Motley Fool Hidden Gems Investing - It’s NVIDIA’s world and we’re just living in it!

Episode Date: February 23, 2024

Earnings season rolls on plus some acquisitions made the news this week: (00:21) Emily Flippen and Andy Cross discuss: - Earnings reports for Nvidia, Etsy, Wayfair, Walmart, Palo Alto Networks, and MercadoLibre - Acquisition roundup: Capital One is acquiring Discovery Financial and Walmart is acquiring Vizio (19:11) Bloomberg reporter, Kurt Wagner talks about Twitter and his new book “The Battle for the Bird.” (34:25) Emily and Andy break down two stocks on their radar: Grab Holdings and HubSpot Stocks discussed: NVDA, ETSY, W, WMT, PANW, MELI, COF, DFS, GRAB, HUBS Host: Ron Gross Guests: Emily Flippen, Andy Cross, Kurt Wagner Engineers: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Motley Fool Money starts now. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Ron Gross, sitting in for Dylan Lewis. Joining me today are senior analysts Emily Flippen and Andy Cross. Fools, how you doing? Hey, Ron. Hey.

Fools' earnings season rolls on. We've got a lot to talk about. Today, we're going to talk acquisitions and e-commerce, but we must begin with NVIDIA. On Thursday, NVIDIA reported results that knocked it out of the park, and management provided guidance that was higher than analysts were expecting. Andy, I'm not even sure where to begin. This was really some report. The stock's performance is outstanding. What stood out to you? Where do we go from here? Ron, these are like monopoly numbers. NVIDIA has become the bellwether stock for this rally. It's up more than 60% this year alone, 275% for the past year. Since those earnings came out, team, it's added around $300 billion in market cap to be close to that $2 trillion

level. That's the size of AMD. It's a close competitor. The growth has been insane. Quickly, at the fourth quarter, revenues were up 22% from the third quarter, up 265% from a year ago. This is for a $2 trillion company, don't forget. Earnings at $5.16, up 486% from a year ago. The data center revenues, that's the biggest part of their business and what is driving so much of the growth, up more than 400%. When you think about what the world is spending on right now, it is so much in artificial intelligence technology driven by NVIDIA, the Hopper GPU for training and inferencing these large language models. With about half the revenues coming from these large cloud providers like Meta, like Microsoft, like AWS, revenues for China fell

significantly. Those were really the only weak spot when you think about what happened. Growth accelerated through the year. For the full year, growth was up more than 120%. Again, 120% for the year and more than 275% for the quarter. So, Jensen Wong, the founder and CEO, said, we've hit a tipping point in generative AI. Generative AI is the new application. It's enabling new ways to create software. It's a new way of computing. And this is enabling a whole new industry. Now, you just see this massive growth going into the biggest part of their business, which is data center revenues. Gaming was still pretty nice. It was up 15% for the entire full year. Automotive was up 20% for the full year, down for the quarter.

I mean, CFO Colette Criss expects demand to far exceed supply for these next-gen products. The quarter, they're expecting similar growth rates. You just don't see this kind of performance. Such a large company. And NVIDIA is just clearly not just knocking it out of the park. They're setting the park. If it's an artificial intelligence park, I don't even know what. But these performance numbers are really outstanding. I mean, it's actually amazing they're not more supply constrained than they are. Because think about the businesses that can support this amount of growth. I mean, like if you come to Chipotle and you're looking at 100% increase in Chipotle, they're

out of guac. You know, they haven't had the opportunity to even meet that demand. So the fact that management, I mean, a year ago, management was talking about the demand cycle. They saw it coming down the pipeline. They communicated it to investors and they said, this is what we're ramping up for. And investors, myself included, were maybe a little bit skeptical and said, these projections are insane.

