Motley Fool Hidden Gems Investing - The Next Amazon May Already Be Here

Episode Date: May 5, 2017

Apple sells 50 million iPhones for the quarter. Facebook closes in on 2 billion subscribers. And MercadoLibre does its best Amazon impression. Plus, best-selling author and New York Times journalist Charles Duhigg talks American Express, Chase, and the battle to be your credit card. Thanks to Slack for supporting The Motley Fool. Learn more at slack.com.     Learn more about your ad choices. Visit megaphone.fm/adchoices

Thanks to Slack for supporting this episode of Motley Fool Money. Slack is a messaging app which brings together all your team's communications in one place, making work simpler and more productive. Slack, where work happens. Find out why at Slack.com. Everybody needs money. That's why they call it money. The best things in life are free.

But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Chris Hill, and joining me in studio this week from Million Dollar Portfolio, Jason Moser and Matt Argesinger, and from Motley Fool Explorer, Simon Erickson. Good to see you, as always, gentlemen. Hey! We've got the latest headlines from Wall Street.

Pulitzer Prize-winning reporter Charles Duhigg is our guest, and as always, we'll give you an inside look at the stocks on our radar. But we begin with the biggest public company getting even bigger. year. Apple's second quarter profits rose more than 10%. Revenue of just under $53 billion, Matty, and the stock hitting an all-time high on Friday. Yeah, the numbers are so big, it's almost hard to put them in context. But this is still the iPhone story. The iPhone, which was 63% of revenue, of course, Apple's most important product. The unit sales there fell 1% to $50.8 million, which is still, again,

a massive number. But I think the anticipation there of the newer iPhone is probably affecting that a little bit. But what I like to pay attention to is the average selling price for the iPhone, which was $655 this past quarter, up from $642 last year. I think that is one of the key numbers you want to watch. As important as the iPhone is to their revenue and to the business, we want to see that ASP remain high. If we see any degradation in that, we're going start worrying about whether or not the smartphone market is becoming commoditized, and if the iPhone can maintain its competitive position. I'll also point out that the services revenue, which Tim Cook was touting, up 18% to $7 billion. Now, it's a small number relative to everything

else Apple does, but just to put that in perspective, it's more than double what Netflix does in revenue in a given quarter. Great numbers, I think. Again, this is becoming a capital allocation story, though. We know the cash hoard. We know that management upped their buybacks by $50 billion. They're going to return $300 billion total in buybacks and dividends. They raised the dividend. A lot to like. Again, though, paying attention to those iPhone numbers, that's key. Speaking about capital allocation, how about we throw acquisition targets in that as a potential, too? We're starting to talk about a 10% potential repatriation tax.

that would give Apple over $220 billion to work with for either acquisitions or buybacks here in the States. Citigroup just listed seven companies that could be potential takeouts. On that list, Netflix, Walt Disney, and Tesla. I don't know. I mean, this is a company that historically doesn't make big acquisitions. No, and I think that's really the big question, because we've looked at the last five years as Tim Cook has really, I think, done a good job managing the business. But it's becoming clear that they're lacking that innovation that existed when Steve Jobs was still alive. So, like Matty said, this is becoming really a capital allocation story. And as it stands right now, it just doesn't seem like he's

really up to that task, at least looking outside of returning money to shareholders. So, we'll see share repurchases, we'll see dividends being juiced a little bit here and there, But it is still an iPhone story. And one thing I'm noticing is that as iPhones progress, we get to the 6 and the 6S and the 7 and yada, yada, yada, those phones get better, which means we can use them for longer periods of time. And I started thinking about that just in regard to my phone. I think I have the 6 and I feel like I've had it for about five years. And honestly, I don't know that I have any desire to upgrade it, because it still works just fine. Now, I will say, I've also refused to upgrade the operating system because

they've fooled me enough times on doing that. At some point, it just turns your device into a brick and you're forced to upgrade. But it is one of those things where it's a solid piece of hardware. I think they'll maintain that competitive position there. The brand stands for a lot. But as these phones get better, I don't think people are feeling the need to upgrade quite as frequently. I think, above all, I'd like to see Apple pay a ... and we rarely see this, but I love it when I see it, is a company that pays a dividend based on its profits in a given quarter, given year. Apple, like many companies, is increasing the dividends,

