Chit Chat Stocks - Friday Power Hour #4: Netflix Collapse, Buy With Prime, Tesla Does It Again

Episode Date: April 23, 2022

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Restrictions apply. Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chitchat Money by Ryan or Brett or any other podcast guest is not

formal advice or recommendation. Now, please enjoy this episode. All right. Welcome to the Friday Investing Power Hour. My name is Brett Schaefer. I'm here as always with Ian Gray and Ryan Henderson. guys we have lots to talk about this week I will say again as always in the intro this show we have no preparation and we are kind of just winging it we actually that is the one rule is that there is

no preparation but like Ryan just said there's going to be no shortage of things to talk about this week since earnings have kicked off and we had some spicy reports I mean I don't know I've been talking with ryan all week about it but oh thank you ian let's flip the gallery thank you for that all right ian what have i don't know hold on we should mention that this is uh for all the podcast listeners if you actually want to like ask us questions or something like this that that is uh this is live on youtube at 10 a.m pacific time on fridays so um you guys can like there's like a chat function i think where you guys can ask questions and we got some good ones last week so feel free to shoot in there yep exactly all right ian anything that piqued

your interest this week well i'm gonna take a step back from kind of the news and i actually started uh the snowball this week so it's going to be a little bit of a push to try and finish it before the meeting starts but i'm going to try um and so just a just about two and a half chapters in so far but enjoying it um i think for those who don't know it's the warren buffett biography um and just has it's very detailed very lots of information really paints the full picture of um kind of these different events that are happening and so i think uh i always i always love kind of digging into people's lives and especially people who have lived or who are great in some field or in their whole life but um just kind of getting to get real granular on

great people is something that um i enjoy doing it's it's kind of interesting to me and what makes people tick and how they got to the level that they are and what the shortcomings were and what the things that really propelled them were. And so anyways, I'm excited to finish. I think both of you have read it, right? Yeah. First 100 pages aren't good. I'll admit that. It's too, it's a little, the early life, I think they may have done a bit, you know, a few too many words in the early life, but that's okay. It gets good in the middle. I think it's entertaining, the early life to see how inquisitive of a child little Warren

was fireball well we maybe can do that in 20 pages not 200 but who knows it will be a tall task to finish that before the meeting ends yeah only one basically one week

from right now and that's what 800 pages something like that that'll be tough i like reading though so it's and i've got i've got some motivation to get this one done so we'll see we'll see i'll give you i'll give an update the next time we do a power hour yeah yeah that'll be post berkshire so i assume we're going to talk post berkshire at the the next one because next week we'll we'll be off this is another good time to mention yeah we're

not going to be we're not going to be doing this next week but for anyone who doesn't know we are going to the Berkshire Hathaway annual meeting, Ian, Brett, and I. So if you're there, give us a shout either over email or Twitter or something. And we'd love to meet up. Last time we were there, we met some listeners, grabbed some drinks. That was fun. Yep. There should be some Malay Fool people there as well that we've been talking to. A lot of people, if you're in the FinTwit universe and kind of within our sort of fundamental investor group that you know there's all those different types of styles on fin twit a lot of those people will be there as well so probably just dm us on the twitter account that's the best way to access it

um all right email our email is also podcast at gmail.com yeah we'll make sure to put it in the show notes um and it should be in any other podcast show notes all right let's get to real stuff today what's the first thing we should talk about i know everyone's been talking about netflix So I don't know if we want to cover that. Well, yeah, I do. You do? All right. Ryan, you just talked about that at Motley Fool Live.

So any takeaways? What are your thoughts? Well, okay. First things first. I think they're like the first big company to report during the earning season. I think that's a huge disadvantage because no matter what happens, it feels like the investor reaction gets amplified because everyone's just like waiting for a report. So I wonder if they were two weeks later, how much they would be down compared to being the first to report.

Because they're down like 40% since the report, which is a pretty wild swing. And I think they're down almost 60% on the year. So I don't know. It's kind of shocking. And I guess for anyone that wasn't aware of the quarter, subscribers declined quarter over quarter for the first time in a decade. They would have been positive if it weren't for basically axing Russia's access to Netflix, but still it would have been a really low subscriber ad. I don't think that it's that attributable to competition. Everyone is saying, well, the industry has attracted so much capital that Netflix can't keep its position.

But their market share among TV viewership in the U.S., they sustained it during the quarter. So that kind of tells me that maybe it isn't the competition, that maybe it's more they've just hit saturation in the mature markets. Or they've hit a roadblock internationally. yeah they also said that a lot of the eastern european countries like there was some attrition over there just because of like they think it was related to the ukraine russia ukraine situation like maybe just tightening up her strings in some of those areas um maybe over like fear that the conflict's going to escalate a little further but I don't know. I just feel

like it might be an overreaction. I'm never going to be long Netflix because I don't know why. I just I'm not going to be. I can't really predict what's going to happen in that industry, but I guess never

say never, but it feels and I say this every quarter, it drops, but it feels like a good time to be an owner. Reed Hastings, I don't know. That management team always figures it out. yeah i uh yeah i agree if you're bullish on netflix this is where you kind of gotta i feel like grit your teeth and get long but it doesn't feel comfortable obviously i've never owned it so

it's hard to tell don't really have a read on it but i think it's interesting to look back on their sort of buyback talk their video game initiatives and that was a maybe a bit of a leading indicator that they're trying to they're reaching saturation with the core product um i do like the advertising if they do it correctly though because yeah you're seeing that streamers want that here's the conundrum though if they would haven't tried to kill hbo and embrace more of high quality content if you kind of know what i mean instead of the low quality stuff that they're kind of pumping out right now majority of which you know those reality tv shows what do they call that love is blind all that all that stuff that's and um uh just more of have on content instead of