And here's the reality. They're not insane. It's a really interesting advantage they have is in the manufacturing, because these chips they're making are so complex. So they've done this for so long and invested so much into this with their partners like TSMC. So they really have an edge there. And what's really interesting from the call is they said that about 40% of the revenue

is for the inference revenues. that's like when you do a prompt on generative AI and you get an answer. That was really encouraging for the future growth in the chip spending for NVIDIA. That was a little bit of light they shined on at the quarter. Earlier in the week, Etsy and Wayfair reported results. Etsy's results were mixed and shares fell, while Wayfair showed improved results and the stock was up 10%. Emily, any similarities here in these reports? What's Wayfair doing? that Etsy isn't. I mean, look, this is a great example of don't judge a company by a single quarter. Because if you look at these two quarters, as you just mentioned, Ron, it makes it seem like,

well, Wayfair is executing, right? Those costs are coming down and Etsy is struggling. In reality, both of these businesses are struggling a bit. Although Etsy has a better track record, I think, of kind of proving out the usefulness of its platform in comparison to something like Wayfair, who has struggled to maintain its strategy, especially in the world post-pandemic. But both of these companies do have a similarity, as you mentioned, Ron, which is both of these platforms right now are pretty out of favor. Wayfair is struggling to increase demand, even as consumers remain relatively resilient. If you look at just their results, their active customers over the course of the year were flat, both in the quarter as well as throughout the

entirety of 2023. Their lifetime revenue per active customer and their average order value all declined. So the good news for Wayfair in the quarter was just the fact that they're able to cut costs. So any margin expansion is them just trying to narrow the size of their business, despite the fact that their top line has been so paltry. Etsy, on the other hand, I think has kind of struggled to maintain growth in the post-pandemic world in the sense that its growth has continuously kind of grown smaller than the e-commerce sector at large. If you look at this quarter, this is their second full year of negative GMS growth. That's their gross merchandise sales. The second full year of negative growth, which of course is below industry averages. So both

these companies, I think, are still going back to the drawing board to say, what can we do to drive consumers to our platform? Because it's not enough to say high interest rates are driving consumers away. We see time and time again from other consumer-facing businesses, people are willing to spend, just not here. Is it fair to say that Etsy is more discretionary spending focused and Wayfair has some non-discretionary? Could that be impacting results? I think that's fair. I will say, I think Etsy has an understanding about where it stands in a consumer's cycle more than something like Wayfair does. Wayfair has a ton of competitors. They're a known website, but they don't get as

much direct traffic as, say, Etsy. They spend more money to acquire those customers. They're competing with the Amazons of the world in a way that Etsy just isn't. So, they have a distinct brand at Etsy, which I think benefits them a bit more, despite the fact that what people are purchasing are things like gifts or presents, which can be, to your point, more discretionary. On Tuesday, Walmart reported better-than-expected earnings, a 9% increase in its dividend, and plans to acquire smart TV maker Vizio to boost its ad business. Andy, a lot to unpack here. Results look good.

The acquisition is interesting to me. What's your headline here? Yeah, hard to find a mass retailer with a better quarter than Walmart. As you mentioned, e-commerce sales were up 23% for the quarter. Walmart, U.S. gains in grocery and those e-commerce sales were up 17% in the U.S. Global advertising was up 33%, with EPS earnings per share up $1.80, handily beating estimates, generated $15 billion in free cash flow for the year, up $3 billion. And then, Ron, as you mentioned, boosted that dividend 9%, which was the highest in 10 years.

But what was really interesting was this acquisition of Vizio. It had been rumored for a week or so. It was a $2.3 billion acquisition, so not very large for the likes of someone like Walmart. but as CEO Doug McMillan said, this acquisition accelerates the build-out of our advertising platform into the connected TV business. And Vizio has this SmartCast operating system. It's going to connect with the Walmart Connect ad platform. And I think it's a really interesting, reasonably priced way for Walmart to continue to build out that advertising network. And interesting, you saw a lot of those ad tech companies fall off on this news because now,

all of a sudden you have one of the best operators in the world really making a deeper push into connected television advertising. And Vizio has 500 direct advertising partners, and many of them are part of the Fortune 500. So it's a really good fit for Walmart. 51st consecutive year of dividend increases, 25 times forward earnings for Walmart. You like the stock? Yeah, I think it's really interesting. Don't expect the massive growth because they are really looking and pushing aggressively into these, what we all thought were kind of like side business, but very much could be kind of core. Also, their international business is doing quite well too. On Tuesday, Teladoc reported a fourth quarter loss that was less than expected, but sales were disappointing

