Chit Chat Stocks - SpaceX's Imminent IPO; Meta's Lawsuit Implications; Opportunity In Luxury Stocks?

Episode Date: March 27, 2026

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 (03:06) Luxury Stocks: Analyzing the Drawdown (12:31) Fundrise Innovation Fund: A New Venture in Private Tech (30:16) Grab's Expansion into Taiwan: Strategic Acquisition (42:28) Autonomous Vehicles and Delivery Efficiency (50:07) Small Cap Spotlight: Loar Holdings (55:16) Meta's New Legal Challenges ***************************************************** 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

Will the price of gold exceed $5,350 on March 31st, 2026? Turn your view into a trade with IBKR Forecast Trader and earn a dollar per contract if you're right at ibkr.com slash forecast. Last trading day is March 31st. Welcome to Chit Chat Stocks, the podcast that helps you discover your next great investment. I'm one of your hosts, Ryan Henderson, and I am joined as always by the one and only Brett Schaefer. Today we've got our weekly investing power hour episode number 204. We've been doing these for plenty of episodes and people are enjoying them. And on these episodes, we talk all things financial markets, any news, anything peaking our interest, any earnings, anything relevant in the financial world. We try to

tackle it here and we do these live on Thursdays at 5 p.m. Eastern time. Usually we're going a little early this week because i had a conflict i got a flight but where do we want to start brett where do we want to kick things off well i'm curious ryan is it a uh work trip or a little vacation or a little mix of both uh vacation all right yeah just uh a little more a little more pleasure in business i guess but uh well you know what we haven't given an update to the listeners on on your whereabouts because you are doing a little anecdotal research for us little boots on the ground down there in Latin America. That's true.

Any takeaways from the investment side of things? And do you want to disclose where you are? Sure, sure. I am in southern Brazil. Turns out Portuguese is a different language than Spanish. It's very, very hard. I don't know it at all. But from an investing lens, yeah, you know,

people use MercadoLibre and NewBank. I think we already knew that. And you had the same takeaway in Argentina. Exactly, exactly. Although, as people figure out in my Emerging Moats report, and many people already know, Argentina does not have NewBank, and that's one of the reasons why Mercado Pago is much more profitable there, in my opinion. Yeah, what I'm really worried about is that I can't seem to figure out the background

here, the lighting. I have so much good natural lighting in this Airbnb that it makes my video not look great. But people are here to look at our videos. They're here for our stock analysis and entertainment. Ryan, we have so many topics this week. i think i actually have a record of four bubble watch topics there's a lot of i think people out there even claiming that the the top is in an ai there's a ton of stuff i mean open ai's preferred return guarantees there's well uh just plenty of topics i mean spacex is about to ipo

apparently we might have an s1 dropping within the next week which is exciting and then as always We have plenty of stuff that I think will be quite fun. We have a small cap of the week that a listener suggested. You have some luxury stock stuff, DoorDash thoughts, plus plenty more. But if we're talking anecdotal evidence in Brazil, for anyone that's worried, yes, people use NewBank and people use MercadoLibre. All right. I don't know where we want to start. Let's maybe we talk with the luxury stock drawdown.

This is something that kind of caught me off guard. I didn't really realize this up until I think last week when you posted about Hermes. But if we look at sort of the top four luxury stocks, I think this is, I call them my top four. There's no qualification here, but Essilor, Luxottica, Hermes, Ferrari, and LVMH. You could probably throw in like Carine and Prada, but I just, for whatever reason, didn't choose those. all four of those and the luxury sector broadly are in pretty significant drawdowns so s laurel exotica is down 39 percent from highs hermes is down 41 percent from highs ferrari down 43 percent and lvmh down a whopping 49 percent i was trying to figure out what's causing the

collapse and if you look at and brett maybe you can share this chart from our friends at fiscal If you just look at the revenue for the combined revenue of LVMH, Ferrari, Esploralo, Exotica, Hermes, and you add Carrion too, it is the first time, excluding the pandemic, which happened quickly and we saw the bullwhip there. It's the first time since the GFC that industry revenue has declined for luxury, for the whole luxury category. it's a nice little chart you got here yeah it seemed does this seem like a bullwhip to you sorry to catch you off but there was such good growth coming out of the pandemic yes this has happened in a lot of industries with inflation but i feel like this is just a normal normalization back to the long-term trend of steady growth a little bit above gdp yeah it could be maybe there's some sort of a wealth effect coming out of

covid that helped this isn't the kind of these aren't the kind of companies that benefit from the stimulus checks uh i don't think people are taking those 1400 payments and going and buying uh ferrari but there was you know there could be potentially wealthier people in parts of the world that are able to afford these products but the other part is china specifically has been a big pain point that that was accounting for the i think that was the largest growth market for most to the luxury companies and they've had a big uh sort of property crisis from from what i've read that's affected a lot of wealth there and so they're seeing particular weakness in that geography tariffs potentially are impacting these uh companies also and then maybe some as of late

maybe some middle east headwinds uh among like the uae well that's fair point i'm not i'm not sure how large that market is for them but it could be middle eastern people going to europe and shopping and they can't do that anymore yeah that's fair that's fair on sentiment yeah yeah it's hard to point to any really any one thing i mean we did see sort of record growth coming out of the pandemic uh 2020 the i've got the combined revenue here 82 billion among those five companies. And by 2023, they were at 151 billion, almost doubled revenue over three years span. It's now since come back down. I've got the valuations here. These are the enterprise value to EBIT multiples, sort of the acquirers multiple for those familiar with their