like maybe a really big show say hbo kind of does a lot of those then the subscription model works perfectly because you know you want i don't know that just works better for that stuff but i get a a little i get a little mixed signals about how like they went after these reality type shows which are huge on the platform now or action movies and really rewatchable action movies and stuff like that that feels way more catered to an advertising tier than an hbo style one if we're looking at the last 50 years of what's worked on television i could agree with that the i do think the competition that's like the big i feel like all the bears came out of the woodwork this this quarter and they're like told you competition's gonna get them and it's like

like hbo's been around this isn't like they've been around they've been competing with all these companies now they're doing it maybe a little more head-to-head but they've been competing with these companies all along it's not like it's not new maybe companies are spending more but i think yeah the ad supported tier everyone bags on it but i think it's probably a good idea and i was watching some of the day from like one of the ex executives from hulu and he said if the ad supported tier is done right and you get the advertising right the arpu is higher than the pure subscription like meaningfully higher yeah me and any any thoughts on that i don't know i think i probably attribute more like i don't

know in this quarter but i think that the the competition is a bigger deal going forward i think is these all these streaming services start to get on you know like with disney plus releasing the mandalore or not the mandalorian the obi-wan kenobi series soon and um you know netflix has the new season stranger things coming out i think there's going to be people who start to rotate around especially if netflix starts to do the um where they're charging for the um, the other household using your password and stuff, the password sharing, cracking down on that password. Yeah. Cracking down on password sharing. Like, I think people are just going to start because I know people who have like, you know, one person will have the Disney plus account

and someone else will have the Netflix account and someone else will have the, you know, whatever it is, the HBO account. And they all share their passwords amongst each other. But if, if you're really going to have to start doing it yourself, like, I think there's going to be people who say, i'm gonna get netflix this month and i'm gonna get disney plus next month because you know this show's coming out that i want to see and and i think disney has the advantage there too because of the kids content um that there's just like that's the stuff that sticks around the one that you have to flip on for your kid whichever that platform happens to be whichever that service happens to be that's the one that people are going to do and i think that

a lot of these i think streaming itself is probably recession proof um that you're going to have some sort of streaming option. Um, but I don't think, I think the thing that's less recession proof is having all the streaming things. I think people will look at it and go, okay, I can spend $15 a month or $10 a month on one of them rather than $80 on all of them or a hundred dollars on all of them. So I think, I don't know, I don't think like Netflix is going to get killed or anything like that, but I think they're, I think they're kind of, as you said, kind of hitting some maturity, at least in the bigger markets. And it's always a tough question with companies like this because you'd like to see the innovation

and we're going to get into gaming, we're going to get into this other stuff. But it also kind of gives you the indication that the current business isn't going to be the thing that drives meaningful growth over the next number of years, right? they're looking for, they're looking for that next big growth driver. And I don't think, I think that's the thing with Netflix that if, if you were going to get long, I'm not long, I've never been long. I probably won't get long. We'll see, you know, never say never. But the thing, the thing that I would be curious in as a potential investor would be what is that next step of growth? And maybe it's just international, but that seems to be slowing as well to some extent. So I don't know

That would be the thing that if I was going to get long, I'd really want to be clear about where is the growth coming from from here. I think they should go into sports, but that's just me. They talked about that on the conference call. They've been against it while everything was working beautifully. They've been against advertising in sports. And that sounds great when the business is growing. but look, everyone in, okay. I've said Roku should go into local sports rights and they let it go to like

Fubo, which is just, how did you lose that to Fubo? I mean, you have way more, I don't know. It's just, I wrote, I thought, I've been thinking Roku should go into sports rights, local sports rights and Netflix should, I don't care if it doesn't scale around. If you have access to the local sports team in an area and everyone already has access to a netflix account if you put it on the ad supported tier that is and you upgrade from the shitty tv advertising to really strong cpms on internet enabled advertising on ctvs

i mean that are the amount of commercials and sports games are off the charts i don't know i just see i think they're dropping the ball here amazon's really going for the national stuff but i mean maybe they talked about sports but did you read the conference call at all no but i know they always talk about how they don't want to go local but maybe they changed their tune i don't know no i mean basically like the the analyst asked about like the sports market and they like they they just said like listen i know everyone else seems to be doing it right now but we don't see how this is gonna help us like increase cash flow for our shareholders over the long term because they said like we're we're definitely more excited to do like the supportive

content like the drive to survive or some of the other stuff they have coming out but basically they made it sound like these deals are stupid and they're they aren't going to get a lot of value out of it it's they have to pay a ton and it like isn't that yeah value accretive I don't know how Maybe the rights are a barrier But how is Fubo able to record stuff Or get stuff They have no money

Yeah and they're burning money I think the rights are too expensive I don't know I just kind of disagree I think the sports The results are there The rights are too expensive Fubo is just shelling money out No but that's for a different

That's for a flawed model of trying to bring cable To streaming I think if you bring the whatever the cpm levels up to a proper targeted whatever it is like internet enabled ones it'll be extremely profitable and not only that it locks in churn but how i way low i mean the only reason cable was so successful for so long is because you had lock in basically with the box and whatever the distribution to the household and sports. How do you know it's

going to be insanely profitable for local sports rights? I'm sure they've explored the option. And right now when I watch local sports, the ads are terrible. You don't think they've considered that? It seems like they've explored it and said it's not worthwhile.

