Chit Chat Stocks - SpaceX and OpenAI Prepare Monster IPOs; Netflix + Wise Earnings; A New Micro Cap Defense Play

Episode Date: January 23, 2026

(We talk about SpaceX at the very end of the episode) 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 (04:46) Analyzing Wise's Impressive Earnings (14:56) Intel's Role in the AI Era (25:35) Interactive Brokers: A Business Powerhouse (33:46) Netflix's Strategic Shifts in Streaming (40:31) Netflix's Strategic Moves and Content Integration (45:31) Advertising Revenue and Market Dynamics (50:09) Exploring a new micro cap (01:03:26) PayPal's Acquisition ***************************************************** Subscribe to Emerging Moats Research: emergingmoats.com  ********************************************************************* Chit Chat Stocks is presented by Interactive Brokers. Get professional pricing, global access, and premier technology with the best brokerage for investors today:  https://www.interactivebrokers.com/  Interactive Brokers is a member of SIPC.  ********************************************************************* 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, the podcast that helps you find 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. Today, we've got a lot to talk about. We've got some political news that is potentially investable. We'll talk through that. Greenland. We've also got the first week of earnings season. So a bunch of companies to talk about interactive brokers, Netflix, Intel, just reported. We've also got Wise, a big holding for me, and we've got a small cap of the week. I don't know. There's a lot of places we can go. Software Mageddon has slowed for the time being, but we can sift through some of the companies in the software space that we are maybe looking into. Brett, I guess before we get into the content, I should mention this is our weekly Power Hour episode.

We do these every week at 5 p.m. Eastern time on Thursdays on YouTube. if you ever want to ask us questions feel free to head on over to youtube chit chat stocks on thursdays at 5 p.m eastern time and get your questions in i'm gonna stop there brett where do you want to start content wise why don't we oh i don't even know you got some you got some greenland news macroeconomically some potential danish consumer stocks if they get a nice stimmy from the u.s government i'm not sure what's exactly going on over there it seems like things have cooled down but why don't you take us through

the the information that may or may not be stale within an hour yeah by the time this is released it could be totally meaningless but apparently and i throw some big emphasis on the word apparently because it might not i don't know how much truth there is to this but united states is and i'm reading a quote here united states is finalizing a staggering 700 billion dollar cash offer to buy greenland outright from denmark plus 100 000 lump sum payments oh yeah i think that that's that's been stale for a day but is that was that wiped yeah i believe so okay so let's just leave it at a cash offer to denmark i still think the same question applies if uh if there's a big influx of cash to denmark what danish stocks could first of all do you think this isn't if this does happen

do you think it's an investable event for you and do you see any danish stocks that would be natural beneficiaries uh danish stocks natural beneficiaries it feels like too small of a country, but I did tweet out something along those lines like, hey, are there any Danish consumer stocks out there? And we have a follower named Micro something Denmark. Let me try to find that. But it was companies I'd never heard of before. I honestly don't know if it makes sense to invest on this because the last thing I heard, and maybe that has changed, is they came to an agreement on defense and then there's not going to be any sort of acquisition of the country. Yeah, I got the question here.

Okay. This guy said there's some real estate plays. They're Danish, aren't they? That doesn't matter. Yeah, but that's not going to affect anything. Other names. Matos. Makeup.

Seabrain. Government spending. IT. T. Trag. Insurance. DSV for transport. Ooh, here's a good one.

Carlsberg for the brewery. Thought that might be international. Makeup. Makeup might be the one, though. That's discretionary. I'm looking at, I just screened for Danish stocks, about $2 billion market cap on physical AI. I had the same thought. I'm scrolling through this list. I saw Carlsberg. I thought, you know, if Danish consumers have a little more money in their pocket, maybe they're going to be buying some beer. um but yeah i don't think this stimulus is going through i'm i'm pretty sure and i read this morning that they've made a preliminary deal that there's not going to be

any it's just a deal over defense so all the real beneficiaries are the defense defense contractors per usual per usual uh it's important to keep those shareholders happy but yeah all the blustery narrative not really much not not really much there anymore um all right what about we had either wise ipk or netflix and many listeners in the sub stack chat were saying we should talk about them why don't why don't we pick one of those why don't we eat our veggies with wise here i think it's a little less sexy than interactive brokers or netflix although you know it gets some attention as well but so the stock was up i think 18 after the report first of all it's they did like a third quarter interim trading report so it doesn't a lot of people don't

always see it uh because it's not just a 10q filed like a q3 normal quarterly earnings report there's really no difference they act like uh they kind of publish like a u.s company which makes sense given they're about to uplist but anyways the business looked really good this quarter it looks like there's a lot of momentum personal customers grew 20 percent business customers grew 25 percent and then total volume was which is total payments volume flowing across the wise network was 64 billion dollars so that is a 25 percent year-over-year strong volume growth and it's the largest sequential volume increase. So compared to last quarter,

I think they added roughly $5 billion in new volume. Now, maybe there's some seasonality in this business. I wouldn't think so that much, but it's possible. But yeah, strong quarter across the board. Take rate dropped year over year. It's been flat roughly for a few quarters, but the take rate, their aggregate take rate is 0.5%. So half a percent of your payments are getting taken by Wise, although really a lot of that's being passed on to bank partners.