and management issued weak forward guidance. And Emily, the stock got whacked. Is Teladoc's growth story officially coming to an end here? I think Teladoc's growth story has been coming to and in for a pretty extensive period of time. And I know a lot of people will point to the pandemic as an indicator that this telemedicine provider was always going to be something that people only used when they were stuck at home. And that, of course, people go back to their doctor's offices whenever the pandemic has let up. And certainly there has been some of that. But I think that oversimplifies the story of TelDoc, which is to say that the thesis behind this business was that they were going to spend, admittedly, a lot of money up front

to acquire and roll up all of these smaller telemedicine providers until they were kind of the dominant force. And they have a fair amount of relationships with healthcare plans, but that roll-up strategy ended up being incredibly expensive at a time when the businesses that they were acquiring were just trading at insane valuations, which made it really challenging for Teladoc to actually gain market share as well as drive profitability. And we're still seeing the outfall of that today. And that was what we saw in this most recent quarter, which was, sales growth was pretty paltry, only around 4%. Indicators for that slowdown, and especially in margin expansion, to continue. But they are still

looking to improve their business. Now, I will say this, that margin expansion they're aiming for, they're saying 5,200 basis points of margin expansion for adjusted EBITDA over the next three years each year. And it's always good to be like, hey, look, we're driving profitability. But gosh, 5,200 basis points with this company is not enough. In this past quarter, they had 260 basis points of expansion. So, that just shows you how much that slowdown is happening in terms of their margin. Coming up, we'll talk cybersecurity and an acquisition in the banking sector. You're listening to Motley Fool Money. You just found out that your sales team is at risk of missing quota. Don't panic,

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Ready to rule your business? Head to rippling.ai slash fool to get the only AI built to give you full visibility and take complex actions across your entire organization. That's r-i-p-p-l-i-n-g dot a-i slash f-o-o-l. Sign up for exclusive access today, rippling.ai slash fool. Ron Gross. Welcome back to Motley Fool Money. I'm Ron Gross, here in studio with Emily Flippen and Andy Cross. On Tuesday, cybersecurity company Palo Alto Networks reported results that were not met with enthusiasm. It wasn't necessarily the quarterly results, but more so a change to its strategy that spooked investors. Emily, results didn't seem to warrant a 25% drop in the stock. So what's the problem with the new strategy that has investors running for the

door? Just looking at the quarter, as you mentioned, things look great. They had 16% in billings growth. Whatever strategy Palo Alto has been implementing to this point has worked for the stock. It's worked for investors. So when a management came out and said, hey, we had 16% in billings growth this quarter, but we think that's going to be 2% to 3% next quarter. I mean, investors shot first and asked questions later, which is understandable. In addition, with Palo Alto falling, a lot of other cybersecurity companies started falling as well, which begs the question of, is this a slowdown in demand for cybersecurity in general, or is this a Palo Alto-specific issue?

The answer, in my opinion, is very much the latter. Palo Alto is implementing a change in their call strategy, I'd say tactics, of a way of acquiring customers, which is to say, when companies are in the process of shifting their security to the cloud, they're oftentimes working with numerous different vendors, all of which Palo Alto seeks to replace. and it can make that transition challenging for them. Palo Alto, historically, alongside other companies, has been transitioning and charging full upfront, despite the fact that that company may be working with different vendors. Under their new strategy, what they're effectively doing is

providing their services for free until those existing vendor contracts end later on. This could be a period of effectively years. But management thinks that this is going to accelerate their long-term revenue growth, even though it shows a slowdown in the short term, and that this could theoretically be a more offensive strategy to gain market share in an industry that is becoming increasingly competitive. Price wars maybe in the future here as a result of this move? That's what a lot of people are saying, but I think it still remains TBD whether or not companies like CrowdStrike, for instance, are really going to feel the need to provide their platform for free when they've managed

