Motley Fool Money - As GameStop Turns

Episode Date: January 29, 2021

Investors react to the escalating drama with Redditt, speculators, and GameStop. Johnson & Johnson reports Phase 3 trial results from its one-shot vaccine. Apple reports record-breaking revenue. Microsoft hits a new high on earnings. Facebook slides. Atlassian rises. Starbucks surprises. And Tesla dips. Motley Fool analysts Andy Cross and Ron Gross discuss those stories and weigh in on the latest from Mastercard, Visa, and General Motors. Ron and Andy share two stocks on their radar: NextEra Energy and Unity Software. Plus, Ad Age’s Jeanine Poggi previews the advertising for Super Bowl LV. Learn more about your ad choices. Visit megaphone.fm/adchoices

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app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money Radio Show. I'm Chris Hill, joining me this week, senior analyst Andy Cross and Ron Gross. Good to see you, as always, gentlemen. Hey, Chris. You're doing, Chris. We've got the latest earnings from Wall Street. We've got the latest vaccine news from Johnson and Johnson. And as always, we've got a couple of stocks on our radar. But we begin with America. America's hottest new soap opera as GameStop turns. This week, an escalating drama on Wall Street became front-page news across America and around the

world. GameStop is, by most measures, a challenged bricks and mortar retailer that sells video games. Because of that, it is one of the most heavily shorted stocks in the market. But retail investors, led by a Reddit community called Wall Street Betts, has been steadily buying shares of GameStop, pushing up the price and forcing short sellers to run for the exits. This week, shares of GameStop are up more than 400 percent, year-to-date so far, shares up nearly 2,000 percent. Ron, I'll start with you. There are so many angles to this story. We have hedge funds on one side. We have retail investors on the other. We have Robin Hood somewhere in the middle. as an experienced investor, what do you think as you watch all of this play out?

Oh, boy. This is different. A few thoughts here. So I love the sharing of information and how social media has changed that game. No problem with that. I love that individual investors, especially young individual investors, are becoming more interested in the stock market. Wonderful. I don't think all hedge funds are the devil. I think shorting does provide some benefits, such as liquidity. and the ability to hedge your portfolio. But importantly, I don't think what the Wall Street bets folks are doing is investing. It's speculation, it's manipulation, and it's going to end badly for some. It's probably not illegal, but it's going to end up being painful for some that got in at the wrong prices and don't actually understand what's going on because they're not investing, they're gambling.

So more than ever, I think it's important for folks like us to teach the importance of being a long-term investment. and what that means to own a small piece of a company for the long term. I think the market's self-correcting. Institutions are going to figure out how to mitigate this. Maybe there won't be as much shorting going on in individual companies. This won't persist. But as you said, a lot to unpack, a lot of different emotions flowing all around. You know, Chris, for me, what's really interesting is this just continues to bring more and more light

to some of the optics and some of the mechanics behind what's going on. behind the scenes when you place a trade. Any of us place a trade. I've certainly placed trades that are just a few shares for expensive stocks, but just how market makers work, the impact of leverage. That's the real danger here for me is just the impact of leverage and concern of any, well, certainly institutions we're seeing hedge funds get crushed because of the leverage. But when you see this stock on these short squeezes and GameStop, you know, has 70 million shares outstanding and almost about that were short going into this. So you just see a lot of this short covering and continued buying of the stock that pushed the stock further and further up as market

makers and investors or hedge funds or anyone who was short in it has to cover those shorts. And because so many of them are levered, that continues to make it worse and worse and worse. And you just see this play out. And while it started off maybe as a Reddit Wall Street bets kind of retail investor move to get started in this and propel it. That was just a spark behind this fire that just kind of grew as more and more institutions. And certainly when you look at the dollars at play here, this is a lot of institutional money on both sides of the trade. They can continue to get on board that and that just continue to propel the stock up as they had to cover more and more of their short bets. And that's just the real danger of leverage. And I love

what Ron said and really helping people understand this. But the one reason is why when we talk about things you really need to be careful of, it is using that leverage either on margin or borrowing to buy shares in any way or go short because that can really have dire consequences. You need to be careful of that. Yeah, it reminded me a little bit of the drama we saw play out years ago with Erbilife where Bill Ackman, you know, billionaire money manager comes out and says, I'm sure this stock. And Carl Icon, in part because of some animosity towards Bill Ackman, said, oh, you're going to short that? I think I'm going to buy it and cause you some pain. I mean, you know, this one obviously involves a lot more players. But the fundamentals,

Ron, seem like they're pretty much the same. Yeah, you know, I said I'm not against shorting because it does provide some benefits. But we should be clear, it's not investing. It's placing a bet on something going down. It's not being happy to be a partner in a business with the folks running it and owning it for the long term. So it is a more speculative thing just by definition. Very dangerous, though, because when you sell something short, you're betting it's going to go down. If it goes the opposite way, a stock can theoretically go to infinity and your losses are unlimited. If you buy a stock, your losses are capped because it can only go to zero.

