Chit Chat Stocks - Uber vs. Waymo; Match Group's New Dividend; Time to Invest in Argentina? (MTCH, UBER, CAAP, GOOG)

Starting point is 00:00:00 Welcome to Chit Chat Stocks. On this show, hosts Ryan Henderson and Brett Schaefer analyze businesses and riff on the world of investing. As a quick reminder, Chit Chat Stocks is a CCM Media Group podcast. Anything discussed on Chit Chat Stocks by Ryan, Brett, or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. welcome to chit chat stocks this is our weekly power hour episode and i am one of your hosts ryan henderson i'm joined as always by the one and only brett schaefer we have a number of topics to discuss on today's episode for reference we do these shows every week live on youtube at typically 10 30 pacific time 1 30 eastern time on wednesdays and we also upload them to the podcast player so

Starting point is 00:00:59 wherever you get it, we appreciate you for tuning in. We're going to be talking a little bit of Uber this week, which has been pretty controversial. I would say sort of a polarizing company at the moment because of some of the autonomous vehicle discussions and debates going on. But we've also got some other stuff. An old flame of ours, at least I don't think we both own it anymore. Match Group had an investor day, which we'll be going through as well. But I guess, Brett, how are you this morning? It's officially the dead week, I think. Like this week and next week are the dead week.

Starting point is 00:01:33 No earnings whatsoever. And into the new year. Yeah. Christmas, holidays, New Year's, New Year's Eve, New Year's Day. Nothing much happens. We got inflation, not inflation today. The Fed meeting. I guess they're going to lower interest rates by 25 basis points.

Starting point is 00:01:56 Yeah, that's exciting. Have they been looking at the meme coin market? Barcoin, yeah. It's like they don't even pay attention to it. I did read a stat that it was like more than 40% of all public U.S. companies, which is just a sad allocation of capital, but that's okay. There's a lot of really small U.S. public companies out there, and all of the big ones seem to be staying private. But did you see that Databricks raised $10 billion in a Series J? Series J?

Starting point is 00:02:32 Series J. A, B, C, D, E, F, G, H, I, J. That's 10. Oh, my gosh. That might be a record. And probably seed rounds too. Yeah, yeah. Could be a record.

Starting point is 00:02:48 Could be a record. Which as a public market investor, that sucks. That kind of sucks. I am hoping – we talked about this last week, OTC markets. I'm hoping that it becomes so professionalized and such like there's no stain on that, that it really kind of becomes more accessible to be in the public markets because it seems like the NASDAQ and New York Stock Exchange are prohibitively expensive. But we're going to be talking about some other topics this week. Before we get to that though, I want to talk about our friends at Public. Heads up, folks.

Starting point is 00:03:24 Interest rates are falling, but you can still lock in a 6% or higher yield with a bond account at public.com. It's a pretty big deal because when rates drop, so can the interest you earn on your investment. A bond account allows you to lock in a 6% or higher yield with a diversified portfolio of high-yield and investment-grade corporate bonds. So while other people are watching their returns shrink, you can sit back with regular interest payments. But you might want to act fast because your yield is not locked in until you invest. The good news, it only takes a couple of minutes to sign up at public.com. Lock in a 6% or higher yield with a bond account only at public.com forward slash chitchat stocks. All right, Brett, where do we want to kick things off?

Starting point is 00:04:07 I will say I've got a topic that I'm quite excited for because I did, I guess, a little bit of digging. But we can save that for later if we want to. It's Uber. Uber and Waymo. Let's talk Uber. I thought we talked about them last week, or was that just briefly at the end? Or was it more of the Waymo network? I can't remember. It was the cruise.

Starting point is 00:04:29 Yeah, the cruise basically shut down, and that was seen as kind of a positive for Waymo. We also talked the quantum computing breakthrough, which we are such masters of topic on. Well, hey, to be fair to us, 99.9999% of the people in the world don't know anything about this topic. And I'm not sure the people studying quantum computers actually understand that topic just because it's so wonky and complex. So if we sounded dumb, well, I think that's pretty much how everyone sounds about it. You know, you kind of just say, hey, we're revolutionizing computing. It might revolutionize computing. That's essentially all we could add there. But we did have a lot of people when we asked, wanted us to talk about Uber. So maybe we can start with that. And have you confirmed, and maybe I'm kind of leading a question here, is it going to be your next stock research episode for January? Potentially. This is kind of a bit of a research report in and of itself because we're going to dig into the kind of little bit of the valuation for Uber as well.

Starting point is 00:05:40 But just to, I guess, paint a picture for anyone who has not been on financial Twitter and financial communities and seen the news regarding Uber, Uber stock is now down 27% from its highs. So not a huge drawdown, but it does trade at its cheapest free cash flow multiple ever, which for what it's worth, free cash flow is not that relevant for them given that they have a lot of stock-based compensation. But they've gotten a true gap profitability and their EBIT margins are inflecting pretty quickly. So anyways, I'm just going to use the free cash flow multiple because it's a decent barometer. So 29 times last 12-month free cash flow, which might not sound that cheap, but the margins are climbing quickly. So the forward free cash flow multiple is somewhere around 20 times depending on whether or not they hit their estimates. So based on consensus estimates, basically 20 times forward-free cash flow. However, I guess the concern here and what's driving the majority of this drawdown is really the success of Waymo, Alphabet's or Google's self-driving or autonomous vehicle division.