to convert so many enterprise spenders with full payments right up front. Earlier in the week, Capital One announced that it would acquire Discover Financial, and an all-stock transaction worth $32.3 billion. This deal would combine two of the largest credit card companies in the U.S. Andy, what's got Capital One interested in Discover, and do you like the deal? Yeah, it's really about the network. Buying that Discover network, it's one of the major ones with Visa, MasterCard, American Express. Granted, it's much smaller than those. Based on data from our sister company, The Ascent, reports that Visa, MasterCard, and American Express have about 96% market share of payment

volume with Discover at 4%. It's much smaller, but it's unique. Capital One now is going out to spend an all-stock deal valued at about $35 billion to acquire this network. That network that they'll be able to bring into their family and start to move some of their MasterCard and Visa credit cards over to the Discover family. When you start thinking about what Richard Fairbanks, the co-founder and CEO of Capital One, calls the holy grail to be both an issuer and a network provider. That's real magic because it starts to connect them with those merchants that Discover has that Capital One just didn't have access to. So, it is not a sure thing. The stock's at about $120-ish, and the deal point would be at about $140. So, there's some concern

that regulatory issues are going to keep this deal from happening. But overall, if you're a CAP1 shareholder, I think it's a good deal for you to buy this. It could dilute a little bit of the book value, but overall, I think the long-term picture for CAP1 with Discover is pretty bright. Banking sector always controversial, especially within the Senate. It is an election year. Do you think we have some senators here, some government officials here clamoring for this deal not to get done? We're already seeing it. Senator Warren's come out pretty aggressively saying, don't do the deal. And they do expect it to close late 2024 or early 2025. I can't see it closing this year. If it gets through, it'll probably be early next year. But I do think

it'll get very high scrutiny. And that's one reason why the stock is not really that close to the acquisition price. Would you recommend an arbitrage share? Would you arbitrage a stock? I would not arbitrage a stock. I think if you're a Discover shareholder, hold on to your shares. Sounds good. On Thursday, MercadoLibre reported solid sales results, but earnings were hurt by what appears to be two non-recurring tax charges. Emily, first, are the charges really non-recurring? And second, how do results look if we adjust for them? Yeah, to answer your question with a non-answer, yes and no. It is not recurring in the sense that

the business in this most recent quarter is recognizing a lot of expenses associated with change in tax status right up front, when less than 1% of that is actually attributable to their actions over the last quarter. So, you can understand why they back that out. But yes, it can be recurring in the sense that management did say that moving forward under these new tax rules, they're going to have around $20 million a quarter in incremental charges. In addition to that, they have this lawsuit that they're expecting that they're now going to lose it. It seems to be non-material for the business moving forward, stemming from some rather old liability associated with its business over the past decade. But all those expenses kind of being

recognized in the quarter did bring that non-adjusted number down. But even if you just back out those numbers, results still kind of came in a bit less than what the market expected. The good news is sales were strong. So, the stock is not down massively. The thesis from MercadoLibre hasn't been broken. But they did fail to keep up with the pace of inflation in Argentina, which resulted in the margin of sales coming from that country to be a little bit lower. I think investors should continue to really watch the fintech business here, though. This is the driving force, what I believe to be the driving force behind MercadoLibre's profitability, which is their expansion of credit offerings, debit cards, bank accounts, all of which continue to explode.

When you think about that fintech business that Emily just talked about, the performance of non-performing loans due 90 days or longer fell from almost 30% to 18.7% this quarter over the past year. That's a good sign. They're seeing less and less on the non-performing side. But they have increased the provision to those downfall accounts to the highest of the year. I think there is maybe perhaps some investor concern that it is going to be a little bit more challenging environment for them. But the fintech side aside for MercadoLibre, what I think continues to be interesting is the logistics business. They shipped 407 million items. That was up 31%. Next day items shipped was up 21% year over year. Now, almost 50% of