So folks need to understand what they're getting into. Let's move on to some stocks that are very far away from zero. Apple's first quarter report was highlighted by revenue of $111 billion. And the fact that sales in every product category rose by double digits, despite all that, Andy, shares of Apple down a little bit this week, but still up 70 plus percent over the past year. Oh, gosh, Chris. It's been a fantastic stock in large market cap, one of the largest market cap companies in the world. Most profitable quarter ever for Apple, as you mentioned, 100%.

111 billion sales, up 21% in the first time that it crossed over the $100 billion mark blew away estimates. It was the highest growth of a quarterly growth since 2015, earnings per share of $1.60. That was up 35%. They continued to buy back a lot of stocks, so that that really helps the EPS grow. Again, blew by the estimates of $1.42. Sales were in that double-digit, Chris, in every group that you look at, iPhone, MacBook, iPad, wearables, services, above 10% growth in all those categories.

iPhone, which the largest business, obviously, up 17%. Wearables, home and accessories up 30%. Services up 24% is now the second largest group with almost 16 billion in quarterly sales across all geographies, especially China with this all growth of 57%. So a really impressive number quarter by Apple. On the gross margin side, the total gross margin was up 160 basis points or 1.5%. are 1.6%. And on the product, up a lot, the gross margin was up 5.3 percentage points to 35%. So, really nice quarter from Apple, continuing to grow that install base of iPhones and Macbooks

that's now a record high for all of those devices. And that really helps propel the services business, which is a growing part of their business, more profitable. That's where they're spending a lot of energy. And you just look at their Apple One product, continue to show lots of excitement and lots of growth. So, record high in FaceTime calls over Christmas, they mentioned, and I thought that was kind of interesting just thinking about those of us who are Zoom investors as well. So really a nice quarter from Apple and continued exciting product innovation with iOS 14 throughout the year. $2.2 trillion company trading at 35 times earnings. I'm okay with the 35 times, but as Apple is one

of my largest positions, Andy, do we think that this could double? For us, anybody new investor or current investor to get a double, we've got to go to $4.4 trillion. Is that even possible? Not exactly because they're buying back so much stock run, as you know. So it's not so much the market cap. It's much more of the per share basis. So because they are buying so much, they bought back $24 billion worth of shares last quarter and paid out $6 billion in dividends.

So when you add the dividends and the share buybacks, that will impact the stock price. So you don't need it necessarily go to $4.4 trillion because on a per share basis, basis, which is what we care about the most. A double, I think, will still be a little bit tricky over the next five years, but I think from a steady performer that is having more and more impact on the S&P 500, I think you're going to be making some money on Apple over the next few years. All right. I feel a little better. Shares of Microsoft hit a new all-time high this week after second quarter revenue grew 17%. The Azure cloud business leading the way for Microsoft once again, Ron.

They continue to just really put up wonderful numbers. Better than expected revenue up 17%. Strong demand for corporate cloud computing services and software that supports all of us while we're at home. 14th straight quarter of double-digit revenue growth, just to break down some of the segments. The productivity business up 13%. That's the segment that houses the Office, commercial and consumer versions of Office, as well as LinkedIn, which was up 23%. Intelligent Cloud, that's going to be the big story, up 23%.

That includes Azure, which was up 50%. Continues to get it done there. And even personal computing was up 14%, which includes Windows and Xbox. Xbox content and services are up 40%. And they did introduce some new game consoles. So hardware is up big too at about 86%, despite the fact that there were semiconductor supply shortages that kind of hurt them getting that to market. So the companies continues to put up wonderful numbers.

