Chit Chat Stocks - Michael Burry’s AI Short Bet; Q3 Fallen Angels; Earnings Round-Up ($RELY, $CPNG, $SFM, $MNDY + More)

Episode Date: November 14, 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: (00:00) Introduction (00:59) Investing Insights from Japan (02:23) Deep Dive into Remitly Earnings (11:43) Fallen Angels: Stocks in Decline (17:15) Monday.com: Earnings and Market Reaction (23:50) Apple's Innovation and Market Position (30:43) Sprouts Farmers Market: Investment Opportunity (38:40) Exploring the 50-Year Mortgage (44:47) Analyzing Coupang Earnings (52:54) The Altman Interview (01:01:01) Michael Burry's Short Bet ***************************************************** 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.  ********************************************************************* Fiscal.ai is building the future of financial data. With custom charts, AI-generated research reports, and endless analytical tools, you can get up to speed on any stock around the globe. All for a reasonable price.  Use our LINK and get 15% off any premium plan: ⁠https://fiscal.ai/chitchat  ********************************************************************* Disclosure: Chit Chat Stocks hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Chit Chat Stocks podcast, a podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. Brett and I have both been traveling over the last couple of weeks, so we missed last week's Power Hour. We brought you an Ask Us Anything and some interviews instead, but we've got plenty of topics to catch up on.

For those that aren't familiar with our format, this is the weekly Power Hour. We go live on YouTube at five o'clock Eastern time. Typically on Thursdays, we're going a day early this time, but we talk all things financial markets and we have plenty to discuss this week. We've got 50 year mortgages on the table. Stimulus checks are back. Some earnings reports for some of our largest companies or our largest portfolio companies. And we've got plenty of questions from listeners as well.

So let's go ahead and jump right into things. Brett, how was your trip? any investing takeaways and then let's kick things off with the remittly earnings well investing takeaways i guess i should say i was in japan maybe the yen is undervalued stuff's cheap over there it could be a good currency to own i think a lot of people share that sentiment but it's been undervalued for many years now investing specifically probably not so much i don't think it was some wide awakening of what you know people have their thoughts of what that market is like versus what it actually was with boots on the ground i think most people's takes are generally

in line with that but i am excited to talk about companies well so some that had some weak earnings uh well quote unquote weak earnings given the stock reaction such as remittly global um coupon gets us down a little bit and i got back with an old flame sprouts farmers market i'm excited to talk about them as well oh you're you're back together with sprouts i am and you gotta be in the uh sub stack group chat or forum or whatever you call it that's where uh active yeah uh do you want to kick things off with remitly earnings though we had a lot of people asking us about Remitly. Full disclosure, this is my second largest position and I believe it's one of your largest positions as well.

Yeah, I think it's dropped back down to three. It's over a 10% position even with this recent stock drop. It's in a 55% drawdown this year now. It's been kind of an ugly one. It's been tough to stomach, although it's one that is kind of an example of, all right, well, if you're going to invest in high growth stocks that aren't profitable or not as clean as some of the high quality compounders out there and have that quote unquote emerging moat characteristics, you're going to experience drawdowns like this. And it is another good example of, all right, can you experience that without getting emotionally erratic or panicking and stuff like that and I feel fine now, especially when looking at the underlying numbers here. Let's go through

them. Quarterly numbers, revenue was up 25% year over year. Send volume, which is the total amount of money sent through the remittance platform, up 35% year over year to $19.5 billion. I know you gave a good chart on how send volume or either revenue in North America is pretty much closed in now with Western Union. And I would notice here that there is a gap between revenue growth and send volume growth. One, they are reducing the take rate, it seems like over time, which I think is good as they scale up, but it can help insulate themselves from the competition. It's the classic scaled economy shared that they're trying to go with with their customers here. But also they are targeting more high valued senders and businesses which are going to have lower take rates in

general. So they are upping the amount that people can send on the platform given the fraud stuff they're doing now or not the fraud stuff they're doing the fraud protection stuff they're doing as well as the small businesses. So all in all, good numbers there. And I'm not concerned that quarterly revenue is growing at a smaller gap than send volume. That's just going to happen. And yeah, Ryan is showing that chart here. Remit leaves. What is that? United States and Canada revenue versus Western Union. North America revenue pretty much closing in on themselves. Quarterly operating margin was just 3%. It keeps growing year over year, but it hasn't grown sequentially for the last two quarters. I'd say that's something to watch out for. I would

hope that it keeps growing. It might not be linear just given that they are right now reinvesting in a lot of new products, stuff like that. I think the big hiccup for investors, I didn't see this out there, but this is just what I would expect, is the initial guide for 2026 was only high teens revenue growth. That's probably mean 17 to 18%, something like that. And they're expecting $1.62 billion in revenue in 2025. So if we look at that high teens revenue growth and just say it's 18%, that is $1.9 billion in revenue in next year. And again, they haven't gotten here yet, but given the fact that their gross margins are pretty much 60%, and I give them a, I think they can get a 20% gap operating margin over time.

