Chit Chat Stocks - Oracle’s Blistering Backlog; Nebius + Microsoft AI Deal; Is Duolingo Dying? $ORCL $NBIS $DUOL

Episode Date: September 12, 2025

The Investing Power Hour was recorded on Tuesday this week. Back to our regular time of 5pm EST on Thursday next week. We discussed: (00:00) Introduction (02:06) Analyzing Chipotle's Performance (11:04) Duolingo's Disruption Concerns (19:39) AI Infrastructure and OpenAI's Cash Burn (31:50) Emerging Players in AI: Nebius (34:22) Shorting Stocks: Risks and Strategies (37:13) Exploring Cybersecurity Stocks (47:14) Gambling.com: A Marketing Agency in Online Gambling (47:43) The Internet of Things: SamSara's Business Model (49:51) Rubrik: Cybersecurity and Business Resilience (55:06) Bubble Watch: The State of AI and Market Speculation ***************************************************** 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 Chit Chat Stocks, a podcast that helps you discover your next great investment. I am one of your hosts, Ryan Henderson, and I am joined, as always, by the one and only Brett Schaefer. This is one of our weekly Power Hour episodes. We've got a couple topics. We had to be a little creative this week. It's dead earning season. We've got a couple interesting topics, though.

Duo lingo seems to be getting crushed. people are worried that the business model could collapse apparently we've got a number of listener recommendation for stocks to look at we've got news on chipotle we've got i think five different listener recommendations on companies to talk about so we're going to dig into all of those number of them are new to us so we'll go through some of them but before we do quick reminder please like or give us a review if you enjoy these shows and follow us on whatever your podcast player is so apple podcast spotify that way you will never miss an episode brett how are you today doing well uh yeah we got a lot of stuff to cover thank you to the listeners for sharing some stocks

we want to look at just a little tease some cyber security stuff internet of things company that kind of looks interesting, if I'm being honest, a really cheap online gambling company. And of course, some AI stuff. Luckily, as in each week, there is new AI and cloud infrastructure news for us to cover, as well as some bubble watch stuff. And when you said, you know, finding new stocks to buy that, Ryan, we did get a nice review again this week for someone on Apple podcast saying that we're a show that helps find new stocks that they can research above all else. That's our goal here. And then the second thing I'll say is we're recording this before the episode is coming out.

But for anyone listening on Friday, we recorded an interview with David Gardner. It's going to be out in your podcast feeds. We're super excited about this. One of our Mount Rushmore guests, he has a new book coming out. We asked, I think, a ton of interesting questions, different questions than he gets asked on most financial media outlets. So if you want to hear the answers to those, that's my little tease. Go listen to that one.

I think, Ryan, we should start with Chipotle. Multiple listeners wanted us to talk about this one. It's down. I don't know. We can check it on Fiscal.ai really quickly here, but it's down significantly from the peak. I'll let you start. What are your initial thoughts on the drawdown and what's happening with this business? Yeah, maybe you can check the drawdown real quick. Actually, it looks like I'm pulling it up here on Fiscal. I believe it's around down like 40 percent roughly uh but i'll double check it here in a second the my the question i pose yeah it's down 42 the question i tried to pose to people on socials this week and i think i already know your take because you came up with this take a couple years

ago but has chipotle peaked so the big thing is that last quarter they reported negative four percent comp restaurant sales growth that is their first decline in comp store sales since the pandemic but if you exclude the pandemic since the e-coli crisis and there have been difficult economic environments throughout that time like even during the interest rate spike from last year they were able to show great comp store sales and it's really just been overall a pretty solid last five years for them and they've grown through difficult environments they i mean one of the benefits for them is that no they aren't fast food but they are a cheaper alternative if you're looking for a healthy option. Getting a $10 burrito bowl, whatever it

is, that's a lower cost alternative to going out to a restaurant, which ends up having them be in sort of the right spot, even in difficult macro environments for consumers. However, right now, we have seen an overall slowdown across pretty much all fast casual dining concepts. And part of it is i think consumer weakness that consumers are just maybe dining out less or they're trading down we've seen positive numbers from mcdonald's and domino's and taco bell and they've talked about the consumer trade down but chipotle's usually been resilient through that type of environment and the average revenue per restaurant is down over the last three quarters now so i guess my question to you is do you think this is a temporary blip and just sort of temporary

consumer weakness or have we hit peak chipotle do you think revenue per restaurant will be much higher in five years i'm going to give you the boring answer and an exciting answer and say i'm not sure which factor it is i think it might be a bit of both we've seen the macro issues it hit a ton of restaurants out there. I think it's just spending across the board. You've seen companies that are much cheaper or brands that have much cheaper alternatives, such as the Applebee's of the world doing quite well, the Domino's of the world doing quite well. But a lot of these other players, even ones that are relatively cheap price like Chipotle, traffic has gone down. I'm not sure exactly what it is. Maybe there's less return to office boost

because it's such a lunchtime option maybe it's just the fact that they've lost their luster or maybe they had those one-time deals they always advertise the special uh what is it like brisket or honey chicken that's always on the tv during sports commercials the that might not hit this quarter who knows but what i will say is that if you compare them to some of the other fast casual players such as a kava there was people that you know i think a quarter ago saying that Well, Cabo's gay comp store sales look fantastic. Chipotle's look pretty weak, but now they're kind of tracking pretty equivalent here. Both are seeing declining numbers.

