Chit Chat Stocks - Is Google Search Dead? Coupang and Remitly's Stellar Growth; Buffett's Curtain Call (UBER, PTLO)

Episode Date: May 9, 2025

The Investing Power Hour is live-streamed every Thursday on the Chit Chat Stocks Podcast YouTube channel at 5:00 PM EST. This week we discussed: (03:52) Warren Buffett's Retirement Announcement (11:02) Berkshire Hathaway's Future Leadership and Investment Strategy (13:40) Apple vs. Google: The Search Engine Battle (23:02) Apple's In-App Purchase Controversy (28:53) Coupang's Earnings Report and Growth Strategy (37:06) Remitly's Performance and Competitive Landscape (38:25) Uber's Financial Performance and Market Position (41:30) Waymo's Impact on Uber's Future (45:25) Portillo's Earnings and Growth Potential (51:18) Remitly's Market Position and Growth Prospects (56:23) Earnings Reports: Highlights and Lowlights ***************************************************** JOIN OUR NEWSLETTER AND CHAT COMMUNITY: https://chitchatstocks.substack.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.  ********************************************************************* FinChat.io is The Complete Stock Research Platform for fundamental investors. With its beautiful design and institutional-quality data, FinChat is incredibly powerful and easy to use. Use our LINK and get 15% off any premium plan: ⁠https://finchat.io/chitchat  ********************************************************************* Bluechippers Club is a tight-knit community of stock focused investors. Members share ideas, participate in weekly calls, and compete in portfolio competitions. To join, go to ⁠Blue Chippers and apply! Link: ⁠https://bluechippersclub.com/ ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM Media Group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. welcome to chit chat stocks i'm one of your hosts ryan henderson and i'm joined as always by brett schaefer this is our power hour our weekly power hour episode this is our power hour number 160 not that that has any uh important mark but it's still earning season so we've got plenty to discuss and on these episodes we talk all things financial markets we talk about our

holdings. We talk about companies that reported earnings, basically anything relevant in the financial world that we think we should discuss. It's fair game here. And we go live for these shows on Thursdays at 2 p.m. Pacific time, 5 p.m. Eastern time. So if you ever want to ask us questions, head on over to YouTube, look up Chit Chat Stocks and throw some questions in the comments. Brett, earnings season, how are you? Feeling good. Companies I own have done solid this week, so can't complain. Although earnings bumps aren't really what we're doing over here. We're trying to find some good long-term companies to invest in. But yeah, there's been plenty of stuff in my own portfolio. We have people asking about a couple that we talk about on the show,

like Coupang or Remitly to talk about once again this week. They had some solid numbers. We have Google and Apple. There apparently not only is OpenAI disrupting Google, they are now disrupting Apple, which would be quite the development. But there are a lot of people that asked us to talk about that as well.

We have, and we can't not talk about it, although it's probably been talked about ad nauseum at the moment, the Buffett retirement announcement. And it looks like you got Uber earnings as well. Yeah, plenty to discuss. And we're going to get to all that. But before we do, we want to talk about our friends at Interactive Brokers. Interactive Brokers is the professional's gateway to the world's markets. Interactive Brokers offers commissions starting at $0. Yes, you heard that right, on US listed stocks and ETFs with low commissions on other products. and there are no added spreads ticket charges or account minimums clients in over 200 countries

and territories trade stocks options futures currencies bonds funds and more on 160 global markets from a single unified platform clients can earn interest rates of up to 3.83 on instantly available cash and pay margin rates up to 53 lower than the industry so you can also earn extra income on your lendable shares and ibkr's powerful award-winning platform helps every level investors succeed from beginner to advanced on mobile web and desktop. When placing your money with a broker, go with a broker you can trust. Make sure your broker is secure and can endure through good and bad times. We use IBKR here at Chit Chat Stocks for their best in class international coverage. And you can too by heading on over to IBKR.com. Interactive Brokers is a

member SIPC. I'll also give a shout out to Interactive Brokers. We did an episode on the business recently and i think one one of the best ways to describe interactive brokers is they don't cut corners i think they do a really good job all around with the platform but maybe customer support but you know that's how those profit margins are so high let's talk earnings i think the biggest thing here is probably the google stuff and there's a lot to unpack because it It kind of feels like sort of a cat fight among big tech. Maybe we start with the GOAT himself. Talk about this now.

Kind of get it out of the way. I'm sure everyone has heard, if you're in the investment world, that Warren Buffett has announced that he is going to retire or at least step down as CEO. I don't know. I assume he'll probably remain chairman. I don't know if he explicitly said that at the Berkshire Hathaway annual meeting, but he's going to step down as CEO and he's going to recommend to the board that he be replaced by Greg Abel. I want to put some numbers on what a legendary run he has had as CEO. And I know these numbers get tossed around all the time, but I just think let's take a second to appreciate what happened here. So he compounded Berkshire's per share market value at 19.9% for 60 years.

I saw a popular Twitter account take a victory lap and say that no one – it just goes to show that no one can do 20% over the long run, which is kind of funny. But that is a cumulative return of 5.5 million percent. The market over that time, S&P 500, did 39,000%. So to illustrate it, $10,000 invested in Berkshire in 1964, which I will say there are people that – people slash families now because it's been going on for so long that probably got close to that. Maybe bots – there's always these like analogies where if you bought shares way back when and held them, I think if there's any stock where people may have actually held

them for 60 years or families might have held them for 60 years, it's probably Berkshire since they did such a good job kind of being partners with the shareholders. And when you go to the Berkshire Hathaway annual meetings, you actually meet a lot of people that have been shareholders just for a long time. They've built up a ton of wealth doing that. So $10,000 invested in Berkshire in 1964 would today be worth $550 million. He's built a lot of wealth for people. And the stat that always blows my mind, if Berkshire Hathaway shares dropped 99% tomorrow, Buffett still would have outperformed the S&P 500 over his career.