total shipments of all the products they ship go across the MercadoLibre logistics business. Again, they just continue to build out that ecosystem. They have a little budding streaming business. I just really like the way they are positioning themselves. But there are these macro factors that investors have to watch, and we certainly watched them over at Stock Advisor. On Friday, stock was down about 10%. I'm still not really seeing the reason for it. Did you think that potentially could be overblown? I think there's an expectation now with those impending tax charges that their margin is going to be just mildly lower than what analysts expect. That combined with the failure and

expansion of profitability and inflation in Argentina probably just lowered expectations. All right, Fools, we'll see you a little bit later in the show. Up next, a conversation with Bloomberg reporter Kurt Wagner about Twitter and his book, The Battle for the Bird. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Ron Gross. Motley Fool Money's Deidre Woolard caught up with Kurt Wagner, a Bloomberg reporter covering social media companies and author of the new book, The Battle for the Bird. They discussed Twitter's early days, lesson from Musk's takeover, and what makes the old Twitter so hard to replicate.

I love this book. I love the idea of the history of Twitter. And you go back before everything really started getting crazy. And I want to take the listeners back because I want to start with a couple of alternate universe questions. Because you talk about 2015, Twitter's casting around for a new CEO before bringing back Jack Dorsey. And they look at Andy Jassy, who now, of course, is Amazon CEO, but was running AWS at that point. Probably a better move for him. But what might Twitter be like with someone a little more organized at the helm? Maybe more traditional, right? Yes, traditional is a good word. Traditional business That's mine. Well, certainly a more lucrative decision for Andy Jassy to stay working at

Amazon. But the reason the board came to this conclusion is they thought at the time that Twitter's biggest issue was the product. They really thought if they could figure out how to grow the product, how to create maybe some killer features that the business would follow. And so as a result, Jack Dorsey felt like the product choice here. Andy Jassy felt more like the business choice. He was someone who obviously had a ton of success, but in enterprise software, not necessarily consumer products. And so they ultimately went with Jack Dorsey. It's a fun thought experiment to think like, what would Twitter have looked like? Actually, a lot of people don't realize there's a decent chunk of Twitter's business that was

related to the API and to data sharing and things like that. And maybe that would have become a much larger thing under someone like Andy Jassy, just given his background. But, you know, we'll never really know. They thought that Jack was the product guy that they needed. And that's obviously in the direction that they went. Well, another sort of alternate universe question I have for you is about when Disney and Salesforce were hovering around thinking about buying Twitter, Disney got pretty close, which I found surprising. I know that they at one point were thinking of almost buying BuzzFeed. What do you think Twitter would have been like if the deal went through with Disney? Would it still exist? Yeah, I think it would have

because the way that Disney was thinking about Twitter at that time was as a streaming service. So a lot of people might not remember, but in 2016, when these conversations were happening, Twitter was really pushing into live video. They wanted to sort of be like a TV on the internet, right? They were streaming Thursday night football games. They were making deals with all kinds of other content partners. And that was what attracted Disney was this idea that maybe they could take their catalog of high quality content and get it to people through Twitter. And so, you know, you look at what Disney Plus is right now, for example, right? It's possible that that could have been like a role that Twitter played had this acquisition happened or in some way maybe Twitter would have shifted and looked very different than it does today.

But I do kind of think it would have existed because the thing that Disney wanted it for is something that the company is still very much doing. Well, I find this fascinating with the video because Twitter, they got it early on. they got it ahead of everybody, you know, but, and they struggled with it. So you've got the shutdown of Vine and Periscope. You've got these repeated miss swings. You just talked about the Thursday night football. They keep building it, but then they keep not really being successful with it. So what made this so hard to master for them? Yeah, the execution was, was obviously poor, right? And I think when you think about Vine, uh, for those who, who might not remember Vine was this, you know, short six second looping video. Uh, and, and it was very creative. Like the people

who used it were very creative. There was a whole community and culture that had sort of been built around vine and it was very reminiscent or sorry, very similar, I should say to what we now see with Tik TOK. Right. So, so Twitter at the time kind of had Tik TOK in the building, but they didn't nail it. And the biggest, I think issue that I gathered was around this time, they were doing three different video offerings at once. All three were led by different people. All three were competing for resources internally. There was no real cohesive effort. They had Periscope, which was live video. They had this professional produced live stuff, the TV stuff we talked about with the NFL. And then they had Vine. And there was just no cohesion between those three. They