I think that is more of an indicator that this is a macroeconomic effect, but I still don't know at a PE, a trailing P of 36, if I'm confident in buying this. With inflation, I'm sure that the revenue per restaurant is going to – it'll be higher in five years. But is it going to significantly outpace inflation like it has been even in the historical ones that Ryan's pulling up from our friends at Fiscal AI here? I'm not sure. What do you think, Ryan? Yeah, they will probably grow at least – can you hear me okay? Yeah, you might have heard me.

All right, maybe I'll – Okay. Yeah. My internet's a little spotty, but I agree. So I think they will at least grow with inflation, at least the average sales per restaurant. I'm pulling up this chart from Fiscal AI and shout out to their custom metrics feature, just revenue divided by total restaurants. december of last year they got to about three and a half million dollars on average annual sales per restaurant it's come down a little bit since i have doubts that they will be able to grow faster than inflation on an average sales per restaurant basis it just feels maybe it's me as a consumer changing my habits but it feels like the concept and the uniqueness of the concept and frankly my consumer dining experiences there have just underwhelmed or petered out maybe it's more competitive now

but yeah i agree maybe they can continue to grow restaurant count which will help boost sales and they'll grow with inflation but i would be surprised if you get comp store sales that are significantly higher than the inflation rate. Yeah. I have one more thing to say about Chipotle, but I should mention, we forgot to say this at the start. For anyone listening on Friday, we are recording this on Tuesday, September 9th. So if any big news hits Wednesday or Thursday, we're not talking about it. We're going to be at a conference that day and we're recording this early. So if we get anything wrong, any numbers are widely changed. If Chipotle has another E. Coli crisis and the stock is down 30%, that's why we are not talking about this again. We're

talking about we're recording the show on Tuesday September 9th but here's what I think has changed about Chipotle they talk about store count expansion in the United States I'm not sure how much longer they have to grow store count significantly given that they're a lot different than some of these other concepts where you're not going to really want the density I don't think as opposed to a McDonald's or a Burger King it's not going to make sense it's going to become an international expansion story. And, you know, today the PE is 36.4, EV to EBITDA 24, free cash flow ratio 36, right around the PE ratio. Their 10-year diluted earnings per share growth has been 13% a year over the last 10 years. Now, they can expand internationally. They've started a

little bit in Europe, a little bit in the Middle East. They're planning one in Mexico City. If they can, if the concept can succeed in Europe, the Middle East, Latin America, even if it can succeed in Mexico, I think it can probably succeed everywhere, anywhere. But then if it can also expand to, you know, other markets such as Australia or Asia, then the stock probably works here because they can keep growing this earnings per share, whether from a wholly owned model or from a licensing model internationally, if they can keep growing earnings per share at 13%, the stock will work i'm just not i don't know if it's a good risk reward at this price i agree i think if you're betting on unit expansion you're betting that restaurants like that's the

crux of your thesis there's other bets to make i mean even wingstop probably has a lot more headway to expand restaurant count portillo's has a lot more headway to expand restaurant count hopefully for brett their sales look if they look just as ugly but the stock is probably at 30 of the price even though it hasn't worked very very well in my portfolio this year it's probably been the one big dog yeah so short answer to has chipotle peaked maybe but i don't think it's seems that attractive as an investment here the second topic i want to talk about unless there's any pressing ones that you want to get to brett i want to i want to mention duolingo because some news came out today also which has created a little bit of controversy didn't a new iphone

come out or was it announced um i think maybe it might have been but i think it's slimmer the the news i saw was that airpods are going to have live translation so and the stock dropped another four percent the interesting thing for duolingo is this stock has dropped like one to three percent seemingly every day for the last five months is what it feels like it's the stock overall has been cut in half i think it's minus 53 percent roughly over the last five months and a couple things so last week basically the whole theme here other than maybe a lofty valuation is that people think Duolingo

is going to get disrupted by AI. And there's a couple of ways that it could do that. First of all, apparently the Google Translate app rolled out a feature called Practice that will apparently compete more directly with Duolingo. But I kind of shrug my shoulders at that. Like Google Translate itself is a competitor, but teaching someone a new language

Like Duolingo already has a ton of competitors on that ground. I don't think this is some revolutionary breakthrough for Google Translate to be trying to teach people new languages. I think most people that use Google Translate use it to not learn new languages for the most part. They use it to translate. So I kind of think that's a little bizarre that the stock sold off so much on that, but that happened two weeks ago. And then today, as I mentioned, AirPods apparently came out with live translation, which sounds pretty cool in theory. We'll see how well it works. Google came out with these – with actually this exact same functionality and it's on its – what do they call it? Pixel Buds I think is their term. I think they came up with that – they came out with that product in 2017.