They're trying, they are proactively trying to lower the take rate as much as they can. The quote that I'll pull here is from Crystal Carmen on the letter. He says, our financial performance in Q3 and throughout fiscal year 26 has been strong and we remain on track to meet our guidance. we expect to complete our dual listing in the first half of 2026 which will further increase our profile in the u.s as we remain focused on accelerating global growth and becoming the network for the world's money how's the competitive advantage for the new york stock exchange and the nasdaq god it's beautiful ain't it it is it is great business probably one of the few them hermes ferrari the one of the few that deserve to trade at 30 40 50 times earnings

yeah and from what i've heard it's people are getting frustrated listing in europe companies are apparently the london stock exchange has been there's been a lot of backlash i'm just kind of reading international news i don't know i'm not that in tune with it but you're seeing companies like wise which is a burgeoning tech company in based in the uk want to move their primary listing to either the New York Stock Exchange or the NASDAQ. They haven't made clear which one it's going to be. I do think that will raise visibility. Honestly, I think that's going to people are going to start looking at why it's a lot more U.S. investors that have previously just omitted them. The one stat that stood out to me here is card revenue grew 41 percent year

a year and it now accounts for more than a quarter of overall revenue and sometimes financial companies launch a card and i think like what oh you know it could be a nice cross sell but for who launched a card ibkr not a soul is going to use it yet i yeah i mean those are things where it's like a quality of life feature for a customer and it can be helpful but with wise there's a very natural uh inclination to use the card because you can minimize you further minimize your fees so if if you're doing let's say a wise account to wise account transfer from the uk to the us it's going to be zero fee i think it'll be like zero percent commission because it's just wise bank account to wise bank account the fee and i think it's like a dollar dollar and 20 cents

in the u.s to go from your wise account to send it to your bank that's when it happens is the off-ramp from wise if you choose instead to keep your money in the wise account and use your card the transaction that you're paying is the interchange fees as opposed to actually the transfer fees and then ultimately the interchange fees from your bank so you really are that that is the i know i'm kind of maybe it might be a little hard to follow but it really is the lowest cost form of sending money across borders and spending it this is what stable coins wants to be it sounds like you're doing the card is it for a merchant transaction because our consumers never paying the interchange fee i'm a little confused there

yeah i mean it's just baked in right so the like the the transfer is zero fee when you pay there's the two point you you technically are not paying a fee to but your price i mean the list price isn't going to change the list price of the good like when you buy something yeah correct i mean technically there's no fees maybe merchants will be happier i think in general them building spending stuff they should invest in that if they're going to try to become a global bank account for people traveling around the world it's been lacking in recent years their their progress on that front there is uh like not all platforms not all businesses accept wise cards because it's sometimes gets treated like a prepaid card um but it is the more that people spend

through wise a that means dollars are staying on wise that's great for interest income for wise's business but it's also it gives proof to the concept to the uh business model that they can actually truly for the first time i think in like 300 years give money without borders like their mission statement it actually comes true i was reading this week about just the whole global transfer system and it's it is a very complex system and it's mostly a patchwork of like individual countries have their banking system countries do it differently elsewhere swift has kind of become like a standardized communication layer between those but ultimately you end up still going to the correspondent banks and it's like if you try to wire ten thousand

from here to China or whatever, there's going to be multiple stakeholders that take a fee throughout that process. Wise, this is really the only way to make fees as close to zero as possible is to be the bank on both sides, because then you're just crediting the accounts as opposed to actually transferring any money. It's sending money across borders without actually ever crossing the border so anyway it was it was long-winded i read the whole thing and i just thought like this is all a pitch for wise's business model and it makes it gives i know i'm going long here it gives me confidence that companies like new bank are using wise's network to offer the service like it's hard to beat yeah it's a it's a good business they keep compounding

we have a comment here question actually two questions from tyler what does wise results mean for Remitly? Are there any lookthroughs from Wise's results that will have an impact on Remitly? I actually don't think so really at all. It's two different customer bases. You have Wise, for anyone that doesn't know, they're serving more of the international, I mean, on a global basis, wealthier consumer. It'd be someone from the United States or Europe or maybe Japan or something like that who's traveling to foreign areas who need some sort of international connection there or to send money to family potentially internationally. But when you look at Remitly, it's immigrants, immigrant families sending money back. And their core three quarters

that they started off on were three of the largest ones for U.S. people or people living in the U.S. to send money back home, which was Mexico, the Philippines and India. Now, that might change in the coming years as remotely targets the small business customer that wise also uses for example we use wise for chit chat stocks it helps for international things but overall yeah another good quarter and it seems like tpv will continue to grow uh yeah really no no complaints feel solid i i agree with you i don't think remotely and wise i think the overlap on the customer base is is very low people use from what i understand people use remitly for convenience speed looks like we lost brett there but people use remitly for

convenience speed and different ways to receive money so you can for example pick it up in cash if you're sending it back to your grandma they want to go to the store pick it up in cash spend it that way you can do that why is the focus almost exclusively i think for most their customers is cost minimization how do i get money across borders the cheapest possible brett i think we lost you there for a second but uh yeah not sure not sure what happened the the application must must have just bugged out but the internet seemed totally fine nothing stopped there so let's keep plugging along do you want to talk Intel

only true Patriots own it only true Patriots own Intel right right or wrong you can't own Taiwan Semiconductor you have to own Intel like true true American well I mean the company is extremely important for the future

of just compute AI who whatever buzzword you want to toss out they reported this right before we decided to record stocks down about 6%. And after hours, we're still at about $50 a share. And over the last year, it's up about 150%. If we look at the Q4 earnings, revenue was down 4% year over year. Full year revenue was flat year over year. Ryan may be pulling up some charts for us right now. It's really showing off

for his friends at Fiscal AI that update stuff instantly. Here's a quote from the new CEO, and apologies for mispronouncing your name, Liputon. Our conviction in the essential role of CPUs in the AI era continues to grow. We delivered a solid finish to the year and made progress on our journey to build a new Intel. The introduction of our first products on Intel 18A, the most advanced process technology developed

and manufactured in the United States, marks an important milestone and we're working aggressively to grow supply to meet customer demand. Our priorities are clear, sharpen execution, reinvigorate engineering excellence, and fully capitalize on the vast opportunity AI presents itself across all our businesses. Ryan, if you were a shareholder, how would you

feel reading that quote? If you're a regular listener to Chitchat Stocks, then you've probably heard us talk about interactive brokers. Here are three reasons why we think interactive brokers is better than any other brokerage platform. Number one, they've got it all. Stocks, bonds, ETFs, options, crypto, you name it. 170 markets, 36 countries, 28 currencies. We believe they are the absolute best platform for global investors. Two, best-in-class pricing. They have zero commissions on U.S.-listed stocks and ETFs and offer margin rates up to 54% lower than the industry.