Starting point is 00:06:52 And there's been a lot of positive news for Waymo recently. So for starters, the big thing that really drove this was a third-party data provider, an alternative data provider, released this chart that was like – let's see. It's basically ride-sharing or ride-hailing market share in San Francisco specifically. The scary Yipit data. Everyone gets freaked out about that Yipit data. which i will say i just feel like alternative data just gets so overblown unless you want to be our sponsors that if it wants to be our sponsor i will hype you up to no end but don't these get disproven in earnings it can be valuable but sometimes you see screenshots

Starting point is 00:07:41 getting tossed out there from things like the cloud providers and they you know oh aws is plummeting and then the quarter comes and it's fine so sometimes i feel like they they misstep here but continue what's the data so the data basically shows that waymo in san francisco has been rapidly gaining share compared to lyft and uber lyft maybe you can just share this chart that i've got here it's basically uber's been at between 60 to 70 percent market share for a little over a year. Lyft was at around 30% and both of them have been dropping. Uber is still the leader, but Waymo has officially surpassed Lyft for ride hailing services. The concern here is that this obviously continues and everyone, investors, I guess, maybe logically extrapolated this out as

Starting point is 00:08:34 this could be happening everywhere. And so it's led to a whole bunch of concern around Uber. Now, last week we talked about this. General Motors shut down its robo-taxi efforts. That means yet another competitor is gone for Waymo. And then this week they announced an expansion into Tokyo. So for anyone that thought, well, it works in the States, but at least Uber's got the international football. I had that take. It aged so poorly in about one week. Less than a week, honestly. Yeah, and for what it's worth, just a slight expansion into probably a couple areas or a couple neighborhoods in Tokyo does not mean that they're going to conquer all international markets that Uber operates. It's probably going to be quite a while. But it seems like Waymo is expanding quickly. They've gotten into I think five cities in the states now. They just announced two expansion markets in I think Austin and Atlanta.

Starting point is 00:09:33 And then they've got – they've obviously operated in San Francisco. They've operated in Phoenix. I think there's one more market that I'm missing. Los Angeles, Miami. Los Angeles, Miami. So I guess this Tokyo would be the seventh market. The concern, I think Uber investors are justifiably worried, I would say. It feels like – I think you made this comparison, the TikTok threat to Meta from two to three years ago.

Starting point is 00:10:06 Now, I guess maybe a little longer. Now, you've got Waymo potentially disrupting Uber's market. And the bigger concern is that Uber – like Dara Khosrowshahi, I think I'm saying that right, might be botching that. The CEO of Uber, he basically said like, we think autonomous vehicles are going to expand the addressable market overall and we are going to be the connector. And the idea there was that you have companies like Cruise and you have companies like Waymo and Tesla and there's all these different autonomous vehicles that they need the demand. They're going to come to Uber to do it. With the competitors dropping like flies, you now have consolidated power basically to Waymo. If you're Uber, you're happy if Tesla becomes kind of an autonomous vehicle provider as well.

Starting point is 00:11:04 There was a conference this week, an investment conference that the CFO, Uber CFO went to. And basically the whole thing was focused on the threat of Waymo, which is kind of funny. Like you come in as CFO and like one year later, all the questions are like – you're being disrupted. What's going to happen? And you thought you were joining like the innovator. And he's the accounting guy. Yeah. What's he going to say?

Starting point is 00:11:30 Yeah. But to put the numbers in context, for now, last quarter, Uber completed 2.9 billion trips. this quarter give or take waymo is expected to complete 1.2 million trips that's equivalent to one-tenth of one percent of uber strip so right now it is an absolute like tiny fraction of actually less than one-tenth of one percent the it's a tiny fraction of uber's business but obviously if things scale up quickly it's a threat to uber long term and the here's what the CFO said that scared me. He said, our view has not changed. So we believe the introduction of autonomous vehicles is going to be critical for us to be able to bring on

Starting point is 00:12:15 continued supply to grow the business. So kind of treating this as a good thing for them. My discussion question is, do you agree with this? Basically, let's assume that Tesla and Waymo are the only providers in five years. Do you think customers will be ordering those rides through uber or will they be ordering them through tesla and waymo apps independently that's a that's a big question i lean to the idea and this is really where the the debate centers and people differ and get very uh passionate about either side because it seems like there's you know some very bullish people on uber and very bearish people that have differing views And I think that Waymo and Tesla, I guess Tesla hasn't, they're a little bit behind because, and they're also doing it in a different manner.

Starting point is 00:13:07 They're not at the same spot as Waymo, but I don't think either needs Uber to exist. Google Maps already has 2 billion users. If you, and Google Maps is what's embedded in Uber. if you literally search on Google Maps, it gives you the directions and it can pop up, hey, do you want a Waymo to this location? I don't think adding in that is going to be difficult for Google. And I am not surprised that at an investment conference, a CFO is saying, oh, there's a big disruption to our business. There's a potentially big disruption. Well, we actually think it's going to benefit us. No one is going to go into one of those and say,

Starting point is 00:13:51 oh no we're screwed we're screwed you should sell our stock yeah i do think you can go in and say like look we're monitoring this very closely and we're not sure what impact it's going to have on our business like we're trying to do the best we can to make it to be beneficiary of it but ultimately we don't know but yeah wall street would get scared about that what do you think part here's the part that gave me some consolation if if i were an uber shareholder the cfo said no disrespect to the uber ops team but we do a lot of unsexy work it is the identifying and confirming that the writer getting the getting in the vehicle is the person who ordered the vehicle it is handling all the payments activities again high volume payments at relatively low transaction

Starting point is 00:14:39 values it is the fraud prevention that goes with that it is returning lost items it is customer service with all the numerous questions and complaints and opportunities to improve service that come with that it's a very big operating operations function that we do at scale at an incredibly efficient cost there is a lot of logistical operational stuff that uber has fine-tuned over the last decade and it's not that waymo can't do it or doesn't have the money to do it but is that why they want to partner with uber is that why they have partnered that this that part of the business build out is not what they're interested in perhaps that's part of it but i think at the beginning the the most important thing and why why they are partnering is they want

Starting point is 00:15:25 if someone is ordering a car a vehicle they want to make sure that you never have a 20 minute wait because if you open the app for the first time the waymo app and you see oh i can get this taxi but it won't be ready for 20 minutes, you're going to go, I'm not going to open this one again. And Uber can basically guarantee in almost all circumstances, except for if you're out in the boonies or it's way late at night, stuff like that. Most of the time, you can get something within five minutes. And I think Waymo doesn't want to ruin that experience, at least at first. But I think over the long term, I see this stuff where they go, oh, we're handling a lot of payments oh we have a lot of back-end software you know who owns waymo right i think they can

Starting point is 00:16:16 handle that that customer support well that's kind of something that google is allergic to but yeah yeah and i think a lot of the customer support requests or inbounds are probably related to drivers too so for uber so you kind of eliminate that to some degree um the my first thought was like well maybe waymo can't go everywhere right like it doesn't make sense for them or it's not practical for them to be in the suburbs which makes sense because for one waymo does not deliver to airports um it's too much of like logistical nightmare for drop off and pick up. Oh, really?