So, on one side, you've got a whole lot of big techs coming to disrupt them type narrative, not to mention, apparently, there's some third party data providers that are saying the app usage is down over the last couple weeks, relative to last year, it's come down quickly. So I tend to say don't give too much thought to third-party data providers, but it tends to have an impact with analysts because people don't want to be wrong in the short term. On the flip side, Duolingo is producing phenomenal results. They continue to grow users. More and more of those monthly active users are converting to daily active users. And the percentage of users that are converting to paying users continues to rise as well. So as far as mobile apps go, this might be one of the best mobile app businesses out there right now in terms of how they're performing. valuation wise the app still has an enterprise value of 11 billion dollars roughly they're on pace for 1 billion in revenue this year and currently have 10 operating margins so ev to is around 100x there's they're probably gonna see operating leverage from here but i guess two-part question for you one do you think duolingo is truly at risk of disruption by ai

and live translation type offerings and then two do you have any interest in duolingo is this something you could ever see yourself owning i'm not sure on the ai disruption with the thinking from these people that say oh look google translator airpods or what have you are going to directly lead to people not needing to learn a new language and then they can directly converts with people that's going to mean that everyone around the world is going to be wearing either airpods or smart glasses or something that's going to be this interface in the real world between people and i think that's either a never going to happen or take like 20 years to get to that level especially if you're traveling to a foreign country um which would be the point

of training you know practicing on this thing another thing is it's more of a game so the disruption from ai there's potential for them to expand their offerings and make stuff more personalized within the duolingo app but there's also a risk of the commoditization of language training i think there's an entirely different market of oh i want to use google translate to converse with someone in a foreign country when i don't know the language versus i want to actually learn the language so i don't think that's a risk but am i interested i i know people love this management team. I think the founder is still running the business. There's people out there that know this business quite well. They've made some great calls on this stock. Obviously,

the financial history has been phenomenal. I'm just not comfortable with... How would I say this? You're going opposite of lethargy of people, of laziness. And I think there's got to be pretty sizable churn here. Speaking personally, there's definitely sizable turn. I go off and on. I'm using the app and practicing and stuff like that. I put it into the too hard pile, maybe by mistake. But right now, I guess it doesn't look like too bad of a mistake. And the fact that you mentioned the valuation, I'll use another way to go about it. EV to gross profit is 18. That's not dirt cheap. Even for a company, as you mentioned, 10 operating margins today they could probably expand to 30 it still doesn't look overly cheap

for my liking but hey this management team they seem great and if if there is this really like if a lot of people are on the fence as to whether or not this is a business model that will be disrupted by live translation you would think it deserves a bigger discount like it's down even if you assume that a hundred percent of gross profit flows through to the bottom line it's not dirt dirt cheap if there are some growth headwinds in front of it from live translation i think it could work there will probably be a lot of operating leverage and there's probably more growth to be had but i think i'm kind of with you i i do people taking up learning on their own doesn't seem to be like a

growing part of the population i don't want to bet on that no i don't want to bet on that i'd rather buy pepsi with declining volumes at the right price maybe it's a pessimistic worldview but i think you're right the one thing i will say no it's not pessimistic it's just how it is just how you gotta look at the world how it is not how not oh we're doing so good for the world it's like um those come those stocks that are certified b corporations it's not gonna get you to buy my stuff but get me to buy your stuff it's actually gonna make me less interested in buying your stock because one percent of your revenue is getting donated to charity and not me a shareholder yeah the same thing the only last thing i'll say on duolingo

i personally feel that the venn diagram of people who are going to do a lingo to learn a language and those that just want live translation is pretty small i think the live translation if you've if you're going to do a lingo you are at least proactively trying to learn and i feel like the live translation audience is slightly different would be my guess but who knows could be wrong on that let's get to some stocks that well listeners we have we have some we need to talk about i just saw this after hours oracle reported i don't know if you saw can you guess this is a market cap of before they reported 680 billion dollars can you guess how much they were up in after hours no no 100 billion uh more 27 this is going to lead into an

ai topic i think is quite interesting let me so they talked about their rp on backlog i'm not going to read through this whole thing but they say they're going to detail a financial plan in the next month at their analyst meeting as a bit of a preview and this is a quote we expect oracle cloud infrastructure revenue to grow 77 to 18 billion dollars this fiscal year and then increase to 32 billion 73 billion 114 billion and 144 billion dollars over the subsequent four years most of the revenue in this five-year forecast is already booked in a reported rpo oracle is off to a brilliant start to fiscal year 2026 how can they be so precise yeah that's true i guess maybe if they think supply is so restricted

and then demand is just going to match whatever they have but it depends on what you price stuff at ryan the music is still playing and everyone's dancing i guess if it's all already booked then yeah you can afford to be precise with your estimates as a management team but on the flip side why are you if supply is constrained why are you booking things four years out you could raise prices right like wouldn't wouldn't you want to keep the windows somewhat tight like you don't that that might it's kind of like the boeing thing where they have they always brag about their backlog of planes but the delivery issues are the problem and now all of a sudden you've got a backlog that it's going to be more of a liability right raise prices yeah maybe they

don't want antitrust stuff maybe it's inflation on stuff like this they don't want issues with that either way i mean that is quite impressive we saw someone in the chat here thank you simon saying rpo is now 455 billion dollars in quadrupled year over year they could be the the fourth horseman here in the cloud uh data center business and speaking of there are well i have some of it in bubble watch it kind of can relate all together here there's two other things in ai infrastructure as well as one of the stocks we're going to hit later open ai's cash burn projection according to the publication called The Information, which follows, I think, the Silicon Valley world very well. OpenAI is projecting $115 billion in cumulative cash burn through 2029, up $80