Three, you can ditch the separate high-yield cash account. Interactive Brokers offers up to 3.14% interest on instantly available cash held in your investment account. Head on over to IBKR.com. Rates subject to change. Margin evolves risk. Restrictions apply. Interactive Brokers is a member of SIPC.

uh kind of feels like the same platitudes everyone's saying honestly sorry i was a little distracted looking at the results but it's hard to be inspired by these numbers and i think investors think the same it's down eight percent after hours so it's i keep thinking with intel i'm pretty sure the stock's up like a double 150 150 yeah yeah Yeah. None of this is fundamental, right? well i mean they're getting a lot of stuff from customer orders you're seeing cash flow i think improve a little bit and it's basically saying look demand for ai is so strong they're eventually going to become the second player here regardless of whether they can catch up exactly to what tsmc

is doing they are going to build out all these data or not data centers these factories in the united states that are going to serve customers they have signed contracts and i think investment partnership with Nvidia. I believe there's rumors that Apple is going to come back to them for some products. You have the government stake here. I think if I remember correctly, it's really hard to remember all the stuff that comes online for them. Amazon is in some sort of partnership with them. So there's a lot of stuff under the hood. But with any sort of product like this, I remember we talked last week the fact that TSMC has to invest two to three years ahead of where they think demand is going to be and that's very very difficult right now and it's why that CEO is

extremely nervous well for Intel we're not going to see the fundamental results today but you kind of have to read through the tea leaves and say all right what's setting them up two to three years from now they're gonna I wonder what they're gonna plow capex into I'm looking at the guide here for Q1. They don't have a CapEx unless I'm missing that. I would like to see what that number is and what they think they're going to be able to do. But overall, yeah, you're not going to see it in the numbers today. It's going to be almost entirely of, all right, what's the order book on things like Intel 18A? Again, I'm no expert on this business. I don't know the nomenclature that well, but it's going to be that. All right, are we getting orders from

whoever. And I think the next step is to finally separate the design business in Portland, which is one of the only advanced design areas in the world, along with Taiwan and South Korea, and the manufacturing businesses, which are

I believe in Arizona, Ohio, and other areas. I'm forgetting. I know Arizona's a big one, but yeah, it's... i mean i guess if the demand is so strong that they just need foundry capacity like the world just needs it and intel's going to capture that excess demand i mean that could just propel the

business higher propel the top line higher i just there's been excess demand for three years like where's it how is it not showing up in the foundry they're not i'm in again it's I know it takes a while it takes a while to build these facilities they have to catch up on design there's a lot of things yeah they tell the same

story but it's different now the government's involved that's not the end all be all and you have actual orders from all of these customers specifically customers that are also customers of TSMC saying

We believe in you. We'll invest in you. We're going to commit to orders. Again, I think Apple's a rumor, but NVIDIA, Amazon, Apple, that's a huge boon. And I think it logically is going to play out as, look, they don't want TSMC to be a monopoly because NVIDIA loses their pricing power. So they want as much as possible Intel to survive. I think that's just how it plays out.

And it was the type of investment I like. no but really congrats to the people that bought in um i mean anywhere in the the 2024 late 2024 early 2025 period because you finally got that all right this is a structurally significant from a national security standpoint company and regardless of what the numbers look like it's not going to matter eventually i guess the risk is that you kind of get diluted away or something like that but eventually they're going to play out yeah the incentives make sense like obviously there's all the incentive in the world for the u.s to have this domestically uh instead of relying on taiwan which is geopolitical hotspot but there's also all the incentive in the world

for nvidia to not rely exclusively on taiwan semiconductors so that they can not be gouged on foundry prices or whatever the i just i if i were buying here my worry would just be that this isn't necessarily something that you can just throw money at the problem like say you get government investment government backing is it still too complex to build to keep up with what taiwan semiconductor has they're not that far behind they're not i honestly have no idea that so i mean i guess i could take your word for it but i would just think if they weren't that far behind you would seen it in some of the financial results well i guess they're not that far behind in a in like a couple of years maybe but tsmc keeps going ahead and remember these are

long lead time contracts so nvidia is saying look we need our supply we know tsmc can provide this and they're the ones that can do 2 nanometer 3 nanometer at the moment they're not going to go to Intel unless they get some persuasion but I don't think you could again you could definitely be right I'm not buying Intel but you can envision a world where 10 years from now Intel is

just as strong as TSMC if not stronger because these cycles have gone through before with these manufacturers who can design better who can innovate better some new innovation can come through and i again i haven't kept up on this in the last year or so but i believe the uh ultra advanced i forget the name but asml is like ultra euv machine is first going to intel i believe were in 2025 so we'll see what happens there let's see what the market cap is what do we get we've got a couple comments here tyler says revenue down four percent stock up 150 percent yeah yeah hey you don't make money

on the past and we've that's what you always say when the numbers are bad right you don't make money on the past you make money on future earnings and we've got amazon to the moon which you know what i took a stake in amazon this week i actually did you're on the same page but i ended up just buying i think like a couple shares all right let me close that intel let me close that intel the market go ahead 270 billion dollars dsmc i think is pushing 1.5 trillion does the risk reward make sense here i'm not a buyer if that's what you're asking no look it could but not to me yeah and i don't have i don't have any insight here it feels like also neither i still yeah competitive in like you got to be really

bright to have any sort of edge here it's competitive for the analysis and it's complicated enough almost at the end of the day you kind of go i'll wait for asml which unfortunately i guess was cheap last summer, but at periods when that's at 20, 25 times earnings, that's maybe the easiest way to play things in this industry. Let's go to another topic, though. Want to hit IBK earnings? I'll mention, we can do this briefly because, well, I guess you made the notes, but for the Emerging Moats newsletter this week, it will be focused on interactive brokers. It'll be out as most of these people are listening on friday morning so if you want full details good many many paragraphs to read about the full