They haven't tried it. They haven't tried anything. What do you mean they haven't tried anything? I think they've never tried sports. They've never tried it. I think it could be just a, they could just incinerate cash if they did it. Oh,

I think it would be one of those. I think it would be one of those big bets that I'd want them to be fairly confident in before they undertook. And I don't think as Ryan's saying, I don't think they've got the indication. It seemed, it doesn't seem core to what they're doing right now. Right.

They have no live programming. And they seem to be getting kind of more into what are additional asynchronous type things that we can do with the gaming or even the other night my sister and i stumbled across the trivia crack game on netflix or whatever and they seem to be going more that direction and maybe that's a mistake but that seems to be where their comfort level is rather than getting into the live stuff real quick i want to bring up we got a couple of comments here we got a comment from caesar saying it's such a difficult business honestly literally as soon as they have success with a movie or series they have to think about what they're going to do next to

keep subs from churning and i think that's true sports creates the content for you it's literally no like that's the whole thing it's not free though i know but it's it's and it has a lot it has a way shorter shelf life is there enough crossover between the audiences it it it's there's a league there's league the leagues redo it for you every year and you don't have to do shit yeah do you think there's enough enough crossover there in the audiences though like is what percentage everyone in netflix everyone in the united states has access to netflix my grandpa's 85 years old and he doesn't even know how to work his phone and he doesn't even know how to email. He's like Buffett and he watches Netflix. Right. But is your, so this is the question

though. Your grandpa's probably not going to be flipping through and like changing his subscription from Netflix to Hulu to whatever each month. And so he's already locked in of the people who might do that. What percentage of people, of those people actually care about live sports, right? People who are in their twenties and thirties and especially local live sports, right? It's got, it's only got to be 10 to 20 percent of netflix subscribers but i mean i know what this is about i know that brett is upset that the mariners games aren't on ctv aren't streamed but i don't that's a problem that a lot of people have i'm speaking personally a lot of people want i mean i've talked to this with my friends they're like i would pay 20 bucks a month to watch the local

baseball games let me do that the sport like someone is there's an op there's an opportunity there's the vacuum there and the reason that local that young people aren't watching whatever baseball local sports is because they literally can't it's not because they don't care it's because they can't and i just these companies are seeing this data of oh sports reports are going down like whatever sports watching is going down among young people it's because they literally can't watch these games so i don't know that's why it's going down i don't think that's why i think reed hastings has probably thought it over i don't think they're looking at well less people on ctv are watching local sports because they they know everyone knows that it's like not

easily available for us but i think all the rights the rights are held up the rights are held up though the rights are held up that's no they can't they like they can't right now it's held owned by like Sinclair and other people that aren't uh they're keeping it on cable Pluralsight a tech workforce development company provides the solutions high-performing engineering teams need to tackle today's biggest challenges whether it's building the skills individuals and teams need to tackle mission-critical projects driving cloud transformation or helping software teams to ship reliable scalable and secure code harness the collective power of hindsight foresight, and insight with Pluralsight at pluralsight.com slash vision.

I do think the other thing that Ian kind of touched on, and I guess to get back to Cesar's question real fast, yeah, that is something that's always prohibited me is the content treadmill that they basically have to, they're stuck on. I think there is sort of a, I would have imagined that there's like a point of their scale where it starts to like not be, as long as you can produce like one decent thing every two months i'll stay um but the to ian's point i think with all the content being so fragmented now each service is more disposable than cable so it's like and i think we saw that in europe like it isn't recession proof anymore if and not that there was a recession there but when when people started to tighten their purse

strings it's one of the first things to go like all these streaming services you're not gonna have them three to one yeah we've got another i don't want to harp on this again but guess what one you would keep if you were a soccer fan in europe the one with soccer content um so i guess we'll see though we'll see i could totally be wrong i'm no expert on video streaming here's the other question that ian was probably about to say which is very very interesting how do you think this competition affects ad companies like Trade Desk or Pubmatic. And I will add on top of that, Roku. Any thoughts from you guys?

I know we're not experts on the Trade Desk, but we kind of know what the business is. And we don't own it any. I want to be clear. Ian, do you own the Trade Desk? I own just a little bit of the Trade Desk. I have a bigger position and you can't even really call it a Trade Desk competitor, but a similar service to the Trade Desk called Acuity Ads.

All right. Full disclosure there. All right. Any thoughts? I think, yeah, I think they are the safer, like, I think they're the safer business models to bet on. Like, I'm not sure on valuation for the Trade Desk or Pubmatic, but they are essentially the arms dealers, it feels like. that's going to be competitive too but they are the arms dealers to this absurd content spend from all the media companies um and i i think those are the companies that feel safer to me like that's a more resilient model than throwing a bunch of money into content and kind of hoping it sticks

i like roku a lot yeah me too i i haven't owned uh owned in the past don't own it right now Probably could own it in the future. It's on the watch list. But here's what I see is that they're the operating system. Netflix is maybe going to start promoting their stuff on the home screen. They're going to spend more with them. There's all these streaming services that are trying to pump stuff up. They have the cut of ad spend when something goes.