billion from the previous estimates. Here's a quote from the article. The company's cash burn more than double to $17 billion next year, $10 billion higher than the earlier projection with the burn of $35 billion in 2027 and $45 billion in 2028. That's a lot of numbers. I'm just going to ask, what point do we admit this is not realistic business? This is not a realistic business model or sustainable whatsoever. Are you tired of moving money between your bank account and brokerage account? Well, with Interactive Brokers, there's no longer a need to have a separate high yield cash account. Interactive Brokers offers up to 3.83% interest on instantly available cash. That means if you've got some cash sitting in your brokerage account

and you're waiting to deploy that money until you find your next great investment, now it's actually going to be earning something in the meantime. This is just one of the hidden advantages that comes with being an IBKR customer. They simply do not cut corners. And I constantly find myself surprised by just how much they're willing to do for customers that other brokerage platforms are not. If you're interested in checking them out, head on over to ibkr.com, restrictions apply, Interactive Brokers is a member of SIPC. All right, folks, if you are a regular listener to Chit Chat Stocks, then you know that we use fiscal.ai, formerly known as FinChat, daily. Fiscal.ai is our complete stock research terminal. It's where we have our

investment dashboards. It's where we create financial charts. It's where I read all the transcripts for conference calls, sell side events, shareholder meetings, and it has Morningstar's high quality reports on more than 1700 companies. It really is the complete research platform for stock focused investors. If you use our link fiscal.ai slash chitchat, you will automatically get two weeks of fiscal pro for free. And if you find that it's worth upgrading, which I think you will, you'll get 15% off any paid plans with our link. Again, that is fiscal.ai slash chitchat. The link will be in the show notes. Wait, I'm sorry.

That's the cash burn for Oracle? This is an annual cash burn. Yeah, sure. The quote is a lot clearer. So this is what they're projecting based on their spending plans. Yeah, I have worries about this. It's kind of the – I have the same worries. You have worries?

That's – okay. That's an understatement of the year. Well, no, I mean – okay. on the one i i think i would venture to bet that the majority of analysts and the investment community are not worried about them the cash burn given that they're able to book it in remaining performance obligations like you're getting open ai this is open oh oh okay then yeah obviously that's horrendous that's a big issue but i thought we were still on oracle the ryan's internet is not great today as you can see his videos stuck it's been cutting out but

i don't see how they turn that around unless they give one of those we work charts where the it's just all theoretical it's that's a little more of a real burn are they like is there some sort of remaining performance obligations here where it's synced up to sort of backlog growth or is this just pure i mean And then where's OpenAI's backlog going to be from? API deals? That's not backlog, that's usage. Well, there's contractual agreements there that are banked out some time.

Usage has to keep growing. I want to know what the difference between this is and WeWork's business model, besides the fact that they actually innovated with a new technology. Because the actual business model is similar. You grow, you lose more. You grow, you lose more. Makes zero sense. the one if you're optimistic here that this is good and i think a lot more people complain about opening eyes cash burn because it's a private company if they were a public company i think you'd get a lot of investors that are just like revenue growth revenue growth revenue growth who cares about the cash burn but the one positive i'd say is that i think

microsoft will be more willing to push the brakes on this than if open ai were basically truly independent which at this point it's not microsoft has significant say on what they do financially so well they're already going to softbank oracle um google and others they're doing apparently a lot of this is in relation to their building their own cloud infrastructure that stargate project which i think is extremely risky and what's funny is it probably relates a lot to this oracle rpo i think open ai uh because that stargate deal and whatever the contract is with them is getting funded by oracle uh softbank and others along with open ai yeah is it just meant to like take out some of their compute costs i mean if they're trying to

go the meta route where they own their own infrastructure i don't know if it's terrible but i would imagine that they have a lot of systems running on azure gcp i know that they announced a big deal at gcp i don't know if they rely on aws at all but switching off of those systems and using solely your own infrastructure would be quite quite a uh lift not only on the capex line but also on the actual business line so if i mean if the route is to go the meta way where they just want to own their own infrastructure and it can work out well for them i'd say great but i'm yet to find a very successful example of someone other than meta someone saying we're gonna we're gonna run on our own cloud we're gonna run on our own

infrastructure well i mean google but yeah i get what you mean right but they're okay outside of the hyperscalers i i understand what you mean yeah uh man there's a couple out there smaller that are niche there's actually one the stocks we're going to mention here fortinet they have their own for like security purposes but i understand uh what you're saying here and i agree It, you got to worry about an Icarus situation here. This could be flying too close to the sun and just blowing up. Maybe they don't care. Maybe Altman, the Elon Musk of the world, just want to take insane risk with this.

And is it going to create a lot of consumer surplus? Sure. But from a stock equity investor perspective, this has the ingredients to blow up magnificently. I mean, just look at what they are saying. I think the difficulty is that whenever you are competing on a big TAM with big tech, you feel like you have to take insane risks to win. because big tech doesn't have to do it like big for example what i'm saying here is google can spend an exorbitant amount on gemini and have it not really affect well it is affecting their financials but not have it affect their bottom line in the same way that it would open ai because

they have so many other business lines i think we've seen this before core weave even is probably an example here where if you want to get relevant in a big industry like that you feel compelled to take these absurd risks when maybe you could just build your business model out in a more conservative manner and still be fine maybe i'm wrong maybe you can't maybe you do have to take those insane risks in order to compete with big tech but i wouldn't want to be a shareholder in that case yeah and guess what open ai is still technically a non-profit this thing is a whole mess it's a whole mess and i'll be fascinated to follow it from the sidelines um let's do one more little thing within the ai stuff because then we don't need to talk about it forever when we go to

some of these stocks that people recommended there was this one people wanted us to talk about because the stock was up, I think, 100%, maybe 50%. It's a company called Nebius. You heard of this one, Ryan? Did you hear about it before today? I've seen it floated around as a ticker. It's a hot ticker on Twitter, yeah. Okay, so here's a quote that they tossed out.