were competitive. This, in my opinion, is one of the biggest mistakes that Jack Dorsey made when he came back was not figuring out a way to bring this strategy sort of together. And as a result, even though they were early to a lot of these things, they didn't execute on them well enough to ultimately establish themselves, I guess, as the premier place for them. I feel like they didn't give it enough time either, especially with Vine. Because what you just talked about, I mean, you sort of had like proto-influencers. You had people that were like doing stunts and things like that. It was pretty sticky. Periscope was less so, but Vine was interesting. Well, and one of the big things I think with Vine is I don't think they ever did

enough to convince creators that that was worth their time, right? So imagine you're a young internet creator. You're creating these fun videos. You've built an audience on Vine. Well, at a certain point, you're looking to make money, right? And Twitter and Vine were not offering them the ways to make money that, you know, YouTube was, that Instagram would eventually kind of go on to do. And if you're someone who's, that's your livelihood, you're going to go to the place where you can make some money. And so I think there was just, you know, too slow to kind of recognize that, hey, we have this great community. We need to figure out how that they can stay, you know, self-sustainable. And they just didn't pivot quick enough to do that for them.

Well, before Elon enters the room, we've got Elliott Investment Management. They pop up in the book. I've seen a lot of Elliot in the news lately. You know, they've been looking at Crown Castle, which is a tower read I follow. They've been looking at Match, Phillips 66. What did you learn about Elliot's style by researching what they were doing with Twitter? It's a pretty simple style, which is what can we do to make the most money, right? They don't really worry a ton about the collateral damage. In Twitter's case, it was, okay, we have this service that's incredibly popular, but we have a guy who's running it who has another full-time job. This just does not equate. The thought was, Twitter would simply be worth more money and would be more valuable

if the person running it did it as a full-time job. It's a hard thing to argue. Most companies of that size should have a full-time CEO. And so they came in with that mindset, like, hey, it's nothing personal. Jack, we don't dislike you as a person. But the fact that you're running two jobs, it hurts the value of this company, and we need to figure that out. And so I really liked this chapter, and I really liked digging in on this, because it was a really fascinating business clash to watch this activist investor try and boot a CEO from the company while the board of directors is actively fighting to keep him. And ultimately, I would say the board won in the short term. Jack got to keep his job. They had to make a bunch of

concessions to Elliot in order for that to happen. But in the long term, I think Elliot actually got what they wanted, which was they got a much more focused company. They got some very specific goals around the business, around user growth, around revenue, things like that, that Twitter had never had to do before. And ultimately, Jack Dorsey left the company about 18 months later. And I think a big reason was that this had burnt him out and this had really bothered him. And so even though he got to keep his job short term, I think Elliot kind of got what they wanted in the long term, which was that full-time CEO for Twitter. Well, you mentioned that it was nothing personal, but he took it personally. And I think that's something that he has in common

with Elon Musk is this idea of taking business things really personally. And so the relationship between them is interesting. I mean, we knew that Musk loved Twitter, but the relationship between Musk and Dorsey, I found really interesting in the book because you give us a good flavor that there's a mutual admiration society there, but then it seems like there's been less of that over time. So I think I see some of the ways that they're similar, but tell me, tell me a little bit about where they're similar and where they differ. Yeah. I would say I'll start with the differences because I think they're more striking, right? I think the way that these two choose to manage and lead is, is very, very different. Jack was very thoughtful, almost to a fault. He was,

he was generally slow. He was hands-off, right? He didn't like to make a ton of decisions. He like to empower the people who reported him to do that. He sort of served as like an advisor, if you will. And then Elon is the exact opposite, right? He runs a million miles per hour. He makes all the decisions himself. He, uh, you know, doesn't necessarily care too much about the feelings of his employees. He's just sort of working toward his, his ultimate mission. And if you get in the way, you know, you either run with him or you get run over. And so I think, you know, from a, from a management standpoint, they were incredibly different where I think they were similar is that I think Jack sort of had this idealistic vision for Twitter about what