In fact, he would have almost doubled it. It's the power of being in the market, I guess, consistently having very, very strong shareholder returns. Did you watch the announcement live, Ryan? Live, no. I saw the videos after the fact. Dang. Dang. I turned it on for the end. It starts at like 5 a.m. over here, maybe 6 a.m., but not getting up that early on a Saturday morning. I'm not 80 years old. It was quite funny how he did it. I have the clip loaded up, actually, if you want to. Should we play some of the audio? I know he talks very slow, so if it gets boring, we'll cut it out. It's slow. It's a slow clip.

yeah maybe if we could play youtube at 2x speed but it's just funny how able so the person able not i don't know it's a very confusing word sometimes he was sitting right there and he had no idea that this announcement was coming so think about that like i almost envisioned it like that lord of the rings at the beginning when he says he's leaving and putting on the magic ring i almost imagined buffett was going to put on a magic ring at the end and disappear in front of everyone's eyes it was it was that funny but here maybe we'll maybe we'll turn it on here two of the directors who are my children uh howie and suzy know what i'm going to talk about there the rest of them this will come as news too uh but i think it it's uh the time has arrived

where greg should become the chief executive officer of the company at year end and i want what do you think as anti-climatic as ever he's like uh so uh i think the yeah i think i'm gonna leave and i'm gonna disappear now i think it's cool i mean it's not like greg didn't see it coming eventually right like i think this has been in the works for quite a while but i'm sure that was quite the shock for him uh and actually a bit of a negative reaction by investors after this maybe more so just to like kudos to his investing prowess but by saying he's stepping down berkshire shares dropped i think four percent on monday i guess a couple discussion questions yeah i kind of shrugged the shoulders as well

a couple discussion questions are you surprised by the reaction at all do you think this deserves to trade at a cheaper multiple without buffett involved and i think he's still going to be involved and kind of be sort of an advisor to greg and probably involved in a lot of decisions but An advisor from – on high rent? I mean it's – he's going to pass away soon. Yeah, maybe. But I mean even in that clip that you showed, he mentioned that he's going to stay on and he'll be a part of the decisions. If he isn't involved at all though, let's say year two down the road, do you think this deserves to trade at a cheaper multiple? no it's already trades at fairly cheap multiple i just don't this doesn't excite me whatsoever uh the one concern as i was trying to think through who has the responsibilities here

and maybe this is where the uncertainty would come from is back in the day or up until this moment all the capital allocation decisions were technically from buffett which includes the investment portfolio. Now he's been brought on Todd Combs and Ted Weschler to manage part of the investment portfolio. And then eventually I would think take that over as Greg Abel is more of a business operator, not much of a stock investor. But now we have Greg Abel as the CEO and these two guys running the stock portfolio. My question is how much cash do they have to deploy? Is it like a fixed amount of money that they get? Because Buffett had the ultimate flexibility to invest a ton into stocks or draw down that portfolio and acquire a company back

in the day is there still going to be that flexibility from the management team and that would be my one concern where there could be conflicts of interest where back in the day buffett could just do whatever he wanted yeah that's a good point i imagine there's some structure laid out in terms of percentage of the assets that's allocated to various But still, that's still restricting. It defeats the flexibility, yeah. And when Buffett's gone, what happens? I could see tension building there.

You get a fixed amount of money. Again, I don't know if it is a huge deal, but yeah. And if you look at these businesses, yeah, it's fine. But they talked about how the railway and the energy businesses are not that great. They're fine, but they're struggling and going to need a lot of money. the energy business is tough from a regulatory standpoint the insurance operations seem fine good i mean good as good as ever it's a great business but they have 300 billion dollars in cash

do they have anything that they can invest in maybe but i would be worried given what todd and ted have invested in of how that could impact the overall stock portfolio i see things like sirius xm rh uh what are some other things the sirius xm was uh it's definitely not buffett yeah too small the that investment concerns me well yeah i have high conviction against sirius xm the fact that no one under the age of 50 uses Is it? Yeah. Maybe it's like – okay, I honestly haven't done that much valuation work, so I'm sure these guys are sharper than I am.

But although like most – it's not a business – I can't imagine that they are running these portfolios as like buying cigar butts. Like this is Berkshire. You have huge money to play with. You need businesses that are going to grow. Nothing tells me that SiriusXM is going to grow. Their revenue per subscriber continues to decline, and their number of subscribers continues to decline. I don't see why that would change. And they have $10 billion in debt.

And maybe the biggest concern I would have if I were a Berkshire shareholder is they still have a pretty massive Apple stake. And a lot of news hit this week that I think is actually kind of a big deal, and we can talk about it. Do you want to go through, I guess, what was said by Apple at this hearing and how it affected Google? And then we can talk about some of the other – I think it was a separate hearing regarding the in-app purchases stuff. Right. So a lot of people want us to talk about this. We'll get to earnings, so don't worry, everyone. But Apple Services President Eddie Q was testifying in court this week, and the visit was over the Google's illegally ruled, say, domination, monopoly of the digital advertising space.