a steady dividend, it's almost a 2% yield that shareholders can depend on. I would just say with a business like this, because you don't know if that iPhone is going to fall off the cliff, you don't know if those services are ever going to grow and become a real strong recurring revenue base for them, just pay out a massive dividend, but make it a percentage of profits in a given year, and I think that would be a big boost for shareholders. Hey, even Costco went out there and paid like a $7 special dividend. Granted, they borrowed $3 billion to do it, but as long as we're talking about big balance sheets, Apple could certainly afford squeezing out a couple of big special dividends there. I think shareholders

would like it. Facebook's first quarter profits and revenue both came in higher than expected, Simon, but Wall Street was unimpressed. Shares of Facebook down a couple percent this week. Unimpressed? How can you be unimpressed with a company that's doing $8 billion of revenue, growing at 49% year over year. That's pretty impressive, Wall Street, if you ask me. I think the next step for Facebook, though, is, I mean, they have nailed it already with advertising and with mobile advertising. I think the next step for them, in my opinion, is going to have to be about transactions. We've seen things in the past, like the Buy button directly on Facebook

pages. We've seen David Marcus come over from PayPal, try to build out some of these APIs so that companies can book things like Uber directly on the Facebook Messenger and things like that. But I think that advertising is great. The even better thing is when people are actually buying things on Facebook. That's more valuable to an advertising customer. That's what I think is the next three years of this company. Closing in on 2 billion users. Amazing. Well, and when you think about everything you just laid out, particularly with respect

to transactions, I mean, they don't need that many of their users to make it meaningful. Zillow's first quarter revenue was 32% higher than a year ago. The company also raised guidance for the full fiscal year. That's encouraging, Jason. They're also spending a lot of money over there at Zillow. Yeah, and guidance that raised was very, very slight. So, I'll just throw that in there. And I grow more and more conflicted with Zillow every quarter, it feels like, as time goes on. I mean, on the one hand, it's plainly the brand that everybody knows in online real estate. I mean, it is the brand that people know. The platform was built for a mobile

existence, and it's a great experience. I think things like the Zestimate, not a big fan. I almost wonder if that doesn't hurt the cause in some respects, because it really isn't an appraisal in any sense. But like you said, all of this growth does come at a cost, and they have to continue that spend here for the foreseeable future to drive all that traffic. And when we talk about traffic, the traffic is certainly going there. Visits to Zillow Group Brands mobile apps over the quarter were up 18%, more than 1.5 billion visits in the first quarter of this year. They are ratcheting back this focus on growing out the number of Premier agents and really just focusing on the highest spenders. Even there, the number

of Premier agent accounts that spent more than $5,000 per month in the quarter grew by 98%. So, that basically almost doubled. That's a big deal. These guys are doing something right. The biggest question is, will they be able to drive that traffic when they pull back on that spend? When they pull back on that spend, that really, I think, is going to expose whether they have a sort of sustainable advantage in this market or not. Because as it stands right now, they've had to spend a lot of money to drive that traffic, and that's what's driven those results. And the stock, by no means, is any kind of a steal That's so key, because I think what we're all waiting for is for Zillow to really

turn on the cash flow and the profits, but they can't do it because they're spending so much on marketing. And to Jason's point, if they stop spending, how strong is the brand? How well does it hold up? Is it still the premier destination for people on mobile or online looking at real estate? That is a big outstanding question. Shares of Tesla falling a bit this week after its first quarter report. They shipped a record number of vehicles, Simon, but Tesla's loss was a lot bigger than people were expecting. Yeah, and holy cow, Tesla's now a $50 billion company. That's bigger than any other of the OEMs, of the automakers out of Detroit right now, because the market is forward-looking.