analysis for myself will be there but ryan what were the headline numbers as you have a title here which is music to my ears is this the best business in the entire world well yeah i guess it's a two-part question is this the best business in the entire world or is it a at a cyclical peak i honestly don't know uh yes to both is this your best investment over the last few years i think so after after it jumped this week yeah i think most likely percentage wise yes and when we did that end of year episode i believe on a dollar value it was nelnet since that's such a large position for me percentage wise i think ibkr and then grupo norte airports also up there the appreciation of the peso the mexican peso versus the u.s dollar is kind of being under

underappreciated by the markets uh those the those mexican airports are doing quite well but that's getting us up track take us through interactive brokers earnings yeah and i do just want to reiterate since interactive brokers is one of our sponsors these are not related at all i we analyze the business totally independently of that uh anyways yeah another impressive quarter total revenue grew 18 they reported once again for the second quarter in a row 79 operating margins which just feels weird coming out of my mouth to say that about any business i just that blows my mind yeah i don't know how it could be any higher like that might be the highest operating margin i know of it could take higher there's

it's a if they could double their business with their like they're growing their employees at i think six percent year over year and their revenue is growing 20 if that continues it should take i mean you can't go above 100 but it should go into the 80s at some point yeah i guess like they've just done such a good job eliminating their cost of sales like building everything from the ground up if i'm not mistaken uh yeah it's extremely scalable yeah yeah now what does this say about wise's potential operating margins i'll let i'll let people i'll let people think about that one it should be it should be bullish i think though they added 272 000 new customer accounts this quarter that's the second largest ever quarterly

net ads and totaling 4.4 million customers so up 32 percent year over year when asked about how long they could sustain this account growth thomas petterfee said as long as i shall live which which is just a phenomenal that might not be direct but essentially he was saying as long as i'm still here and he said i've got the transcript here as long as i shall live yes and then he kind of goes yes that's my answer or something like that yep that's my answer yeah at first he said it somewhat in jest and then he's like no that might actually be my answer he's he i think he basically says sky's the limit why can't they go out and keep getting more accounts well they have four point they have under five million accounts how many

people especially when you think about globally with smartphones how many people are getting access to investment products there's hundreds of millions if not eventually 500 million potential brokerage accounts to tackle maybe you can exclude china okay it's hundreds of millions but still they're a tiny fraction of their overall space they could just pick up the robin hood graduates and honestly triple their accounts that way it's operating income has increased at 30 a year over the last five years it's so profitable and so i again i post the question is this the best business around today or are we at a cyclical peak and then the second question is how much bigger can this get because my my natural instinct is one of the biggest

brokerages by market cap one of the i think one of the richest men in the world the founder thomas peter fee so you you think like must be somewhat close to maturity because it's been around for a long time too it's not a four million accounts yeah i think robin hood's got 15 or something like that. Yeah. And if you look at accounts, you could say, okay, well, they skew more professional traders than Robinhood or they skew more funds and stuff like that. Now, if we look at your first question, is this one of the best businesses around today? I think clearly the margins speak for themselves. And maybe I don't want to go into too detail on it, but there are distinct competitive advantages here that I think reinforce over times. And I go into detail with

that in the newsletter that comes out tomorrow morning. And are we at a cyclical peak? Maybe. I mean, if the market crashes in 2026, the numbers are going to look worse. They are a pro-cyclical business. The financials do look better in bull markets. They do get worse in bear markets. That's just the nature of the business, but I don't think it really impacts their long-term competitive advantage. And if you are, look, if we're in a Great Depression, We got other fish to fry. But I still kind of look at it through the lens of, will they keep getting market share?

I think so. And when specifically, and I'll leave it at my final thought on this, they got asked about advertising on the conference call. And I will say they're in the early innings of advertising, especially because they advertise with a mid-sized podcast such as ourselves. And that's kind of one of their first dipping their toes in. And it's kind of, I feel, you know, privileged to be one of the first advertisers for them. But they said, look, we are figuring this out.

At least this is what they were talking to the analyst at. And they said, look, we've kind of figured out what works here. And we're going to push our foot onto the gas pedal even further. And given their size, they can probably scale up their marketing a ton. And yeah, that could impact operating margin in the short term. but that could help them sustain 30% something year-over-year growth. And, you know, sky's the limit. I mean, look, of course, bear market happens.

The earnings are going to go down. Stock's going to go down. But I think that's probably a buying opportunity. But you could also, I mean, like, yeah, trading transaction revenue will probably decline in a bear market. But, for example, I was looking at Schwab, and cash as a percentage of client assets is at like a record low the if interest rates rise and cash as a percentage of assets rises

that's higher interest income for interactive brokers which could potentially offset some of the transaction revenue declines as well fair i think most of their interest income comes from margin loans stuff like that shorting so like that given the nature of their clients but for Schwab. That's specific. We have a question here that says, is it too late or is it still a good time to buy? I think it's got to be up to the individual investor. But the way I look at Interactive Brokers is it's a perfect stock given their conservative balance sheet. They're not at any risk of blowing up in a financial crisis or something like that. And given the fact that they are pro cyclical and they do tend to dip in a more aggressive manner

than the broad market in a downturn, if we see a bear market, that's the perfect time during a raging bull market at the moment I kind of wish I owned more but just sitting on my hands for now should we talk Netflix soon to be Netflix soon to be Netflix Warner Brothers Discovery

if they abridge their name the return of Netflix remember that when people are saying that for like five straight years just wait next quarter this blows up just wait i don't next quarter they'll blow up yeah i guess if people are confident about things if you thought that the world of streaming was going to be more and more competitive and that netflix's position would get eroded away maybe you can i could see why someone would have made

the case but obviously netflix proved the case completely wrong so do we want to talk through their earnings. Yeah, we have a question here that says, do you guys think the government will block the merger? Trying to analyze what this government is going to do is not possible. So yeah, I'll leave that one there. But let's look at the earnings. Really, really strong year for them. They're turning on that advertising engine. 16% revenue growth, 30% operating margin for the year. Operating margin did tick up. Viewing hours, though, only grew 2% year over year. Let me table this question for you after my notes here. Is that a concern?

