I enjoyed the CSU one. There was a quote that stood out to me. The CEO was asked about AI and he said, I don't think we've lost one customer because of AI, like literally one customer. And he looked at like across at the other managers of the subsidiaries, like, yeah, we haven't seen any. And it kind of made me think like for first of all you kind of expect someone to say that when the narrative is ai is going to hurt them but if you think about the customers constellation serves a lot of them

are like government bodies or utilities or like really slow moving organizations where it probably takes like 10 layers of approval to even open up clod on your company computer so sure do you really think those customers are vibe coding their own solutions it seems very very unlikely there is yeah they're not they're not in enterprise they're not in startups they're not in stuff like that that is seems to be the massive adoption of ai at the moment like it's companies with coders and young coders that seem to be going after the ai stuff again we're talking without any technical expertise here i agree similar similar i will say to my thesis on wix yeah i would say businesses yes i'd say that's probably accurate for the most part although potentially the partners

or the agencies we can talk about that in a second the only other thing i'll say on constellation is the reason i kind of dismiss the ai threat a little bit is they also said there's no positive impact from ai for them really basically like their customers are not asking for chatbots on top of their software that they don't really care so it they basically said the only improvement is it's allowing us to kind of ship features faster and i came away from the meeting thinking this is a pretty boring business and it's shocking how much attention it gets they're probably going to generate continue continue to generate good returns on capital because they can acquire these niche things at one-time sales or whatever but anyway i'll leave it there let's talk we can shift to

wix because they reported earnings while we were uh out i know i was on vacation i was like oh what our wix stock is doing and the lighting the the light internet speeds i was like i really want to read what's going on here uh yeah down to 55 people were not happy something that so i guess I would say probably the biggest negative headline for them here was the partners revenue dropping, which I could see. De-sell, right? De-sell. Oh, yeah, I guess it didn't technically drop, but it was like flat quarter over quarter, basically, for the first time in forever. I could see a world where partners are using more AI in their workflows or like the agencies with tons of customers. the part that caught me off guard i didn't think about this wix had a ton of cash just sitting on

the balance sheet and they were earning interest from it every quarter that was a big chunk of their income when you go out and do a tender offer and basically deplete your cash that interest income goes away so a lot of their i remember them saying like a huge chunk of their revenue or their their earnings which it's all obviously super high margin income a hundred percent margin disappeared because of those share repurchases i totally kind of didn't factor that in but anyway any other real takeaways from the quarter yeah i think market overreacted a bit seemed okay i mean not really anything i didn't expect the one thing that they just need to figure out is simplifying the story of the income statement because there's always something

going on like oh well there was some cost here some cost there and people might argue well it's because they're hiding costs and one-time things maybe but the cash flow always looks all right um they did repurchase that stock and the revenue keeps growing across the board margins look okay uh like if you look at the overall margin it's going down a bit because of the ai spend base 44 maybe didn't grow as fast as people expected but it's up to 150 150 million in arr as of may you'd hope for continued progress on that i honestly didn't see any huge like nothing unexpected here um i think the adverse impact on earnings of investing so much in base 44 is probably i think the investments there were higher than maybe people were expecting

but if they telegraph this though they said there's going to be upfront margin hit and that's what happens when you have to spend money on the infrastructure cost i mean if you're just looking at this report for the first time it does kind of look a little rough there's some you know the core business seems a little at risk the partner's revenue growth was flat quarter over quarter for the first time and then they're investing a lot in this private business which is not this you know as proven and then all their cash disappeared you haven't seen the impact yet i know it didn't disappear but the shares outstanding didn't drop this quarter because it happened whatever you know basically i think on the break of the quarter so it's going it's

kind of look uh it looks rough if you're looking at it for the first time i think this will end up being a phenomenal investment from here honestly yeah the market cap i haven't gone through yet like i've been going through a lot of uh stuff to catch up after the vacation but yeah you look at creative subscriptions revenue up 13 pretty steady no i think they're in a good spot i i think they serve a customer that should be fairly sticky there's kind of natural churn with with their customer base but that's that's more so from uh you know customers going out of business customers not you know having they've always been anymore i mean they train their own llm to save costs so they've always been much more nimble than some of the other players out there and they're much

more nimble than wordpress because wordpress i think is open source here's a uh company we we have not discussed yet the reported earnings airbnb a fascinating stat reserve now pay later accounted for 20 of bookings in q1 which is yeah that's just that's the standard model though of like a hotel you know what i mean yeah you pay it you pay a check or you pay after you pay a check-in it is Right. The pay-in-for approach, I don't think, because it's reserve-now-pay-later is like a pay-in-for approach, I believe. It had an adverse effect on cash flow, obviously, because you're not seeing the cash up front. but they grew bookings much faster than both booking holdings and expedia and my guess would be you know unlocking this reserve now pay later probably gives make some trips more palatable for