And if you are investing in Tesla at this point, it's not based on stock fundamentals. It's based on the Model 3, which is set to start deliveries later this year and continue into next year. Elon Musk thinks he can ship 500,000 of these every year, which would put it in the race for being one of the best-selling vehicles in all of America. If that demand is true, and all of Tesla's spin that they're putting right now into the Gigafactory, into Fremont's production lines upgrades, I mean, these are multi-billion dollar spins they're putting to CapEx. Ultimately, it's going to be the market that deems whether or not that was a good decision. Don't you think that the other automakers

are keeping their powder dry in terms of going after Tesla, because Tesla was, up until the Model 3, very much a luxury automaker. So, if you're Ford or you're GM or Toyota, you can just sit back and say, well, no, they're really competing with Rolls-Royce and Lamborghini and that sort of thing. If they're coming out with a mainstream car, I think the knives are going to start to come out. Yeah, and there have been fast followers for the EVs. There's no doubt about that, that all the other automakers are following Tesla's lead that they've had on this. But I think that even in addition to that, Chris, something we've always been watching is just, is the auto industry changing right now?

Are people really willing to spend $50,000, $80,000 for a luxury vehicle up front when it's just being parked 95% of the time? When we've got this new mobility as a service buzzword rolling around, this is Uber without the drivers. So you might be getting $0.20, $0.30 per mile just to get from point A to point B. That really changes a lot of things, I think. Earningspalooza rolls on And after the break, stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argersinger, and Simon Erickson. Shares of MercadoLibre up big on Friday after first quarter profits for the e-commerce company rose 60%. Matty, this was a stock on your radar a couple of

weeks ago. Was a 60% rise in profits on your radar? Not quite that big, but I've been excited about MercadoLibre for a long time, this is going to sound a little hyperbolic here, but of any company I watch closely out there, this looks like Amazon about a decade ago. It's a company that's investing heavily in building out a two-sided network effect, consumers, merchants, and by all accounts, it's working beautifully. You know, Unique Buyers was up 20% to $13.3 million in the first quarter. Items sold across the platform, which is a way I kind of look at my proxy for normalized revenue growth, up 38.6% to $53 million, and that includes 50% growth

in Brazil, which is their largest market. Transactions across MercadoPago, which is their payments platform, up more than 60%. And the net revenue in U.S. dollars, up 74%. That's the fastest growth in U.S. dollar terms in over five years. So, by all accounts, MercadoLibre is just getting it done. And yet, here we are, the stock's up, I think, 70% year-to-date. I look at the enterprise value, $12 billion, they've got a lot of cash. It just doesn't seem very big to me, weighed against the opportunity, if they truly are an early Amazon that's dominating the region. How do you think eBay is feeling right now?

That's on my mind. Kind of like McDonald's when they unloaded Chipotle. Yeah, absolutely. I think the price was around $175 when eBay unloaded last fall. So I think that's a little bit, yeah, seller's regret there. Quick question, since you compared them to Amazon 10 years ago, do they have their own Jeff Bezos-type leadership at the top? Yeah, Marcus Galbaran is ... I can't put him in the same league as Jeff Bezos, but he founded the company. He's from Argentina, but he's a Stanford business grad. You know,

he kind of followed eBay's blueprint early on, and him, to his credit, has shifted that a lot towards more of an Amazon-like platform, with payments and shipping, and now free shipping. And so, yeah, I put a lot of chips. He owns a lot of the company, but certainly no one can be in Jeff Bezos' league. Mattie, I would just like to chime in and say, excellent Espanol. Good job on the pronunciations. You've gotten a crash course with MercadoLibre the last couple of years. Been forced to. ShakeShack's first quarter profits came in higher than expected, but same-store sales

fell 2.5%. Jason, they were working off a little bit of a tough comp, but you never want to see same-store sales falling. Well, Chris, let's be clear. It's same-shack sales. Yeah, yes. If Zillow can have the zest of it, then they can have same-shack sales. Yeah, I think, listen, Shake Shack has 127 stores worldwide at the end of this quarter. So, I think there is the potential there for some growth, but I think you have to take that with a grain of salt, because when you look at that 127-store base, a big percentage of them are licensed stores, and I think those licensed stores just simply aren't nearly