I think they can pretty easily achieve that, given that they're capital-wide. They're really just right now spending on marketing to acquire customers, which have pretty standard payback periods, plus all the new products they're launching now. If you have $1.9 billion in revenue, 20% operating margin,

that's $380 million in earnings. Right now, the enterprise value is $2 billion. So we're looking at look-through earnings about five times there. The market cap is $2.6 billion. They have a lot of cash on the balance sheet. That means I think, I hope, maybe they won't buy back a lot of stock, but I think they should buy back a lot of stock, and I wouldn't even mind them taking out debt to buy back stock given that they generate a lot of cash. I like this stock a lot here. I didn't really see anything negative about the quarter it seems like and i don't have the anecdotes in front of me they

gave some good stats about the initial adoption of the remitly one subscription where you have the remitly wallet where you can store money you can do the send now pay later and then you can do the uh the debit card that you can spend money with that internationally with no foreign transaction fees so am i gonna add i haven't bought any more yet but as i keep adding more cash to my brokerage account each month, I could definitely see myself adding here, probably if I'm starting from zero, this is my number one opportunity at the moment. Yeah, I really like the setup here. Remitly, to put some numbers on it, it really has lost like, it seems like investors have kind of given up on Remitly and the narrative is pretty poor,

i think for most remittance providers generally but if you just look at like pure revenue growth and the trajectory of operating margins and you had no idea what the business was what they did you just looked at like the unit economics the improvement in margins and the revenue growth you would it would get a much higher multiple than it does to put some an actual ratio on it enterprise value to adjusted EBITDA, which I know is a flawed metric, but for a software company that is scaling over time, adjusted EBITDA should be a leading indicator. Now, it depends how generous they are with stock-based compensation and some of those other adjustments. But honestly, there is some validity to that metric for software companies, especially one that is growing. EV to adjusted

is 9.3 times it's pretty rare that you see a company who is growing revenue let me just find the figure they have grown revenue by 54 annually over the last five or six years probably going to be more in the high teens mid-teens over the next three years and they're scaling to profitability i think you're right i mean they've said that they think they can get to western union level margins at least which was 18 percent gap operating margins right now if they do that this will be a great return for investors i'm quite confident in that now stay patient hey sometimes stocks get dislocated there's the immigration fears it's not look even given the amount of deportations out there it's it's not it's a drop in the bucket in the overall number

of immigrants out there. And even if the next few quarters are slower than usual, Remitly is taking a lot of market share and they're growing 35% send volume in a tough industry backdrop. Yeah. It's so easy to get shaken out of positions here. I'm sharing the total revenue chart for Remitly over the last five years. It's phenomenal. They've grown from basically $250 million in quarterly revenue, or sorry, trailing 12-month revenue to $1.5 billion. And as much money as you pour into marketing, all that, if you grow from $250 million in revenue to $1.5 billion, there's some traction in your business. And that means people are using it, especially for a software provider or a remittance provider like this.

So there's a lot of validity to the business model. It's so easy, I think, to get worried about the narrative and any bearish points, especially when the stock is collapsing. I think the stock is down like 40% or something year to date. Price can drive narrative. Yep. Yep. but i think the results are really good here and i've said this before but i really love businesses where they are turning the corner to profitability it's it's been maybe it's a recent ipo last five

years kind of thing they are still growing the business and they're turning the corner to profitability and their margin potential is much higher than what investors are giving it credit for or what investors are willing to wait for that that to me kind of feels like the situation right now is investors don't want to wait around until they get to 20 operating margins they want to see the cash flow now and i think you can get really good returns from here do we want to move to anything else i guess on your point i think you mentioned the buyback you've got a lot of They've done a little bit. They've done a little bit so far, so they're not like – they're not an immune company from Silicon Valley or something like that. Yeah, and the other part is there's been insider sales, so just executives selling scheduled sales.

But for a company that has been private for a long time, still founder-led, they oftentimes don't care that much about the price. They just bake this into their income and they just say, all right, here's my options. I'm not going to be that sensitive to what the price is. I'm going to, you know, purchase them and sell them. And I don't think there's that much to read into it if it's just a planned sale, but I would hope that over the coming quarters, they become a little more sensitive to it and maybe decide, hey, I'm going to hold off this year, not sell that extra 400K or whatever of shares and wait until we get a better price. but yeah i really like the setup here there's there's a couple stocks maybe i'll go through this towards the end of the episode that are i don't know if i'd call them fallen angels but they've been previously liked by the market and all of the sudden over the last couple orders just yeah yeah here let me let's just go through some of these now remitly believe it or not at one point i know anyone that's followed us and been a part of owning remotely as well feels like the

narrative's been terrible for a while they were at one point well received by investors post ipo the stock jumped quite a bit and there was a an expensive valuation that we weren't willing to pay the other ones monday.com down 31 year-to-date return i think it's in like a 62 total drawdown the trade desk one of the worst performing stocks i believe in the s&p 500 this year minus 63 year to date constellation software out of nowhere there's been a bit of a narrative shift because that's had a phenomenal narrative for a decade well maybe not out of nowhere the founder and leader of the business and that created the whole thing basically from scratch has to retire for health reasons so i think to be fair there are some people that are concerned

plus the ai stuff but hey i agree with you it's kind of out of nowhere that the stock's down what did you say here is it 24 that's their largest date their largest drawdown i think they're down like 35 or more from highs which isn't saying that that's their largest drawdown ever but whatever the narrative has definitely flipped and the price just reinforces that where the stock keeps going down people go and i do this with you know remitly i was trying to search all right what are people actually worried about with this quarter and then you kind of come up with stuff yourself and then it reinforces oh well what's happening here the price is going down i'm getting so concerned about this thing that i'm just blowing out of proportion