certain customers do you think reserve now pay later is net benefit to the business are you upset at all about the working capital advantage maybe disappearing it's not going to disappear entirely but i think they can management and price it appropriately look going faster than booking um i mean it's a couple of quarters i think maybe in only two but the thesis seems to be playing out yeah very stable i would world cup will probably be really solid for them i guess that might have led to the outperformance with bookings this quarter as well relative to like booking holdings since they have more north american exposure sure sure do we want oh any interest in this into it down 20 today as this recording yeah we had a listener question about that 14 times ebit

the i i guess concern is on the conference call that came out and said basically we are losing share in sort of the low end customer for TurboTax. And they said, don't worry, everyone, they're not, we're not losing them to AI. We're losing them to lower priced competitors. They really wanted to stress that they are not losing customers to AI, which I feel like most people are probably not risking their taxes right now with AI yet. But so I kind of believe them there but it it does seem TurboTax maybe doesn't have the moat the world thought yeah this is

always a risk look at this PE chart here from our friends at fiscal AI use our link fiscal dot AI slash chit chat with me using the charts throughout the show you can get 15% off any paid point as Ryan mentioned fiscal AI has the SpaceX KPIs already loaded so they're always working hard to keep uh providing value to their customers look at this pe 18.6 i mean

significantly lower than anything they've ever traded at they've historically been at the 40 50 range it's just been quite the compounder you look at the business i use turbo tax every year same it's kind of my that's kind of my barometer um and the free stuff i can't i don't qualify for so yeah the more you earn the less incentive you have to switch based on price it's fair so i think maybe it'd be okay to churn out some of those customers but and as a commenter here says it's not the entire business correct right it's a big narrative quickbooks is proving to be pretty sticky and a decent asset as well did you know intuit worst performing stock in the s&p 500 this year not surprising seeing that b ratio but could be are they buying back stock that's the big

question let's pull it up fiscal wow 20 today geez you know who is the second worst performing stock the trade desk no but they're they're close uh co-start group you know them they're kind of like real estate commercial real estate software they're trying to disrupt zillow which yeah homes.com it wasn't it wasn't gonna work if if any company is ripe to be disrupted i mean zillow has they have not been able to monetize their business properly for 15 years yeah yeah i mean you just look at costar at their valuation was always insane and they weren't growing that quickly it was one that i i could never understand i'm seeing i think i'm uh quarterly okay quarterly for cash flow for intuit was 5.2 billion we got a comment here saying eight billion

dollar share purchase oh yeah sorry forgot about the seasonality here yeah they spent 1.6 billion on on buybacks intuit is one of those where the was it the first quarter maybe it's the second quarter always looks ridiculous uh seasonality yeah at 1.6 billion on buybacks in the quarter yeah 84 billion dollar market cap wow pretty good yeah and they've that's uh three quarters in a row now with more than a billion dollars in buyback so kind of like like to see it any earnings you want to touch on i mean we we are 53 minutes into this episode and we haven't got a video sure for anyone that doesn't know the numbers 85 percent revenue growth uh 145 percent operating income growth to 40 53 and a half billion data set of revenue 92 percent growth i think

again you're at the same dilemma with this company the problem just remains valuation 5.3 trillion dollar market cap it's really hard to know what to do with it you know there's a risk that earnings are currently a little elevated there's also an opportunity that earnings could double over the next couple of years right now you're at 26 and a half times run rate operating revenue i have no idea whether that is cheap or expensive i think that's what people are kind of getting to the moment on here with nvidia there's potential competitive threats here there's also just the huge opportunity there's the tsmc holding them back with capacity what do you do i i don't know i really don't know and it seems boring at this point i hate to say it yeah it's weird to say

85 revenue growth is boring but it's well telegraphed from analysts at this point very well covered and it kind of feels like they're in this limbo stage i'm with you like i don't know the technology well enough to have a grasp on where they stand versus tpus like what what could be stolen from them demand wise from homegrown projects like google's tpus like amazon tranium that kind of stuff like how much can that carve into their market the i mean the results look really really good uh on their face so it doesn't surprise me that they're still the largest company in the world i i'm in the same spot i don't really know what to do here does it surprise you that they're buying back so much stock they announced a new

80 billion dollar repurchase uh no they've been doing this but don't like it it's just offsetting sbc and burry's been doing some good work on this it's pretty unless you think this is going to be a business generating hundreds of billions in annual operating earnings soon or like 300 billion which is possible unless you think that's happening it's probably in your buying back stock well above intrinsic intrinsic value so i'm not sure they know what to do with it dividend probably works better special dividend would probably work much better But the buyback at these prices, it's not going to do much to that share count. Hey, they did raise their quarterly dividend from one cent to 25 cents, 25x.