The Amsterdam-based firm, Nebius, announced it had struck a multi-year deal with Microsoft worth up to $19.4 billion to provide cloud computing power for AI workloads. Nebius, which was spun out from the Russian internet giant Yandex in 2023, provides graphics processing units or GPUs for training AI models. Just another $20 billion. Just another $20 billion, right? I think we're going insane. This is not just a core like it's not just a competitor this is just another core weave copycat of which there seems to be they sprout up like it's like it's like a infectious disease of your garden it's just it's growing like wild it's taking over i can't i don't even know what to say anymore about this

stuff what so it's the whole what are these the whole business model just that they happen to have gpus in a world where a lot of people can't seem to get them it's gonna end yeah it's you're your magic is going to end they know someone at nvidia that was willing to keep them priority gpu access the yeah remember the company's super micro computer be sustainable oh yeah yes they're they have i do remember they have a hilarious about page two uh quote ai is no longer a distant promise it is becoming a defining force impacting every aspect of our lives this is what nebius builds vertically integrated ai infrastructure that accelerates ai innovation globally and at scale lots of ai hey they got they signed a great deal

with microsoft so do you do anything with these do you actually ignore right that's that's how i feel like i see this stuff people get so up in arms about it and as someone that doesn't short myself i just toss it to the side i do not care like maybe i should because maybe it has ripple effects elsewhere but i'm yet to see that really so i don't know like i see these business models popping up and i start to think okay markets feel frothy but does it affect my holdings in any way i hope not uh does it yeah i wouldn't want a short ai infrastructure company especially smaller ones um yeah like i have some as we talked about some very small shorts across uh my portfolio like some of the quantum computing startups i kind of think are all scams

um little palantir in there which is larger i don't think yeah we have a comment here don't short nebius i i agree it's smaller and they could sign these large deals and it could easily go up 10x and become a total meme stock i wouldn't want to touch that but for something like today palantir after the 10x growth into 400 billion dollar market cap i think if you have a diversified short portfolio it is much less risky even if that stock doubles it's not going to kill you yeah also then you start to get into a like flows situation where it's like can't is there enough money like could could palantir hit a two trillion dollar market cap i don't know if there's enough money out there in the world to support that there is and even then if you have

it yeah and if it's a small short it's not going to blow you up even in that case because i think their market cap is still like 400 billion dollars so size matters when it comes to meme stocks and yeah do you just call these later sorry ryan can we just call these meme stocks at this point ah there's someone we're gonna talk open door later but it's a little different i guess open door's business model is not too different buy a bunch of stuff try to sell it keep losing money selling dollars for 90 cents it's it's nice it's nice money it's nice when you can get it let's take some of these stocks that listeners recommended where do you want to start let's do fortinet this is one that i talked with a listener about it's one that i struggled to

maybe do a deep dive on because it's cyber security and not really something i'm going to have much expertise on but for anyone in that space and wants a stock to look at maybe this is interesting because seems reasonable given their long-term growth trajectory. So they're a cybersecurity company with its own cloud infrastructure. Their 10-year revenue growth annualized is 22%. So really impressive long-term growth. They're in a bit of the stocks in a slight drawdown. Their three-year revenue growth is 18%. Price to free cashflow of 30. Any interest here, Ryan, or cybersecurity outside of your circle of competence as well? Because given the price, And I feel like if I knew this industry, that's something I would go, okay, look at that historical growth. Look at this reasonable valuation. If you think it can continue, this stock can probably work.

Yeah, I would say cybersecurity outside my circle of competence. But how come every cybersecurity company has a revenue chart that looks like this? Am I sharing my screen properly? Can you see this? Yes, I can. Sorry, I was on mute. Every cybersecurity company, I swear, every one that I look at has a revenue chart that's incredible. CrowdStrike, Fortinet. I think CrowdStrike qualifies here. Palo Alto Networks, Zscaler. I think that's Zscaler's business. SentinelOne. I'm pretty sure all of those are either cybersecurity or cybersecurity ancillary. There's another one on this list that I'm going to talk about. yeah maybe it's just the industry to be in maybe it's maybe you should just take an etf approach or something but yeah i would love maybe when i i hate saying that now i know it's outside my circle of competence because i feel like i miss out on a lot because of that there's probably so much tailwinds for these businesses just in general like

cybersecurity businesses i'm talking about that it would be great to be a shareholder and i wish i didn't just corner myself off and say oh no i can't be a shareholder because it's outside my circle of competence and typically the other thing if you're like myself you're not a dev you're not a cyber security expert these can be intimidating but typically when you own the company and you read conference call after conference call and you read shareholder letters, maybe any sort of communications, it becomes more digestible. You get to know management. You can still get a gauge on the performance of the business without knowing the specs of a product and the competitive dynamics for specific products. You can still