Starting point is 00:16:59 Yeah. And that's where a lot of the Uber requests from suburban America comes from is getting dropped off at the airport. I'm guessing profitable. But I would guess, and I don't know if it's been broken out, that the majority of Uber volume

Starting point is 00:17:16 is not coming from suburban America. Those people have their own cars. They drive themselves everywhere. I would bet the bulk of it comes from the cities, which is really where Waymo is trying to build its foothold so it it does feel like a very material risk i could see both businesses continuing to grow for the next three four or five years and all of a sudden it starts to feel like oh waymo's wearing off and uber's fine it can grow too but it starts to slowly trickle in

Starting point is 00:17:49 the growth rate starts to decline at uber as waymo starts to steal more volume i do think they are like one accident away from having some some scared people uh people not willing to adopt waymo because there's like one accident that's true like a death although there's probably yeah there's constant ones i'm guessing from human drivers well i'm not getting not guessing but within the ride sharing ones there's got to be constant uh crashes from from the human drivers but it's a higher expectation people you know it's a new technology you're you're letting the robots take the wheel literally and there's going to be the high expectation we saw that with cruise um they i think part of that was them didn't they sorry i'm trying not to use a swear word

Starting point is 00:18:42 miss not a misinterpret but they fudged their own data that they were sending to the regulators i think that happened so part of that you know i'm not sure they threw some stuff under the rug there I lean to the side that Uber will be fine, even though I'm pretty pessimistic on some of these developments being headwinds or potential headwinds. There's just a lot of things that Waymo has to go through to become broad based. A lot of hurdles they have to get through. You have the weather outside of most cities. They're really only in very mild weathered and sunny cities. They can't operate in the rain right now.

Starting point is 00:19:19 You have the fact that it takes so much capital to scale up. then i kind of poked fun of those things that the cfo was talking about but those are true and then you have the existing network from uber that idea that people go straight to the uber app and you know that you can have something available within five minutes and waymo being so small might be a little different i also would add in that san francisco is the most tech like they they force new tech down your throat there that's a little different than other cities i know yeah i mean people are like anything that takes adoption in san francisco a lot of people from san francisco tend to say well this is the future this is what's going to happen and i know

Starting point is 00:20:07 what happened with uber but if you went and polled 50 of people in nebraska on whether or not they take a waymo or an uber they would have absolutely no idea what a waymo is so the idea that this is like the like the future of technology and it like i believe in the tech as much as anyone else but and i do think it has a bright future and will probably be a much bigger business but it's not as big today or not as relevant today as it might get portrayed in silicon valley yeah but nebraska is irrelevant to uber's financials true all these big cities aren't let's see if it gets wide adoption in a place like dallas i'm sure they'll go there eventually just given the weather's probably it fits that fits their criteria at least for right now

Starting point is 00:21:01 let's go through some questions had a lot of good ones in the chat here someone says thoughts on waymo international i guess we already hit that one here's one that's interesting what headlines do you think would need to occur for peak uber bear sentiment what pe multiple do you think could occur at peak uber bear sentiment i don't think we're there yet or maybe in well let's use the baseball analogy fourth inning i think yeah if you get much worse more yippit data would be uh detrimental i think to uber stock price well let's look at how's lyft holding up because they got hurt way more in that yippit data than uber uber's still at 50 percent

Starting point is 00:21:52 yeah they're fine well maybe the it's just because the stock was so bombed out yeah it's so hard to forecast like i don't the thing is if you're uber like what do you do do you invest in self-driving or robo taxis fleet of your own i sure certainly hope not um if you're share with that a long time ago yeah because they had the crashes they are invested in some they have stakes in some third-party ones but i think those ones aren't doing nearly as well as waymo here's here's what gets the pe down to and what do you have next 12 month at 20 20 free cash flow free cash flow yeah here's what gets it lower to 15 you know 13 is if waymo keeps its 10Xing rides per week. If it hits a million, I know that's really not that.

Starting point is 00:22:53 It's still what? That would be less than 1% probably of Uber's overall trips. Even so, that's a round number. That's something that can get hyped up in news articles. Look, I write for The Motley Fool. I know how the sausage gets made. That's something that can work in a headline. The momentum of narratives just starts forming. This is how the same thing happen with TikTok and meta and all that spending. People that don't look at the underlying financials, that don't look at what management is actually saying, can get things spun out of proportion. And that's where an opportunity could present itself. This goes to show, when people say, oh man, I wish I could buy it on that drawdown. I wish I bought it when it was trading at

Starting point is 00:23:35 15 times earnings. It's not trading at 15 times earnings, but let's say it were. this is a very convincing bear argument like waymo is eating their lunch in markets as they expand it's going to continue to eat their lunch this is like the beginning of the end it's like usually when it trades that cheaply it trades that cheaply for a reason you can go back and say well apple at a single digit earnings multiple had to be the easiest buy of all time iphone sales i think declined year over year when that happened or there was a decade of growth of unit volume growth froze and then they stopped reporting unit volume sales i think is what happened so yeah it's just it's harder it's harder than it seems what multiple would you

Starting point is 00:24:28 be interested in this at in uber saying nothing changes like at this moment because usually if the multiple falls something's going to change but for the time being i think i said 15 last last episode and i think i grew i will keep it there i am not uber bullish well that's funny i use that i'm not very bullish on uber and their capital allocation i'd say i'm lukewarm on it they seem they're returning cash to shareholders now they seem to be willing to take on some debt to accelerate a buyback program. And they're very profitable now. But there are these disruption risks.