Because one of my big concerns with Roku is that Netflix was succeeding without ads. If Netflix embraces this ad-supporting tier, that could be a huge uplift for them. now on the flip side a lot of roku's advertising revenue is coming from the free roku channel which is kind of like one of those you know it's got those reruns it's got movies on there that's ad supported and it's supposed to be you know better cpm so hopefully fairly profitable even though they get on the content trend a little bit of embracing that old content um of saying like buying up some old movie catalogs and stuff like that so that could be a headwind if netflix you you know, goes into advertising tier or, you know, obviously YouTube has been a competitor

with that as well. But I think overall Roku will benefit from this shift if it really is this big shift and Netflix has to embrace advertising and become more level playing field among all the streamers. Yeah. And it's also Roku's pricing model agnostic where if you're subscribing to Disney Plus, Roku gets cut. If you're on Netflix's Next Ad Supported, I imagine there's, uh i believe the way roku's works is they get a cut of the ad supply to fill i believe it's a bit of a black box i've never been able to confirm it but i think that's how it works yeah yeah so like if you aren't a sub if it isn't subscription monetization or if it isn't subscription revenue for roku i believe you have to designate a portion of your ad supply to roku like you have to give it

them for them to fill as long as people are going to ctv they win and here's the thing netflix used to have the negotiating power to not give roku any cut of subscription dollars may that change because it's sort of like the battle that people have with apple not nearly as powerful obviously of apple with the smartphone stuff but i could see that happening where and people always say that roku is just uh like that i don't know they say it's a commodity well i don't i disagree because i have the tv it's a roku tv i'm not switching and i'm locked into the operating service and it's a good operating system it works very very well a lot it's very easy way better than amazon fire tv and everyone that that okay i and maybe i overestimate this

But the layout is so simple that I think it's really valuable for them because one of the people I live with now has this horrible, I think it's an Apple TV. I don't know, but it's insanely hard to navigate. The Fire TV is insanely hard to navigate. Roku, I know exactly where everything is. I know exactly. It's a very intuitive operating system. I'm not going to switch. Well, you're going to know next one, next TV you buy, I'm assuming over the next decade, you'll buy like maybe one more TV or something. If you move somewhere, it's most likely going to be a Roku enabled one just because of your customer experience. Ian, any thoughts on there? And maybe we want to talk about the ads, not the DSPs or whatever those advertising technology companies. I mean, it seems like it'll just be a rising tide for them. Yeah, that was the direction I was going to go is I think for the companies like the Trade Desk acuity ads like i was mentioning um i think this is generally a good the competition is a good

thing because it seems to be driving subscription prices towards zero which means that they're going to become more ad supported um that because of all the competition people are having to or all these companies are having to figure out ways to still generate income and have people like the best thing to help with churn is when you actually don't have to pay each month right if you're if you're paying nothing or a nominal amount each month to have the service you're less likely to turn than if you're paying 10 12 15 bucks a month so i think that that's been positive for this industry um i would say the caveat to that is for someone like netflix i would be concerned that their ad supply never reaches the dsps or the ssps or any of that network that they

i would suspect if netflix was going to do it themselves or that if netflix was going to do an ad supported platform they might build their own ad ad network similar to a snapchat similar to a facebook similar to a google you're thinking walled garden that's ambitious i don't think they want to do that they said they won't on the conference call oh really that's a lot they want to delegate that it's a heavy investment right there well that's good to know i yeah i did not see the conference call yet so that's that's good to know um that's what i would have thought as well it seems like they like doing things in-house i mean they talked about bringing all the gaming they said they want to produce the games in-house but are they gonna get the cash to

do both of those things that's just my question like the tech the ad technology debt would more debt more debt uh i don't know i just don't see where they're gonna get the cash to do that i i i don't know they basically said they basically said like the gaming i think that's probably why they're going to design or delegate the like the ad tech to other companies but um because that would probably be really expensive to build out but the gaming side is just going to replace linear content spend um and the the interesting thing is i think they can i actually like that strategy because i think netflix really benefits from virality you know where like you almost get FOMO when everyone's talking about a show and you haven't seen it squid games right

if you can there's always that with gaming too like everyone that was basically the whole fortnite craze right there's like that industry is like really built on virality and like games hitting sort of a success threshold and then it attracts more users if they can do that with something like like the exploding kittens game which i think will do well um and then you can parlay that with some content like some linear content i think that's a good strategy and that could build a lot of that sort of like fomo what am i missing on that game it's very easy to over mobile it's very accessible so i don't know i like that i like the idea of trying out some interactive content i like it if they succeed i just don't think they will i don't know i just

i'll believe when i see it i just get a little nervous but yeah if they execute i mean that's it'll, it'll be a great addition. All right. Any, we've belabored Netflix streaming a lot. I think that was good. Anything else this week,

guys? Um, I mean, Tesla earnings. Fantastic. I think, well, should we all say fantastic report?

Yeah. Yeah. I know me and Ryan have been here for a long time. Yeah. Me and Ryan, I've been haters for years, but you got to call as you see it. If they can,

uh, produce those types of gross margins, even in this commodity environment, And it's highly impressive now. I do wonder like, yeah, I wonder how they're doing that. But the, uh, I thought it was really funny afterwards. Someone was like, someone compared operating expense spend from Tesla. And then Elon like said, like, we can get it down even further.

I'm just like picturing the employees that are on like the payroll, like, uh, okay, thanks. All right. Yeah. I guess I'll just like leave the desk. I'll go home. Yeah. I found it interesting that he was going to leverage his stock to Twitter to buy Twitter a little bit. I mean, not too much, but I mean, Tesla stock still very value premium, premiumly priced.