gauge the progress of the business. So maybe I'm giving myself a little hype pump up talk here to actually start researching these things yes i would love to own i would love to own one of the businesses that actually has revenue that looks like this it's a good pond to fish in yeah yeah owning one of these companies that well and look they're not losing money it seems like they're profitable it seems like they're a steady grower as a comment here commenter here said you have high high switching costs and cyber security is getting more and more important every year yeah do you want to be on decision if you're a cto do you want to be the one that takes the risks and gets rid of their cyber security supplier or vendor and then has a

big breach probably not that's a fireable offense so yeah i imagine the switching costs are insanely high i agree i agree one to look at yeah if that's an industry you're interested in uh let me address some comments here that says a lot of people hyping up Nebius saying that they are we need to get educated on it and that these are actually they are the real deal maybe they are

maybe we need to get an interview with someone that covers this name because looking at that deal looking at what the stock has done hey you can't knock them so far but first glance to me it looked like a core we've copycat then someone asked this question

uh brett you know who are you saying go ahead ryan sorry i cut you off there my internet sucks you know who's an ebbia shareholder i do not our good friend ryan o'connor crossroads capital okay okay let's see well we can't go through all today but thank you this commenter says haroldson management team they were forced out of russia i'm assuming part of the ukraine stuff tons of experience in ai not just hardware but also software they own a european uber okay well that's a surprise and they have the subsidiaries there's a jv with a bezos investment group okay well lots of stuff maybe there's more than meets the eye there if you didn't like us hating on nebius we're just the the dollar amounts getting thrown around in ai today

are just hard to fathom i think that's what we can conclude yeah my gut reaction with a lot of these businesses is they're just getting caught up with all the excitement and fervor and ai but yesterday when i saw ryan o'connor who i greatly respect as an investor having shares it provides a little legitimacy in my opinion do we want to go through some of these other stocks brett you've got one that interests me purely because of the name here your stock number three you want to talk about this sure we can do this one number yeah we'll go to two after it's called gambling.com another listener recommendation so thank you it's a performance marketer for the online gambling industry feels like a pretty straightforward business but is it a good business i don't know

maybe it's kind of a commodity. I'm not sure. I'd have to look into it further. Their five-year revenue growth, 51% EV, enterprise value of $370 million. According to Fiscal AI, sometimes the aggregators can get that type of stuff wrong. So do deeper research on the balance sheet to get a true enterprise value. Market cap, $294 million. Priced a free cash flow of six, EV to EBITDA of eight. Any interest here? Can you elaborate on what

they do? Are you able to do that? Do you actually have... I think it's they basically help like their... It's just a marketing agency basically? Yeah, I think. I think that's what it is.

So an online gambling company goes to them and says, Get his customers. I believe that's what it is, but I have not read the annual report. Again, these are first looks. If we get anything wrong, that's, I guess, the whole point of the first look is, hey, we want to decide whether we want to research something further. And these are all listener recommendations. Okay.

I generated an AI report with Fiscal AI. Shout out to them again. Gambling.com is a marketing and sports data services company in the online gambling industry. They deliver new depositing customers to online gambling operators and provide sports data services through their acquired odds jam and optic odds businesses. So, yeah, I think you're basically right. It's sort of a third-party marketing agency that I'm guessing maybe the DraftKings of the world rely on to attract new customers. Yeah, margins are phenomenal for advertising agencies. is i think gross margins for gambling.com was like 95 yeah 94 this commenter simon who i think

is the one that recommended recommended we take a look at this company it says 75 of the business is affiliate marketing 25 is sports data subscription services so that could also be interesting that's not bad i like i've always okay sports gambling there have been a lot of companies i've always wanted somehow a bet in this industry and it's been really hard to get behind sort of the draft kings of the world because that industry is just hyper competitive and you are paying absurd sums to probably companies like gambling.com to go out and attract customers. Now, maybe the lifetime value of those customers is worth it. But remember in 2020 when they were giving you like first $200 of bets free, like just absurd offers to get people to come through.

That's not really a business I want to be in, especially if you're a business where you have to pay to acquire customers twice that i mean that's kind of difficult when it's so competitive but this seems like sort of a picks and shovels provider to an industry that i definitely would be happy to be invested in yeah it seems like a good industry profitable and uh lindy so it's been a long time yeah people like to gamble people like to bet on things people like the excitement and i don't think it's going away whether legal or not you know this is one where regulation and regulatory and legal stuff can matter a lot that kind of get their wrench in the mix of some things but doesn't mean it's a terrible industry shout out to whoever gave this

recommendation because i am actually going to look at this further i really like this so thank you and if you have any further research on it feel free to send it my way because i'd like a little shortcut on some of the research that should inspire you to join uh the substack chat for the podcast ryan because that's we are where we are discussing it uh let's see he also says they have a revenue split with a lot of the operators okay well interesting maybe it's more than just marketing and we have another guy that is not happy about your bad internet says it's how do you have bad internet in austin well he is traveling because we're at a conference so this is the last week for that yeah then the internet will be perfect uh let's yeah my

apologies for the internet but it will get resolved bear with us i am not at my office not at my regular studio do you want to talk about rubric sure sure let's do number two let's not skip number two before we get a number four yeah rubric's also cyber security but this one i think i'm a little more interested in it's called samsara ticker iot it is an internet of things connector hence the ticker and they take data that a company generates from an on-site operation like a factory or even your car. I think they have a partnership with a lot of automotive manufacturers, and then they upload it to the cloud, process it, help you analyze it. Founded in just 2015, but they already have a $24 billion market cap.