you have to just take back seat don't look at your portfolio every 30 minutes trust that the business is doing well if the numbers look good just trust your thesis yeah one more that would be on there is duolingo this was for a short period it was really liked by investors and the narrative despite still pretty solid results the the stock has taken quite a tumble as well those are kind of my five fallen angels so and those are my q3 fallen angels because there's other ones as well like adobe i think falls in that category pfizer used to although i would say that that may have been that they deserve sort of an accounting scandal and maybe there might have been some fraud there as well so they deserve their drawdown but yeah the

five there money.com remitly the trade desk constellation software and duolingo do any of those interest you other than remitly since i know you're a shareholder yeah let me just rank up one obviously remitly since i'm a shareholder i'm gonna go to constellation software just because I respect their business performance so much and I respect the culture they built. Three, I'll say money.com and you're probably about, we can go through your more in-depth numbers on their earnings after this. Four, Duolingo. Five, the Trade Desk. Sorry, Trade Desk. I know there's some big fans out there of the Trade Desk, but I've never really understood where their moat comes from. I know that they have a tiny bit of counter-positioning, but you're competing with

amazon google facebook in their bread and butter and why that deserved 100 times earnings i'm not sure maybe 30 times free cash flow is more comfortable but yeah still still doesn't do it for me yeah what what surprises me is that a number of these companies and i don't know if it's just people saying this now that it's down but they seem to have an ai will disrupt them narrative specifically monday.com the trade desk or not the traders monday.com constellation software and duolingo people keep talking about ai disrupting uh constellation software which truth be told makes no sense to me i don't think that's realistic like if i'm some bowling alley i'm not like and i want some sort of operational software for my bowling alley i'm gonna go with

a vertical specific software vendor that has done this for a while i'm not like i don't have the ability to just whip one up from scratch with ai i i think people are overestimating the impact it could have on constellation software's business it's possible i'm i won't pretend to be an expert on the software market it always kind of have a net neutral take i never know whether to be bullish or bearish, but I think that makes sense. Do we want to talk a company that grows pretty darn consistently? They're seeing a cashflow and earnings inflection. It's monday.com. I know they're trending at 20 times free cashflow and there's going to be the value investors listening. Whoa, what about stock-based compensation? What about stock-based compensation?

I get it. It's there, but take us through the numbers. Why do you think the stock is down and whether you're buying before we move on we want to talk about our friends at interactive brokers interactive brokers is our favorite brokerage platform they make it easy to buy stocks etfs options futures currencies bonds and more all from a single unified platform and interactive brokers allows you to maximize your returns by minimizing your costs they offer zero commissions on u.s stocks and low commissions on international securities and they don't cut corners either Interactive Brokers, one-of-a-kind smart routing technology, gets you the lowest price possible in 36 countries and 28 different currencies. Interactive Brokers is our home for stock

trading and we wouldn't go anywhere else. If you're getting serious about investing, it's time to upgrade to a broker you can trust. Head on over to IBKR.com. Restrictions apply. Interactive Brokers is a member of SIPC. Yeah, so Monday.com reported earnings on monday i think they always do i don't know if that's intentional or what but they great branding great branding right there yeah they currently have an enterprise value to free cash flow multiple of less than 20 times that is their lowest multiple they've ever had yes a lot of stock-based compensation baked in there so they they are literally just turning the corner to profitability on a gap basis but shares have dropped 15 percent in the last five days they

beat revenue and earnings per share estimates. And then this seems to be sort of a theme this quarter where it's a beat on both the top and bottom line. And then guidance is slightly disappointing. And there's a big reaction that seemed to be the case here. They are expecting 22 to 23% revenue growth for the fourth quarter, which is a slowdown for 26% year over year revenue growth this quarter i don't really see what investors are so hung up on and what's driving the like the big drawdown here money.com seems like a really really well-run software company revenue has grown at 52 annually over the last five years they have very good retention with their customers as well.

So more and more enterprises are adopting Monday.com. Monday.com really kind of started in the small, medium-sized business realm. And it's kind of task management, but really sort of a workflow software for teams and organizations. And now it's really moved into the much larger enterprises.

I think Enterprise ARR now accounts for a quarter of their business and should probably account for more over the next couple of years. But the number of customers contributing more than $50,000 in ARR, which is generally a sign that you make good use of the software when you're willing to spend that much on a tool. Well, maybe I can pull up the specific number and how many they have, but the retention rate is phenomenal for those customers.

So it's 117% net retention rate among their highest spending customers, meaning those customers are spending 17% more net on average across the whole customer base every year. So whether they're expanding the seats, they're eating the pricing power from money.com or price increases, they seem to be more than happy to continue paying. there is a narrative around ai disruption here again i don't think it makes a whole lot of sense ai disruption i i think for big enterprises it makes a lot more sense to subscribe to something like this where it's a sticky tool a whole bunch of people are already using it and it's really hard to rip and replace this once it's become a big part of the enterprise so i like where they're at. And once again, I'm a big fan of companies that are just turning the corner to profitability because it seems like there's a big window for mispricings when that happens. And that seems

to be the case again. This might be my next research report. All right. That does sound interesting. And I totally agree with you. There's a lot of people that just go, wow, the PE is 200. And you just go, yeah, well, they have a 1% operating margin with 80% gross margins. they can get to 25, 30% operating margins if they start reinvesting so much for growth. Yes, these companies can be undisciplined on spending. Sometimes the SBC, I get it, that's probably Remitly's biggest and probably money.com's too. Concern, headwinds is stuff we don't like, but that doesn't make them bad businesses. And once they get lean, the operating leverage can show up rather quickly.