Starting point is 00:25:16 I think 15 times makes sense. And the upside from 15 times, if you are returning cash to shareholders, reducing the shares outstanding, and you have that end market growing at 10% a year for a long time, that can add up to some really good returns, especially when you have operating leverage

Starting point is 00:25:34 in that business model. yeah all right well i think we've gone a little while we got other questions here that some of these are good in a world of autonomous vehicles do you think people will own their own vehicles and rent them out uh letting strangers and dirt dirty stuff into their cars i think car ownership could go down a bunch what's weird though is it i i'm curious how much it gets affected today because if you actually run the math on like car costs car insurance gas costs uber makes a lot more sense to people to people than you'd think but people still like owning cars so i don't know how much that's gonna change things

Starting point is 00:26:19 yes but especially if you're in a city or near an urban area the it i don't know i don't know what it does i don't think that it's going to turn into like airbnb where people are like buying car i mean i guess it's already happening happening to some degree with turo but and uber some people they get the finance by their uber stuff like that i know i just mean would you do you think people would start creating these businesses where you're buying a autonomous fully autonomous vehicle purely as like a financial asset no i think the platforms will own it i don't think it's gonna be owned at the personal level but that's the vision for for me on tesla from elon is that you can you can drive it around during the day or it can drive you around during the

Starting point is 00:27:17 day and then at night you can send it off to earn you money in your sleep but he's got to sell vehicles to customers so uh the incentive kind of shows why he he has that viewpoint last thought here and this one's interesting what if google or tesla buys lyft against instant demand in my opinion that's the real risk to uber maybe what do you think a match made in heaven maybe lena khan's gonna be gone soon here google can google's built what is it seven different apps now seven different platforms that have more than a billion users i think google could build something from the ground up with not without needing to acquire a marketplace or yeah uber is built on google maps

Starting point is 00:28:10 yeah yeah to me i think google could do without acquiring lyft i think tesla could probably create enough demand around its app as well um probably elon's very good at advertising yeah i'll be you know what i'm sorry finishing that i want to be banking on a buyout if you're a lyft shareholder yeah that stock was cheap earlier this year didn't we talk about it at one point and we were like it looks cheap but don't don't play in the second player stock went up quite a bit but speaking of tesla advertisements and promoting themselves i saw them advertising a mega pack or something like that to me on twitter so we're seeing the dipping we had to

Starting point is 00:29:05 get twitter's advertising revenue up we need to you know send some promotional materials over there just a side thought that's not that's not a that's not a real topic also i don't know if my for you page is like if i've been like watching the wrong things but it's pretty much like all elon content i i think well that's for you the algorithm he is deciding the algorithm everyone on if you're on twitter you like elon you like me that's what he says gotta go following only ryan i know yeah i have been i really never considered it honestly until uh the takeover because then it's just like the feed changed really quickly for some reason yeah but let's uh let's shift gears a little bit did you see the masa sun i think you mentioned

Starting point is 00:29:51 this to me the other day but did you see the video of him at the press conference announcing his investment i did not watch the video i think i saw a screenshot but yeah he's he's a hype man and he's the president's a hype man or the incoming president and did you see trump strong arm him like did you see how when he was like masa sun is going to invest 100 billion dollars trump just on the spot in front of everyone's like why don't we make it 200 billion I think that's probably a joke, but I guess I didn't watch it. Was it – did it seem more awkwardly serious than – Yeah, he did – Trump just stood there silently after he said it, and Moss's son was like, well, yeah, I guess we can.

Starting point is 00:30:39 He's probably just pulling his leg. I think he likes to embarrass people, so I'm guessing it's not too serious of it. But more importantly – What does that even mean? Honestly, what does that mean from SoftBank's perspective? Like saying we are going to invest $100 billion into the United States. It's just U.S. companies. Just buying steaks in the U.S.

Starting point is 00:31:02 Yeah. Last Trump administration, they promised $50 billion and they put half of that into WeWork. That's investing in America. I think what might be back is the VC and Masa Sun funded consumer surplus for young Americans. and i am excited yeah well uh five dollar ubers give it time newman's gonna be back he's oh i read an article that said flow is picking up which is his new startup flow is picking up with everything that we work left off oh boy well you know what do you think about this 100 billion dollar fund though could be nice could be nice i'm not investing in any of these

Starting point is 00:31:52 companies but it could be nice for the consumer surplus i think discounts are going to be back that's what i'm excited about yeah that's very true door dashes of the world will be a little less expensive um door dash orders i should say yeah i don't know it just feels like a little bit of fluff to me it could mean anything honestly like okay i'm just gonna buy more nvidia stock That's true. Does that help America? I guess maybe. Here's a headline for you.

Starting point is 00:32:24 I looked up Adam Neumann Flow, which is his new company, as you were talking here. This is a TechCrunch headline. Adam Neumann Startup Flow Opens Co-Living Community in Saudi Arabia. Do you want to move? Are you going to join? maybe i'm too pessimistic but i think co-living sounds horrendous like as a living arrangement i can't think of something i would want less for like my own personal living arrangement yeah like you have to be like super communal with all with everyone in your apartment block like

Starting point is 00:33:03 is that basically the gist of it yeah forcing that i agree there are those videos that have popped up on twitter about these new communities and they try to post them in that tiktok fashion they're originally tiktok videos but they post them in that fashion where they're you know quick jumps and they show like the day in the life and they go through it and they go oh this is incredible everything's taken care of for me and i look at them and i think someone that one of the anonymous accounts uh from fintwit had this take that i agree with so what do you do all day it just seems like a really nice prison i don't know i guess you can leave so it's not a prison it uh we had a comment here that says masa is going to fund the series k for databricks

Starting point is 00:33:49 yeah hey these funding rounds are getting big in ai and cloud so maybe there is 100 billion dollars to throw around yeah all right i want to talk about the match group investor day But before we do that, I want to talk about our new sponsor here on Chitchat Stocks, Blue Chippers Club. Blue Chippers Club was recently started by two friends of ours with the goal of building a tight-knit community of stock-focused investors. Inside this community, everyone gets to share, break down their portfolios with each other, participate in weekly calls, and compete in fun portfolio performance monthly competitions. I honestly love this idea, and it's why we are promoting it here on the show. In fact, Brett and I are in this community ourselves and enjoy just how much value we get collaborating with others.