And he said during, you know, testifying where you can get a lot of people to speak, like, frankly and honestly, because they're under oath as opposed to on a conference call. And they say, well, developments are good. Apple intelligence is great. We're working on it. But he said searches, and I think when he means searches, he means Google searches, on Safari, which is their native browser on the iPhone, declined for the first time in April. And he said they would look to add other AI services like OpenAI, Perplexity, Anthropic for search options. And this caused Google stock to fall or Alphabet slash Google stock to fall. Well, what is also a concern and where we may be seeing Apple and Google trying to play, I don't know, save their profits by just making arguments that competition is strong, things are different than they were five or ten years ago.

Because part of the remedy for Google's antitrust case is that they may not be able to pay to be a default search engine on hardware devices such as Apple or Samsung. And Apple gets estimated $20 billion or more in pure profit from this deal every year. And Apple might be saying, well, look, there are a lot of competitors here. So don't, you know, don't take this away from us. This is a fine deal. And the reason they could be saying that is not because they actually believe it wholeheartedly. wholeheartedly it's because they want to make people believe that google's domination is not there anymore and they want to save this 20 billion dollar in payment

i was interested to see google stuck following the news apples didn't react too much what were your thoughts ryan and maybe we can get into some of the implications here because for me, people can kind of hear from how I'm talking here. I still think a lot is up in the air. We just don't know. Yeah. So first off, Google responded this morning with a press release and they said, the title was, here's our statement on this morning's press reports about search traffic. So I guess it came out the day of. We continue to see overall query growth in search. That includes an increase in total queries coming from Apple's devices and platforms. On the one hand, it's like okay that's reassuring so chrome so chrome's growing share maybe but well potentially

but the other part that's kind of vague here is like we continue to see or that includes an increase in total queries coming from apple's devices and platforms that doesn't necessarily mean like safari on the iphone which i think is probably where safari gets the most use as opposed A lot of that search volume or search increase could be coming from Mac devices, for example. So ultimately, that is something – I kind of flip-flop on this all the time. There is the chance that Google Chrome has just been stealing share on Apple devices and the search volume is coming from there as opposed to search volume through Safari. Well, there's data out there that that's true. I think it's about 50% share now.

But is it enough to offset the decline, I don't know, in both companies? Like no one has said – we don't get total query volume, so you kind of have to do a lot of guesswork here. I really don't know where to stand on Google, honestly. Okay, there's no doubt that more and more searches are coming off of Google. like i think chat gpt has 400 million monthly active users perplexity gets 100 million queries a day grok has like 17 million weekly active users something like all people in reply is getting this information yeah those are on twitter incredibly annoying but uh people certainly use it and i'm sure everyone has noticed probably friends using it people you know like conversational

AI gets more user ads, and that means searches are going away from Google. Paid clicks also grew at its lowest rate ever, I think, this quarter. However, they grew. So on the one hand, yes, search does not deserve the multiple that maybe it commanded in 2015. But if it can still grow, I don't think it deserves to be treated like it's going to zero because there's no world, I don't think, in the next 10 years where Google still doesn't have a huge chunk of search share. So in terms of Google's valuation today, and for the record, it's trading at I think its lowest earnings multiple roughly ever, at least in the last decade. ev to ebit's slightly higher than its 2022 lows but basically 14 times ev to ebit trailing trailing 14.8 or something like that i think even if you don't believe in search that much

even if you don't think it can grow i think you can still get good returns from here yeah it is there's a lot of i say this one a lot there's a lot of variables at play when you say 10 years from now google search will still be it exists but it's just well if revenue is declining that's they're going to slap a whole new multiple on that um and it's not worth as much as we thought i've tried look on the one hand i've i you see the usage here but on the other hand and maybe i'm just not trying hard enough but i needed more storage on my google drive so i got there's this 20 a month uh it's like this google package where you get this extra storage over the free tier and then

you get access to the latest and greatest google gemini products which for anyone that doesn't know those are the open ai you know chat gpt competitors so i get gemini something something advanced i've tried it out it creates some good historical stuff for reading companies you can take stuff from websites and i want to use it more but i don't find myself going there all the time versus google where if i'm looking up for example flights or hotels i'll still use google so maybe that changes someday maybe chat gpt is that much better i haven't used them lately um but it is definitely a risk we talked about it last week but who is it a bigger risk for apple or google i would probably lean apple from a profitability standpoint and perhaps

just given the fact that they haven't seemed to be able to do anything at all within ai where google is actually fairly competitive within this market But their moat, their whatever, their seamless operating system, their power within the consumer electronic space could start to deteriorate if AI matters more, wearables matter more, all that stuff. And you could see, we haven't even talked about this App Store thing, you could see this $20 billion payment go away. And I think it's more of a concern for Apple, even though Google search is the number one target right now, at least Alphabet has the capabilities to try to defend itself. Yeah, I think I'm surprised Apple, well, I guess nothing surprises me that much with Apple anymore. But this week seems like it would have been a huge down week for Apple given some of the stuff that came out around the court ruling, even this Google News because, yes, that is a $20 billion bribe basically out the window, which is huge for their services business. And actually, I think it's more than $20 billion at this point.