as meaningful to the top line. So, the top line this quarter was driven by new stores, right? Same Shack sales were a little bit off the mark. Now, part of that was, may come as a surprise, weather-related. They also ran a big promotion on their new app, which took a lot of promotional activity, gave away a lot of burgers that way. I'm not conflicted here. I mean, I really enjoyed when we went up to New York City and ate there. I think it's delicious food. I think you have to really look, though, at the store base. You have to look at the economics of the business and understand that, even at just a bit more than $1 billion market cap, I just don't know that the same kind of growth is there for something

like a Chipotle, where they own all of the stores and the economics are far different. Does this brand elicit the same kind of brand loyalty? I don't know. I don't think it really does. I think burgers are pretty easy to replicate, and a lot of places do it really well. These guys are doing okay. I'm still kind of surprised to see the stock where it is today. I just feel like it's very, very optimistic for what looks like maybe not as big a growth opportunity as some might like to believe. I'll give them a slight pass on the weather, just because so many of the stores that fall into the same-store sales category, they've been open for more than a year, so many of them are concentrated in the Northeast.

So you get a little bit of a pass, but as far as I'm concerned, that pass is now gone. No, that pass is now gone, absolutely. Good week for FireEye, the cybersecurity Solutions Company's first quarter results were better than expected. That, plus some encouraging guidance, sent shares of FireEye up nearly 20% this week. It was a good quarter, Simon. They kind of need to keep it going, though. That's right, Chris. FireEye is in a transition right now as a company. They originally had some really big hits by selling cybersecurity products to deep-pocketed customers, like the CIA, Department of Defense, financial services, companies like this. And they've

realized that if they wanted to get into the mass market, you weren't selling to people that were setting up these giant data centers. You were selling to businesses that had Amazon Web Services. And so they changed the business to focus on subscriptions. Subscriptions have more of an even kind of revenue over time. It's not all up front. And so they had to adjust their cost structure. And they did a very, very good job of doing that over the last six months. You're starting to see them come back to profitability. And as long as they continue those subscription recurring revenues that the business is winning, I think this is a company that's in pretty good shape. In terms of the stock this week, is it still

looking cheap to you? Or, again, do you want to see a couple more quarters like this? It's volatile. I mean, this is a company that you constantly will see 20% or even more than that. Stock go up or down 20% based on earnings releases. But I think that longer term, as you see, what I'm watching as an investor is paying attention to Helix and CloudMVX. Those are their recurring subscriptions. If they're continuing to win those, I think you're in good shape. This weekend is the Berkshire Hathaway annual meeting. We've got a couple members of our editorial team in Omaha. So if you are looking for coverage this weekend, we've got you taken care of. You can go to fool.com as well as The

Motley Fool's Twitter feed for The Motley Fool's coverage of Berkshire Hathaway. The big news heading into the annual meeting on Friday was Warren Buffett admitting that he has sold about one-third of his stake in IBM. Jason, Big Blue was one of the big four. Looks like Warren's taking a little bit of a pass now. Do you feel like maybe he's thinking he's stepped a little bit outside of his circle of competence? I mean, he was never really that big a fan of tech, and maybe he got a little bit lost and asked Watson what to do, and Watson just gave him the straight scoop. You've got to sell. Maybe buy something like Apple, it's a little bit more reliable.

I just think this, we talked about this a month ago, but I just feel like it wasn't so much a tech, outside of circle of competence in terms of just being a company that's not doing well, changing its business structure, highly competitive, which he admits right now. I think there are a lot of reasons for Warren Buffett not to invest in IBM. I'm glad he's selling. O'Reilly. Warren, I'll buy your shares. I'll take the other side of the coin on this one. For 12 times earnings, I think IBM continues to lose a lot of its legacy business and revenue continues to fall. But earnings are continuing to grow as Watson and that AI is continuing to be a more important part of the business. I think they got a lot upside. O'Reilly. A big deal in the home

services industry this week. Angie's List was bought by Interactive Corp., also known as IAC, the parent company of brands like College Humor, Daily Beast, and Dictionary.com. IAC is going to merge Angie's List with its home advisor unit and spin it out into a new public company. Shares of Angie's List up 80% on the buyout. Let's go to our man behind the glass, Steve Broido. Steve, you're an Angie's List customer. Were you surprised by the news? I was a little bit, especially because I used to pay them, and then they stopped charging me, and it was all free. Do you think that had anything to do with why they had to sell? I think it's exactly what happened.