Starting point is 00:34:35 And we also do participate in those weekly calls as well. It's just a really good sounding board to talk with other investors, see what they're seeing, maybe share some ideas as well. If you're interested in joining, head on over to bluechippersclub.com and hit apply. Right now, it is completely free to join. I got an email with a question asking, how much does it cost? It's free. Like our friends here, they're literally just building a club of tight-knit community or tight-knit – a tight-knit community of stock-focused investors.

Starting point is 00:35:05 So totally free to join at the moment. The link will be in the description. Do you want to hit another one? Or do you want to do another ad? Let's just break it. Let's do the public one again before we hit the segment. Sure. Yeah.

Starting point is 00:35:18 Yeah. Listen up, folks. Time could be running out to lock in a 6% or higher yield at public.com. But you can lock in that yield with a bond account at Public. However, that yield is not locked in until the time of purchase, so you might want to act fast. Lock in a 6% or higher yield with a diversified portfolio of high-yield and investment-grade corporate bonds only at public.com forward slash chitchatstocks. I checked out their six-month treasury account too. Pretty cool.

Starting point is 00:35:47 Pretty cool. We got some really good savings stuff. Yeah, I use their high-yield savings. I'm not sure if it's the absolute highest, but it is up there. It's a very good high-yield savings account. And they got all these other options for different types of fixed income and savings account you can use. I think that's one of their best features. All right, Investor Day, Ryan.

Starting point is 00:36:08 There's 140 slides from Match Group talking a lot of big talk about the future of dating. You'll never guess AI and how it's going to help them. When in doubt. So when your business is struggling, all you need to do to patch that bad boy up, a 140-slide Investor Day presentation. Yep. Yeah. Oh, boy. I feel for anyone that watched this whole thing because I just looked at the slide decks.

Starting point is 00:36:38 And our friend Alex Morris at the TSOH Investing Research Service had a great summary and analysis of them. Or maybe he's planning to do that. Either way, he's going to have an update on them soon. It came out already? Yeah. Yeah, dude. Here's what I have to take away. Essentially four things from the earnings, or excuse me, the investor day.

Starting point is 00:37:01 One, new 2% dividend yield, or dividend that's yielding about 2% right now. Two, promising $3 billion in cumulative free cash flow generation through 2027. three tinder low single digit revenue decline in 2025 would you say that's about three percent they're projecting like a three percent revenue decline sure something like that kind of their lingo yeah and they are implementing a hefty buyback now you look at this and you go tinder maus keep falling they actually disclosed the chart this time going back to 2016 maus peaked in 2022 they keep declining and that's a concern and they're projecting another revenue decline in 2025 for tinder so contrary to what we believed a couple years ago tinder may be in a way

Starting point is 00:37:59 worse spot than we previously thought well it is in a way worse spot than we previously thought and each year that it doesn't recover it might not be fixable however however and this is what i i need a hotline for this stock because it has a market cap of eight under eight billion dollars ryan and they're going to buy back three million dollars for the stock don't do it brett don't do it okay here's the thing it might look i think it might work it might work if they stay it might work the stock might work three billion dollars in free cash flow for the next three years probably yeah yeah that's what it's going to say eight billion you hear that that that sounds great eight billion

Starting point is 00:38:53 dollar market cap they're expecting three billion dollars in free cash flow over the next three years it is not that cheap factory and sbc factory and sbc it's not that cheap for a business that will potentially not grow for the next three to four years not grow the top line according to fin chat you got a pe of 14.4 hey they might have added some new kpis that you guys can put in there Although they don't give the actual data, they just give the charts and you have to kind of do a little line and maybe put a ruler on your computer screen and then go, okay, it's maybe 65, maybe 67 million that year. But PE of 14.4 is a little, that's probably a better metric. Is that cheap for a business that will, let's, I would probably think flat revenue for the next three years. is a price-to-earnings multiple of $14 cheap.

Starting point is 00:39:52 Flat revenue. Yeah, I think that's reasonable. I'm thinking about your revenue estimate. It depends, I guess, what currencies do, just because if the dollar appreciates, that really screws them. And I guess FX neutral. Yeah, say revenue's flat.

Starting point is 00:40:11 It seems to be about fair value. you need to have a differentiated view on tinder it is amazing to me how long it has felt like it's at fair value i would say for the last for the last is it efficiently priced last 50 drawdown i've been thinking it's not cheap but it's a reasonable it's a fair value and then i then it keeps going down the estimates or the growth expectations keep coming down and all of a sudden it's like well yeah it's never i guess it never was cheap um do you feel good that we didn't mark the bottom by selling earlier this year because there were some people that said we were and i i'm all good with them joking around this

Starting point is 00:40:51 you know the losses are the losses doesn't change anything but they're saying that we are going to mark the bottom by capitulating at about 35 a share and hey not yet my friend we're at about 31 today are you feeling good about it they broke free yeah i am very happy to no longer be associated with the company well no longer the uh there's a question here it says for match are you not just waiting for hinge to overtake tinder i got it i got a nice chart from sorry go ahead that's basically what you're doing i think you're you're the the user trends at tinder look ugly and i think honestly hinge probably has cannibalized tinder to some degree so it could be 10 years out a better a better business like hinge makes up 60 percent