As a result of that revenue growth, you saw margins wide in operating income up 29% with net income up 33%. Strong guidance, exceeding expectations, returned 10 billion to shareholders in the term, and share repurchases and dividends, which was an 18% increase. They are just, they are firing on all cylinders. Facebook's fourth quarter profits and revenue came in higher than expected, but shares falling 6% this week. As CEO, Mark Zuckerberg made it very clear that Facebook's primary competition is now Apple. So, Andy, if you didn't think they were fighting before, it's clear that they are now. It was very clear. He was exceptionally clear in the opening remarks and the press release saying, I do want to highlight that we are increasingly seeing Apple as one of our biggest competitors.

IMessage is a key part to their ecosystem, talking about how IMessage is pre-installed in all the iPhones. They also have concerns a lot around the IOS 14 ability to restrict targeted ads by requiring users to opt-in to third-party apps that collect data. So, yeah, definitely. He did not mince any words by going directly after Apple talking about their competitive advantage. Reminded me a little bit of what the accusation of Microsoft with Internet Explorer back in the 90s. But overall, really solid quarter.

Revenue is up 33% to $28 billion, earnings per share, up 52%, both far ahead of analysts' expectations. Their cost structure only up 25%, Chris, so that really juiced the operating profit by more than 44%. Free cash flow up 90% to $9 billion, so continuing to raking the dollars. Their ad revenue, which is the biggest part of their business, up 30%. Other revenue, which is Facebook Marketplace, Oculus Quest, up 156% with Daily active users now at 1.84 billion, up 11% across Facebook, really seeing the benefits of the shift to online commerce and the advertising growth. Add impressions, by the way, up 25% across all their platforms. So really seeing a lot of spending going on across their platforms with advertising

as more and more of us are shifting over to commerce spending and buying online. I will just note also they talked about how they will. They do see more and more investments and more effort to kind of work when through the funnel from looking and advertising all the way down at purchasing through their through their Facebook ecosystem to be able to take especially on Instagram with Instagram shopping, being able to take benefit of people seeing advertisements and going on to buy it. So it will be interesting to see how that evolves. But clearly the headline really was Mark Zuckerberg addressing Apple's competitive position. Up next, Johnson & Johnson comes through with promising news in the fight against COVID-19.

Details after the break. So stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here with Andy Cross and Ron Gross. More good news in the fight against COVID-19. On Friday, Johnson & Johnson announced the results of its vaccine in phase three trials. It is 85% effective in preventing deaths and severe disease. And Ron, this is a one-shot vaccine. So no going back weeks later for that second shot. And everything we've seen so far seems pretty promising. You know, I was originally conflicted when I read the headline, but I'm coming around now. And that headline was 66% effective overall, which beats the FDA threshold of 50% for an approved

vaccine, but it's less than that 95% we've been hearing from Moderna and Pfizer. So I was like, oh, I don't know. But, you know, offered 100% protection against COVID-related hospitalizations. I think that's the number to focus on, and your 85% number as well, because, okay, we can maybe be home and feel a little under the weather. But if it's not progressing to something life-threatening, I think we're in good place here. And I've come around, and I think this is really positive news, as you said. Tesla's fourth quarter revenue was nearly $11 billion, but shares down a bit this week, although, Andy, shares of Tesla up more than 600% over the past year. So hopefully

shareholders aren't complaining. Oh, yeah. And there's Elon Musk, who's really benefited from that, that actually hurt them on the profitability side, but still a really nice quarter on the profit side. There's six quarters in a row now. They were profitable, wrapped up the first year of profitability on a generally accounting practices metric, expanding their programs to increase production and deliveries by 50 percent long term. That's the goal. They think they will exceed that this year. They were implying that, which is good news. They're operating margins at $5.5.5. 5.4% for the quarter. In 2020, the operating margin was at 6.3% versus negative in 2019. So, you know, that's at the industry best levels, Chris. The revenues, as you mentioned,

27.2 billion for the year, up 31%. Free cash flow at 2.8 billion versus 1 billion in 2019. So continue to make lots of investments in building out their capacity. The Fremont factory is almost at full production speed. The Model 3 in Shanghai is now up to 5,000. per week, and the first Model Y crossover was made in the China factory. So overall, the investments that they're making in Tesla continue to expand their lead. Obviously, the stock now is at an $800 billion market cap, so a lot of growth and a lot of excitement still baked into the Tesla share price. But so far this year, they've been able to live up to those expectations. Shares of Starbucks falling 6% this week. First quarter profits came in higher than expected,

But same store sales in the U.S. were down. Revenue was light. This wasn't a bad quarter, Ron, but the bad outweighed the good. Yeah, I'm calling it a mixed quarter. So, as you imagine, some metrics, revenue fell 5%. Usual culprits there. Reduced customer traffic. They had to modify the operations. Reduced store operating hours, temporary store closures, all these things, COVID-related. Global same-store sales down 5%, which was a worse and expected number. I think that's what investors are largely focusing on. But sequentially, we did see some improvement. So things are slowly getting better. We saw a 19% decrease in comparable transactions.