Well, I noticed, looking at the financials, there was a clear point where the top line started to decline. I mean, obviously, sales were slowing down, so I guess that was just the … Sales stopped, my friend. They didn't slow down, they stopped. All right, guys, we'll see you later in the show. Up next, best-selling author Charles Duhigg is going to take us inside the snob wars. Stay right here. This is Motley Fool Money. Before we get to Charles Duhigg, I want to say thank you to Slack for supporting this week's Motley Fool Money. Slack is a messaging app that brings together all your team's

communications in one place, and it makes your working life simpler and more productive. We use Slack here at The Motley Fool. We've been using it for a few years, and it's fantastic. It connects the tools and services you need in one place. It allows you to work with your team using real-time messaging, video, voice calls. You can share files. There are searchable archives. It's super easy to use. Major companies use it, like Capital One and Electronic Arts. And like I said, smaller companies like ours use Slack. It saves you time, and it's going to make you more productive. Here at The Motley Fool, our internal email was dramatically cut because we were able to use Slack. You don't have to search through emails for that one follow-up or look

through multiple systems to find what you're looking for. No more switching across multiple tabs and platforms to keep updated with your work. Plus, you can tailor Slack to your work with over 900 apps. They've got the mobile app for iOS and Android that syncs seamlessly. You can always pick up right where you're left off, no matter where you are. So, check it out. Slack, where work happens. Find out why at slack.com. Welcome back to Motley Fool Money. I'm Chris Hill. Charles Duhigg is a Pulitzer Prize-winning reporter for The New York Times and the best-selling author of The Power of Habit and Smarter, Faster, Better, The Secrets of Being Productive in Life and Business. And he joins me now from New York City, Charles. Welcome back to Motley Fool Money.

Thanks for having me on. There's a bunch of things I want to talk to you about. So let's start with the most recent thing you've written for The New York Times, which is the battle between two financial titans, American Express and Chase. And it comes with the fantastic headline, Amex challenged by Chase is losing the snob war. On the surface, I got to say, the snob war doesn't sound like a war you necessarily want to win until you realize that you're in the business of selling credit cards to affluent customers. That's exactly right. First, before we get into the story itself, how did you get into this topic?

Well, I have a new column at the Times called Adventures in Capitalism. And I was looking for something to write about. And I was talking to a friend of mine who has the Chase Sapphire Reserve card, right? This card that it's made out of metal. And he was saying how amazing and life-changing it was. And I was thinking to myself, when's the last time that someone said a credit card was life-changing, right? Like I'm carrying like five or six of these things in my wallet and I don't really feel like my life has changed by it. But then I started going online and realizing there's like this whole chorus of people out there who talk about Chase and this new credit card they get, the Sapphire, and how amazing it is. And it occurred to me when I was

a kid in the 1980s, that was Amex. Remember all those commercials that Amex used to play? Absolutely. Membership has its privileges, right? And it was like, if you've really made it, if you're successful, the way you show that is you have an American Express in your pocket. I realized. It really was such an amazing sign of prestige. And we're about the same age. I remember those ads as well. And at no point did I think it was necessarily snobby. I just thought, well, you've made it if you've got one of those Amex cards. That's exactly right. And in fact, I went back and I started looking at some of the ads that they used to run in

the 80s and 90s. And if you get a chance to look them up on YouTube, they're amazing. Because what they basically show is they show always men, these men in business suits rushing through airports and being able to buy that teddy bear for their kid at the last minute before they get on their first class flight and fly home and then ask their wife as they're watching their children perform on stage like which one's my daughter like it's like it's like this like stereotype of like everything that parents aren't supposed to be today and and by the way all the male chauvinism that like if you made a commercial like that now you would get

tarred and feathered but that was amex right that was like that was like the way you show success is you're so busy and important that you just you have to pick up a toy on the way at the airport and your Amex will get accepted anywhere because you're that important. And what was amazing to me is I thought that this kind of snobbery had totally fallen out of favor until I realized, no, it hasn't fallen out of favor. It's just changed. For millennials, that attraction of snobbery still exists. But the way you show it now is not the Amex that your dad had.