Starting point is 00:41:49 of revenue it's the go-to dating app internationally the average revenue per payer is substantially higher i think it's almost double tinder's if it's able to replace it that's great but it's going to be a while until that point and they're going to exhaust development resources on Tinder in the meantime. That's another good point. I am looking at the KPI chart from our friends at FinChat. Again, use our link, finchat.io slash chitchat. Get a 15% discount on any paid plan. Save yourself a lot of money. And hey, help out our show as well. From December 2020 to the last 12 months, which I'm not sure, do they give out hinge revenue every quarter so just say give or take last 12 months the revenue is compounded at 60 percent per year

Starting point is 00:42:43 59.5 percent to be exact gone from 90 million dollars in 2020 for hinge to 520 million dollars over the last 12 months and the in the investor day had forecasts of i think a billion in three years yeah at that point it gets pretty relevant to the business because what are they at about three four billion dollars in revenue i haven't looked at them too closely lately but either way the last if your thesis was and this is part of i think our mistake in 2021 is hinge was way too small at that point to make any meaningful changes it could be a positive over the long term from 2021 but maybe today you have that thesis i could see that thesis working out

Starting point is 00:43:27 yeah you know what was a mildly concerning chart in that investor day was they talked about where like couples originate from like what are the sources for people meeting and there has been an uptick in social media over the last two years i think while dating apps have declined do you see that as a risk at all because we've said no in the past wait sorry i'm confused there's been okay basically they had like where people have met from and it's for the last like i think it's like over the last five years and like dating apps is number one by a lot there's basically bars clubs all the family church whatever that are just like at the bottom that are like one percentage and then there's social

Starting point is 00:44:15 media which has grown uh oh so social media is taking some share yeah that should be a concern yes oh typically you have a symbiotic relationship between the platforms i would argue but maybe it's becoming less over time it's fin to it a lot people like value investors a lot of a lot of matchmaking happening on there i don't i don't think so maybe it's instagram investors yeah value investors date.com let's see question let's finish up with some comments here from the the audience on match they say is it similar to paypal perhaps could be a similar story could be a similar story where revenue looks like better than people think and there's this narrative um yeah and then you know the paypal venmo and stuff

Starting point is 00:45:11 like that yeah yeah yeah i could loss it um let's see if tinder ever stops the mau loss then the stock probably doubles yeah probably probably if it's for multiple quarters let's see another question do you guys follow boston omaha oh yeah yes unfortunately my friend we went to the annual meeting in 2021 and keeping on the wait and see approach i'd say yeah there were some red flags i will say i like adam peterson the the thing there was a lot of like cognitive dissonance with that shareholder group it seems because people were like these are the best co-managers ever and then they basically ousted uh alex i think is his name rosek and he sold his shares and they're like that's all right he was he wasn't good anyways

Starting point is 00:46:03 then it's but it's like i i will say i liked adam peterson a little better uh at the meeting at least the my big thing there is i just don't love the businesses like i don't really love the operating companies that they have and i think that's where probably aside from the management turnover where a lot of the struggle has come from for the stock recently so that's love the i like the capital allocation ideology like the philosophy like adam or adam peterson but I worry a bit about the actual operating businesses. I agree. Price to books below one now, though.

Starting point is 00:46:45 And they have some stuff that's probably understated by book value. So if you're optimistic on this business, Stalag looks fairly cheap. But yeah, let's move on to our next segment. Small cap of the week. I, as a little tease for the segment we're going to end with, i know people really enjoy ryan's segment that he came up with in 2024 so i thought of doing another one which is basically the bubble update i don't know what we want to call it if that makes sense but essentially checking in on the bubble every week and deciding what stage of the bubble we're

Starting point is 00:47:23 in or if we're not one uh and i have how about there's really nothing to miss there's there was an infinite amount of things I could have chosen. I chose just a couple. Yeah, it's not a bad one, but hopefully, well, if the bubble pops, we might be out of a segment there. What about, I'll take small cap of the week, you take future small cap of the week. So most concerning company. Yeah, stock that's done bad. That could work during earnings season, I think. But right now, that might be tough. How about market cycle update? We could do something like that.

Starting point is 00:47:56 But, yeah, we can figure something out. But I think if the bubble crashes, there's probably even more, or if the bubble pops and a lot of stocks crash, there's probably even more interesting things to talk about, at least for another year. So for the time being, I think I'm going to do something around bubble update, market cycle update, what ending are we in, as people like to say. But first, let's talk about small cap of the week,

Starting point is 00:48:18 one that I helped out recently with the mend, the Auckland Airport. That's right. This is the Small Cap of the Week presented by Yellow Brick Investing. We've got to make sure to add that in there as well. They are the best place on the internet to find high-quality stock pitches. So anytime someone gives you a tip, like we just had one in the comments here. Someone says, small cap suggestions, ticker K-A-R-O or S-E-R-V. You know what I'm going to do?

Starting point is 00:48:46 Go ahead. I'm going to punch those into Yellow Brick Investing and see if I can find some high-quality write-ups on there. They're a great aggregator. highly recommend checking them out. And we've got a link for them. It's yellowbrick.com slash chitchat if you want to get a discount on a paid plan. But Auckland Airport is the company for this week, technically Auckland International Airport. They own and operate the largest airport in New Zealand. Brett may have some anecdotal evidence for us, which we can talk about here

Starting point is 00:49:17 in a second. But to give some context on the business, they're currently in the process of a 10-plus year period of elevated CapEx as they're building a new domestic terminal and eventually adding a second runway. The airport was built in the 60s, privatized in 1998, and it's been, as with most airports, it's been a nice profit machine for quite a while. It's basically, it's hard really not to make money with an airport, it seems. And for a little additional info on the business, we've talked about airports a couple of times here, but there's three ways they make money. It's very similar to most other airports.

Starting point is 00:49:56 There's the aeronautical revenue, which typically accounts for about just under half of EBITDA. This consists of regulated fees paid by airlines for use of AIAs, runways, or terminals. So think – it's basically anytime you buy a ticket for a flight, there's an embedded fee that you're paying in there that's a part of the price that the airline then passes through to the airport operator. So you're basically paying – it's basically a passenger fee essentially. The second part that's important to the business here, which is about 40% of EBITDA, is retail. This is just rents and royalties from store operators as well as parking revenue on the business. The last one is just property. So this is rents from warehouses, shopping centers, hotels on AIA's land. So Auckland International Airport, some airports have like this just like infinite lease essentially where they operate. Auckland actually owns the land and a ton of the land around it.