Great. Yeah. It's amazing to have such a massive company report such insane numbers and feel like I'm already ready to be done talking about it. So let's shift gears to Nubank, a company you have covered, I think, a couple of times on the Emerging Moats research service. Yes, well, full stock research report was out two weeks ago, I guess. It was the last one since I took last week off. So go check that out. Pretty comprehensive coverage.

They had their earnings sometime in the last two weeks. Again, time has been a bit of a mystery for me, but it feels like a long time since we've talked. Active customers up to $113 million in Q1. Monthly revenue per active up to $16, while cost to serve has stayed at $1 per month. I have a chart here, which is maybe a little small to share, but it shows basically this. Revenue per active customer going from $3 to $16 while cost to serve that customer has gone essentially flat. And that gap is just giving them more opportunity to earn margin per each active customer. It's just fantastic.

Again, we can use our friends here at Fiscal.ai to build some of these KPI charts. Use our link, fiscal.ai.ai slash chitchat, get 15% off. They can keep doing this, and they're just a highly efficiently run bank. The Mexico business is now inflecting the profitability. It seems like credit quality, given their metrics,

we don't have to go through them all on the podcast, but they're holding fine. There are rumors and notes out there that loans and consumers are deteriorating in Brazil. I don't see that showing up in their numbers yet, but people are, there's a lot of talk. Um, like, look, these are still short-term loans. They're high write-off loans anyway, even if they're profitable. And given the fact that they're not locking in low income, just terrible credit quality consumers into long-term loans that are going to expire worthless, I think they can adapt if they want to. Net income for the

bottom line results up 41% year over year. It seems like something along those lines is probably doable over the next three years, maybe a slight slowdown because again, you can add more active customers across Mexico, Colombia, and potentially other countries. You can get better operating leverage because you're getting greater scale again over that fixed cost base and there's more room to grow revenue per active customer with a lot of the different things they're doing and right now the pe is only 21 that feels entirely reasonable to me it's growing at income 41 pe is 41 i mean what other stocks are trading like that yeah it looks really good in terms of all the numbers we just shared the mercato pago has taken share

now both of them are adding tons of customers and taking from legacy bank so i don't think it really matters do you see this as a so i don't really care but yeah i was gonna say let me phrase it this way if you are looking at new bank is there any point in examining mercato libre if you're just definitely looking at new bank if you if you want to be a shareholder of new bank you're interested do you need to understand the mercado pago story or is it not even worthwhile i'm not sure maybe maybe it's different it's probably like credit cards in the united states where sure you have your bank of america card but you also have your amazon prime

card yeah multiple yeah all right uh i've got a couple other funny notes but we are bumping up on time here you this will take 30 seconds this is something in bubble watch i don't know if you saw this probably did and i just want to say i really hope my tax dollars specifically my tax payment went to pay for this uh ibm global foundries D-Wave Quantum Rigetti Compute, as I call it, Rigatoni Compute, Influxion, PSI Quantum Quantinium, Atom Computing, and Dirac,

which sounds like a rapper, all received around $100 million or more in funding from the United States government as part of a quantum computing initiative. I think they're just trying to make me mad at this point. Rigatoni Compute, it's a scam it's a cup boy scam here's the there was an interview with jeff bezos yesterday that

went kind of viral and he basically said like it's got nothing to do with the top line for the government it has to do with where the money's being spent like the man makes too much sense he breaks people's brains because he simplifies things way too down he got you to deliver a two hours across the united states which is a geography of just terrible vastness like trust the man yeah and people are like he's delivered no value yeah yeah it was i actually love hearing interviews with him but yeah he basically addressed this same thing which is you know money needs to be spent in other ways i think that's going to do it we uh i've got a comment here that says i like inter as well for brazilian digital bank yes they are uh there's been some

good write-ups from them on from ian bezek uh that's correct oh and also we had a comment that said your premier league picks were perfect at the start of the year do you remember what you said arsenal would win and leeds would stay up please was more of a personal one for the friends right but yeah they did they got it hey good should i should have put some money down huh yeah there you go um i think that's gonna do it any other thoughts brett before we depart here none of us stay safe everyone ipos usually go down after the pop so just fomo is gonna happen just relax that is gonna do it thank you everyone for tuning in today we want to remind listeners that brett and i are not financial advisors anything we say or discuss here on chitchat

stocks is not formal advice or recommendation we may buy sell or hold any of the securities discussed on this podcast. Thank you again for tuning in. We'll see you next time. I finally had a light bulb moment about a stock we've all heard about, growing at 18% a year and a 15 PE. I shared this insight in a special deep dive report to subscribers of my research service value spotlight the report is called a generational moment reigniting human connections through a tangible network of intangible assets chit chat listeners can get a discount to my research at stock write up.com that's stock w-r-i-t-e-u-p.com