One, they're investing in live events. They have been for the last few years here. They're doing things like the World Baseball Classic in Japan, a lot more sporting events, kind of a big thing for them. Of course, they have the Warner Bros. Discovery thing that we've been talking about for the last month or so. That transaction has now been revised to all cash. They are investing heavily in quote-unquote creators.

Oh, I do. I always laugh at that term and video podcasts. So, hey, if you guys want to throw a couple thousand dollars at a mid-sized investing show, we are right here for you. We'll upgrade our backgrounds. Don't worry. They're investing in cloud gaming services. It was kind of the three things here. In a more serious note, live events, creators and video podcasts and cloud gaming were the three things they talked about as their initiatives.

they're investing and of course they're investing more to advertising to scale it up from a monetization standpoint but those are from the usage standpoint they're at about 27 times ebit right now i had a chart here from fiscal ai they were trading at 50 times in 2025 at one point that really gonna pay 50 times for netflix guys that just at their scale didn't make much sense to me i'll ask the two questions one is there a concern on viewing hours ryan and doesn't the fact that netflix has to go out and buy all these shows license all these shows mean they are in a worse spot than youtube which everyone just they don't need to incentivize anyone everyone just comes to them yeah they are in a worse spot than youtube everyone's in a worse spot than youtube it's not

it's not like netflix can't be can't also be a winner here in my opinion the the thing i don't get is two percent growth in engagement hours but i'm pretty sure their share of u.s streaming tv time was higher hit or hit a record high right i remember seeing that nielsen data oh we can check doesn't our friend tso alex morris tskwitch uh yeah he tweets that out maybe maybe i'll find it from from one of his tweets i i think they well this globally and nielsen's us maybe that's maybe that's a difference there but yeah it could be but i mean they saw mid-teens growth out of every single market revenue wise so i would think unless they raise prices on everyone okay let's try to analyze this chart

what is december 2024 maybe they were at nine percent december 2025 they were at nine percent of tv time they're holding share then let's say the maybe tv time's going down it's possible it's possible i mean i saw all those like super dystopian sounding comments of like producers having to optimize their shows for people being on their phones while watching just maybe that is like the dame in an affleck yeah what do you think about ben affleck way smarter than he gets credit for maybe on his ai tags he sounded a bit like ai giving his takes on ai but a lot smarter than a lot of you know the average person out there yeah it's so i actually kind of like netflix here i i don't mind the warner brothers discovery deal i know apparently

reed hastings is like not a huge fan of it is what he's he's at his utah ski lodge and he's he's telling his assistant drop this to bloomberg how much of the company does he still own do you know let's look that up on yeah check that on fincher physical ai excuse me drink uh for me right now let's see we got some comments here i think netflix is a buy in the low 70s probably we're about $80 something today. Shout out to Ryan for that 10x EBITDA EBIT in five years framework. I've been using it more and more recently in my own valuations. I agree that's a good framework. It's a nice little rule of thumb to use for a compound or a growth stock. Question here, do you guys think Netflix will be able to cross sell a discounted max to Netflix subs and a

discounted Netflix to max subs? They would know which subs are exclusive to each and target them in the max and Netflix deal. Yeah, I'm not sure exactly on that one how they're going to do it, But what I do like is that I think they have and either licensing or after this acquisition and ownership of every major studio outside of Disney. So Universal, Sony, you know, that's why they have that. That's why they get all that. Those Mario movies is because, well, there's just one.

But they have the partnership to have all the Nintendo movies because Universal has a partnership with Netflix. You have a lot of content that's going to be coming online for them. It's just we'll see what happens with that max. Netflix says I'm sure they can work it out much better than I can. We have another comment here that says 2% viewing hours thing surprised me a bit given the Strangers thing season five. Yeah, I think that would be the only concern looking at this quarter.

I would be much more inclined to think the stock is attractive at 27 times earnings if viewing hours were growing in line with say revenue or maybe closer to 10%. But that kind of makes me think, is this a more mature business than we thought? I would be much more inclined to buy closer to 20 times at this stage in their business. All right, folks, before we move on, let's talk about our home for investment research, Fiscal AI. Fiscal AI is the complete stock research platform for fundamental investors. We use it every single day here at Chit Chat Stocks. It has everything you need to research individual companies from 20 years of financial data to company-specific segments and KPIs, earnings call transcripts, Morningstar reports, and insider ownership data, and much, much more. And they just lowered the price of their highest tier by 60%.

If you want a complete enterprise-grade financial data terminal, check out Fiscal.ai. If you use our link, fiscal.ai slash chitchat, you will automatically get two weeks of Fiscal Pro for free, no card required. And if you want to upgrade, our link will get you 15% off any paid plan. Again, that's fiscal.ai slash chitchat. The link will be in the show notes. All right, listeners, I want to take this time to remind you about the Emerging Moats Stock Research Service, a newsletter that will produce a stock research report every four weeks, regular updates on existing stocks in the Emerging Moats universe.