He's doing what a margin of cash he has, but there's like a margin loan on his Tesla collateral. You're using Tesla stock as collateral. I mean, I don't know. That feels risky to me. I don't really have any good takes on the Tesla report, except for the fact that I think they've locked in commodity prices before on those long-term contracts. It'll be interesting to see what happens if these prices stay elevated. Because I just wonder how they are able to have gross margins and profit margins so much higher than the competition. It baffles me.

I think I'm going to say it. I might have been wrong. Yeah. Might have been wrong. The story's not over. We were definitely, so far when we were saying it was overvalued at what, what it would have been like 50 or a hundred dollars a share split adjusted.

Definitely wrong. I think we can confidently say that now. Yeah. Yeah. That's all right. You've been a shareholder. Yeah. I've been a shareholder.

I've reduced my stake at some different times. And for me, it was never one that I felt like, Oh, this is a genius investment. Or it was kind of, I tend to have a lot of tracking positions in my portfolio. And that was one that kind of the reason I actually go ahead and buy something is you buy it when it was, I think I had it at, what was it like $35 split adjusted or something when I bought my first little thing and just, it was a tiny portion of the portfolio, but then when it does what it's done, it becomes a little bit more. And it's nice to have that little piece rather than it just

sitting on the watch list but um so that's why i why i do that and have all these little tiny positions to some extent but um i don't know i think i think it's fair to say that people were wrong that it wasn't ever gonna like be a real company right because i feel like when i when i bought it whatever it was like i said in the 30 split adjusted there was like questions about whether it was going to go bankrupt, whether people would even drive the cars, whether it was a fad, all that type of stuff. It doesn't, it seems to have passed all of those questions. Right. Let me clarify that with Musk said that there were weeks from bankruptcy multiple times. So it was close. Right, exactly. And right. But they have, my point is that even though they were

at that point, they have passed that point. Presumably they're not close to bankruptcy at this point given their balance sheet or better hope yeah better hope yeah um so so i think like they've passed all those concerns the thing is like today you know i look at the valuation and i still go man this is kind of wild um but they like for a long time i think there was questions from a lot of the twitter you know the tesla q community that like this is a fake company it's all fraud there's no they're there and like clearly if you look around or if you're on the west coast at all you see their cars everywhere um it's become one of the most popular cars out there there's a lot of concerns about the quality of it and i think those are fair but um but it's

a real company and is it one of the top 10 most valuable companies in the world uh like by market cap it is but i think it's you know i think that's that's a much more i think it's i think you guys are not wrong that that's probably not the truth right in the long term if it's a fraud it is the best run fraud i've ever seen i want to clarify this there can still be fraud committed at a legitimate company that sells products that those two things are not mutually mutually exclusive right i'm using that term correctly they have committed clear fraud at least one time two well one of them's definitively clear the solar roof tile reveal now it was for the good of america well do we want the planet to die we need them to commit fraud on the hollywood studio with

a fake solar tile we do need that but that was i mean that's been proven in court to be fraudulent it has not mattered i also think this the the whatever the full self-driving reveal will prove to be fraudulent but that one's a bit unclear because they're still selling the product however that stuff has not mattered and obviously millions of people are still buying the cars especially on the west coast i did learn that up until 2019 though 0.2 of zip codes which are basically all california and i'm assuming one the seattle one in washington covered 25 percent of all electric vehicle sales in the united states which is kind of wild so that is our electric And we lived in that zip code.

Yeah, our electric vehicle sales tied to the NASDAQ to QQQ prices because of all the stock options. I think maybe in 2018 they were, but not anymore. It's more mainstream now. Yeah, it's too mainstream now. I don't know. I feel like I don't like how good some people feel about themselves by having an electric vehicle

without knowing where that power is coming from? I mean, yeah. Well, you bend metal with magic, right? It doesn't take any energy. I don't know. There's just a little bit of hypocrisy there that bothers me, but I imagine I'm not doing that much better

by the planet by driving around an ice car. Yeah. All right. I mean, the stock has to fight gravity, though. I will say that ARK Invest, man, they must be glad that was their largest position. Because if that was not their largest position, I'd be really worried about that fund. And other funds that invest like that. Because ARK is down like 60%.

And Tesla has been flat, basically. Or up over the last year. But flat since the start of the year. I mean, it just feels wild to me that even though, obviously, the report has been solid, but almost every company's stock has dropped, at least in the technology sector, excluding energy, stuff like that, has dropped like 20%. I don't know. It's weird that that's the one stock that is being excluded from the drawdown. Go ahead, Ian. No, no, no.

Go ahead. This is a little bit of a tangent, so go for it. All right. what I was going to say is you were talking about how all the tech stocks are down and I'm getting sick and tired of these pair trades where they're

so irrational. Netflix drops and then Mash Group drops 10%. Every consumer internet company drops 10%. They're like, well, the indication.

Why are you sick of that? That's great. It creates awesome volume. it's a good buying opportunity i don't i actually i enjoy the buying opportunities i don't appreciate the irrationality and i know it's probably just some some algorithm that's doing it but whatever i was going to put forward a little bit of a hypothetical here so what do you guys think next five years better performance twitter or tesla and if twitter gets taken out the returns are whatever it was i don't want to play twitter

100 twitter i don't want to play this game the put it in the books it'll be on the internet forever i said that i am highly confident it'll be twitter if it gets taken private at a premium i would be extremely confident i don't know i do not like twitter as an investment ever other than the fact that i mean that the bold thesis at this point well the bold thesis like from two weeks ago was that like basically it's going to be a bidding war um i honestly haven't kept up with it enough but i just don't like the idea of billionaires owning media outlets like holy on the communication services yeah yeah as someone who's criticized tesla they're gonna

like we said they're gonna shut us down he's gonna he's gonna shut us down um yeah what's weird though is twitter's business okay excluding the sbc like that's whatever that's its own issue but the business i don't know has grown pretty solidly if i'm not mistaken right well has on a per share basis uh let me look up revenue per share growth let me get a little let me put coif in an action here so we can pull up it's grown but it shows just how how much it used to be worth like just how overvalued it used to be it came out at 80 times sales isn't that right? It was hot in 2011. I mean, everyone thought it was going to kill Facebook even. That was the thesis. It's for you. Credentials to advance, confidence to stand out in your career.