I think it's gone up. Probably higher, yeah. I think it was around like $30 billion last time I was quoted. but this i think this is another one there was the in-apps purchases like it google antitrust case i forget what the name was probably doj versus apple or whatever and this quote that you have is a massive deal it says what this i'm not sure where you got this this is not a sorry you said uh google uh this is the apple in-app store case where there was a lawsuit from epic games to say that the 30% fee on in-app purchases was illegal, say discriminatory, where some apps

like Uber don't have to use it. Some apps like Epic Games have to use it. And they would stop people or stop app developers such as Netflix, Spotify, dating apps, Duolingo, from directing users to a third party or their own payment service that could bypass this 30%. And even if they tried to bypass it, they would still charge, I think, a 27% commission to offset that payment fee. So there was no way for people to escape these fees. There was an old ruling that got them to this middle ground, and then Apple was not really playing ball at all. They did that 27% commission thing. And now whoever was a judge, whatever the judgment, they said, look, you can't do this, Apple. You have to let links within the apps to direct to third-party

payments that will allow them to skip the 30% fee. Now, Apple can still charge 30% if you use their services, but you have the option to do both. And the quote here from this Twitter account says, what this means is apps like Netflix, Spotify, dating apps can just soon prompt you to click on a link, then open a browser like Safari with Stripe preloaded or whatever payment processor you want and entirely avoid Apple's 30% commission. This might not be as big of a profit driver as the Google search payment, but it's still probably sizable for them and extremely high margin. Even if it's 10, $20 billion in revenue a year, that's very, very high margin. So yeah, this is another headwind for them. You're probably going to see fees come down

and you're going to see companies charge less. They'll probably serve different prices. Like, okay, Spotify, if you purchase through Apple, it's $10. But if you go off Apple, it's $8, Just as an example. I would not be surprised if between the Google payment and in-app 30% commissions, those account for 50% of the services division's gross profits. I think that's very possible. That is a huge hit to Apple's overall gross profits. and for for anyone that isn't familiar with how this has worked previously like you see it with spotify in a big way where there's like throughout all of spotify's history if you had it on an

iphone you could not sign up for spotify on the on your phone you had to go to a desktop browser go to spotify sign up online and then sign in on your phone because that's the only way spotify could get around the 30 commission which was it's kind of incredible to think they've gotten to basically 700 million active users without a native checkout but well you can do the free the free sure hey 200 and something million paid still impressive i just i don't see how this is not a huge hit to apple no one cares it's it's a quote-unquote good buffett owns it it's a you They're like, oh, it's a durable company. It's got high terminal value.

It's not growing. Who cares? It's basically a bond. That's one of the most dangerous things you can ever hear when investors hit the stages of denial. And they go, well, it's basically a bond now. It's like, oh, okay. That's supposed to get me to want to buy this? There's a – yeah.

I actually – I've been to like a couple advisor-type conferences lately. And I noticed that there – that whole – what was the old saying? Like can't go – can't lose your job buying Disney. Buying IBM. Or buying IBM. Yeah. That is – that totally exists with Apple today. Like if Apple really struggles, it's like, wow, I mean it was the best company in the world.

Who is going to – who could have seen that coming? But like all the indicators – if you had no idea what this business was, You just looked at the recent rulings, the recent growth, the saturation within its existing markets. You would think this probably deserves to trade at a mid-teens earnings multiple. A Google multiple? Not 30 times. Yeah. And Alphabet actually has something that will – like they have Google Cloud, which is doing quite well at the moment.

So that's entirely different. But we have plenty of else to talk about on this episode. ryan are we at a point where we want to do advertisement or do we want to talk about earnings let's talk blue chippers club and then we got a couple of earnings reports to get through blue chippers club was started by two friends of ours it is a tight-knit community of stock focused investors and inside this community you can share break down your portfolio pitch stocks receive feedback and participate in weekly calls if you like i've said it here before but i love weekly calls as long as i can make them on time i love the weekly calls it's great for feedback

and it's great to actually talk with other investors i mean brett and i as we do this podcast aside from comments in the chat you know we don't really get to talk face to face that much with our listeners this is a perfect way to actually collaborate and communicate and actually i don't know uh banter over different ideas so i recommend checking it out it's bluechippersclub.com If you're interested in joining, the link will be in the description. Once again, that's bluechippersclub.com. Helps with that idea generation. All right.

Coupon? A lot of people are asking about coupon. Yeah. Let's do it. Well, another solid report. Another solid growth numbers. If you look at the top line figures, you kind of need to separate out what the actual underlying growth was in South Korea versus foreign exchange rate. and the different ways they're doing their accounting out.

For anyone that doesn't know, we've had, I think, multiple either interviews or stock research episodes on coupons. If you want a full breakdown of this East Asian e-commerce company, go find those within our podcast players. It's pretty easy. Just go search it. But they had 11% revenue growth last quarter, but 21% growth on an FX neutral basis. So that means that the US dollar was appreciating versus the South Korean won,

but that has reversed so far in the last couple of months. So I think that's good. That's going to help, you know, just earnings in US dollar terms. But if you look at their gross profit, that grew 31% FX neutral. And that's what we should care about because the way they are transitioning their business model is they're performing one of the maneuvers that Amazon did, where they're becoming a facilitator of third party sellers. So they have all these sellers joining their platform that aren't actually selling to coupon. They're just selling directly to consumers and they're taking a take rate off of that. But instead of counting all of that as revenue, which they did in the past, they're now counting it as gross profit. So gross profit is

going to be the best top line figure to look at. They had positive operating income. They had 8% margin for their product commerce, which is their legacy, like just e-commerce platform business. It doesn't include food delivery. It doesn't include the expansion internationally. It doesn't include fintech or anything like that. They had 78% revenue growth in the other segment, which is the developing offerings, which was on top of 143% year-over-year growth, organic growth, excluding Farfetch last year. So really tremendous growth. From that standpoint, they are starting to buy back stock. They announced a $1 billion share repurchase authorization. It'll be, I think, for me, some of the uncertainty here is looking at how aggressive they're going to be with this buyback. they could take out a billion dollars within a quarter, given their balance sheet. They don't generate that much in cash flow, but they could be aggressive here if they wanted to. Gross profit margin, I think has gone from under 20% just a few years ago to close to 30% today. So just really, really strong figures there. Yeah, I think Ryan's pulling that up right there. Great, great numbers.