valuation work and from Tobias Carlisle's book. Always loved Tobias. He's one of the few people that came on our our show when we were we were nothing so i always feel grateful to for tim yeah shout out to toby uh so here are the multiples uh let's go highest to lowest so essilor luxottica is trading at 29 times eb to ebit um caring 29 times as well airmez 24 times ferrari 24 times and lvmh 14 times do any of these stocks interest you oh let me try to look again do you want me to just rank podcast style stocks i've never owned and we'll see i think we'll go air mess one ferrari two alvin match three caring four although maybe caring is that very very trough earnings because there's been so many struggles there and i read

i believe like one wall street journal article so by no means am i an expert on the stock yet but i read that they may be turning things around and then exo the the glasses company i can never pronounce sure they have the partnership with meta but i'm kind of out on the the surveillance glasses that teenagers wear there's already blowback and barely any people have them i think those are going to be nothing airmes one ferrari two lmh three lmh i think it's just less quality than ferrari hermes but curious your thoughts and you're you mean like in terms of the business or uh of the products or just the business quality is worse yeah you have what less pricing power probably i i would think i mean i know half of it is louis vuitton

i think of their profit pool but again they have a factory in texas hermes handcrafts everything in france that's not disruptable by automation and pumping out a bunch of copies from china yeah i think i'd probably rank similarly uh ferrari the only thing that doesn't excite like i like the ferrari business and i think it's very durable like there's probably uh i imagine people have heard sort of the ferrari story about how it's sort of like a luxury club not a car maker all that stuff hey you're uh that was your pitch at the motley fool as your internship right that was your final project i think that was one yeah that was the one yeah well i don't know if you bought i think yeah i haven't uh i don't know this total stock returns over that time but i

guess they're positive my issue here is like there's a production ceiling like if you can is there any risk that they erode the value like you they started over the last couple years seeing record growth in vehicle deliveries that whenever i see that for ferrari i think that's not beneficial for the business like it might be in the short term and maybe that was sort of some of the chinese customers that are now disappearing but i would ideally if you're ferrari you grow production or deliveries one to two percent a year with six seven percent price increases every year that to me seems more sustainable the i think they guided for that i know we're there's people out there that are much more experts on the business i believe they

guided for unit volumes not to grow this year so that could be a good sign if that's what you're worried about uh but i do agree where you need you can't have the product available to everyone that can afford it. And even if there's a slight growth in the number of wealthy people out there that can afford one of these products, it really is that resale value. For example, with an Hermes bag, the resale value can be 2x, 3x, depending on the product. And if that stays around, that gives them perpetual pricing power for, I mean, if you raise prices at 3% every year, you can probably do that for three three decades i think we did the math once with uh that luxury overview episode which i would still recommend people listen to uh if you kind of search it in our podcast player

you'll be able to find it it's with sleep well capital and leandra from best angers now i believe we went like over two hours with them extremely comprehensive and and it's one of our most loved episodes i think that that's aged quite well yeah i think i'd probably rank aramez number one ferrari number two i don't know the carrying business super well and if it is at trough earnings maybe that's something to be excited about but it is this is a good example of it seemed like two three years ago as these businesses were going really quickly there was this sense that even if we hit a recession the recession is not going to impact these luxury businesses because the wealthiest are going to continue to buy i think we've maybe seen a dent in that thesis

where we've seen some recessions and difficult economic environments in big markets like China. And we're seeing the pullback, at least for, I think Hermes and Ferrari have both still grown revenue, but at sort of the aspirational brands, if you want to call them that,

Louis Vuitton, for example, which is kind of right, I think it's a tier below, there's sensitivity in terms of consumer spending. Okay. I have nothing else to add. Did you hear about this Fundrise Innovation Fund? We have a bunch of listeners in the Substack chat this week.

I did not. It's, well, I'm going to give an article from two days ago from Sherwood News. It says, Fundrise Innovation Fund is a publicly traded venture fund that owns some of the biggest names in private tech, and it is up more than 750% since it went public last week. The fund went public on March 19th with a share price of $31, and it's now at about 10x that by Thursday morning. However, two days later, now as we're recording this on March 26th,

Citron Research came out of the woodwork, decided to short on valuation concerns because, according to one of our Substack chat members, apparently they were trading at 15 times NAV, which is crazy, I would think. And if you look at the fund holdings, You have, as of early 2026, 20% Anthropic, 18% Databricks, 10% OpenAI, 7% Angel, 5% SpaceX. These are some pretty premium valuations.

That is quite the crazy start, 15 times NAV. I mean, it's just a holding fund. You already have, as well, I think a 2% management fee on top of that. So, Fundrise, hey, great launch. Good business if you can get it. But it shows the animal spirits, I think, are still there. But on the other hand, I feel like this shows that once again, and maybe we'll talk about this later or we can talk about it now, Musk is perfect at timing capital markets.

He is trying to raise a ton of money. And the demand is just outrageous for these private companies. yeah it helps that these companies while they're private don't have to report their numbers like you can it's vibes really like for public market investors they want all they hear is the positive things generally you hear a lot of the positive things for these private companies because they can be selective over what they announce and you just want to be a part of it without having any sense of what you're actually paying or what price you're paying so it makes sense that a fund like this would get a lot of demand 15 times nav makes no sense whatsoever my hot take here and maybe this

can go into the spacex uh imminent ipo i think it's going to be wildly oversubscribed even at the numbers you're talking about. Will the price of gold exceed $5,350 on March 31st, 2026? At IBKR Forecast Trader, the yes recently priced at 28% and no at 71%. But markets move fast. Forecast contracts let you turn your views into trades on future events like the economy, climate change, and politics with simple yes or no prediction style contracts. Get your prediction right and you earn $1 per contract at settlement. Plus, you'll earn up to a 3.14% APY on your investment with an interest-like incentive coupon and you'll get $3 for signing up with IBKR Forecast Trader. Forecast contracts are not suitable for all investors. Go to