Exactly. And I think this is an important thing to remember with software companies. Every single figure, every single line item below the gross profit is manageable. I think that's why software companies tend to get aggressive with marketing spend. They tend to get aggressive with headcount and operational expenses is because when push comes to shove, they can manage that really easily. i say easily i mean you have to stomach it as an organization but let's use salesforce as an example because they've been kind of the prototypical sas company over the last 20 years largest one yep operating margins went from zero percent to 18 for them in two years they can manage everything below the gross profit line if they choose to so it really is these are i like

software businesses. I've come to like them more and more as I've been a part of one where I've been able to realize you can kind of put your foot on the gas pedal as you choose if you're running these companies. So Remitly, Money.com, these people that are getting to profitability slowly, I think are doing so intentionally. It's not like they are unable to turn a profit. It's very much a conscious choice. yeah i i agree with that sentiment on the other hand though if you really cared about shareholders at all you might try to get leaner quicker there are it seems like you almost need an activist in there every time to kind of pull them to long and it's not like you have to go oh hey we're

going to treat our employees terribly maybe just don't salesforce spend 20 million dollars on matthew mcconaughey ads because he's friends with your ceo stuff like that do we want to move on to more earnings do we want to talk we have some other news items but i think this one's letter apple this one's very important the apple iphone pocket now for anyone who didn't see apple had a big product launch this week and they unveiled the apple iphone pocket this is a 3d knitted piece of cloth that can hold any iphone if that doesn't sound like innovation that's what they call them yeah i don't know that's just a part of their press release i guess the uh if if this doesn't sound like innovation i don't know what does you can get this

sock frankly this is what it looks like it looks like a sock hanging around someone's shoulder it's literally like a tiny purse for anyone that needs the visual you can get this for the small price of just 230 dollars to be clear there are comparable pieces of apparel for like 15 bucks on amazon if you are really looking for something like this are you buying one of these yeah no that's not the that's not happening the only reason i think anyone up anyone should upgrade their phone anymore as if your carrier just pays for it which they seem to do i don't i can't still figure out how they make money uh these carriers because they seem to be subsidizing everything but that's a whole nother question this is yeah i think it

just shows where apple is these days they're not very innovative and on another topic that's not related, but also related is the fact that Apple is going to be using Gemini, Google slash Alphabet's AI tool or AI language model, however you want to define it, to power Siri going forward. I don't know when that is going to start. But instead of in the olden days, when Apple received $20 billion or more a year to have Google Search be the default engine on Safari. This time, Apple is paying Google for the ability to access Gemini. I think we're slowly seeing the results of a decade plus of a lack of innovation compared to the other big tech giants that are actually trying to push the envelope on new technology.

i mean look this is what they're coming out with it's a satchel it is a satchel a 230 dollar satchel you can buy that at 40 times earnings to be fair i have i've short a whole two shares of apple so i'm biased but yeah well that's hasn't worked out it hasn't worked out so far yeah it is amazing how fast the narrative on google changed literally six months and all of the sudden they are they've gone from search is dying google is screwed to google is actually the ai leader they are the only vertically integrated player and they're gonna win it's and now looking back on google paying to power safari it's like the trojan horse they are because google's search results are powering gemini responses right so in a way it's apple basically google's paying

to receive the queries on google search through safari and then apple now pays gemini to give it to them in a different format to distribute it differently so google does seem to be in a good position and yeah apple look there i think they're still going to be the fact that the iphone is still so used and that doesn't seem to be changing they're going to be fine but i would be surprised if they get more than how about this six percent annual revenue growth next five years do you think it's higher or lower under uh easy easy under maybe inflation could hurt that but i think that's an easy under where is it coming from price increases of the iphone but upgrade rates have fallen for, excluding one COVID year where they got a bump, they've fallen for 10 or 15

straight years. I forget the exact date. I think it's since 2010, so it might be 15 straight years. What's going to cause that to switch? And there's no new products. They get the bump from the Apple Watch, the AirPods, the iPad, the services. Services, you're going from a 100% margin business from the google search payment to a cost center with ai so yeah i mean they're make they're still going to make a lot more money from google than what they're paying out right i mean sure yeah for the time being but google search is transitioning to gemini so that is going to it may not take five years but over 20 years it's probably going to go away i'll tell you what about you you take an over under yeah satchel the satchel is going to drive

sales growth for this company it costs about as much as the watch right the airpods i do say that when i have been thinking of buying airpods for the the show so maybe the investor brain and the consumer brain are different but uh yeah uh i don't even know what to say apple it's tough you could have any headphones you can go pick up 15 headphones on amazon yeah that's true that is true but they are nice i guess probably the best product they've made in a long time yeah it they kind of it feels like apple's in no man's land for me there are still so many people that probably buy apple or own apple and just have no idea or don't pay attention to the results. I would guess more than 50% of their shareholders do not track the performance

of the company. Well, they're index funds. So yeah, by definition. Yeah. We have a comment here that says, what if Gemini 3.0, the upcoming new launch from Alphabet is so good that it causes investors to no longer believe that OpenAI is going to make its commitments and causes the market to crash? Wouldn't that be ironic? That's a question from Tyler. I'm going to tease that and hold it there for the bubble watch segment later because i think that relates to some of the news reporting that's come out on anthropic and open ai but i also want to talk about how many of that i discussed it in the the sub stack chat my newest stock that i bought sprouts farmers market a company we owned i guess both of us owned back in 2020 2021 the stock has crashed