You can check out all the KPIs at finchad.io. Use our link, get a discount. Ryan, I believe you are a shareholder as well, I should say. This is one that's in my portfolio. What did you think of the quarter? I thought this quarter was exceptional. Yeah, Brett mentioned the gross margin expansion. Over the last five years, they've gone from about 16% gross margins to 30%.

And that's just them reaping the benefits of past investments in logistics. it's similar to amazon in a way uh actually very similar where the only company you can truly compare to amazon with them and mercado libre right everyone else is is uh not a serious comparison yeah let me there's actually a one kpi i really like to look at which is the uh i think they have like logistics square footage right yeah i don't know if they're opening that anymore yeah okay so it's gone from 25 million square feet of leased and owned fulfillment and logistics square footage to 67 million square feet which it just goes to illustrate that the like the capex is not all growth or sorry not all maintenance capex like i sometimes i think

sometimes people worry about the free cash flow figures with a capital intensive business like this because it's – I guess you worry that you're on sort of the CapEx treadmill and that maybe the investments aren't going to bear fruit in terms of actually generating positive free cash flow down the line. But this just goes to show that a lot of it is growth CapEx and they continue to expand their logistics and fulfillment capacity. Something that I really like about Coupang, it's never going to look optically cheap i don't think it could be wrong maybe they have a good year of earnings but it's one of those companies that continues to plow so much money back in to the business through capex expanding their fulfillment capacity improving their

uh, fleet, uh, paying labor more, like all the different true investments they can pour into their business. They continue to do that. So free cashflow and earnings tend to look depressed relative to what they could truly earn. So it doesn't screen cheap. And it honestly, like reminds me of Amazon in that way, where all for the last two decades, they have been, it's other than 2022 it never looked optically cheap like it never screened cheap but they were continuing to grow like the underlying earnings power of the business it feels like coupon is in that same vein which for me i'm totally comfortable with and i think you probably have to just value this more on a gross profit basis and assume they can get to those 10 percent uh sort of bottom line

margins that they've stated as their goal i'm very comfortable owning this i was actually bummed when the report came out the stock initially dropped two percent after hours thought i was going to be able to buy more shares but then the next day it uh jumped 10 so i was a little surprised to see the reaction but i'm happy as a shareholder yeah and i gave back i think four percent today so maybe in a little bit cheaper we can even look at the product commerce segment 8% margins. Let's say they can bump that up to 10%, which seems very doable given they're still reinvesting within this core segment. There is reason to believe unless the Korean won gets depreciated by half versus the US dollars that they can get $40 billion in revenue pretty

soon here from this product commerce business. 10% margin on $40 billion in revenue is $4 billion dollars in earnings which is excluding the developing offering segment which is uh taiwan coupon eats uh which are both doing fantastic farfetch stuff like that you have four billion dollars in earnings the market cap right now i mean the enterprise value is like 40 billion maybe closer to four to five right now yeah and the fulfillment it's cheap on those numbers the fulfillment and logistics uptake from merchants has been phenomenal too it's not like they just rolled out you know there's so many times where you see companies roll out great ideas but the execution just isn't there and you actually don't really see it show up we're totally

seeing it show up in the numbers correct me if i'm wrong but the third-party merchant services revenue i believe is primarily flc if i'm not mistaken um honestly i don't know what's maybe advertising is in there i'm not exactly sure either way i mean this is uh probably better economics than you get in the true core product commerce business. And it's just grown like a weed. It seems like they just – they're willing to invest and try things and cut them if it doesn't go well. For example, I think they initially tried to expand it to Japan. It didn't work.

They weren't seeing the benefits. They weren't afraid to stop it. Whereas if they do see the benefits, they signal that it's providing a lot of value to customers. They continue to pour money into it. It seems like that's what they're doing. This is probably the holding I'm the most optimistic about at the moment, my own personal holding. What about Remitly? Come on, that's another company that's doing well.

Yeah, I feel a little more comfortable with Coupang. I think Remitly could have higher upside, but I feel like there's a bigger competitive advantage with Coupang. Yeah, I agree. now sidebar this is from a commenter do you remember dave ryan the stock yes up 45 42 percent today whatever that's i honestly whatever it's just like what is why are they named dave wasn't it the financial wasn't it some fintech thing that was one of your small caps of the week maybe i can go find those notes i'll look through here but up 42 percent oh my gosh like it feels like every three years there's a new fintech that's like disrupting

lending yeah how's upstart doing actually i think they reported this week wow let's see back to 50 dollars good for upstart there we go all right do you want to talk uber we'll rotate excuse me rotate to one of yours yeah let's talk uber in general i thought the numbers were pretty good uh i think investors maybe had slightly better expectations but if you were looking at it on a quarterly basis they did have their first ever sequential decline in gross book sorry not first ever first since COVID. Sequential decline in gross bookings across the whole business, but there's some seasonality. So that doesn't really matter. Trips grew 18% year over year. Revenue grew 14%.