ibkr.com slash forecast. Last trading day for this contract is March 31st. Sure. We can go into the numbers. Yeah. I don't know if Ryan will allow it, but I would like to automate or allocate half the show to Bubble Watch this week if I could because there's just a lot of stuff out there, but I'll try to keep it quick with a lot of these topics. First off, this article out there I found talking about the private market transactions is just an all-time quote. It starts out with, quote, entrepreneur Tishpal Bhatia is confident he owns a slice of Elon Musk's SpaceX, but he can't be 100% sure. This is apparently out there, it's a separate topic because there's a lot of special purpose vehicles. You might see the term

throwing out their spvs for private investor trading and it's unclear exactly if people actually own the stock which is quite lovely i think it's going to be great for the story and if anything comes out with this at least for us talking on the show but if we go to that on that it's actually a brilliant model because it's like it's almost information arbitrage where Like if I'm a VC or say I want to set up some VC fund, and I actually don't know the mechanics of these SPVs, but my assumption is that it's some private investment group that invests in a variety of companies totally regardless, like irrespective of any valuations, doesn't matter. And they just turn around and sell it in some structure to retail investors. So they really like that private investment group doesn't have to care about the numbers. They just got to care about selling it.

They just got to care about having the hottest name in that fund, whatever it is. I'm assuming that's the way the structure works. With this guy specifically, it's trying to get actual shares of a single company. It's just privately traded. So you have employees or existing investors that have been around with SpaceX for a decade. And then they're selling into the market. They find another private buyer who's a, what do they call it, accredited investor. and maybe there's the middleman here trying to broker the deal,

but you're not confident that it's actually the underlying shares that you want to own. I'd be concerned if I were. Let's buy those at 100 times sales. Why don't we? Let's talk about this reported valuation. Sure. So, and I think these numbers, I agree, is probably going to happen. I think the reports out there is that the valuation could be $1.75 trillion.

dollars and again they want that number out there to set the tone because then if it comes down a little bit it's not the end of the world and they want to raise ryan 75 billion that's us dollars not pesos all right that would be over two times the size of saudi aramco which is the largest ever in terms of money raised money raised yes yeah my gut says they're they're going to raise that much money and then some i think they're going to have an absurd valuation because no one cares like people like us the action yes they just want to be part of it they just want the name and there are enough if if the last 10 years last 15 years has taught me anything people just believe in elon musk that he has he and it's only grown the cult has only

grown and he would they will buy whatever is offered to him there's so many different ways to go about this i think one for an example back in even five ten years ago people talked about buying tesla stock and i know that this may seem like dumb but they say well spacex is going to as no actual financial sentiment but the underlying demand from the retail crowd for spacex is going to be higher than tesla and tesla is one of the highest ever so i think you're right on that point second apparently the filing the s1 filing is going to happen this week or next week should we do a special within maybe the wednesday slot an s1 breakdown i think we have to tell us if we should my concern is that this is going to be like a 600 page document uh that's fine ryan

you don't mind homework 600 pages of homework might be tough the yeah yeah we got to do a special episode on this largest ipo ever most likely the it's gonna be good the funny thing yeah like you said i think a lot of people for a long time just treated it as like i'm not investing in tesla i'm investing in elon musk and like literally for believed that their ownership of tesla gave them ownership of everything else that was related to musk and now it might come to fruition so oh you think i did i say last week that my my hot my hot take around the mergers happening this year they're setting things up i don't know if you mentioned it but i saw you tweet about it. And I agree. I think it's all going to end up under one umbrella. Yeah, we don't need to

talk about Terafab, which again, the naming is just phenomenal. Apparently, they're going to 10x the size of Taiwan Semiconductors output. Hey, I hope it happens. The world will be a better place, but TBD if that actually does. But what I thought was very curious as someone who knows way too much about Elon Musk and his companies is that it's a combined endeavor between SpaceX and Tesla. And I think that's just laying the groundwork to saying, look, we got to be together to have this work. And they're going to pitch that. They're going to merge. It's going to be a whole party.

The name will be X. Yes, yes, yes. We're on the same wavelength there. Come on. That's happening within the next 18 months. The thing that's funny is like all of this is going on. Tesla as a business has really struggled over the last three years. And it just like, it's as if no one even cares anymore.

No, they don't. Optimus is coming. Come on. Optimus is going to be the only employee at TerraFab, Ryan, within 18 months. But look, they need to have a new story. They need to raise, I don't know if Tesla needs to raise capital, but if things keep going as they are, the valuation is going to compress. They're going to need money eventually. and given their ambitions cyber cab all this stuff full self-driving optimist uh what was

this terror fad thing crazy ambitions which we should be nice to musky that does execute you know a lot of the time with this on a long enough time horizon now these new promises seem a bit crazy again you know i'm trying to be a bit fair to the audience ryan uh as skeptical but they're i think the story is going to be we're going to merge we need a ton of money we have this story to sell ai data centers in space and what i think musk knows above all else probably smarter than open ai and anthropic is that he needs to get to the capital markets quick because things are looking a little creaky i would say yeah i mean credit to musk because he's you're right He's 100% phenomenal at timing capital markets.