At Regent University, you'll join more than 30,000 world changers making a difference in high-demand fields. Pursue your bachelor's, master's, or doctorate online or on campus in Virginia Beach. Your degree from top-ranked Regent University is waiting. So is the world you will elevate. Say yes to your purpose and position yourself for a brighter future. Visit regent.edu slash learn more. regent.edu slash learn more. I swear every investor goes through or every single person on Twitter who's also an investor goes through the same exact cycle. They're like, I spend so much time on this. There's so much potential value to unlock. Okay, they can't do it through ads. Maybe they can find a new

monetization strategy and then it's like no they can't do that either okay all right i guess this is just a free service then basically yeah okay over the last 10 years it's gone from revenue per share has gone from two dollars and 69 cents a share to six dollars and 37 cents a share so that's solid over 10 years over 10 years approximately run your own numbers exactly i'm just looking at a chart it's not bad i wonder right but you wouldn't have when they came out in 2011 like you would not have thought that that was going to be the trajectory right i think people would have yeah you would have guessed that they were going to 10x revenue per share over 10 years right that that was they were there was so much like you said there's so much it was 80 times

80 times sales, right? That's what you're expecting is huge, huge revenue growth numbers. It does feel like there's a lot of problems internally at that company. And part of that is just because Jack was complaining about the board of directors. He seemed to be the problem, if I'm not mistaken. He seemed to be the issue. maybe we'll never know i guess we'll never know unless there's a tell-all but i think i how is he not the issue

well i think there's still issues now with him true true right like i you know he's not involved and twitter is still it's not like twitter has had some remarkable um initiatives and remarkable growth or even like a great plan well it's only been three months right yeah but still if you know you like i'm not saying they would have like turned the whole business around but would have thought maybe that there was like it just seems like there's more controversy right ever since that's happened they've had numerous times where they're there's these controversy about what they're banning and what they're like all things that actually aren't core to the business right or at least not value add to the business they're just it's like they're still

just putting out fires rather than like that's the problem with twitter is it feels like twitter's constantly in the mode where it has to be putting out fires rather than actually focusing on value add things to the business yeah but that's i i think and i've heard like executives talk about this where there's like all this like the back end is not done was not done right and they're like the controls have been like it like it's a hard uh it's a hard community to control and they can't just like flip a switch and fix it so yeah like you said ian that they're basically spending all their time trying to put out political fires uh that they don't there's like no focus on growth initiatives and if they maybe it just isn't growable like maybe the maybe the platform

can't expand beyond what it is right now like i i don't listen to space as much anymore i thought that could be it um i don't i don't use it for anything other than i for anything other than what i used to use it for three two or three years ago i just don't know if it's changeable yeah i just i kind of disagree with the political stuff because facebook's had 10 times as much of that and they're way more profitable i i just don't i don't i think that's but i think that's because facebook has figured out ways to deal with that and part of it is they have huge teams focused on it right but facebook has figured out ways to navigate that and keep keep innovating and keep adding you know keep keep raising their uh their average revenue per user throughout all

that despite and and like i said and innovating and doing stuff whereas twitter it seems like just sucks up all their attention and all their time and there's they haven't been able to innovate true maybe for sure we'll see i read something i can't remember where it was but i read something um or maybe it was zuckerberg in an interview and he was probably you know pumping facebook a little bit too but but he made some comment about how big their uh i can't remember what called it, but their safety team or their compliant, like they're basically the moderation team and how big it was. And that he saw that as a major competitive advantage for them because they had the capital and they had the revenue to support such a big team where they could actually

handle those issues better than, and this was post 2016, but that they could handle those issues better than any of their competitors in social media, just because they had such a massive team that was both doing it themselves, but also building tools that helped with moderation. And I think that's probably true. I think that's been proven out over the last couple of years. And things like Snapchat, it probably matters less because there's less of the general feed social component. But for something like Twitter, that's all based on the feed, I think they are at a competitive disadvantage with something like Facebook or Instagram because they just don't have the same capital to vote to huge content moderation teams. it's yeah those jobs seem terrible though like it's a competitive advantage that we can pay people a decent amount of money to watch beheadings and child porn and tell us to delete it like doesn't that job just seem like it's awful yes but i don't know i just i think that's a long term i think there's also you know and now this is getting into areas that i'm not as much

of an expert but i think they're also a lot of those jobs are actually building tools that interesting that can catch that type of stuff effectively yeah i've always content moderation in a perfect world is done through uh algorithms like that are picking it even if there's rules and yeah even if there's like even if it i think misses not not misses some uh to where it's put up, but they're overprotective, I think it's almost a good thing. Yeah. Well, that makes it

hard to culturally, it's hard to navigate that stuff. I get surprised, though, speaking of snap, I get surprised every quarter that they continue to grow. I don't know. Who's on that?