it could be, or maybe should be if it wasn't a publicly traded company. And I think Elon sort of bought into that or agreed with that. Right. So I think where they met was like, okay, we manage things differently. We treat people differently, but our vision for what Twitter could be or should be is the same. And that's where they sort of shook hands and seemed to be on the same page. Now, obviously, I don't think that's materialized in the way that certainly Jack Dorsey had envisioned. But, you know, I think there's also something to be said about being rich and being a founder, right? Like, it's a small crew. It's a small social circle of billionaire tech founders.

And so I think sometimes people who are in that circle sort of, you know, gravitate towards one another simply because there's very few people in the world who can relate to what they go through, what their life is like. And I'm sure that there was some of that as well. Let's talk about when he comes in, you know, comes into this company, he brings a sink in the building. I mean, it's all nuts. It's sort of like a how, it's like a how not to, because there's layoffs, there's chaos, there's a climate of fear, there's just bad communication, there's threats. Is there any positive lessons that we can learn from the general disaster that happens

when he decides to take over? I'll maybe give him two, I don't even know if they're compliments, but I'll maybe say that there's two things that maybe were on the right track at least to start. And the one is when you take over a company like this, being very dramatic in terms of your changes, I actually think is an okay thing to do, right? I mean, Twitter was in a rut. It had spent a long summer, as we've talked about with the lawsuit and all these things. And I think the idea of coming in and really trying to be radically different is actually okay. I don't think he executed on this idea very well. But I think in theory, being radically different wasn't necessarily a bad idea. And the other thing that

I think he sort of did, or at least the intentions were there to do okay, was he moves very fast, right? And Twitter had a history of moving very slowly, of second guessing themselves, of taking forever to launch things. And this idea that Elon had came in and wanted to move quickly and was willing to literally sleep at the office to sort of get things done, set that kind of example for people.

You know, I don't think that's healthy work-life balance by any stretch, but I do think there's something to be said about like his willingness to move fast, you know, in the tech world can be somewhat commendable sometimes. Now, again, I don't think he executed either of these things very well.

I think his, you know, he didn't really have a set plan when he came in And then the moving quickly actually got them into more trouble because there was no plan that he was following. But I think on paper, those two things could have been positives had they been handled a little bit differently. The new X, it's a different place. I mean, I've been on there.

I think I joined Twitter in 2008. I've tried to move on. I've tried threads. We've got Jack Dorsey's got Blue Sky. Nothing has quite measured up so far. So is, was Twitter like a time and place phenomenon do you think, or is there room for like the next big short message, social media service? And, and if so, do you see anything like what are you using? Are you still on Twitter? Uh, yeah, I am still on, on Twitter. Um, now X of course. Um, I,

I like to think that I'm mostly there cause I cover the company, but to be honest, I still do get some, some real value out of it. I'm a, I'm a big sports fan and like the, you know, sports news and sports community on Twitter, I think is one of the things that has actually been able to stay somewhat strong. But I've been thinking a lot about this, like, can Twitter be replicated, right? And I'm not so sure that it can for a couple reasons. Number one, like the thing that made Twitter so unique and great was that pretty much everyone felt that they needed to be on it in terms of celebrity, right? So if you're a politician, if you're a musician, if you're a journalist, if you're a celebrity of some kind, there was this feeling that you had to be on