And I think he has overpromised on a lot of things, but the capital raises have always helped him execute or at least attempt to execute against his ambitions. So he's got a big piggy bank to work with, and he can throw a lot of money at some of these big issues that he's trying to tackle. Yep. All right. Let's get some more topics here. Do we want to try? Again, I'll keep it. We'll keep it brief. We got a lot of maybe more vegetable topics that I want to hit. AI update, Ryan. We have some listener questions here that I think it may be spirit. Let's see. one tyler says since it seems like open ai is inference constrained by dropping sora and h100 and b200 rental rates are skyrocketing does that mean hyperscalers are going to have margin expansion and it seems it seems like anthropic is increasing arr by around 10 billion dollars or so a month doesn't this imply aws is going to have massive acceleration revenue i'd agree on that but then we have other questions here around um let's see predictions around open ai they won't

IPO in 2026, says the other Tyler. Sarah Fryer was interviewed by Kramer earlier in the week. She stated the company is on a journey to get ready for the public markets. Ooh, Fryer. We need better energy than that. Wait, Sarah Fryer's the OpenAI CFO? Yeah, which I have to say, given what is going on at the last 10 years of Block, slash XYZ, slash whatever Square's name now, I don't have much.

That doesn't inspire much confidence for me. Yeah, I agree. This all leads into the topic that I think is maybe making me pull out. I don't know if this is the best day, but I'm pulling out the WeWork meter on OpenAI because I think it's flashing code red. Because this investor, did you see these return promises? I'm sure you did. Yeah, yeah, I saw them.

Okay, so here's the quote from Reuters, which had the exclusive reporting. open ai is an offer is offering private equity firms preferred equity stakes with a guaranteed minimum return of 17 and a half percent significantly higher than typical preferred instruments to people familiar with the matter said it is also invest offering early access to its newest ai models as it seeks to enlist investors such as tpg and advent verge joint venture now i had ai gemini funny enough right a comparison to what this is uh these numbers are compared to what Buffett offered Goldman Sachs in a liquidity crisis of the great financial crisis.

And it's significantly worse. So OpenAI is trying to raise money at worse terms than the investment banks had to in one of the greatest liquidity crises in banking history. Is it AI WeWork, Brian? Come on. Tell me I'm crazy. It feels like it. I haven't heard a good piece of news from OpenAI in like a year. Everything feels so concerning with them. Why can't they just slow down? Like all of this, like this liquidity crunch, it all feels extremely self-inflicted. And I know they're in this race, this AI race, if we want to call it that.

But if they slowed down just a little bit, I think they'd be able to sort of bridge the gap maybe and get public and be okay. But my guess is they are just hemorrhaging money. And I don't think that's going to sit well. I think it might work for SpaceX. I don't think it's going to work for OpenAI. that this 17 and a half percent guaranteed return is truly truly outrageous that's that's unheard of i'm pretty sure and i've never i mean buffett had 10 dividends on his preferred stock that he could kick into a equity position which he did and made fantastic returns on but yeah the 17 and a half percent would be wouldn't you be upset if you're any other investor yeah that the this new tranche is getting 17 and a half percent guaranteed returns oh yeah and i think they and i don't we don't have the full numbers this is just recording i believe they're senior like above all other investors too so it makes me think

they're a little desperate to put it mildly and you know what i think we have other topics to go to do is that that interview on what is it the brad and brad not brad brad i was just thinking about that that one is going to be in every documentary yeah i can just envision it now either whether this is the moment that open ai turns things around and becomes a massive success or if a call comes crashing down it's that interview when altman told gersner sell if you want which everyone said yeah do it get out get out brad you have all these other investors that They're doing great. Open AI, you don't need them.

That's exactly what I was thinking. If you're Brad Gerstner and the CEO came on and told you, go ahead and sell, like if you're so scared, basically, like threatened him, and Gerstner's like, whoa, no, no, no, I'm just, this is what other people might be saying. That's not me. And then they turn around and give the next investor 17.5% guaranteed returns. Wouldn't you be like, okay, yeah, maybe I should sell. Maybe it's time.

it goes to show for me i think there's this quote a long time ago from um i'm blanking on his name but he writes a wonderful column i think works for bloomberg now uh and he said basically like there's no venture capital is the biggest sort of herd animal of any investment community in in the world like they group think is super prevalent in the vc world it just goes to show i think they just want association like company association like a lot of vc firms want company association with these big names and they're willing to raise money yeah yeah probably i mean they're willing to you know look past any any actual investment concerns uh because they can raise money and they want to be invited to the parties. 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 out 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 Find your advisor at IGPrivateWealth.com. Yeah, the Chicago Pension Fund can go, well, you guys got access to open AI? Oh, wow, interesting.

I hear that's hard to get. Oh, here's $10 billion. Yeah, I guess. Okay, do we want to keep going on Bubble Watch? Yeah, what else do I even have here? There was something about crypto-backed mortgages. I need to take a break from this. Let's eat our veggies for a second,

talk about something tangible yeah let's go with you with grab entering taiwan because i think that talk you know relates to grab you've been interested in them on the watch list it enters a market that coupon is trying to enter there's the chinese players yeah i think this could should be quite interesting yeah i i've been doing more work on grab they are the leading ride sharing company in southeast asia for those unfamiliar uh i i like that i like the business it basically for simple terms it's sort of the uber of southeast asia and then they've got some fintech capabilities for the consumer app and this week they announced that they are buying food panda which is the lead leading food delivery app in taiwan for 600 million dollars in cash

great name for an app food panda come on and i i think it was owned by delivery hero is the overall company name but yeah food panda primarily competes with uber eats in that market those are sort of the two leaders and here's the quote from anthony tan he says this acquisition will mark grabs expansion into taiwan our ninth market and first outside of southeast asia this is a natural next step for grab as our experience in southeast asia is a direct fit for this market our long-standing expertise in managing complex delivery logistics for dense and high traffic cities is well suited for taiwan's bustling cities taiwan's population of approximately 23 million also has a high demand for mobile first services similar to the southeast asian consumers who grab serves every day we see

a significant opportunity to grow the food and groceries delivery scene here grab has 6.8 billion dollars in cash and equivalents on the balance sheet so not a huge dent for them a 600 million dollar cash acquisition and food panda apparently generates 1.8 billion in annual uh gross merchandise volume or value whatever they go by grab for context generates about 14 billion so little over i guess probably 15 percent of grabs current gmv the i think the optimist here would say that grab can accelerate the business grab can potentially improve margins with their own sort of logistics capabilities and what they've built with their app the other maybe exciting thing here is uber tried to buy food panda uh two years ago for 950 million dollars