from all-time highs after some slightly weak guidance on comp sales for Q4 of 2025 and then discussions on 2026 on the conference call. It's down 55% from highs. And I decided to make the plunge, took it out at an average price of around $78. It's not a huge position yet, but it's one I want to build over time. If we look at the quarterly earnings, it was 13% revenue growth, 5.9% comp store sales growth. They authorized a new $1 billion buyback versus the current market cap of under $8 billion. The problem was that they guided for 0% to 2% comp store sales growth in Q4. But if we look at this chart here, and I can maybe share it as we're talking here, it's one of the reasons why, yeah, maybe Ryan can do it. One of the reasons why I think visualizing

numbers is so important when investing because you can see when you can just understand what's happening with a company. So the comp store sales growth just accelerated greatly last year in Q4 and then Q1 and Q2 of this year. And as I talked about on the call, I think in October, they had 13% comp store sales growth. So they are lapping huge growth in Q4 of last year when they really started to see their concept and the revitalization of the grocery store brand take off. And with that in context, the two year stack and comp store sales looks fine to me, even if they go zero to 3% or something like that over the next few quarters. That's because they're lapping just phenomenal numbers from late 2024 and early 2025. They still have greenfield area to I'd say double

store count over the next decade. They're closing in on 500 stores, but I think there's plenty of room to reach 1,000 over the next decade. If you have durable revenue growth, I think you have stable and possibly, if there's upside here, expanding EBIT margins and a lot of buybacks with the stock trading and EV to EBIT of 13.5. At least when I bought it, I guess it's gone up a had so we're at like 14 now seems like a layup to me the risk is margin compression which will happen if com store sales growth is lower than their inflationary inputs that's a risk i'm willing to take and it's one that i think with this new management team i guess they're not new anymore but with the management team that came over in 2019 they've gotten their footing and

they're now putting the accelerator down i think it really seems like a good risk reward at these levels and would i have liked to just hold it held it from twenty dollars a share sure but i think this is a plenty good opportunity i would buy if it keeps falling yeah i think there's a pretty high chance they're able to hit 10 percent revenue growth over the next annual revenue growth over the next five to 10 years purely you know five percent six percent store growth and four to five percent comp store sales growth they still talk about the 10 goal for uh store count growth but they haven't hit it yet i don't know if they're ever gonna hit it it's fine but they aspire to 10 yeah i don't like i don't know it's so hard for physical concepts to grow unit count by at

a double digit percentage pace and not have a lapse in quality especially if you're fully owned yeah and you're not you're not franchising i think the you're right that the focus should be on yes okay growing at a small rate per year that five six percent but the core focus should be on driving higher volumes at your existing locations i think with sprouts there was an extremely low starting point on per store traffic and when you look at and there's been reporting out there people concerned about the amazonification of whole foods and that becoming more of a we call it discount retailer but less of the old cachet that whole foods has i think there is a gap to potentially fill there that sprouts can excuse me a gap that sprouts

can potentially fill yeah i would say it's probably an uphill battle for amazon to replace the cachet around whole foods being a premium grocer now maybe they can do it because they have so much distribution and and they're amazon but yeah there's definitely a narrative that whole foods is premium priced i think well no i'm not saying i'm saying that people do not they're they're saying it's becoming commodified and not for example the old whole foods where you have this you know random new item that we found from an organic farmer and sprouts does that where they find five six hundreds of different like sourcing for stuff that's you know not the coca-cola's of the world not the mass market stuff that's where people go to these stores and you could start

stealing those customers which i should mention are usually quite high income and recession resilient okay so it's becoming boilerplate boring commodity like items from that's what the narrative is there's been a lot of news stories out there yeah yeah my general take here would be groceries big that i wouldn't worry so much like i don't think sprouts the results of this investment i don't think come down to competition from amazon the same way it didn't come down to competition from amazon over the last five years they do i think they've carved out an important niche where more and more people are going to find them it's a pretty popular concept down here in austin people like it it's health focused the brand's good you see

that in the comp sales over the last few years i think that's affordable yeah yeah it's affordable and they're still doing i believe 38 gross margin and something like seven to eight percent ebit margin so they have the potential to keep expanding that because they're not dealing with the huge players out there in their supply chain they're not dealing with coke they're not dealing with pepsi they're not dealing with procter and gamble and they're selling things like vitamins and minerals and health stuff that have way way better margins than what you're getting extracted from from from coca-cola all right let's shift gears do we want to talk the 50-year mortgage or do we want to save that we can talk about that what i guess it's maybe not happening because

pulte just snuck it in to the executive office i don't know if you saw that reporting that the everyone else in the administration's mad about that but let's say it's real what are your thoughts on it? All right, folks, before we move on, we need to tell you where we get our data. Fiscal.ai. Fiscal.ai is the complete stock research platform for fundamental investors. I use the platform pretty much every single day. You'll see the charts in our podcast. You'll see it in our newsletter. This is our one-stop shop for stock research. They've got up to 20 years of financial data on all companies globally, including the largest company-specific segment and KPI data set on the internet.

That includes metrics like Duolingo's daily active users, Oracle's backlog, Rocket Lab's revenue per launch, and literally millions more data points. They've also got earnings call transcripts, ownership data, equity research reports, and much, much more. If you want complete financial data at your fingertips, you need to check out Fiscal.ai.