EV to gross profit is 20. EV to sales is 16. They have pretty high margins, pretty high revenue, five-year revenue growth rate of 60%. Clearly, EV to gross profit of 20 is fairly expensive, but i'm interested in this company it seems seems like a promising business and just look at that growth rate and i think it's something you can understand look these companies want the data from these physical operations but it's just really really hard to manage you probably need someone in there to do it yeah great ticker iot that's that's got to be always helps so my only concern from the limited information that i have on this business now is it sounds like this is like very custom solutions on a per customer basis would be my

guess it's not like a one-size-fits-all sass model which isn't bad i mean you can build a great business doing that but operating leverage is typically somewhat capped when you have to create custom solutions for each customer i could be totally wrong but it sounds like that's kind of the model here given that they're going given that each business we're going from on-site to cloud data probably has different needs different requirements i could be wrong but if if it is a sass model here i'd probably be more interested yeah i think uh yeah i'm not sure the exact business model it's about what i got introduced with on the first glance but the whole point of this is to say should we research it further i think this one for sure for sure all right last

one before we get to some other topics rubric another cyber security company and their website says at rubric we help enterprises achieve business resilience against cyber attacks malicious insiders and operational disruptions we just secure data where it lives across enterprise cloud, and SaaS, making businesses unstoppable. If you told me that was the definition of any of the cybersecurity companies, I would not be able to tell you between any of them. It just kind of shows I don't know anything about this industry, but their market gap is $18 billion, EV to sales 18.5. I feel like every single cybersecurity company trades at 15 times sales. Last quarter, which was out today i think that's why someone wanted us to talk about it their arr was up 36

percent year over year to 1.25 billion dollars 80 gross margins should probably have crowd strike level margins at scale any interest in this one yes they went public recently too i want to say maybe a year ago two years ago yeah the you're right if you just gave that definition We help enterprises achieve business resilience against cyber attacks. That's not super specific. It could apply to seemingly every cybersecurity business. I go back to the same thing. The one thing I will say is I knew a guy who worked at Rubrik, and he gave me a bit of the investing ick, so to speak.

But usually that's – the employees are not always that indicative of what you can actually get returns from. So that was just a side anecdote. But I do – I go back to wanting to expand my circle of competence here because the tailwinds are huge. And it feels like every cybersecurity company, once again, if I pulled up the ARR chart, my suspicion is it's going to look a lot like the chart from Fortinet, which is just 20%, 30% annual growth on the top line. And it's not – like there's always going to be questions about profitability with these businesses and people consistently look at it and think they're paying so much for that growth. Yeah, because they can. They know what the lock-in is here. Customers don't want to switch. A, there's reputational risk when you're the person at the company that decides to switch these – never mind. Sorry, something popped up for listeners when I did a thumbs up. Anyway, there's reputational risk. You can't do thumbs up on an Apple device. No thumbs up. That's the innovation that they have. Yeah. Thanks, Apple. There's reputational risk, but also it's a pain. It's just a pain to switch cybersecurity providers. It's not one of those things. It's like a direct revenue benefit. So there isn't necessarily this urgency to switch cybersecurity systems. It's more like insurance.

So there's huge switching costs, which means, yeah, you can pay a lot in terms of development expenses and sales and marketing to get in front of customers today because that ARR is true ARR, and it might be multi-year recurring revenue. So I think with these businesses, yeah, the top line is probably the most important to pay attention to because they can manage a lot of the expenses without losing much of it. So, yes, I want to look at this. I want to look at the entire cybersecurity industry. The only issue is seemingly everyone looks like it has kind of an insane sales multiple, which is a little hard to digest. And they describe themselves all the same as their businesses. Maybe we need to get a good interview on. If anyone has any recommendations for industry coverage, let us know.

Yeah, it's the basket approach. Maybe that's the way to go. Basket approach. I haven't taken a basket approach on anything in a long time. but it just feels like all these cyber security businesses are they are unique i get it they're not all offering the same things it feels like you are or they are if you're not in the industry but they just grow and one of them's going to be probably many of them are going to be much bigger businesses this would have to be one you kind of close your eyes on and put it in

the 10-year bucket because it's going to be hard to pallet the valuation and multiple compression could be a real risk for a lot of these, especially in the short run. Related to our David Gardner interview, I'm sure he has some cybersecurity stocks in his portfolio and just given that it's such a disruptive, not a disruptive industry, I guess listen to the interview or read his new book and you'll understand that that's an industry he would target he wouldn't really worry too much about what we're worrying about right now uh for better or worse it's just how we invest but we have a listener question and then i want to get to some bubble watch topics this one i think is fun i was thinking about it for about a day so maybe i can

go first if ryan can't come up with something right away what is the cheapest stock on your watch list and why haven't you pulled the trigger anything come to mind or should i go first ryan go for it i do have some things that come to mind but i'm gonna sort through one to sort through them to pick a single stock well what popped to mind is lululemon we already talked about it it's definitely the cheapest on my watch list i think you saw you posted from the fiscal AI account today. They're EV to EBIT. Maybe a different metric is now below eight trailing forward. It might be a slightly higher because of the earnings headwinds from tariffs and a few other things. I don't know. I feel like I should, part of me feels like I should just own this,