So I would be maybe concerned that maybe Uber was just willing to way overpay, but maybe there was a slowdown as well. Like I would think if you're paying basically 30, 40 percent less of a price tag two years later, I would guess there'd been maybe been some growth headwinds. But that's all suspicion on my end. If you're looking at Grab, they have made acquisitions like this in the past. they bought uber's southeast asia business i think in 2020 time frame maybe 2019 and they also bought jaya grocery which was a big competitor in the grocery delivery space in 2021 and they have done a successful job of migrating those customers onto the grab app and expanding those businesses so i like i think i like the deal we don't have a ton of color on the valuation and

all that. But Grab has been successful with this before. And these do tend to be sort of market share, like win or take most markets, it seems. So I like it. I like Grab as a business. I like Anthony Tan. A little positive anecdote about Grab's CEO, Anthony Tan. In the early days, I think I might have said this on our episode, when they were having a hard time getting drivers on the app he would wake up at 4 a.m and go to the the gas stations where all the taxi drivers would get coffee and he'd give them he'd hand out free coffee if they joined the app so he was he was little boots on the ground ceo willing to get after it i kind of like that anecdote i like like the way he operates we have a comment here in the chat that says i like grab but for southeast asia

i like c limited much more they're running a very similar playbook to mercado libre with a gaming cash cow to fund their expansion without taking on debt cheap right now too as someone who likes and we got to talk about coupon investing heavily in taiwan that could be a competitive threat there because they do have the combination of e-commerce plus food delivery but it's pretty early days i think it'll be quite competitive i like uh as someone who's interested in couponing ricardo libre i don't like that c limited exists because they just go into markets and say hey we're just going to compete with no margin and see what happens uh they do look at them in brazil look at them in brazil and read some of those expert transcripts they are more than happy to lose money

in brazil yeah it's i'd say i've been thinking about a lot because i'm doing a research report next week but in regards to grab with a lot of these markets i believe there will either be under one umbrella or two there's going to be the uh the amazon type player with the the warehouses the fast delivery of goods overnight then there's going to be the fast uh delivery from the what i'd call the motorcycle drivers in the u.s it's a little different but it's kind of the ones with the big the big backpacks and logos there's gonna be one of those players maybe grab can tackle that market uh but at the end of the day i kind of think again and a lot of these companies are trading at reasonable prices maybe you just take a basket approach and go i want um grab

c unlimited coupon uber doordash ricotta libre rappy is now public but i think they're partnering with amazon actually then maybe add amazon into the mix as well by the hood do you think that basket performs well over the next decade can you list them again grab it's basically all fast delivery and e-com so grab c unlimited coupon amazon doordash uber ricardo libre no yeah i think that beats the market the and speaking of doordash i i this isn't really news it's news to me maybe news to you as well i'm getting interested in doordash here 45 percent drawdown they're currently at and a lot of it's related to this ai concern with the citrini piece which is very sort of like far-fetched in my opinion i've got some notes here but let me just

i'll try to bullet point it so i don't go too long here they customer adoption is still really strong gross order value is growing 23 percent year over year organically that doesn't exclude or that does not include their Deliveroo acquisition, which they made, or they closed on last quarter. They have shown that they are profitable on a gap basis. So they've gone from, I think, negative like 10% operating margins or negative $580 million in operating income. Shout out to Fiscal.ai for giving me this data really quick. $580 million in operating losses to $723 million in operating profits over the last two years. So it's been a very big transition. They're at 5 percent operating margins now. They've done that without seeing a slowdown, like a meaningful slowdown in deliveries. And I think they are less susceptible to the autonomous vehicle risk than a business like Uber because there's a lot of complexity involved in the food and the grocery delivery business beyond the ride, right?

I've got one word for you, Ryan. Optimist. Tesla? Yeah, yeah. He's going to make the food. He's going to place it. Yeah, he's going to take it. Well, there's going to be an optimist guy. You're making the food at the restaurant. There's going to be the delivery driver as well.

And he's going to take it to your front door. No, I agree with you. That was a complete joke. That's not going to happen for many years. Like, I kind of think about it like this. in theory if if a waymo were to just show up to a restaurant the restaurant wouldn't necessarily know what to do but if an order gets placed through doordash where the restaurant owner has already uploaded the full menu and is familiar with like the order intake process

instead of just waiting at the door for the driver to come in if they just go in and they place like let's say doordash has rented autonomous vehicles from waymo or whoever and they just go place the to-go box in the car in a secure spot or whatever that makes sense i actually think it kind of supercharges doordash's business because it takes out the biggest cost which is drivers uh the other so i i'd like the av angle for doordash the other thing is i'm pretty sure the recent spike in oil prices is part of what's causing the uh price collapse for doordash lately. DoorDash recently launched an emergency gas relief program where eligible drivers automatically get weekly payments based on the total distance driven. So it's basically just