And if you use our link, fiscal.ai slash chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. If you want to upgrade, our link will also get you 15% off. Again, that's fiscal.ai slash chitchat. The link will be in our show notes. My initial thoughts, honestly, were as a consumer, I think I'm okay with it. Like we've already got the 30-year.

Who cares if you've got the 50-year? Maybe it makes it more affordable. You can always refinance later on. You can probably have some mortgage buyout or lender that switches you from a 50 to a 30 or changes the duration. But I don't think it addresses the problem. I feel like we're just kind of kicking the can down the road on home supply, which seems to be kind of the major issue that people are kind of afraid to address. So I wouldn't be that upset with it. I probably makes it a cheaper monthly payment.

You end up paying more interest over the long term. I saw a lot of people complaining about that. Like, oh, you don't have to take a 50-year mortgage. But I think I saw a number from Resi Club who – what's his name? He's been on the show before. Lance Lambert, been on the show, housing expert. He did something like you could save on a standard $2,700 mortgage payment, you could save like $128 a month.

It doesn't seem like the math, really maths there. And my initial thought was I'm just going to be renting forever because all this stuff, people do not really think ROI on housing whatsoever. They think, oh, I'm building equity. Okay, good for you. I'll speak with stocks. I do think most people don't buy a home for the ROI. That's –

No, so many people. I mean, come on. Okay, home property investors, but I don't think that's most typical home buyers. That's not their primary consideration of I want this to appreciate in value. Yeah. I think it's a middle ground. The other part, Brett, is you're just in one of the highest home-priced areas in the country. So that is another headwind for you.

But I don't see any issue with the 50-year mortgage being an option. Sure. What bank is taking that risk, though? What bank is taking that risk? I mean, there was an example out there of the 100-year Austrian bond that was at a sub-1% interest rate. How they convinced people to do this, I'm not sure. but it is now do you want to guess where it's trading now on the dollar or be uh compared to par value because of what inflation has been over the last five years uh i'm trying to rethink how

bonds work since i haven't looked at bonds in a long time uh i guess it's a hard one to guess it's 30.3 30 cents on the dollar they've lost 70 of their value yeah that makes that could happen that could happen with 50-year mortgages like who's gonna take that duration risk that means that you're going to have a much, much higher interest rate. It's not going to solve anything. Yeah, maybe. But isn't there Fannie and Freddie involvement here that's basically government guarantees for these banks?

That doesn't make the interest payment that high. I know, but they're already taking duration risk with these 30 years. You're taking significantly more with 50 years. So what do you think the interest rate difference would be? Well, people were projecting instead of, what is it right now, six? I actually don't know. Let's just say six now. They're saying like seven and a half.

Again, I don't see the issue with this being an option. Banks will obviously have to price it appropriately, which they tend to do. They have a history of doing fairly well with these. They're not idiots. I know, whatever. 21st century says otherwise but i think that was a different issue but yeah the they'll have to price them appropriately but offering this i don't see the issue in it sure just don't have the government bailing out idiots that on my behalf sorry

all right coupon earnings do we want to talk about this the sure you want to go through the numbers did you read the conference call before we talk about this did you read the whole conference call i think so i was honestly super jet-lagged and read it like i woke up at like 2 a.m i was reading the conference call so maybe i wasn't focusing on it was there anything crazy from it i i didn't i don't remember anything notable there was a bizarre question at the end where some analyst was like do you want to speak to this ad campaign you ran this very specific ad campaign you ran for the apec uh like event and bomb cam was like yeah we try not to talk about things that don't actually

have a material impact on our business on these calls well it should be fair they put out a press release and they never put out press releases for that for anything so i think the analyst was was fair to ask that it's like why did you put out a press release for this okay i must have missed that but it seemed very like a very specific odd out of place question but if they're going to put out a press release i think you yeah i think both were awkward about it i guess i remember that but it doesn't matter for the business what what were the numbers right i guess what what stood out to you yeah i'll just go through some of the headline numbers here They had 22% constant currency gross profit growth.

Gross profits, kind of the figure we both pay attention to the most. Revenue, I think, was high teens. Let me just pull up the actual fiscal AI page here. One second. Yeah. All right. Sorry. Apologies for this audio.

Okay. Okay. 18% year-over-year, 20% foreign exchange neutral, revenue growth. That's on a quarterly basis. Gross profit was 20% year-over-year, 22% FX neutral. EBITDA margins on the product commerce business were solid, 8.8%. I'm going to show a chart here, Ryan, for the product commerce adjusted EBITDA. And I know, I wish they would report other numbers. These are the numbers we're dealing with. I wish they would just do operating income or something like that but again this is what we got to work with and you can kind of just back into okay discount a little bit of what the pure the true depreciation amortization should be we've gone

from negative 2020 2021 to closing in on two and a half billion in earnings from product commerce that is kind of hidden in here because the developing offerings are getting it so much investment and the market cap it's only fit well enterprise value i guess is only 50 billion dollars or less actually probably probably a little less yeah if you would have shown me what the margin expansion would look like for like when i first bought coupon you said here's what margin expansion is going to look like over the next few years for the product side i would be very pleased that's like exactly what i would have hoped for and then you see reinvest faster than i would have expected yeah definitely and there's been a ton of reinvestment into their taiwanese

operation that seems to be the primary drag on uh gap earnings because they continue to pour money into their my take here because i'm sure there's a lot of investors that are unsatisfied with the fact that they are taking so much cash reinvesting it they're not showing as much profits today yeah uncertainty yeah this is a management team and company who has placed a lot of bets like this in the past and hasn't been afraid to shut them down they had this i think they launched or tried to launch in japan quickly realized it wasn't going to work out for them they pulled back on it i remember going through some of the other ones i can't remember on the countries but there was some other international efforts that they quickly revised and shut down