It's by having a Chase Sapphire card. This metal kind of like dot com Silicon Valley cool card because that the Chase Sapphire card shows that you like to buy experiences rather than things. And that's what snobbery is today. Well, snobbery is about what you can do rather than what you can buy. Well, and that's one of the fascinating things in your article is that the people at Chase really figured out how to appeal to the next generation of affluent spenders because that's what you want if you're in this business. You don't just want someone who's affluent. You want someone who's affluent and younger, and you want to lock them in for three, four decades, if possible. And Chase figured out this is the way to appeal to millennials. And I got to be honest, Charles, I was shaking my head at some of the things in your article about Amex and the way within the company, just from the standpoint of the business of American Express and the people who are running it.

And you did not paint a pretty picture in terms of the struggles inside that company. It's an old company. It's a company that, you know, the chairman of the company has been there for 16 years, the president, who's sort of overseen the expansion of Amex. There's this one scene that I described where an executive head described this to me. A bunch of them were in a room talking about how do we go after the millennials? How do we get this new? How do we change? How do we take advantage of people's spending habits and get inside their their head while those habits are up for grabs, which is what happens in our 20s? And the phrase FOMO came up and they're talking there and they're all going, what does FOMO mean?

I keep on hearing the kids say FOMO. What does that mean? And so one of them finally says, well, let's just Google it. And they Google it. Of course, it means fear of missing out. And nobody in the room saw the irony of a group of old Amex executives Googling FOMO and finding out it means fear of missing out and nobody knowing what that means. But that's what's going on right now. You bring up this great point, which is why are all these credit card companies focusing on millennials? And in part, it's because when we're in our 20s, when we're in the age where millennials are right now, we form our spending habits. If I can get a credit card into your hands when you're 23 or 24 and you start using it, you're going to use that credit card for the next three or four decades.

And you might not be that profitable to me when you're 23 or 24, but when you're 43 or 44, you're going to be a goldmine. And so the competition that's happening right now is that Amex has to become cool again. They have to start appealing to these 23-year-olds and 24-year-olds. And it used to be that they appealed to them by saying, oh, if you're a successful businessman, this is what you use. But successful businessman is not cool anymore or businesswoman. What's cool now is being able to be a dot-com millionaire, right? Having your own internet startup. That's cool.

And Amex has struggled to keep their image up with how times have changed. Is this one of those situations where if you are a customer, not necessarily a dot-com millionaire in your 20s, but if you're just someone who's shopping around for a credit card, are you kind of in the driver's seat because both of these companies, and for that matter, anyone else in the credit card space, wants your business? Oh, absolutely. Absolutely. And this is all because of what happened during the financial crisis. So what's interesting is that coming out of the financial crisis, some of the reforms that are passed by Congress, they make it much more difficult to make money on the things that banks

used to do to get big profits, right? All of a sudden, your mortgage business is much, much smaller. Your investment banking and your private wealth management, those are all shrinking. So what do you start looking to as a reliable source of revenue? Credit cards. And that's why you see JP Morgan Chase. That's why you see Citibank. That's why you see all the big banks starting to plow into credit cards in a way that they never did before, is because suddenly that's a much more important revenue stream. And then the question becomes, okay, if you're putting out some Citibank or some Chase Visa or MasterCard, how do you differentiate yourself, right? Visa and MasterCard, you can get those things for free. So how do I convince you to pay $400 or $500 a year

for a credit card that you could normally get for free. And that's where the Chase Sapphire Reserve comes from. They designed this credit card that is made out of metal. I'm actually holding mine right now. And it feels like basically like three or four times as heavy as another one. But it also looks really cool. It's got like, like everything is flat and sleek on it. And it has all of these crazy rewards. They decide to start saying, we're going to give you travel rewards, right? Travel rewards, the same way you get from Amex or that you would get from any of your normal companies. But we're going to define travel as literally almost anything. So if you take a taxi down to Chinatown, and you find some hole in the wall eatery, if you're a

millennial, we're going to call that travel. And we're going to give you extra points for doing that. We're going to let you use all your points to fly to the Bahamas. And we're going to create these crazy advertising campaigns that make it seem like all you have to do is spend and you can live out the experiences of your dreams. This is what millennials, according to their market research love. They love to buy experiences. They think that buying things is what their grandfathers did. If you're new and you're young and you want to live life to the fullest, you want to build up points and experiences that let you go out and buy a life. And so that's what they've designed. And all the banks now are moving into credit cards like you would never believe.