meant to sort of help drivers afford the jump in gas prices. It's going to cut into margins and it's probably going to hurt short-term profitability. But I think this is helpful for retaining drivers in sort of this market share battle with uber eats i kind of i like that they are treating drivers well yeah that's fair any thoughts on the business now i will say this ev to ebitda is 42 times margins are expanding quickly i would add but it's not like cheap cheap yeah i had to take a look before on fiscal ai at the gross profit multiple kind of a nice top line number that was about nine so it's not it's not overly cheap but that's not crazy expensive i i like the business i was someone in the past that had a doubt on this business's viability

because i just thought it was too expensive and people wouldn't use it but look you got to look at the numbers it's people like this stuff even if there are curmudgeons like myself that think it's a complete waste of money and gets you low quality food i'll tell you what you are not the only one there are i have a lot of shock people hate the entire concept of doordash like they think it's the laziest thing in the world and i don't know i mean it's convenient right like people pay a little extra to not have to go get something i don't do it a little extra is going a long way there i'm a little extra is going a long long way that is true i don't do the quality of the food that's where i get hung up but we don't have to have a whole philosophical debate

on uh on whether it's better someone asked where would you pay mature margins for doordash i honestly don't know um what are gross margins at 50 i think yeah but operating what's let's say operating margin let's let's try to pull it up right now i think operating margins are at about five percent my guess would be they could get to probably 20 yeah they get way higher that's the story yes especially like if autonomous vehicles you know let's say that is a tailwind for them that would take out some cost and i and boost the gross profit line so i would guess 20 could be mature margins maybe higher but yeah i'm interested it's it's on the it's moving up the watch list for me yeah and listeners should remember that revenue is after the driver and

restaurant cut so it's what doordash is keeping correct or am i wrong i honestly haven't dug into the account i would assume so if it's 50 gross margins i would assume so yeah i'd assume so as well but uh hey maybe it's another uh stock research episode for you uh in 2025 or 2026 excuse me yeah yeah that might be my next one do we want to talk turbo quant sure sure what i saw That was my nickname in Algebra 2, TurboQuant. I read some comments, people like, this is what I was called my first year in the investment bank. TurboQuant, yeah, yeah, yeah. I was actually called the Bath Robot, so, you know, that was my life.

Close. TurboQuant's not that far off. Yeah, so let's get into what was actually happening here. Alphabet put out a nice blog post. They go into great technical detail over a huge increase on model efficiency that they had. There was a lot of people talking about how this came out a year ago. And that's fair. It's not going to affect the numbers today for some of the businesses that might be hurt. But essentially, it's greatly increasing the efficiency of running the AI models.

That's just about what I know with the new compression algorithm. I will say the Silicon Valley TV show, once again, very prophetic. They go into a lot of technical detail. Like I said, it went really over my head, but this is the line that stood out to me. Quote, the results for long context needle and haystack tasks are shown below. Again, TurboQuant achieves perfect downstream results

across all benchmarks while reducing the key value memory size by a factor of at least 6x. PolarQuant is also nearly lossless for this task. I think what that means is that they're six times more efficient and the results are the same, right? Close. Nearly lossless. Okay, nearly lossless. Results are similar.

I did see a lot of – so basically Google announced this and it was like this incredibly technical explanation of what TurboQuant's doing. And a whole bunch of people in the comments were like, this seems good. I didn't know. Yeah. Sounds good. And I think, well, okay, memory stocks are down in the news. I think, one, you know, if you have six times more efficiency, you're not going to need as much memory when running these AI queries.

For inference is what I'm reading. I would think maybe this means Nintendo is going to be able to get product. Who knows? I believe that that'll be the case. I'm saying that a little bit rhetorically or sarcastically. the one question i have though is why release this to the public and i think it's because alphabet does not need to play the game of going to the computer chip complex as much as every other player out there given their tpu dominance and they want for them if ai models get more and

more efficient that's where they win maybe maybe they also just have a history of publicizing like everything sure but i would guess that if you asked micron for a list of their top five top ten largest customers alphabet's probably still up there that's fair that's fair the I think, okay, look, whatever TurboQuant is, my thinking is, you know, specifically, I don't know exactly what is going on. But I think over the long term, similar to how Google optimized Google Search for 15 years

or the last 25 years, these models are going to get much more efficient. And I don't think there's going to be trillions of dollars in memory and chip demand. There's a trillion dollar incentive to get these models more efficient. And I think the smartest minds in the world who are all working on this

are going to make it happen. Yeah, I don't think, like if you look at Micron's most recent quarter, I don't think growth like that's going to be sustainable. I hope it's not, or else everything's going to get a lot more costly for customers. There's going to be a lot of profits in South Korea.

That's for sure. And Boise, Idaho. Maybe, you know, the downstream effect of what I was thinking is you should bet on Boise State to do well in football because their NIL program is going to get quite well. So turn this into a Calci bet or a Polymarket bet.

What do you think? I think, honestly, that's... I think you might be hopping one step too far. Yeah, it's about four steps too far. But who knows? Their NIL budget is going to increase if Micron stock is up 10x. Do we want to talk... I hate saying this word.