We have an upcoming schedule, including a research report on Wix.com. We have Interactive Brokers, American Express, Nintendo, Airbnb, Nelnet, and much more. Please, if you want, reach out and get a complimentary free trial. You can do that by contacting me through the link in the show notes and giving me a DM on Substack. I hope you'll try out the service. Yeah, it might be more mature. And you're seeing a mix of pricing growth sort of buoy that top line growth, which, I mean, maybe that could continue. uh i think honestly if they integrate all the max content or all the warner brothers discovery

content in there they should be able to raise prices the it's actually kind of funny being on a netflix ad tier these days because the ad business is so nascent for them that a lot of it seems under monetized which is kind of nice like you get less ads but they also only have like they seem to only have a few advertisers maybe i'm wrong on this yeah they repeat a lot of it i'm sure they only have a few amazon's way more mature and they're similar it's similar yeah it's just the same advertisers over and over and honestly it kind of degrades the experience to watch like 10 discover ads in a in an episode i know it doesn't make it doesn't make it hey discover they gotta up your targeting they need to get you on higher demographic targeting that's

an insult if i if i was to discover i'd be like who do you who do you think i am yeah i guess the i could see a world where i like netflix like sorry where i own netflix um yes the youtube like it will never be youtube i don't think any platform will ever be youtube other than you can make the case for instagram becoming that but still youtube's done just as good of a job as long as instagram's been around what do you think about the licensing youtube slash spotify shows i don't like it a little desperate they have much better data than i do probably on podcast watching and people watching podcasts specifically on their smart tvs but i just don't like it something about

it's probably cheaper than a real like production so they can kind of spray and pray i imagine and and close some deals with a lot of different shows but it just feels like they're chasing after youtube and they could do just as well playing their own game like focusing on higher value productions yeah it's not gonna mean much but it's just kind of interesting for our for our business all right last question from tyler here thoughts on how large ads can get given that at 2.5x last year and it's projected to double this year a couple of doubles and ads could be half of netflix's revenue yeah look they get a ton of watch hours globally and once they globalize advertising

they're going to do phenomenal it's it's yeah it could be in eventually the tens of billions of dollars. Well, maybe $10 billion. Let's not get ahead of ourselves. I also think people underestimate how profitable Amazon's advertising is because they have won now the connection with the e-commerce, the sponsored listings, and all of this free ad support stuff you can watch with Prime Video along with the sports, which is a nice captive audience. And they're directly competing now with the trade desk with their own dsp so if netflix has more watch hours i think amazon overall their advertising business of course it's later stages but it's just it's a extremely underrated um yeah yeah i honestly i would love to know how much of the

margin improvement at amazon e-commerce like with i think they break it out into three they they do more granular breakouts but they do north america uh international and aws is like one of the reporting things and their north america operating margins have expanded i really wonder how much of that is credited to advertising specifically all of it i mean they can run like that that's sustainable yeah they can but as a shareholder

well I'm not a shareholder as a psychological long which someone was joking I think in our sub stack chat this week that I was like I'm thinking of buying software stocks they look attractive here and someone's like don't buy it if you like something but don't buy it it actually does much better I was like yeah I think that's true but it doesn't make me feel better

but with advertising okay North America revenue let's try to pull this together. $400 billion, give or take. Advertising services revenue, $64 billion. Let's say $50 billion of that is in the United States. Gross margin on that is going to be extremely high. And if you look at their North American operating margin, what is it? Still single digits? So I could be over 100% of their operating margin at this point if you encompass all of their science projects that they're working on yeah i've always thought that marketplace

sponsored listings is one of the most valuable natural advertising places like such an easy sell to the merchants such an easy sell to like if you're airbnb there's a whole bunch of value to the hosts yeah yeah i actually think it's uh it's a win-win across the board if if airbnb launches sponsored listings that's kind of a side tangent anyways yeah airbnb um we were talking about this with aria on that uber conversation how airbnb talks a lot but never actually does something the fact that airbnb and mostly borrowed ideas um anonymous account who does a lot of you You know, fantastic work covering the tech space. I would subscribe to his newsletter.

He was talking about how it's shocking that Airbnb somehow doesn't have a Gen AI tool out. The further app, because it would just be fantastic if you can put in, I have these eight criteria, find me something in this area. It'd just give them the unique supply. And then second, yeah, the sponsored listings. Like, if you look at Uber,

they've scaled pretty quickly their advertising business. airbnb hasn't done anything uh but back to yeah uh amazon yeah yeah it's funny how a lot of probably yeah airbnb went from trying a million things at once covid hitting them narrowing their focus and now they can't do anything like it feels like the expansion in terms of the product feature set is so limited i just think they have problems with we need to perfect this design and they're trying to build something unique and cool and kind of like trying to do a Steve Jobs thing where, ooh, we have this new product

that's going to change the world. When in reality, they have, given their existing platform, a lot of blocking and tackling to do. One, credit card or some loyalty program plus a credit card, anything in that. Two, sponsored listings. Three, Gen AI search slash, like,

basically a chat bot to find you the best listing because there's millions of listings on there and utilizing like you feel like every time if you use the airbnb app you underutilize oh well what if i miss this area what if i miss this one you just have to basically go through one by one by one by one oh what does this one have what does this one have yeah there's a lot of improvements to be made i think you're right i think chesky has been like so inspired by jobs and it makes no sense to me honestly like The thing is, their moat's wide. What powers their business?

Yeah, they're fine. I mean, I think it's my third largest holding. What powers their business? Supply. Not the cute little animals that they have on their commercials. That doesn't power their business. Look at Booking Holdings. Their design has sucked.

It looks like the 2000s internet. And they just continue to grow stays. Like, if you go to their website, it feels like it's fine. It's a fine website. It doesn't look as pretty and simplistic. but they do a good job and they they because they continue to grow supply all right let's let's shift gears though small small cab small cab a week you want to hear a little micro cap here this is a listener suggestion i forget who it was so apologies uh it was either on substack

or twitter something like that ticker here and this is someone that followed up in relation to our defense spending episode which people seem to enjoy so we will be doing more of those thematic shows throughout 2026. The company's name is Castellum, ticker CTM. Here's what it says they do. Castellum provides services in the areas of cybersecurity, information technology, electronic warfare, information warfare, and information operations. The company offers intelligence analysis, software development, software engineering, program management, strategic and mission planning, blah, blah, blah, blah, blah. On their website, they say they have unique capabilities in electronic and information warfare. That sounds scary, but also profitable