Revenue grew a little quicker for delivery than mobility, but both had pretty strong growth and margins expanded. And if you look at the free cashflow chart for Uber, this is like every vc's dream it goes just from like them hemorrhaging money yeah how much is this gonna lose people in other businesses money but we'll do the uber playbook it worked for them yeah i mean i think what's maybe the vc's dream about this chart and maybe you can pull it up yeah i got it i got it yeah so they went from negative five billion dollars in free cash flow at the bottom which was q2 of 2020 to now generating positive 7.8 billion dollars in free cash flow i think what is so great even though this is like a super risky strategy and

frankly when uh travis kalanick was in charge it seemed like they just had no control over costs it maybe like deepened their advantage i guess like it could have like them being able to lose that much money made it that much harder to compete with them so that on the other side the cash flow and the benefits and sort of the light at the end of the tunnel is that much larger because now you've got lift who's struggling to survive yeah they still have decent market share in the u.s but i guess yeah uber can use their bundle and international to kind of compete them away maybe but they'd probably rather have them stay around so at least there's some competitor out there let me another good business yeah it's good business yeah free cash flow might

is it misleading because of the collections or or no could be a little bit yeah it's And misleading probably more so because the SBC – if you look at it on a GAAP operating income basis, it still looks pretty good. The operating leverage has been there. The part that I thought was interesting here because I don't own Uber and it's kind of – maybe I'd put it in the too hard pile. I think really I'd put it more in the too expensive pile right now. The part I thought was interesting was the commentary around Waymo on the conference call. So Dara – I always botch his last name, but Dara, the CEO of Uber. The CEO, yeah.

Hard one to say for us. Said – this is speaking about Waymo. He says, consumers are loving the product. Opt-in rates are very, very healthy and the ratings are healthy. The team on the ground is doing a terrific job in terms of repairs and cleaning and recharging the cars, et cetera, to make sure that the Waymos are available for rides. And then when the Waymos are available for rides, they are very, very busy. we are seeing very high utilization of the vehicles in terms of trips per vehicle per day.

As a matter of fact, the average Waymo in Austin is busier than 99% of Austin drivers as defined by the number of trips per day per Waymo as well. So very, very encouraging. He says, we're, we're looking forward to increasing the vehicle count and expanding into

Atlanta. Here's my, I guess two questions. First of all, do you think that the most likely outcome here is there's just a bunch of partnerships and kind of licensing fees between the aggregators like uber and the uh automated vehicles like waymo or do you think them bragging about waymo on the conference call is potentially like the more light they give to it say waymo were to strip away that distribution somehow

don't you think that's kind of like a hidden dagger for their business right yeah they they better i know we've talked about this one before but they better hope more players come to the space because if waymo's the winner takes all here well the power resides with them at the end of the day, I still continue to be confused at people that don't think Google can just push one notification to Google Maps and say, download the Waymo app. It's in your area, or send it to your Gmail, or they have this distribution advantage that they can use. Now, on the one hand, I'm confused. And he does like the word very in his quote here. So they said the average Waymo in austin is busier than 99 of austin drivers so that means austin's driver uber drivers yeah

and then defined by the number of trips per day per waymo as well so he's saying that when it's on uber waymos are more busy yeah relative to a typical uber driver waymo is doing like way what about waymo are waymos waymo's are exclusively on uber in austin okay so they can't compare but maybe to other cities they could see better data of utilization rates because they need to have high utilization rates just given the the higher overhead costs from tech and whatever yeah i guess the one argument that i've been hearing is that in favor of uber is that it's harder to run a network like this than people anticipate like for example in this quote he talks about um the team on the ground is doing a terrific job in terms of repairs and cleaning and

recharging the cars and and there's like more to it than just storing them and check out this app you know like it's a very uh it's not just a adams problem it's a or sorry it's not just a bits and digits it's it's an adams problem it's a real world like business they have to run as well Sounds expensive. Uber can do it. I think Waymo would be happy for Uber to do it. But yeah, maybe it all sits on Uber. I don't know. Uber has great distribution. I would love as a Google shareholder for them to try to do all this in-house. But the fact that they haven't – I don't know. It tells me that maybe it's harder than it sounds to just own that ecosystem. Yeah, I think they also may be testing. They're in, what, Phoenix and Los Angeles and San Francisco on their own. They're going to test other cities with Uber. If they see any material difference, they can decide a path forward. But again, I come back to if autonomous vehicle taxis are the future, then every year and Waymo, I mean, is growing at a phenomenal rate. Every year they gain more market share. If all of those are Waymos, I think Uber loses power in the relationship. And that would just be concerning to me over the long term. That's something similar to Apple and Google as well, but Google, again, I understand why people own it because it's trading at some 15 times earnings with some very promising growth subsidiaries, but you have that looming risk.

I just don't know why I would overpay for it. I get that free cash flow number. I mean, what's their EBIT to EBIT right now, Ryan? Do you have the ability to pull that up quick? Yeah, I can. we have a comment here uh as well in the chat saying you guys listen to the google call it's very clear waymo wants uber to help them and also there are updates every day on new uber partnership zooks in vegas uh zooks has like one car yeah actually i think dara said that in the

call like waymo continues to be miles ahead of everyone and they're kind of currently the only player in town so despite the partnerships uh i think the results speak differently ratio so ev to ebit on uber currently 47 times trailing yeah i mean i'd like this at 15 but why am i buying this at 47 i don't know yeah yeah not for me not for me hey i hope it works i think it's good business but we've talked about it plenty of times it's similar to that google search risk where if you believe differently than what mr market's saying you can make money but uber it seems like mr market is not discounting this risk at all yeah yeah i mean it's it's helpful that google's so upbeat about them but let's talk uh we've got