But interestingly, that was offset by a 17% increase in the average ticket. So each time folks were spending a bit more money. Regionally, the Americas were down 6%. International was down only 3%, which was helped by China, which Starbucks has long been a China story in terms of growth and expansion. China was up 5%. So that's a positive number. Margins narrowed the lower revenue, COVID costs. It's not much they could do with respect to that when revenue takes a hit. So you saw a just earning down 23%, which was disappointing. But the growth story continues. They open 278 stores. They're going to open 1,100 new Starbucks stores globally. And I think the growth

story will be intact once we get to the other side of COVID. They offered fiscal guidance, which puts them probably around fiscal 2019 earnings. So, you know, certainly a step back. Sorry to see that Chief Operating Officer Ross Brewer is leaving. She's going to be the CEO at Walgreens. And by the way, on that news, shares of Walgreens pop to a 52-week high. So she's been a great leader on Kevin Johnson's team. For sure. And I believe, I believe, I believe the CFO was departing as well or had departed. So some changes up at the top, especially during difficult times where you need all hands on deck. Not a great thing to see.

They'll get through this, though. Kevin Johnson is a strong operator, strong leader. All right, guys. We'll see you later in the show. Which advertisers are betting big on Super Bowl 55? Janine Poghie of Ad Age has a preview of what to expect. That's next. So stay right here.

This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. On February 7th, the Kansas City Chiefs play the Tampa Bay Buccaneers in Super Bowl 55. And for companies looking to promote their products and services, 30 seconds of ad time will only cost them around $5.5 million. Here to help us make sense of it all is Janine Poggi. Senior editor at Ad Age, she joins me now from New York. Thanks so much for being here. Hey, Chris. Thanks for having me. So, there's always a lot of buzz around Super Bowl ads, but this year, the buzz seems to

be more about the companies that are not participating in the event. And I'm thinking primarily of companies like Coca-Cola, Pepsi, and Budweiser. Budweiser is not going to be advertising during the Super Bowl. I think it's the first time in more than 35 years. Let me start with this. Is that a surprise to you? Look, anytime a Super Bowl advertiser, like Budweiser, who's been in, you're right, it's been 37 years since Budweiser hasn't aired a Super Bowl ad. Of course, that comes off as a surprise. But the thing to remember, anything gets lost on a lot of the conversation, specifically around Budweiser sitting out. Anheiser Bush, its parent company, is still running the same amount of Super Bowl ads that it did last year. It's just choosing to put its dollars into other brands to feature. So they'll have ads for There'll be ads from Mickelope Ultra.

And then they're also doing, in place of a Budweiser ad, a corporate spot. So more of a total brand advertisement versus just focusing on Budweiser. So it's not like Anheuser-Busch is not in the game. They're in the game in the same way they've been the last couple of years. They're just reshifting and refocusing their efforts. Although as a category, automakers this year are largely sitting out of the Super Bowl. And I'm curious if you think that's a reflection of the general economic climate for automakers, or are we actually seeing some cracks in the Super Bowl as being sort of this last bastion of a can't miss huge television audience?

I think that is definitely a factor of what we've seen from COVID and the economic uncertainties this year. Currently, we only have confirmed of two automakers in the game right now. Those are Toyota and General Motors. We're still waiting on a couple of others, but we've seen some big ones that are in year after year like Hyundai and Audi sitting out this year. So really, you know, I think we were not surprised by this move, the auto category in particular, along with movie studios, unsurprisingly, ones that are hugely represented in the Super Bowl in typical years, we will definitely see far fewer from both categories this year.

On the flip side, I should point out that we are going to see some first-time advertisers during the Super Bowl. Chipotle, Huggies diapers, Fiverr. It seems like Super Bowl ads, in part because of the cost associated with them. I mean, the $5.5 million for 30 seconds, that's just the ad time. That doesn't include whatever these companies are paying, to make the ad. Are there rookie mistakes that you see from first-time advertisers? I mean, if any of them come to you and say, all right, before we put our creative team together, what should if we're just looking to not make mistakes, what should we avoid? Well, I would actually start by taking a look back at last year, a first-time advertiser

from last year was Quibi. Quibi, you know, came into the Super Bowl in a big way. We all know how that story turns out. They launched in the spring and shortly after, you know, shuttered didn't even make it a year, but they went out with a Super Bowl ad before the, you know, service even launched to like get out there early and that, you know, not that the Super Bowl ad led to this situation, but they spent a lot of money, obviously, advertising the service.