for the defense contractors. This is a very tiny stock, so I would say you definitely need to do due diligence in exactly what they are doing. They have a market cap of $100 million. I don't have a detailed backstory, just given this is a small cap of the week, that the company was founded in 2019. They then acquired seven different companies to get capabilities and regulatory approvals to sell to the Department of Defense. You can see this, I think, in their massive growth in shares outstanding. But now from 2024 onward, they say they claim they're going for organic growth and new contract wins. And so far, well, I should also mention that they've cleaned up their balance sheet and their operating margin is approaching break-even, which is kind of two

check marks for a small cap. We go, all right, the balance sheet's not going to be a whole liquidity concern. And then, okay, are they actually on the path or about to go to profitability? That's one of the things that i will remember to the end of my days from ian cassell saying a company going from just unprofitable to break even to profitable going to get a huge multiple re-rating but speaking of contracts they have just won a hundred million dollar contract with the u.s navy and another 50 million dollar follow-on contract over five years among other contracts for the last two years the backlog is now likely in the hundreds of millions and we trade at just 4.2 times trailing gross profit feels like an interesting small cap especially given what we kind of took

away from that episode of electronic warfare cyber security information intelligence stuff is going to get a lot of investment over the next decade yeah yeah i'm looking at the numbers now you're right it looks like it's getting sort of closer and closer to profitability on an operating income basis actually last quarter it was their first profitable quarter pretty much break even but yeah the yeah i'm i'm interested the difficulty for me with microcaps in general and this is i mean this is like the whole game and it's probably why people subscribe to microcap club and all that it's so rare that a company with a 100 million dollar market cap or less

has a real competitive advantage but yeah but you're not investing for that it's right remember emerging competitive advantages ryan potential you know that's where that's where we make the money yeah and if if they do have some sort of competitive advantage that can expand and and allow them to kind of either take share from someone or build out their own market the returns are just enormous so i i'm constantly on the fence of man i should spend all my time just digging into these and i should just buy the airbnbs and amazons in the world anyway well if you had if you wanted to if you're like buffeting could spend your whole day doing that and wanted to do that sure but it does take a lot more time to do that

as an individual that's really what it comes down to i like it i look it looks interesting like okay there's things that i want to look at one when kind of going through the flipping through the pages analogy of oh do i want to look further and spend an hour or something researching this company okay the balance sheet isn't going to destroy them they seem to be getting contract wins they actually have a product i think uh they're approaching break even on operating margin so it's not some sort of scam company that's just burning money constantly and the valuation isn't insane all right those are kind of some boxes that are checked maybe i could research further i am a huge fan of the turning the corner to profitability stories

it feels like so often they're mispriced or people are just yeah people just tend to well maybe in some cases they're right to think this but a lot of people tend to underestimate what kind of margins these companies could have at scale or could have as they grow like i mean of course it's a risk yeah it's a risk that doesn't materialize but for example today you look at remitly people go was it trading at 40 times earnings i'm like yeah two percent margin look at their gross margin so yes they haven't proven it yet but there is that potential yeah there is the potential there and a lot of people just use that number disregarded and i think that's where you can see opportunities all right i have some fun stuff one more i was just gonna say i

mean i think there's a lot of investors out there that like whether it's funds whether it's like quantitative if it doesn't screen well on an earnings basis it's just like a non-starter and and i do think that leaves the door open for companies turning the corner to profitability i do you want to talk atlassian we should did you hear they have 26 percent of their revenue on stock-based compensation i think that's better than palantir uh yeah i believe of all the companies in the of all the software companies in the world with more than two billion dollars in revenue or maybe a billion they have the highest percentage of stock-based compensation uh like the highest sbc to revenue ratio in the world and it is insane

the one caveat that i will mention here and this was something that ian bezek raised in his recent article a lot of people are looking at these software companies as they're getting bombed out stocks are plummeting and they're saying okay yeah looks good on a cash flow basis but look at the stock-based comp which is fair it's a real expense but when the stock gets bombed out stock-based compensation is going to look very different next year a lot of the options that were granted three years ago might be underwater so you got a lot of now you could say those people are going to turn around and say oh i want cash i personally don't think the employment market is strong enough that people can just say that and that or i'm going to leave kind of thing

so you could get a higher like gap margin in the coming years because sbc declines which i think people are maybe underestimating yeah and especially with that labor market on On the other hand, though, you could argue that a lower share price is going to mean more absolute shares needed to make up for that compensation. You kind of get what I'm saying? If someone gets $50,000 in stock-based comp, you're going to need more shares, which could technically be more delusion. You get granted an allocation of shares and it's best over for you. But they're not. Okay, okay.

But if someone's coming to the negotiating table. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the vacation of a lifetime. I wonder if my head of office has a forever setting. An IG Private Wealth Advisor creates the clarity you need with plans that harmonize your business, your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivateWealth.com.

Participating A&W locations in Ontario. Yeah, I mean, new hires, potentially, but, like, you can't... But if, and also your best workers are going to want it, if their stock is worth zero, they're going to renegotiate, yeah? Not renegotiate, you can't do it retroactively, but you can ask for new option agreements. Okay. But that...

And I just don't think, I think people are going to be able to say, sorry, like, we can't do that. Now, Atlassian has never really seemed to do that. They don't care about shareholders. I think that's pretty, yeah, that's clear. They don't care. Yeah. They built a giant headquarters in Sydney. Extraordinarily high.

Yeah. And I was feeling bad about researching Wix again. That's the part of the market we're in. spending a lot of time over that one uh i guess their stock-based compensation is not nearly bad as as last as atlassian maybe maybe you know you can put up with that if it's cheap enough i don't know i like wix i like wix it's the base 44 investment seems promising actually as well and i think they just actually rolled out their own like build web build the website with ai tool probably using base 44 as sort of the uh oh yeah i'm a i've been researching it i've been

researching them for emerging moats there's a lot of info there so yeah keep uh listeners readers watch out for that but we have two things i want to talk about and actually three quickly to close this out with some fun topics i'll read you this press release from paypal paypal's agentic commerce services and checkout options are now going to be, well, okay. They're acquiring another company called Symbio. Yeah?