a couple more earnings to get to you got portillo's and remitley yeah now i would prefer if you started with remitley but are you a portillo's shareholder right or no not a not a portillo shareholder right so i'm the only one here hey the stock did okay after the report and people were saying it's a buy because the new pope is from chicago yeah yeah that's just a joke it's not going to affect anything uh and remitley did better but portillo's we'll still call it a solid quarter of progress but early innings on comp sales turnaround 1.8 comp sales growth in the quarter a solid improvement from negative numbers in 2024 positive operating income they slightly increased their guide for comp sales in 2025. Now there was a concern because they had a slow

average unit volume starts at their new restaurants in Texas, which I guess is a different problem than they used to have because they would hype up these openings and then all the people that knew about the brand would come in from these places that they hadn't been in these cities before. I think that is something to watch out for. They mentioned that they don't have that many stores in these areas. And, you know, for example, one of them in Houston had a bunch of construction going on to start out. And it's only been a couple of quarters. So like, they'll see, they'll see. And they said they're still seeing the same customer satisfaction numbers. So we'll see them the figures going forward. What's funny, though, is that investors might end up being happy

that they start slow, because it makes the comp sales growth that much easier when in reality, you're going to be generating less in net earnings. I honestly think that investors would buy up a restaurant that opens at $500,000 in revenue and then does comp sales at an incredible level to $5 million versus Portillo's, which can open at $6 million and then just stay there. That's a story for another day. It's really not too much of a crazy earnings report. Pretty much everything in line besides that one little concern people have. And then they bumped up that comp store sales figure, which is good, I think, because a lot of restaurants are struggling at the moment. uh right now market cap 750 million dollars ev slightly higher i still think there is 10

bagger potential here with this stock but it doesn't come without risks this is not the cleanest story and the one thing i'll be tracking above all else for the rest of the year is simply comp store sales growth if it keeps accelerating stays in that positive two three four percent range or gets there it'll it'll work are you more or less confident than you were when you first came across this business that this could be a national chain i'd say no no different we're still in wait and see mode but they are getting solid avs at these uh the dallas location i would say what they said on the conference call is that there's no reason to think houston and dallas are that different um so yeah i they're not gonna get 10 million dollar average unit volumes like

they do in chicago but i i'd say the same and just gotta watch comp store sales it's moving in the right direction so i'd say this quarter incremental progress but we need to see multiple years of three to four percent i think there's some ways they can do that they have the loyalty program they're investing in better drive-through technology they have kiosks they're trying to clean up the operations that kind of got behind themselves before the ipo and we'll see if it works because people seem to like the food okay you want to shift gears to remitley here They are up, I believe they closed up almost 15% today, if I'm not mistaken. Not a bad day. Yeah, 14.5%. Spruce Point Short Report gave everyone a little buying opportunity, didn't it? All right. Well, send volume up 41%. I know we're giving a lot of numbers here, but only a couple numbers.

send volume up 41%, revenue up 34%, improving unit economics, and improving marketing and overhead cost efficiency, which is leading to bottom line margin expansion, positive net income for the first time. Their guidance remains conservative, I think. I think they're just trying to not, it's guidance, who really cares? And the stock is up, but I still think it's cheap. What kind of, and again, this is, I'll shout out our friends at FinChat who are supposed to do an And for every episode, this is the perfect week to use FinChat, use our link, and get a discount on any paid plan. The link will be in the show notes. We've used them throughout the episode.

Yeah, Ryan's using one of the KPIs you can only get over at FinChat. Active customers. And what's that growth rate? I can't see it on the shared screen. 50% CAGR since 2019. Pretty good. Pretty good, Ryan. I can pull it up.

what is their last 12-month revenue? $1.35 billion, growing 30% right now. They're guiding for 25%. I mean, if we even slow down to an average of 10% to 15%, I mean, they can get to $5 billion in revenue given the opportunity in the remittance market going global. I mean, the rest of the world is growing really quickly. They can get to $5 billion in revenue. And given Even the union economics of a remittance provider like this, $1 billion in earnings on that, so about a 20% margin. It makes a lot of sense. And their market cap is $5 billion. So I think a lot of runway for this stock if they keep growing revenue.

Yeah, their North America revenue has almost surpassed Western Union's North America revenue, which is nice. And the thing I liked the most, the risk kind of coming into this year and what everyone – I think a lot of investors have concerned themselves with is the immigration situation and people being worried that if there's a lot of people that are export or removed from the country, that it's going to affect send volume. There – this was a quote that I think paints a picture of their customer compared to, say, a Western Union customer. So this is on the conference call. He says, as a digital-only player, most of our customers fund their remittance transactions using a card linked to a bank account, which means that they're able to pass bank-level KYC, know your customer, regulations or security checks, signaling an established presence in the country. This contrasts with cash-based providers that often depend on labor-intensive, decentralized processes that are harder to scale, more expensive to maintain, and more prone to inconsistencies or fraud. These controls are routinely subject to regulatory exam and supervision. So it's just to say that they probably are not as at risk as, say, a Western Union, and if this quarter was any indication, it really has not – the deportations, I guess, has not affected their business at all.

I think that risk in general was overblown. It's not going to affect their business. Yeah, that is just not a risk. and if people if people get i'm not saying this is good or bad i wouldn't want people to get separated from their families but if they're forced to go back to example mexico they probably have family in the united states so they're going to send it just in the opposite direction yeah it's not like it doesn't like clean cut them off from the app type of thing like it i don't know i think that risk is just way overblown and

But remotely, even after today, it's still a reasonable price for a business that should probably be able to grow revenue and gross profit at 30% for – well, 20% plus, I should say, for quite a while. And I think there's tons of operating leverage in this business. And we have been using FinChat all day. It's great for earnings season, fantastic for earnings season. And FinChat.io slash chitchat gets everybody 15% off if you're interested in checking it out. And a lot of people have been doing that. We appreciate you signing up because it helps out our business a little bit as well. Are we running up on time, Ryan?