And for Amex, that's really risky because Amex has always made its money on credit cards. And now suddenly they have all these competitors that are huge with huge marketing budgets, huge balance sheets, the ability to go in and start taking business away from them. And Amex is in a really difficult position. Well, and if you think about one of the big stories in partnerships and even in the retail space over the last couple of years is that longtime partnership they had with Costco that went away a couple of years ago. and in the case of Amex, they also had a partnership with JetBlue, and those are both gone now. So it's not just appealing to the individuals. They've got some work to do on the corporate partnership front. It's exactly right. And what's amazing is that the fact that we're having this conversation is a testament to what Amex has become. Because if we were talking

30 years ago, we wouldn't even think of Amex as a financial behemoth, right? It wouldn't be something that's on our consciousness. Amex was almost like an obscure product that businessmen used. The concept of credit cards and luxury credit cards and travel credit cards, Amex basically created that. And it's a testament to their success that today we think that they compete with Citibank and JPMorgan Chase, these huge, huge financial organizations that are much larger than Amex. But like many, many giants, the giant eventually becomes so old that they have trouble navigating the landscape. And that's their question right now. Can Amex turn the corner and stay as big and powerful as they've been, but become a younger, more nimble,

and more exciting company? Earlier in the show, we discussed Apple's latest earnings report, and there's so much focus on the next iPhone, which will presumably be unveiled sometime in the fall. Apple's a company that you've studied and written about. When you look at Apple, what do you wonder about and it may be the iphone but i'm guessing it's not well so the big question i think for me with apple right now is are they going to continue to be this amazing innovator that that made the company or are they a now mature firm that kind of becomes like microsoft and it's interesting right walt mossberg who's kind of the dean of tech reviewers, wrote a piece where he said, I'm going to call it. Apple is not an

innovative company anymore. Like they've lost the Steve Jobs magic. Now, if you look at their business, iPhones make up the vast majority of what drives revenues to Apple. And they are positioned better than almost any other company out there. They have an enormous war chest, right? The news came out earlier this week, the fact that they're sitting on a quarter of a trillion dollars in cash reserves. They could go out and do almost anything. They announced just today a $1 billion fund to go and invest in advanced manufacturing in the United States of America. They can do almost anything. And so the question then becomes, how do they translate this huge, magnificent might into products that excite us as much as the iPhone did when it came

out over a decade ago. Because in the decade since then, they really haven't released anything that changes the world the way that the iPhone did. Another company reporting earnings this week is your company, The New York Times. The big story was the rise in digital subscriptions. You've worked there for over a decade. I'm not asking you about the business of The New York Times, but I'm curious what has been the biggest change in your work that you've seen during your time there? It's a great question. I will actually say that my life now at the New York Times is almost completely different from what it was when I started here 10 years ago. And I think everyone who reads the paper or consumes news, they've seen this transition.

So I'll just describe to you what I do now. I wake up and I start doing reporting, and I have no idea which part of the newspaper it's going to go into. When I say newspaper, I don't even know what that means anymore, right? Because it's going to show up in the printed version someplace, but I probably never meet the editor who's going to figure out what page it runs on. Instead, I'm focused on like where it's going to go on the homepage. Are we going to push it with a digital alert to everyone who has the app? I'm doing a podcast that we're going to be releasing this summer.

Most of my time now is spent just collecting information and trying to come up with like more and more creative ways to present it to the world. Whereas it used to be that I would just sit down at my computer and write an article, now, honestly, from day to day, I don't know exactly how that reporting is going to make its way into people's brains. And that's super duper exciting, but it's also a reflection of the fact that the news industry, as you guys know, is just changing so much and so quickly, and we're rushing to keep up with how our readers and consumers want their news now and how we can get them to pay for it. you can read him in the New York Times. He is one of the most interesting people to follow on Twitter, which is where you could probably hit him up with suggestions for his next bestselling book. Charles Duhigg, thank you so much for being here. Thank you for having me on, Chris. Really appreciate it. Coming up next, we'll give you an inside look at the stocks on our radar.