plug your nose, buy it. It may not work. It may work, but if it does, it could be a multi-bagger over a five-year period i don't own it because i have my rule about apparel and the farther it drops the closer i get to breaking it my gut tells me it's gonna work yeah so i guess it depends how you measure cheapest if we're doing it based on trailing figures the cheapest for me i don't have lululemon on my watch list i'm going through my watch list right now the next cheapest which technically is in my portfolio as well would be the uh latin american airports the corporacion america airports cap i think it's an ev to ebit of like seven or eight so yep and stock fell off after some political news yesterday yeah i don't see anything that's oh the home builders are

close to that level but forward growth probably looks a little different for those than it does for the airports airports seem to have slightly more predictable earnings growth so it either it would either be the home builders or cap corporation america airports why haven't i pulled the trigger well i have so unfortunately i cheated the question but the it's only a small position at the moment so i could maybe the question still applies i kind of get worried about some of the political risk even though maybe i shouldn't the the issue for me when it comes to a company like this where they operate primarily in argentina isn't necessary like i can get comfortable with some of the geopolitical stuff i just hate being so late to news like

it feels like i'm so slow getting information like stock dropped eight percent yesterday it took me like quite a bit to figure out why especially for stocks that aren't like super popular uh cap is is kind of popular but you kind of have to do some digging to figure out what's going on i'm just not as in the know on a lot of the political topics which could impact the business so i hate it's not that it can't end up in my portfolio it's that i just don't want to have a huge chunk of my portfolio where i'm constantly like wait what what happened here like what happened with the news and yeah that seems to be the case constantly with some of these international stocks all right let's close out with bubble watch

there's some ones that if you weren't worried about a bubble with ai uh and all this stuff before i maybe i can change your opinion with this press release that you could or could not have seen yesterday ryan i have the link in here if you want to read it yourself and it's about a company called eight co holdings ticker octo octo octo or eight co holdings today announced the pricing and signing of a private placement for the purchase and sale of approximately 171 million shares of common stock at a price of 1.46 cents per share for expected aggregate gross proceeds of approximately 250 million dollars blah blah blah blah blah blah why am i saying this because they are implementing the first of its kind world coin treasury strategy

in addition 13 million shares of common stock were issued to bit mine for total proceeds of 20 million dollars octo stock currently trades at 40 a share as of this writing and along with the announcement was a picture of dan ives and tom lee say the two most bullish guys that go on cnbc pointing to the orb of world coin if you don't know any about this world coin orb stuff just look it up you'll know what i'm saying they're pointing to it like it's a celebrity you see at some event like hey i just met lebron pointer pointer finger this is uh something that well I worry about the morals of the investors in this

and maybe they don't care because they had I think a 50 bagger in 8 hours that's the world we live in they gotta be getting paid for these promos or maybe they just know they'll make money

they got a deal at a dollar a share they're getting paid yeah what can we still call this the golden age of fraud this feels like golden age of fraud type topics i think it's more is i think it's transition from the golden age of fraud to the golden age of pump and dumps yeah it's a renaissance of pump and dumps 1910s 1920s style speaking of which you want to you want to get an update on open door

we got about 20 seconds so the ultimate pump and dump yeah this is just pure clear pump and dump People don't really care. There's that one guy going to Drake's house. What is he doing? What is he doing? If anyone listening to us thinks we've lost our minds, we have not lost our minds. These are things that have definitely happened

that people are somehow doing in the investing world. I think the cost of capital needs to triple overnight. Opendoor is now at $6 a share, 10 beggar from a Lowe's a few months ago. I'm seeing people on Reddit writing about seven-figure Opendoor portfolios and asking if they will go to $200 or $300 a share. I'm going to close things out.

Is this a good short? It makes me happy to think that Drake probably has no clue who this person is and he spends so much time outside his house trying to be relevant in some way. This is the most... i almost hate the fact that we're giving it attention this is the most insane guy in finance at the moment michael saylor you have been topped congratulations this is what about multi

there's a lot of competition this guy's worse this guy's worse it's so like he's so blatant about it too like he doesn't care that it's a pump and dump and i i think he ended up having to take posts down because uh he got he said something incriminating online so please if somehow you've gotten to the end of this podcast and you are debating whether or not to own shares of opendoor uh just know that there's there's not a whole lot of legitimacy behind the business model when they have to report earnings it's always going to be a rough time so maybe you can you know maybe you know what i take it all back maybe i should just have an emotional hedge and own the stock like because i'm so frustrated by this guy no to me that's what i said yeah

yeah it's funny do you ever talk to people about this stuff in real life and they're like what on earth are you talking about yeah it's that breaking bad meme for sure yeah did you see 8k holdings they're buying a bunch of world coin tom lee's involved like you just talked to me in portuguese but yeah yeah someone said close the door on open door that's a good tagline i like that all right we're going a little long uh if anyone listening to this is at well this is gonna be out after we're gonna be at a conference called fincon um if you're there let us know i'm sure we'll see you thank you everyone for listening uh thank you to our sponsors interactive brokers fiscal ai check them out use our link tell them we sent you get your discounts and all that good

stuff we got some more exciting sponsors coming down the line uh next week or the week after so we're excited to share that and as a disclosure 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 they've held them held them in the past and may buy sell or hold them in the future. Thank you everyone for tuning in on the live show. Typically these will be Thursday 5 p.m. Eastern time and the recordings out Friday morning. We'll be back to our regular scheduled programming next week and we'll see you all then.