You have one final topic. Did you want to do the earnings studs and duds? Sure, yeah. I just wanted to pose this question to you. what were the best and worst quarterly reports you've read so far maybe any that have surprised you that like you don't typically read or companies that you don't follow on a regular basis that's hard uh i'm trying to think through i mean there's some that i follow like i think the one that came to mind first is remitly

i'd say a bad one maybe ultria i'm very concerned about their volume declines with these kind of new nicotine healthier nicotine products coming into the united states if that correlation is correct and we're seeing further acceleration and volume declines they better watch out uh besides that i don't know did you have any in mind you follow a lot more for the charting on the fin chat account ultra is a good one i like to see a re deceleration in their volumes was a little surprising because we're seeing like i thought last year because volumes were declining really quickly i think like almost 10 year every year at this time last year and i thought okay i hope i imagine things will swing back so to see that yeah re-deceleration was

surprising the other report that i thought was just terrible was block cash app xyz has stagnated completely and it's just a coincidence right after that short report about people using it for crime came out yeah talk about kyc that's nothing they're that guy at the security gate just letting everyone through yeah it's i was pretty underwhelmed with that report and then the square ecosystem itself like the seller ecosystem i think it's doing okay but if you look at it in context to like or in relation to toast they're getting pun intended here toasted it's it seems like toast is just winning that battle i know they kind of cater to different audiences but uh there's definitely some overlap there as well

even if you look at them relative to shift four they're just uh not not winning on the uh on the against the other point of sales providers but maybe it's maybe the market's so big it doesn't matter they can all continue to grow yeah yeah i can't continue to grow i was looking at some of the big earnings players that i just kind of trying to uh refresh my memory one that disappointed mcdonald's i don't get owning this at 28 times earnings with bad comp sales it just feels like all right it's one of those again where someone might say well it's a bond it's a bond and that again is the biggest red flag for me and then another good one i'd say meta platforms zuck says we're all having ai friends ryan you better say goodbye i'm gonna have ai ryan as a

friend going forward i'm replacing you i'm only only digital going forward yeah let me rip through some of the reports and see if i found any real winners here there were a couple that surprised i guess shopify was okay trying to think here you know who actually had a surprise come on you're you're a dave hater oh i got a surprisingly underwhelming one here monster total total they just reported total case sales grew one percent so volumes grew one percent compared to last year that's their slowest growth rate yeah slowest growth rate i think maybe ever uh or since the hansen's natural days um white chicks love alani new ryan celsius had a bad report i'd say yeah i was pretty underwhelmed with that one as well

i don't know i'm not i'm seeing some other ones uh app loving actually continues to have really good earnings but if those numbers are legit yeah if the numbers are legit i saw like after that short report i saw a couple like advertisers that were like i i think these guys are wrong this is a platform i have like gotten a ton of value out of lately so i don't know maybe trades at 75 times earnings yeah unfortunately it's uh oh i wanted to share this stat stat to end the episode palantir surpassed salesforce as the largest pure b2b sass company in the world unless you count microsoft i think that's the largest b2b sass do you want to go through some of the numbers oh yeah you go yeah i'm loaded up it's expensive yeah okay so palantir it might

have changed a little bit they were like basically the same market cap same market cap for what should in theory be essentially similar economics at scale like ultimately it's b2b software so it's not like one's going to have way better margins yeah one's got and they both have high amount of sales people just trying to think through expenses yeah so if you could buy either one of these businesses this these are all the numbers i'm going to give you you could buy the entire business yourself. One of them has $38 billion in revenue and does just under $8 billion in operating income. Okay. The other one does $3 billion in revenue. So about 8% as much revenue and $406 million in operating income. So about 5% as much operating income.

isn't that insane yeah it's insane pound tier is an insane stock it's in no man's land uh what did i say it's in the shopify 2020 territory now of just craziness and yeah it's not gonna work from here i'm highly confident in saying that just given the numbers but it's got a rabid fan base i can already hear the people oh you just don't get it dude you just don't get it you don't get this you're revolutionizing defense tech if it grew call it 25 a year for the next 10 years which look i know that sounds super achievable but that is hard to do yeah it would like they wouldn't they still even be near salesforce's numbers yep and they've already got the market cap for it so you know it could still be a great

business and not be a great stock but anyway i think that's gonna do it we're up on time going a little long on time ryan anything before i hit the disclosure and get out of here no someone asked me to talk about semrush uh they did report i think yesterday i might do that as my small cap of the week next week to force myself to revisit them how has the stock done future small cap or no it's looking like that at the moment yeah future small cap of the week small cap so yeah you should do small cap of the week and i'll do future small cap of the week which is like a short reports um but all right let's get out of here thank you everyone for listening remember we are not financial advisors and remember especially on these episodes uh

nothing we say is formal advice or recommendation we may own securities discussed in this podcast And in fact, we do, as of this recording, we may have held them in the past and we may buy, sell, or hold any of these stocks in the future. Thank you everyone for tuning in once again. Remember the live 2 p.m. Pacific time, 5 p.m. Eastern time on Thursdays on our YouTube channel, or listen to the replays on YouTube, Spotify, Apple Podcasts, wherever you get your podcasts. Thank you everyone for tuning into the live show with all the comments.

We really appreciate it, and we'll see you next week. We'll see you next time.