Starting point is 00:50:58 So they have like some rental property revenue that gets included there as well. But in general, there are a ton of things to like about airports. One, they are straight up local monopolies and they've got built-in pricing power, which typically makes for great profitability. However, given the recent expansion that AIA is undergoing, profitability looks a little rough. So Brett, maybe you can share this chart from FinChat. Revenue has basically gone up by 5.5%, 6% for the last 20 years. Free cash flow margins used to be basically 34%, 35% consistently every year. And then they started this massive CapEx cycle. And now you're getting basically negative 50% free cash flow margins as they build out this second runway and domestic terminal. So yeah, Brett's sharing it there. Basically, profitability has gone from 35% free cash flow margins to roughly negative 50. But you basically have guaranteed demand there. So hopefully that CapEx is worth it. The other good thing is that they state this expansion can take capacity from 25 million passengers a year to 50 million passengers a year, which would be a big revenue driver for them because you're just getting more volume. And then you couple that with the incoming price increases.

Starting point is 00:52:23 There should be a major revenue boost relative to their history. So it's been about 5.5%, 6%, as I mentioned, probably most of that coming from price increases and gradual volume increases as well. But here's a quote from a Yellow Book write-up. It says, aeronautical charges for international passengers are increasing 40% in fiscal year 24 and are scheduled to increase at a 12% CAGR over the three subsequent years. Charges for domestic passengers, which that would not be Brett. Brett was on the international side, so good thing you're flying this year. Well, I was – I did some – I am doing some domestic flights, so I got to get a taste of both terminals. Better get them done before the end of FY24.

Starting point is 00:53:06 Med have already been instituted. So what changes for domestic or what? Domestic. Charges for domestic passengers are increasing 52% in fiscal year 24. This article is a little outdated and are scheduled to increase at a 15% CAGR over three subsequent years. Today, they have a market cap of $7.7 billion. So this is really not a small cap of the week. uh that's probably mid-cap um maybe even being a little generous there but international

Starting point is 00:53:36 undiscovered not very many people know about this right sure it's our own rules we can break them yeah that's true i'm not sure what growth will shake out to be but if we take the analyst estimates over the next three years it's basically probably gonna pull this up on fin chat but it's it's going from the typical five percent six percent revenue that they've been generating revenue growth to, I think it's 15%, 12%, 12%. And then I'm just tailoring it off at basically 11% for the fourth and fifth year. So little model here basically gets you a billion and a half in New Zealand currency dollars in sales. Now the CapEx is going to continue for a while. So free cashflow margins should not revert immediately back. But let's say they got back to

Starting point is 00:54:23 that eventually, 30%, 35% free cash flow margins. That would mean $525 million in New Zealand currency in free cash flow a year. Today, they have an enterprise value of $16 billion New Zealand dollars. That means they're trading at potentially 30.5 times 2029 free cash flow. I like the business, love airport operators, but I don't see why you would buy this and not buy the Mexican airports instead because they're trading out a fraction of the multiple yeah i agree i agree seems a little expensive the capex is real though they have a huge construction project going and right now you have to walk there's probably a mile with your bags from the international to the domestic terminal which was not fun uh with giant bags so maybe there's some ways to fix

Starting point is 00:55:18 things the fees going up yeah i guess they might have already got through the domestic flights are pretty expensive i don't traffic's not going to explode to new zealand it's not it's not going to be italy it's just too far away the geography doesn't australia is not that big of a country i mean i think like 50 million people but it's not going to be italy it's not going to be spain it's not going to be mexico this ain't yeah is there any other airports that are even remotely close that they could maybe like cannibalize some routes from there you mean cannibalize no like take no because i don't know how they're projecting 25 million of passengers a year to 50 million but passenger volumes over the last 20 years or like last 15 are barely up it could be

Starting point is 00:56:14 hub connecting to australia and asia just because of its where it's located besides that i'm not exactly sure maybe they're betting on australian and japanese and korean and chinese tourists because that's fairly close there are a lot of those uh here but is that really gonna double Well, yeah. I mean, they can increase – that's kind of my concern. It's like they're doing all this stuff to increase capacity. I mean, they must have better visibility on it and be able to say, like, we are working at capacity right now. As we expand this, we expect to drastically grow how many passengers come through. But even if it happens 30 times free cash flow in a couple of years. So the Mexican ones seem much more attractive to me. Yeah, absolutely. Okay. Speaking of emerging markets, Argentina? Yeah. Should I do this for another week or should I start my bubble update? Let's just do both. This one's quick. I have a quote here, time to invest in Argentina. There was an article in the Wall

Starting point is 00:57:25 Street Journal today updating them with their new president, Javier Malay. And he said, inflation has fallen much faster than we even expected, where Malay was sitting in his office and he had a replica of a chainsaw sitting on a long table. Guy's entertaining. You got to give him that much. Whether he'd like his strategies or not, he is entertaining. And the chainsaw, for people that don't know, is cutting through a bureaucracy. That's a good analogy.

Starting point is 00:57:51 And it's a little aggressive. But here's the other part of the quote. Everything indicates that next year we're going to have less inflation, higher GDP per capita, higher salaries, and less poverty. Could be a good time to invest in Argentina. They don't have the demographics of Mexico. They're not as big as Mexico. They're less attached to the United States.

Starting point is 00:58:13 I think we missed one of the big winners, though. The Argentina airport. Should have listened to our Latin American correspondent, Ian Bieseck, because I think this has been a 10-bagger. Well, if you go to a 100-baggers list, it's basically just scattered with Argentine companies because of the inflation. So is that like in local currency or? That's true. I think this is the New York Stock Exchange listing. So this is adjusted.