Twitter because that's where people talked about things in public. And I'm not sure you could convince that collection of people that they need to be anywhere in 2024 or beyond. I think we've sort of gotten to this point in social media where people 10, 15 years ago thought it was a necessity. Now people have realized, well, there are pros and cons of social media, but it's not something I have to do. And so that's what to me made Twitter so unique was the collection of people who were, who you could hear from quite frankly, on a regular basis. And I just don't think you could convince all those people to come back. And then as a result, you're never going to have that collection, uh, that community in one place again. Um, and I think we're seeing that right

now with like how things are starting to splinter, you know, as you mentioned threads or blue sky or even Instagram, obviously it's no, it's not Twitter, but it's a place where I think people have migrated or said like, okay, I don't have my Twitter anymore. I'll, I'll focus on Instagram instead. It's hard for me to imagine all those groups coming back together in one place again. Coming up after the break, Emily Flippen and Andy Cross return with a couple of stocks on their radar. Stay right here, you're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against,

so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Ron Gross here with Emily Flippen and Andy Cross. Fools, we've got time for one quick story before we hit stocks on our radar. beginning February 26th, KFC is introducing, for the very first time in the U.S., its international smash hit, Chizza, featuring two 100% white meat, extra crispy fillets topped with marinara sauce, mozzarella cheese, and pepperoni. So, fools, what do you think? Would you try it? Will it be a hit in the U.S.? Emily, you're up. Did you just ask me if I've ever had Parmesan chicken?

chicken parmesan, but that's what this is. I mean, you're breading a piece of chicken, covering it in marinara sauce, and then putting cheese on it, then selling it as a, quote, limited-time offering, like I've never had chicken parmesan before. That's fascinating. Emily's not doing the piece of pepperoni any justice. That's true. So you add that into it, and it's a completely different animal. Plus, you've got to eat it at the bottom. How do you hold the thing to eat it in a piece of paper? I'm just curious on how you eat it. Knife and fork, I'm guessing.

Knife and fork? No way. You just devour that thing. All right, folks, we've got a couple stocks on our radar, and I'll bring in our man Dan Boyd to ask a question and pick his favorite. Emily, you are up first. What do you got? The stock on my radar this week is Grab. The ticker is G-R-A-B. And for investors who are unfamiliar, Grab is based out of Southeast Asia. It operates a little bit like Uber Eats or Grubhub, where they have mobility, they have transportation, delivery, logistics, a one-stop shop of sorts. They came out and they posted their first ever quarterly profit this quarter, fourth quarter 2023. They also approved a $500 million share repurchase plan, which is really interesting.

The company doesn't have absurd stock-based compensation, but it does have a ton of cash on its balance sheet. What they're saying is effectively, well, in the meantime, while we figure out what to do with this cash, why not award some shareholders through share repurchases? What I'm continuing to watch, though, is just how they manage their incentive payments to drive expansion in both active customers and the number of orders. They've had a 12% increase in transacting users over the last quarter, which is great, but I want to see those incentive payments continue to come down. Dan, you got a question about Grab? I had never heard of this stock before Emily brought it to the show. I was looking it up,

and I still don't really understand what they do. Emily, could you give us a quick primer? Yeah. Look, have you gone in an Uber before? Have you ordered Grubhub or Uber Eats? Have you into package with someone you love. There you go. You got Grab. All right. I'm still not sure what they do. Andy, you're up. What are you looking at? Team, I'm looking at HubSpot H-U-B-S, a subscription CRM tool, customer relationship management to more than 205,000 customers who rely on that tool, especially small and medium-sized businesses. $30 billion company, $600 stock price. The stock's up 55% in the past year. It's growing about 25% and sells for about a 14 times multiple on those sales.

What's really interesting is they have recently announced a new pricing scheme. They provide these hubs around operations, content management, customer service for these clients. Sales is a big usage of them. They are now doing a new pricing plan that removes some of the seat limitations. It's easier to upgrade. It aligns the pricing with some of the new CRM tools and some of the new AI stuff they're putting forth. That's going to hit in March, so I'm really watching to see how that impacts both their subscriber base as well as some of their revenue numbers.

Dan? This company doesn't make hubcaps? They do not make hubcaps, but I believe they probably help a company that does make hubcaps. Dan, we've got Grab Holdings and HubSpot, neither of which you understand. And what are you putting on your watch list? This is a tough one, Ron. I'm going to go with Grab just because, I don't know, Emily's made more sense with her explanation. All right, Emily Flippen, Andy Cross, thanks for being here. That's going to do it for this week's Motley Fool Money. Thanks for listening. We'll see you next week.