This is 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. Chris Hill here in studio once again with Jason Moser, Matt Argesinger, and Simon Erickson. You can catch Motley Fool Money every weekend on radio stations across America, on iTunes, Stitcher, Spotify, anywhere you find podcasts.

And you can also listen on the Amazon Echo and Google Home. home. And I'm happy to share that The Motley Fool's stock watchlist skill is now available on both Google Home and Amazon Echo. So, if you want to know how your watchlist is doing, just ask your device. Alright, let's get to the stocks on our radar, and our man Steve Broido will hit you with a question. Matt Argersinger, you're up first. What are you looking at this week? Sure, sure. Well, I'm looking at Protolabs, ticker PRLB, a company I've talked to in the past, but haven't mentioned it lately. They had a tough 2016, but they had a nice bounce back quarter so far this year. Revenue was

up 10%, customer count up 12%. This is a company that does prototyping and low-volume manufacturing services like 3D printing, injection molding. So, I was happy to see broad-based growth across their service envelope and across regions. And so, I think this might be an inflection point for their business. So, paying attention again. Steve, question about protolabs? Are we moving to a world where people own fewer objects? I think about everything now, I just own a lot less stuff than I used to. I think that's absolutely true, but the objects that they do own, I think they're

going to be highly customized, very personal, and I think that actually fits right into Protolabs and Wheelhouse. Jason Moser, what are you looking at this week? Yeah, one we talked about before, TripAdvisor. Ticker is TRIP. They have earnings coming out on Tuesday after the market closes with a call the next morning. They just hit a big milestone with half a billion reviews and counting now on their mobile site. I think this is an extremely strong network, but they are going to have to start showing some traction here with their investments in their instant booking product. I think it's a good product. It allows you to book directly from their

site. It really just continues that chain of investigating where you might go and then going ahead and booking where you want to stay. I think it's a great product. I think that over time, they will start to show some traction there. We're going to be looking for that in the form of growth in hotel shoppers, growth in revenue per hotel shopper. If they are able to prove this out and that investment does start bearing fruit, then I think that you look at today's price, it is a very attractive one for what is a really good business. Steve, question about TripAdvisor? Is it possible for companies like Trivago, I can't believe I'm asking this, but I've

seen so many commercials for Trivago to disrupt that business just with ad spends. I think there's no question about it. Really, I think TripAdvisor has felt the pain of pulling back on that ad spend last year. So, we're going to see them spending a little bit more this year. Simon Erickson, what are you looking at this week? Chris, I'm going with Twilio. Ticker is TWLO. This is a company connecting the users of mobile platforms. So, if you've ever used Uber, it gives you the notification your driver's here. If you've ever used Airbnb, it tells you that your room is ready. But I think that the street hung up on Twilio this last week, because the stock was down 30% on news that they wouldn't be

continuing some of their business with Uber. Outside of Uber, revenue was up 60%. They added 4,000 new customers. And I think it's a pretty good acquisition target for a lot of the legacy providers that are kind of interested in this new sharing economy. Steve, question about Twilio? Does the mobile device makers like Apple and Android devices, don't they want to just own that space themselves? Potentially, but it's more for the software and the networks themselves, the Airbnbs, the Match.coms, Facebook Messenger, that kind of stuff. I think it's more of those online destinations, Steve, than the mobile providers themselves. Protolabs, Twilio, TripAdvisor, you got a stock you want to add to your watch list, Steve?

I might go Protolabs, Matt. It's been a compelling case. There we go. Steve, I just have to ask, you mentioned you're owning fewer objects. What are the last couple of things you've gotten rid of? I just got rid of a teeter hang-up, one of those inversion table things. I was having some back pain. I bought one, and I just returned it. Oh, I was thinking about getting one of those. Yeah, you should have talked earlier, because I just had to send a 4,000-pound box back. You guys can talk after the show. All right, that's going to do it for this week's edition

of Motley Fool Money. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.