Starting point is 00:58:45 At the bottom of the pandemic in 2020, we were trading at less at about $1.50. In March of 2022, we were at $5.50. Today, we're at $20. Wow. The ticker is C-A-A-P, Corporacion America Airports. Through its subsidiaries, they operate airport concessions in 53 airports in Latin America, Europe, and Eurasia. And, yeah, that's all they got here. I think it's the American airport.

Starting point is 00:59:18 When you're looking at an emerging market, like you don't know anything about the market. It's maybe a little speculative, but you like, you know, some of the trends, yada, yada. Airport. Yeah, instantly, the first businesses I look at are, one, stock exchange, two, airport, three, maybe like a local lottery if that's privatized. Yeah, I mean, there's one. You can also look at Columbia. They only have a limited amount that are available to invest just because of some rules. They have the biggest bank in Columbia.

Starting point is 00:59:50 There's the oil company, and there's a few grocery stores that do well. But look, sometimes the basics, if you're betting on, and maybe betting on macro stuff is not the best idea. But if you're betting on that type of stuff, some of the basics can make sense. All right, let's get bubble update before we get out of here, Ryan. Not hard to find. And essentially what I want this segment to be is just to check in on what's going on. Because don't you feel like just out of the loop and it's all chaotic with all these things, with all this stuff? We're focusing on earnings, and you see these things going on, and you go, what even is happening with this market bubble?

Starting point is 01:00:31 And, hey, maybe we're not in a bubble, but first one, first one I have. Did you see MicroStrategy is joining the NASDAQ 100? Yeah. Flows are coming in. Flows are coming in now. Well, it's because they have such a dominant software business. Yeah, it's because – yeah, they're such an important part of our economy. Yeah, I guess I have nothing else on that one.

Starting point is 01:00:58 Yeah, it's just – well, yeah, we were talking about this earlier this week, but it's impressive that the indexes like the NASDAQ and the S&P 500 have been able to do so well when you have sort of this like bad incentive for inclusion where it's like the company becomes big enough. It could be because of inflated multiples where it gets included and you're buying it at potentially the worst time. I guess it doesn't matter because it's just carried by the big seven tech companies, but you would think they would potentially do bad because of that when things are included. Eight now, Broadcom, trillion-dollar market cap. I'm going to show you this one, the last one here. Have you seen this? I was just looking at this. this is hysterical oh my gosh this is very uh it's mean whoever's doing this look okay describe it

Starting point is 01:01:56 yeah let's describe it there is a new twitter account that's verified and it's called enron at enron e-n-r-o-n the tweet says thank you houston for coming to our town hall for listening for opening your hearts for sharing your honest concerns you inspire us we promise to make you proud hashtag enron family this someone's getting screwed here this guy here i immediately see a photo this photo i immediately don't he's not being genuine genuine this guy is a hundred percent disingenuous look who is it look at this guy does he have does he have a coin that's who it is it's some it's there's a there's a crypto coin there's a meme coin associated with it and they're just holding up a poster that says we forgive you enron the people of houston

Starting point is 01:02:43 uh he's hugging a guy look at how disingenuous this is do you see this here to listen who are any i don't know what's going on are any of them even associated with enron like the people at this event were they affected by it or is this just like some staging thing i i think yeah i i we need eyes on this thing we need to be monitoring this because i i don't know what the hell is going on it's like some meme coin they're they're donating money to the citizens of houston fifty thousand dollars i am very skeptical the guy the guy is smirking like it's a joke the whole time this uh this tall this tall young dude look look at tell me you don't tell me he is not lying through his teeth by just the way he's smiling yeah it does look scammy the

Starting point is 01:03:36 other thing and this is the biggest pet peeve of mine is issue some meme coin raise millions say we are giving money we are giving back to charity through this and giving like fifty thousand dollars like yeah it's true that is such bs it's yeah all right bubble of the week update is uh maybe it's a working one yeah we'll talk with the listeners uh that's a good way to pitch we have started our old chat community on substack and that's a great way to to kind of discuss with us it's better than twitter and it's all free so just go ahead join that i'll probably ask just you know for some feedback we'll work through what the listeners want but i kind of think people people enjoy getting an update around this just because when a boom is going on things happen

Starting point is 01:04:27 quick and it can seem overwhelming and you kind of just go at some points what is going on so We'll be monitoring the Enron coin situation as whatever the hell it is gets uncovered. Yeah. We're going long, but I should also mention that they did a staged stunt where they walked through New York City and someone pied this guy in the face. But it was all staged. It was clearly like fake. Oh, my gosh. Hey, and here we are talking about it.

Starting point is 01:05:04 Exactly. exactly maybe it's working yeah hopefully we're not we're not we're not getting paid by enron coin that's that's for sure that's for sure you know what we should talk about at some point is the stock promotion scams from oh stock influencers that's something that's would be fun to visit talk about investigative journalist yeah those some youtube channels did some really good work around that i uh yeah i think that's gonna do it for today thank you all for tuning in we've got some great shows slated one that came out on wednesday with sean wang an absolute ai expert um so that one's good to check out a little check-in on the ai world and the landscape there

Starting point is 01:05:44 and then we've got an asml update coming up as well which will be a lot of fun um and then we've got our 2024 predictions also what other shows am i missing or sorry 2025 predictions 2024 recap We're doing No Power Hour the week of Christmas and New Year's. We have a special Sunday episode where I'm doing a stock research on High Tide, a Canadian cannabis retailer that seems to be running away with the space. All right. Well, that is going to do it. Thank you all for tuning in. I want to remind you that Brett and I are not financial advisors.

Starting point is 01:06:20 Anything we say or discuss here on Chit Chat Stocks is not formal advice or recommendation. We may buy, sell, or hold any of the securities discussed in this podcast. Not Enron coin, though. I won't be touching that. But thank you all for tuning in. We'll see you next time.

Chit Chat Stocks - Uber vs. Waymo; Match Group's New Dividend; Time to Invest in Argentina? (MTCH, UBER, CAAP, GOOG)

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