Am I crazy? I'm not that old. You still on a run? Or are you monetizable? I thought you were just messaging. Yeah, I'm not monetizable. It's basically, I have this really long-standing streak with someone from like eight years ago. And I log on once a day and I send a picture of my face. And then I log on the next day and do the same thing.

and I just want to see how high the streak can get I don't think that's a very valuable user but I'm a DAU though it was brilliant the streak feature was brilliant for DAUs

the pump DAUs yeah I mean their revenue though continues to grow and it's kind of surprising I think yeah i'm i'm constantly blown away by how big the world of like like how much advertising spent there is globally yeah and tiktok and this is coming while tiktok's like dominating

time spent now which i someone showed me tiktok for like 10 minutes i gotta say that stuff is pure evil that's it's like that should be banned it's psychotic it's you're such a boomer it's i i felt like i was on crack watching this stuff i'm serious i mean and it's so addictive i was like let's turn it off and they couldn't turn it off like it is true okay it's like it's pure it's it's i think it's pure evil it's like it's it's evil like like heroin's evil like it lures you in and then you can't stop and there's no it's not like youtube where uh there's you know education stuff or whatever it's just i mean there's education there's education but i mean it's like well i've seen guys guys are on there telling you about their life insurance policies that you

can buy oh my god you know there's all sorts of information there i've gotten that call before some variable annuities you know if you're interested all right we got a good have you seen the snake oil channels yeah what about the real estate the guy that uh well i mean fintalk investors that's a great one here's a good question from caesar thank you caesar for being one of the only person dominating the chat room um and this is one i was going to actually bring up we should probably close out with this how do you guys feel about i with prime that seemed like a big announcement i have some thoughts on it i was looking at it anything from you guys you go ahead i i haven't even can you explain what it is i saw everyone talking about on twitter

but i didn't check out what it was okay so they just announced that and and they're expanding it to not only fulfillment by amazon people but right now it's only fulfillment by amazon people if you do that and you have your own website you can add a button called buy with prime and prime members can get all the prime benefits, free shipping and, you know, free and fast shipping from your website if you're fulfilling by Amazon, but not on amazon.com. So this takes prime and it's taking it outside of amazon.com. Say, let's say, what's a good example? Figs. Figs that, whatever, they're a huge e-commerce company that has their own website. If they could add potentially um buy with prime and instead of using anything else like shopify pay paypal whatever you can go

through buy with prime and you get all the access to prime i think it's a great idea and it i think shopify's stock drop is warranted uh i would be very i'd feel very threatened by that yeah and it's so you get all those benefits right you get the free the free shipping the fast shipping and Amazon's doing the shipping for you as the merchant yeah, feels like a great product you're basically just getting fulfillment

capabilities it's expanding fulfillment by Amazon outside of Amazon.com yeah, I mean and they just partnered with Wix too yeah, so I think that's probably part of it BigCommerce, which is another Shopify competitor

is partnering with this as well It was in the press release. I do. Yeah, I would be concerned. Now, that does not destroy Shopify's core revenue driver. Payments? Payments? Core revenue driver.

That. Oh, okay. So the payments would be done through whatever the Amazon system is. that's the risk I'm seeing I don't know if Shopify has a way to counter position themselves but that's the big threat

to me can't Shopify just say not like it's not welcome on our website is that friendly to your merchants if you have

a product that they can't no there's no way they're going to spend 100 billion in CapEx over the next year damn that's a killer yeah

but they're still getting the subscription revenue yeah but that's a very that's a way smaller part of the business right now than the

payment volume through their system yeah then payment revenue how come when did when was this announced because I'm not seeing

it doesn't seem like there's a huge drop this week no they have different press releases they have because they do press release every day

look at like news releases no I know the stock didn't Shopify or Amazon Shopify I mean it's down but so is everything

No, no, it dropped a lot yesterday I mean, it's hard to tell since there's so many factors But it's down 25% this week Or 20% in the last five days Yeah Yeah, but It's hard to know what Netflix probably drove that

Somehow Maybe, maybe, maybe I think it's warranted though I don't know It feels like a threat I'm thinking one i'm thinking self-centeredly here i would use buy with prime yeah me too i think it's great as a consumer right to be able to go to on a website and be like oh i get my prime benefits and i'm

not even on amazon that's awesome right it makes the prime membership i think even uh more valuable that's true and so you know it probably improves amazon's pricing power on the membership fees um because if all of a sudden it becomes because you get the benefit you get the the like the payment piece of it which is like the same thing as the paypal's been but then to get free shipping and fast shipping and you know it's coming from amazon where it's going to have like good return procedures too if you have to return something it just all of a sudden it just makes everything um it just makes it better for consumers and so and you get thursday night football for free.

Sorry. Sports stuff again. We'll call back. Sorry. I don't know if that's the number one reason people buy Prime, but

I think Shopify's got to have some sort of way to counter access. Whether that How though? How?

Because it's really based on their fulfillment network. But how do they Shopify might not It's in their marketplace. What are they going to what are they going to buy?