The fact that they've gone into Taiwan and it's sticking and they're reinvesting more tells me that they're seeing lots of leading indicators that they think this can be sort of replicating their South Korean core e-commerce business. And now they've got the advantage of having done it before and they know what works. Obviously, there's nuances to every market, but they can replicate a lot of the same playbook, both logistically for their fulfillment network, but also on the driving customer demand side. So I really like it. I think this is one that I don't pay too much attention quarter to quarter. I trust Bom Kim, and I think it's going to take some time for them to build out the Taiwanese business. but I'm pretty happy with the results. It's kind of, it's not a screaming buy valuation.

The stock dropped a bit after earnings, but I'm very comfortable holding here and would potentially be willing to add if the stock continues to drop. Yeah, valuation seems, I think, pretty good. You got to be a believer in the margin potential or margin expansion story, but be it 10% margin, $34 billion in revenue,

that's probably it's about 3.4 billion dollars in earnings potential it's not what they are earning but it's kind of what you could project at scale market cap right now i mean the market cap is 53 billion dollars ev is is under 50 so i feel like we're closer to 10 times earnings than people would give them credit for it that is stretching some figures there a little bit but for a high quality business one i think has a wide moat one i think still has a long runway for growth and we always get we always get questions about well what about the demographic collapse in south korea which is real but the population might be down 20 in 20 years that's not something i'm concerned about i'm worried about the next when looking at a stock

I'm worried about the next few years. Yeah, it's maybe a potential headwind, but I think they can actually still drive revenue growth out of their existing population. Even if they don't grow customers, even if customers shrink, I think they can grow wallet share with their existing customers by continuing to improve their offering. And owning Coupang today makes me realize how difficult it might have been to own Amazon early on where they were consistently reinvesting and they never really showed you the margin inflection for pretty much up until damn near 2020. Or whenever it was when you saw them go from, what was it, basically 0% margins following COVID to I think 9% operating margins now. They were just constantly keeping operating margins near zero by choice and reinvesting across the board, especially in the 2000 to 2010 timeframe where there was the logistics and fulfillment build out where you don't always see the benefits of that. and the fulfillment expansion as well. But in the long run, they're serving customers better, faster, cheaper,

and doing so in more places, it's going to create value in the long run. Yeah, I was happy for the quarter. There's some other things we haven't discussed, especially because we've been two weeks off here. The Altman interview that slightly crashed the market. Do you remember this from – it was probably right around a week ago. What did you think about it? When someone asked him if he could fulfill his commitments, and then he said –

Yeah, very sassy, yeah. Yeah. One of his investors and biggest vocal champions, I would say, Brad Gerstner. It felt weird that – That's an understatement. Yeah, it almost felt like a personal attack towards Gerstner when he asked this question. like altman reacted in a way where it was like well maybe you should just sell your shares then you're like you're privileged to even be an owner here and like i'd sell just five five hundred

billion dollar mark value take your money and run i would have i would have expected someone i would have expected i don't know gerson basically turned apologetic and was like no no i want to keep buying don't don't let me don't force me to sell it's like it's tough it's a lot like a live recording it's kind of you don't want to you don't want to hurt his feelings uh but he he was like i can't wait till we're public so that i can just tell people to short the stock i know it's like you're already turning into alex carp i know it's that was 10 red flags in one interview um it is an absurd amount an obviously absurd amount of spending commitments Now, how those spending commitments actually play out and what the contingencies are in those contracts as to whether or not they could revoke them and all this stuff and whether or not it's basically just hype, I don't think a lot of people know, myself included.

But it feels like a very reasonable question to ask and one that I'm sure Altman has been asked before. So why do you seem so hurt in my head? yeah yeah it uh it's perplexing and i will say again the over the last five years i guess it's been a little bit less since he's become famous there has been time and time again altman has told you you should not trust him why would you invest why would you invest in any company that's reliant on open ai good luck wait what do you mean like oracle or something like that like oh we're gonna double oracle's market cap because they have a 300 billion dollar commitment from open ai again good luck yeah and it's not as if open ai like chat gpt has become very much a verb

It is still the leading LLM for consumers. It's the most downloaded LLM app. It is the most used. I should say losing market share consumer-wise to Gemini and losing market share business-wise to Anthropic. Losing market share, yes. Still gaining customers. Growing pie, sure, sure. So it's not like the core business is bad.

And there's a lot of businesses – sorry, the core products. We can talk about economics in a second. The core products, they deliver a lot of value for customers and a lot of value for businesses. But it just – I don't understand the need to take it to such an extreme. to i mean they could have very easily i think produce these results without all of a sudden saying we're going to spend 1.4 trillion dollars like i don't think that had any impact on how many customers use their product uh you think them being hyper aggressive has been better for the business no no but i'm saying they're thinking that they need to be to match demand and they just

don't have the efficient compute like like alphabet do you want i put the notes here you probably saw them there was reporting on both anthropic and open ai's spending and revenue and profit timelines uh which anthropic i guess is underrated as an important player here but given that like the top 20 market cap companies in the world are pretty much all reliant on this it's very very important for the entire market i think people should have interest in it there was a stark contrast in the projections. One, we have Anthropic here, quote, Anthropic, which has a growing number of business users

because of the capabilities of its cloud chatbot, expects to break even for the first time in 2028. By contrast, OpenAI forecasts its operating losses that year, so 2028, to swell to $74 billion, or a 75% negative operating margin, thanks to ballooning spending on computing costs. The chat GPT maker also expects to burn through roughly 14 times as much cash as Anthropic before turning a profit in 2030. Don't worry.