Do we want to talk crypto-backed mortgages? Yeah, this was something. And don't worry. we'll get to small cap of the week after this um i guess we're going to be able to use our one million dollars in fart coin now to make a down payment on a house thank you to regulators uh here's a quote from this article just from this morning the mortgage finance giant fannie may will soon accept so-called crypto backed mortgages for the first time the latest expansion into cryptocurrencies uh for mainstream financial transactions once the crypto assets have been

pledged for the down payment the homeowner can't trade them that's fair the value of the crypto in the account falls the mortgage loans aren't affected as long as the owner keeps making monthly payments i think that's a little peculiar because one you're relying solely on income and if it's going to be collateral well shouldn't there be am i using the word right covenants in the contract where if the value of your collateral goes down a ton the the bank is going to repossess i don't know i don't know but yeah how i mean how far into the crypto universe does this extend like it said bitcoin only i made the fart coin joke it said bitcoin only at that point there may be my concern if i were an underwriter would be obviously stability in the bitcoin price like

if bitcoin does drop 50 or 40 or whatever and you have to repossess the assets you are getting significantly less now there might be enough stability in book bitcoin although it's still proven to be extremely volatile but i would just think like imagine going to the mortgage underwriter and like showing them your financial assets and you're like here's tits coin i have i have a hundred thousand dollars in tits coin would you do you take this i mean it would just be one of the most awkward encounters the i would not if i were the underwriter accept these assets most of them probably bitcoin as well i mean it's just like intensely volatile yeah i guess if it's allowed to happen doesn't mean it will happen i could see it being a part of someone's

portfolio if they need you know to prove that they're credit worthy like oh hey i have all these assets this is a part of it sure it's fine but it is an interesting idea of how how much has money being tied into bitcoin and the rise of bitcoin impacted mortgage demand or home buying demand in the country over the last few years if the underwriters aren't accepting it that that that is kind of interesting as well it was capital in my opinion it was a lot of capital going to waste anyways but uh if you if you can owe you if you could not use it to back any loans uh it was probably a bit of a headwind yeah i agree i really have nothing else to add there want to do small cap of the week listener suggestion let's do it all right it's l it's

Loar Holdings, L-O-A-R, ticker is L-O-A-R, loyal listener. Cade Invest with the suggestion, he writes, Horizons Investing. Here's the fiscal AI summary. Loar's Holdings engages in the design, manufacture, and sale of niche aerospace and defense components for aircraft, aerospace, and defense systems. They were founded in 2017 and are headquartered in White Plains, New York. I actually think the business was formed in 2012, but Lowers Holdings was formed in 2017 as a holding company. First thing I should say is that they're pretty young. But what exactly are the niches that they help with?

Because, you know, if you look at these industries, aerospace parts, defense parts can be quite, quite lucrative. I'm going to be utilizing Verizon's Investing's report and Fiscal AI to help with the brief small capital week overview. I have a nice chart here from Fiscal.ai. They actually have the KPIs already up and running. And it is the amount of money, I could really visualize this quickly, for acquisitions that the company has made. They've made over $1.1 billion and they've increased it over the last few years, the amount of dollars they've spent on acquisitions for their aerospace and defense parts.

Roll up, if you want to use our link and get access to all of these segmented KPIs, thousands and thousands and thousands of them across different companies. Use our link, fiscal.ai slash chitchat. Sign up for any paid plan, and you can get 15% off. All right, back to the small cap of the week. Well, a guy named Dirksen Charles started the business in 2012 with some other aerospace people to build a niche in aero and defense component conglomerate.

I think this should pretty perk up listeners' ears, given you can look at the stock charts for Transdime and Hyco. it's not exactly the same but there's some really good profits to be made in this industry uh the products can include things like safety sensors flight control computers stuff like that founder controls 4.3 percent of the business uh 27 and a half percent revenue growth since 2022 21 operating margin in 2025 uh 10 organic revenue growth for the last three years again confirm what they how they define that but that seems very very good fiscal ai says four times net debt to EBITDA. I'm not sure exactly

that's what the company uses, but they're going for a levered roll-up here. The problem, and what's probably going to keep it on my watch list, is EV to EBIT 58. Now, maybe I need to look into it further and see whether the EBIT is actually that, but

yeah. It's expensive regardless of that growth, but definitely an interesting industry, interesting business. Feels like rock solid. You're going to have durable durable demand yeah there's pretty good history here of serial acquirers in the space doing well the i wonder if maybe they're under earning my i don't want to necessarily write them off right

away just because of a multiple and i actually think that happens i do that all the time where it's like i just see a number that i don't like on the multiple and i don't dig any deeper and there's a chance that they're just like way under earning i find it i like it i'm not like super familiar with the space we've got a comment from tyler in the chat that says just invest in trans dime best of breed serial acquirer yeah they're the aerospace serial acquirers that run leverage and i think trans dime runs it like i'm pretty sure they're at like seven times net debt usually is what they run at they have done well there's uh better relations with suppliers when you can acquire when you can get multiple uh procure multiple items from the same uh vendor

so like boeing buying from trans time or whatever sure so there's some sort of scale economies there i watch list for me it's much less yeah and compared to you know transdem is a large business this company lower holdings market caps five and a half billion so maybe you're getting on the ground floor or something yeah this is going to be one where you need to care about valuation but it's a big bet on management you know it seems like this industry is great but management quality valuation you got to care about those as well i wonder if transdime heiko obviously larger businesses i wonder if they maybe don't bother with acquisitions that might not move the needle for them where there is room for a player or a serial acquirer that targets potentially smaller

businesses like a lower holdings that's purely speculation i don't follow any of those companies But I imagine as you get bigger, there's less emphasis on these tiny deals. All right. Should we talk about Meta's new compensation plan? Sure. I guess what Mark's not worth enough. No, Zuckerberg is not included. So a little different strategy than Musk on that front.