What are they going to buy? App integration is 30 bucks. We get a cut of any payments that go through a Shopify website. I'm sure that, yeah, but that's going to hurt margins. I mean, Wix basically, and all the other ones have zero, you know, they're basically saying we're going to go with Amazon here and basically try to partner with them. But Shopify said like, yeah, they said they're going to buy amazon in 2030 and it's like all right no like their ambitions were to defeat amazon and that's what the stock got up to 200 200 billion dollar market cap but now i feel like they have to embrace

each other well did you see that toby litke changed his profile picture back from an nft to his normal uh to his normal profile pic what a shame it's a it's a bear market sign what a shame someone said someone said uh the the bull market isn't over until or he's like this isn't a true bear market until toby look he changes his profile but pick back from an nft and then like a week later he changed it well yeah is that like i think we may have talked about this before maybe not in this show but i feel like the nft stuff like if any sort of executive embraces that i'm like oh no no no no no no no no if it's like a company you like i'm like in my back my mind i'm just panicking it is a bit of a yes it's a yellow flag 100 starbucks adopting it what the hell

is that about yeah it makes me wonder about like well it basically pulls a boy who cried wolf on the rest of your press releases like you know like oh uh okay a lot of our our stores are unionizing but we're also we also have an nft marketplace so yeah check do you remember do you remember when axi infinity was going to kill all the gaming publishers do you guys remember that do you guys remember that the the play to earn games that were basically a ponzi scheme to have people become serfs in the philippines uh i had kind of heard about it that they kind of It collapsed, I guess. It's basically collapsing.

I don't know. Are you sure? They didn't kill Call of Duty. They asked us to advertise them on our YouTube channel. Axie Infinity? Yeah. No way. I swear to God.

Our tiny YouTube channel. They must be doing really well as a business. Our four listeners, you guys better get on Axie Infinity. I don't even know what it is. How do you... how do you uh you have to buy you have to buy a token first so i kind of i i'd have to read up where does this happen no there's like it's like a video game thing but you have to buy your character with a crypto token so you have to like buy your crypto token and then the more you play

online on your phone or on okay so there's an app uh app computer whatever it's like a social it's like a it's like one of those it's i guess pokemon is kind of a open world type game with a bunch of other people type deal you have to buy a token to play and the more you play to play and play yeah pay to play no no you have okay it's it's you have to pay into the ponzi scheme so you have to buy the tokens but then the more you play the more tokens you earn so like you have to and then you have to get more people to like buy i don't have the exact details but again i know to buy the tokens to come in. And then a bunch of people in the Philippines were doing this

because the amount of money they could earn compared to the foreign exchange could make them a decent amount of money in the U.S. or something. It would be not enough, but they were doing that. And so it was basically just a donation from U.S. VCs through these crypto tokens into the Philippines. And I was just thinking,

why waste the time of having people spend six hours a day on Axie Affinity when you can just donate money to these people to have better lives? Wait, so I'm so confused. You buy the token. Wait, so first of all, the whole point of the game was to eliminate pay-to-play. I know, but it's… You have to buy a token to play? As everything in crypto, it's hypocritical.

All right, I'm not going to turn this into some like bare-round crypto but i i genuinely don't understand where the value is do you buy a token and then you can get unlimited tokens when you play you play to earn yeah and also it's a currency so the price of the currency skyrocketed like 100x in the summer so that was beneficial oh so you buy the axie infinity i don't know what it's called yeah there's there's some token associated with it but then you can get a bunch of tokens back then axie infinity doesn't have any running the business model is potentially flawed ryan i'm not saying there's questions to ask but all i'm saying is that people said it was the future about six months ago and i just got to

say that it was kind of a toppy signal when that was happening yeah you know i think every i swear everyone thinks like there's going to be a video game killer but there's never a video game killer like it's always the same publishers that are doing pretty well fortnite was for like six months maybe a year but it wasn't really a killer it hurt revenue by like 10 they they everyone says vr is gonna like overtake consoles every console still seem to be dominating i just sometimes i i think there isn't going to be that much change yeah let's yeah vr is going to take over i'm going to enjoy getting a headache after playing for 20 minutes that sounds fun hey apparently they eliminated eliminated the headaches oh they did well

that could be big oh all right maybe we're a closer although you know i'm seeing there's so many meta like meta quest 2 ads on tv how bad are those ads how bad are those ads what's this integration with the nfl i don't understand what that is there's nothing to understand there's nothing that like lamar like apparently you're gonna get a camera on lamar jackson's helmet but here's the thing I thought so I watched that little tutorial video and there's this apparently you can like play alongside

the quarterback but all the characters are like turned into these like terrible graphic players like I thought the point was to make it look realistic like to make it like a real reality we're running up on time but I'll say

if VR gets solved and you can be the quarterback in Madden that would be quite fun but guess what the only company that's going to be able to do that because of the exclusive license uh is little known ea sports um so it's in the game thank you ian everyone i think a lot of listeners are thinking uh yeah that exact that exact thing but that does seem cool like the sports things moving into vr although i feel like that's just insanely complicated like that's just 10 years down the line i agree but what if you could watch tiger woods at the masters right next to him in real time and that's how you could experience it how

much would a media company pay for that i don't know like it's it feels weird i just to maybe other people would like that but it feels weird to me to to do that it does feel a little stalker yeah like I don't know I went to a tournament in person like it's that's great but like if I had the same experience in VR I'd feel very empty I suppose

alright well I think that's going to do it we're two minutes over time no show next week I know there's no one that's watching on YouTube so well no we got six people here I guess we're growing we got 50% growth from last week but that's going to do it for this episode we'll be back in two weeks after Berkshire. We'll give a little recap of that. Let me just give the disclosure

just in case. We are not financial advisors. Anything we say on the show is not formal advice or recommendation. Follow us on Spotify or iTunes to get all the show recaps plus different show formats covering individual stocks. Thank you all for listening and watching. We'll see you in two weeks. Bye.