Acquiring another company. Symbio, maybe? Symbio, Symbio, probably Symbio. Yeah, you probably have that right. Okay, as a part of PayPal, Symbio's team and technology will enable StoreSync on PayPal's agentic commerce services. StoreSync makes merchant's product data

discoverable within AI channels. and it includes the ability to seamlessly drop orders to their existing fulfillment and management systems. Importantly, merchants remain the merchant of record. Blah, blah, blah, blah, blah. Abercrombie & Fitch, Fabletics, Ashley Furniture are currently live with StoreSync on Microsoft Copilot and Perplexity.

Well, one, PayPal, challenge, don't make an acquisition. You can't even do it. Two, you're using Microsoft Copilot and Perplexity with this company that that means nothing though both those are going to have zero usage within right am i wrong yeah well i don't know i had no idea within a couple years people seem to really like perplexity uh some of the rappers will be valuable uh like not everyone's gonna i think they have a ton of users and they've built out some cool stuff but the i'm looking at it it says it's an estimated 150 to 200 million dollar acquisition i didn't

see a number yeah okay not that bad but paypal it's so like honestly returns could be good from here i think it's at like an 11 buyback yield there's a whole bunch of dilution but nine percent earnings yield i think yeah yeah why not just sit there and buy back stock because here's the thing is like if people are worried about let's the the biggest concern and why paypal trades at an 11 percent buyback yield and nine percent earnings yield is because their core business is being challenged by the the mobile wallets and like just honestly the payments ecosystem in general their core business is being challenged the paypal button their highest margin product is there's i think the competitors are winning this acquisition does not solve that it's not like

sometimes i there's kind of this balance where i'm sure executives think yeah our stock's cheap but if we just sit here and buy back stock when we should be improving the business we might just be buying ourselves back into a in a like a bankruptcy or whatever but this isn't the solution you can't buy an agentic commerce is not addressing the core problem it's not like this is going to be the solution to the paypal checkout issue so i would say if you're going to make acquisitions like this just buy back your own stock uh yeah paypal uh look i don't envy those the that shareholder base man they just i think they tell you time and time again look don't buy this thing i'm sorry but i want to talk about this

other one especially because i want to put this in the title sorry i like more listens uh and i'll go a minute over for this but it is interesting i think really for the bubble watch one of the segments I've been doing the last few years. We could see the culmination of it this summer if historical record correlates to this. SpaceX is preparing their IPO. They're taking the next steps in the relationship with their investment banks.

They are courting the four big investment banks, which I believe are J.P. Morgan, Morgan Stanley, Goldman Sachs, Bank of America, but don't quote me on that. Rumored to be as large as the Saudi Aramco listing, which was $29 billion raised. The current valuation is $800 billion for SpaceX, and they'd want to go higher than this. Importantly, according to sourcing,

OpenAI wants to IPO because of the SpaceX IPO and Altman and Musk's heated feud. They seem to have a terrible blood feud and just despise each other. And then if OpenAI is going to prepare to IPO, Anthropic now wants to IPO because OpenAI is going public. So we may see all three,

potentially all three in the $500 billion to trillion dollars range within the next six months. They don't ring the bell at the top, literally, but this feels like some jingling. The pitch is that they need massive amounts of capital to build data centers in space, which I don't understand how it's going to work because you can't cool it with air convection

I don't know maybe they've solved something they got smarter people than me does this inspire XAI which remember owns Twitter and XAI GROK are owned by the same corporation now is that going to now get taken over by SpaceX and then second at this moment according to Bloomberg

Sam Altman is in Abu Dhabi trying to raise $50 billion, an $800 billion valuation. And I've got a lot for you here, Ryan. We can't go long on this. But this feels like the Adam Neumann desperation trip to the Middle East. Do you remember that? It's got a little... Yes, I do.

I'm going to give a hot take. It's got a little similar characteristics to that. Honestly, Altman's got a Neumann vibe. He does kind of have a bit... I think it's maybe just any time you get into bed with Masa's son, you build this god complex, it seems. But this would be, honestly, it'd be fun. I'd love to read the S1 for OpenAI. I'd love to read it for SpaceX.

i think of i think honestly spacex would get an extreme valuation for a little while until insider stump until basically the whatever the lock-up period expires and then it would be an unwind like no other retail investors would just get killed yeah i get predictions people love the aura like the the retail investor that just likes elon doesn't look in the financials whatever they love the spacex aura like it's easy to think it's the future like you can just hear the name you think this is the future and you're just going to get curb stomped by the market yeah they just want to be in the mix i got a prediction for you tell me if this is what the odds would be betting because i think it would be minus like 300 all three cash burn cash burn cash burn

yeah yeah yeah for sure right don't they are you saying like right now when they when they file yeah sure when they file yeah probably yeah okay i don't doubt that i mean once we're gonna do a trillion dollars like yeah i mean i think well come on there's a tendency just out of vc backed companies to wait i mean yes my i don't think it's right oh i don't think it's right but i think they will all claim an absurd valuation as long as the music's still playing and they will all be burning cash yeah that seems very likely that feels like a top moment to me

by amazon if anthropic lists that's that's true that's amazon earnings are going to soar AWS I mean right now Anthropics I know we're going long Anthropics Revenue seems to be soaring and usage seems to be Soaring so Already we're seeing that AWS re-acceleration Hopefully it's coming in I'll be rooting for you

Cloud code Yeah cloud code keep using it Everyone it's going to help with that AWS print Alright Ryan anything else We want to go five minutes long here before we get Out of here i think that's gonna do it let's uh let's sign off here thank you to everyone for tuning in

thank you to everyone for the comments in the chat today and we want to remind listeners that brett and i are not financial advisors anything we say or discuss here on chit chat stocks is not formal advice or a recommendation we may buy sell or hold any of the securities discussed in this podcast thank you again for tuning in and we will see you next time Thanks for watching!