But Meta has instituted a price target stock option plan in order to properly align incentives, executives and shareholders the lowest tranche 1100 highest 3700 i believe it's over the next maybe four years maybe it's maybe it's a little longer than that but not too long of a time period current stock price 564 and falling first question before we get another meta topic and why the stock is falling this week does this get you more interested in the company if i were to invest in meta it wouldn't be because of this but it's better than some other compensation plans yeah i think i would say it's positive green flag over a red flag for sure yeah it's better than just throwing out rsu's 200 000 employees recklessly i i saw some crazy figures

on how much spc is costing meta um i want to say it was something it was in relation to this article there's something like tens of billions in like paying the tax withholdings and repurchasing stock for the rsu's uh vesting yeah it's just a lot and you know maybe this will align them better if you actually tie it to stock performance yeah maybe i've just been reading too many headlines but they do seem a little loose with what they're willing to pay employees the the biggest red flag was what they paid that uh guy to run the ai lab 14 billion dollars yeah who would be like a mid level guy at google's ai lab who's not who wouldn't maybe down to maybe a top 10 engineer there yeah yeah just like what are we what are we doing 14 billion that's what a good chunk of their

cash flow yeah it's fair that's fair i mean yeah what are they doing 80 billion in free cash flow i mean yeah pull it up right now alphabet uh i believe spent like a billion to reacquire the guy that invented the transformer model and pretty much was one of the ground breaking researchers in all this that might be a fair price but it's definitely not you know 14 billion dollars for a guy that started some rapidly growing startup 46 billion in trailing 12 months for cash flow Now, granted, big capex cycle. But nevertheless, yes, they are paying 25% of their free cash flow for one employee. And you need to go down the line and look at how much of the SBC in either the investing,

I think it's the financing one. You probably maybe not have that on Fiscal AI, is going to the stock option stuff. Okay, here's something that's more serious and why the stock is down this week. We have reached some landmark court cases. there's actually thousands of them out there in meta and social platforms versus mainly children, health, and addiction. Here's a quote. It happened just, I think, in the last 24 hours. The judgments for the plaintiffs threatened to undermine long-held protections that have shielded internet companies for decades. They suggest future juries might be receptive to a

product liability argument against social media, which forms the basis of thousands of similar lawsuits waiting to be heard. And they encourage new plaintiffs to come forward, raising the prospect of mass litigation that gets stretched for years and lead to settlements or changes in the industry akin to legal campaign against the tobacco industry in the 1990s and a lot of people point out hey tobacco did great since then but it's not the same it's not the same the asbestos claims kind of yes it's probably more similar to that and so do you know what the specifics were of what they were guilty of so the specifics of the jury i believe decided and again some of this stuff is qualitative but it comes around purposefully or basically going a blind eye

to addicting children to your products and having that statement out there and having that be the legal precedent could be very very detrimental to these businesses one you're gonna have to change business model uh for the children which again like i think anyone in society should want to not have these companies addicting children to spending eight hours a day on tiktok and then second there could be massive massive liabilities because of it i feel like the stock reaction is warranted yeah i don't know where i stand on this like it feels a part of me thinks it feels unfair to blame the companies that were doing what was in their own best interest at least financially but at the same time especially for companies like google and meta i think when

you generate more than 50 billion dollars in free cash flow you kind of have a civic duty not to destroy society a little bit or at least invest heavily in like protections Oh, protections. That's my favorite one. What are these protections? I mean, they have been, from what I've seen, I don't have a kid, so I don't know this, but I believe they have been investing in a lot of parental controls, which I would think is the way to go about this, is giving parents the ability to limit time spent and

all that. 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.

you discover coffee plus on espresso.com i think they should have to do tobacco ones where they essentially give you data once the app opens or when you download it and it says this is going to kill your child's brain you know maybe sorry could you hear that ringing in the background yeah apparently in brazil it's a big prank for kids to hit the the doorbell things yeah happens about once today jokes on you uh yeah interesting i mean if this if they end up paying claims every year that's brutal yeah or master settlement agreement the master settlement agreement was a trillion dollars for the tobacco companies over 50 years so yeah it doesn't what would you uh social media companies can no longer market they can no longer advertise what if they

did that the same way they did for tobacco. I would buy Google and I would buy Meta on the spot. They're already close to monopolies. They already don't really market that much versus their size. I don't know if it would be this.

I don't think it's the exact same as tobacco. Let me put it that way. No, that's probably true. We're at an hour. Before we get out of here, people are asking about this Bloomberg report on Nintendo Switch 2 supply reduction. Let me just say, the article is completely wrong. uh that's all i have to say the demand is rising because of this pokemon game and the movie

i have no change to my thesis but there's also questions about building watchlist portfolio stuff rebuilding our portfolio with stuff we've never owned and i would say that we're saving those for potential wednesday episodes but i appreciate all those ideas let's do that let's do yeah rebuilding our portfolios from scratch let's do an episode on that i like that but it's a specific question it can't be stuff we've ever owned i'm down that sounds fun uh stocks let's just go really quick three highest stocks on your watch list go let me load up my dashboard you got to go first i'm loading my dashboard i'm fiscally high uh okay i don't know this isn't necessarily on my watch list but because i i own

some shares so but but it's a starter position which for me sort of functions like a watch list Interactive Brokers is up there. We're going to have a full research episode on them next week from yours truly. Airbnb have been looking at as well to size up, again, sort of a tracker position. And I would say DoorDash might be up there as well. I might be missing some. Let me go – you're going to laugh, but I think it's getting cheap. Autodesk, the company is phenomenal.

New Holdings and Pacifico Airports, although I'm waiting for Pacifico Airports. get a little cheaper our desk that uh the the chronic frustration of management well the business is great the the stock is $240 for forever one more yeah well the return on brain damage might not be worth it but true i think that's gonna do it thank you everyone for tuning in uh thank you for all the comments in the chat it was pretty active today so thank you everyone for listening live. I want to remind you 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 on this podcast. Thank you again. We'll see you all next time.

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