It's just going to be a quick $74 billion loss, and then two years later, we're going to turn a profit. It'll all be fine. But don't you dare sell your shares, or else you can't be friends with Altman anymore. I know. Add 30 times revenue. Yeah. Anthropic? So, Claude, I believe they're more popular with developers. That's kind of the biggest. Yeah, that's what I meant by business. Yeah, I guess.

I was a little anecdotal evidence here from my week in office last week, spent some time with a lot of the developers, and I was pretty blown away by the amount of AI usage in the developers workflow. Like, it's not – I think people picture someone saying, hey, ChatGPT, write me code for this product or whatever. Obviously, that's not how it actually happens. But you can do all of your planning. You can do a lot of the actual lines of code being written using generation models and then basically become an editor for it. Obviously, you have to have the knowledge to know whether or not what was written is actually useful, but I was pretty blown away by the use cases and, in general, came away a little more optimistic for specifically the developer-geared models, Anthropic being, I guess, the leader there. Yeah, that's why they're growing so quickly right now. The other thing I didn't realize, another anecdotal evidence here, I didn't realize that cloud, there is some bit of commodity elements to it.

Like some providers, GCP versus AWS, you might use them for different workflows, but you are very much competing for startup dollars and they will continue to just basically give startups credits, trying to hook them onto whatever their, whatever their business is. So, I don't know, it made me a little more, when I think about like clouds just continuing to see operating leverage like AWS, Azure, GCP, I think there's a threshold there. There's probably a ceiling, not only on the depreciation of GPUs, but there is serious competition between those big three. speaking of which and this is a jam-packed bubble watch did you see the famous michael burry from big short fame uh being vocal about his short bets on i think nvidia and palantir although there's probably some misunderstanding about the nominal um values of what put options are on you know when you look at the 13f on whale wisdom or i should say fiscal ai i think michael burry's included in the super investors there what are your thoughts here he seems pretty vocal

on the depreciation stuff and seems to think this is very unsustainable i i don't know what to think of the depreciation schedules because I have heard people cite that a lot of the five-year-old, six-year-old TPUs or GPUs still get good usage. They just revise what workflows they're going towards.

Obviously, I don't follow the actual accounting depreciation schedules. I think it's a six-year useful life is what Google had for their TPUs and GPUs. I can't remember. But it doesn't seem like something they – all these businesses would feel inclined to lie about it. It boosts earnings, so there's an incentive. I know, but it's just kicking a can down the road for them later on.

Are you saying you'd be surprised at a management team kicking cans down the road to boost earnings in the short term to maximize their bonuses? I mean, this is management 101. Yeah, but all of them are significant shareholders still running the company. Jassy is a big shareholder. Sundar Pichai, I imagine, is a big shareholder. I honestly don't see them being management teams that are trying to create bigger problems for their organization down the road. I really – there are obviously a lot of management teams do that. I don't think Sundar Pichai, Satya Nadella, and Jassy are all doing that.

I guess they're the only ones that know. They're not going to pretend to know what GPUs should be depreciated at. There is auditing here, right? By 23-year-olds from KPMG. No, no. Come on. There's people that are looking at this that it's not like they just make up their own useful life number and people are forced to go with it. Surely that can't be the way.

A lot of accounting is just estimates. It's estimates. They give you wide ranges on estimates. I mean, I would be surprised if all the GPUs, TPUs from five years ago are sitting in the trash. No, that is fair. and they're the ones that should know better than anyone. It's just no one is going to know except for the people that work in the big tech infrastructure.

They're the ones that know. We'll see. It's either the cash flow is going to show up or not. Yeah, that's true. But as for the short positions, I think people give too much thought to Michael Burry's short positions. He moves in and out of things very quickly. and he probably has different motivations you don't know what the options were like you don't

actually know the exact options trade you just know the notional value 13 f's are hard to analyze yeah especially for people that primarily deal in options but he is i believe posting screenshots from the big short movie so hey lululemon shareholder they that's a psychological long for me and i guess i i have a sneaking feeling oh wow it's it's back down to 170 maybe i can still get in uh i have a sneaky feeling i should have done crocs and lululemon for the the apparel rule breaker but just crocs for now and i guess we can talk about them another week but yeah all right we're going long uh we didn't get to buffett's letter we'll maybe get that to another time there wasn't that much there but we also have stuff around credit cards people

asking about portillo's consolation software so plenty of stuff and acts on enterprise which could be a fun one to look at next week we'll have plenty of stuff to discuss on next week's power hour thank you to everyone that joined the live episode we'll typically do these thursday 5 p.m eastern time if not it'll likely be on a wednesday at 5 p.m eastern time but you can come live these come out friday mornings uh and you can listen wherever your podcast youtube spotify apple podcast even amazon somewhere else uh but let's hit the disclosure and get out of here we are not financial advisors anything we say on the show is not formal advice or recommendation ryan i are any podcast guests may hold securities discussed in this podcast may have held them

in the past and may buy, sell, or hold them in the future. Thank you everyone for tuning in once again and asking questions, and we'll see you next time.