I think this year's interesting one for first-time advertisers. You mentioned a couple. I think one of the ones I'm not sure if you mentioned was Scott. Miracle Grow, I think that one speaks to the types of advertisers we're seeing in this year's Super Bowl for the first time. A lot of them are really brands that found a bigger or new consumer base amid the pandemic and amid lockdown. So you think of Scott's Miracle Grow, lawn care gardening, not necessarily something in a prior year you would have thought to be in the Super Bowl. But in the pandemic, we saw a lot of people turning to gardening, wanting to take care of

their lawns because they're home and there's nothing else to do and there's an outside space for them and their families. So brands like that, another one being room, which is an online car dealership that delivers the car right to your door, you don't have to go to the dealership, contactless, the whole thing, you know, that we're thinking about Chipotle promoting their delivery service. And, you know, different things like that that I think this year, you'll see almost all of the first time advertisers taking advantage of maybe some new publicity. that they found during the pandemic. There are ads that are trying to drive action.

Go to our website, take this survey, do whatever. There are ads that are really more about branding. And certainly some of the ones we talked about earlier, Coke, Pepsi, Budweiser, I mean, everybody's familiar with those brands. Is there one strategy that works better than the other? Because it seems like if you're trying to drive action, that can be a good that can be a high-risk, high-reward strategy. The Super Bowl, to me, has always come across as a place where it's about brand awareness.

Many times in the Super Bowl, we've seen brands come out there. You don't even know what product they're necessarily trying to sell, or they're not specifically trying to sell a product. It's about a message that connects consumers to the brand. And that might not be a direct message saying come by our chips, our dip, our cola, whatever other product they're trying to sell. it's about people remembering the brands and being, oh yeah, I really liked that ads when they're in the grocery store and they see those chips on the shelf, you know, that comes to mind. So I do think that the Super Bowl, given the cost and the large amount of people that are watching the game, it's really about building brand awareness, whether it's a brand that's very familiar and we've seen year after year or a newcomer that is just trying to get their company out to a larger audience.

The Super Bowl year in and year out is the most watch television program of the year. We'll see if that streak stays alive. But it's been that way for decades. And most of us watching the game, we're watching the commercials for fun. This is your job. This is what you do for a living. So what are you going to be watching for? And are there any ads in particular that you haven't been privy to yet that you're curious to see?

So in the day of really, you know, at that point, hopefully, because we're not doing our jobs, if not, I've seen most of the ads. So I'm really looking at social conversation around these ads, what is driving interests. I have to say there have been plenty of times that an ad that myself or my colleagues, you know, have just been like, we don't think that's going to land. Maybe because we spend so much time looking at these. Some of them really resonate in different ways with audiences. So I'm really looking to see if there's any that like we just judged wrong. But, you know, for this year in particular, I think one thing that we at ad age are paying really close attention to is how well brands are being inclusive in their ads. I think it's an important conversation in the ad world right now. It's an important conversation in the country right now. You know, really taking a look at beyond just casting and checking off a box what the storytelling is, the inclusive storytelling, who's working on ad in front of and behind the camera. And I think that'll be an important part of the conversation this year. I don't know if that will amount too much change. I hope it does. But I do think

regardless, that will be closely focused on and watch, you know, as we see these ads come in. If you want to know which businesses are making headlines for their marketing spends, you can follow Janine Poji on Twitter. Read her stuff online at adage.com. Janine, I know it's an especially busy time of year for you, so I appreciate you taking a few minutes to talk. Thanks, Chris. Appreciate it. Up next, Andy Cross and Ron Gross return with a few things, including 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. Chris Hill here once again.

with Andy Cross and Ron Gross. Guys, a couple more news items before we get to radar stocks. Visa and MasterCard both out with quarterly reports this week. On the surface, Ron, it seems like a similar story. Both stocks falling a little bit because quarterly revenue for both were falling. But still, we saw improvement over what we had seen out of both Visa and MasterCard earlier in the pandemic. Correct. Things are improving sequentially, but they're still,

obviously weak, and they're largely weak in both cases because of sharp decreases in cross-border volume as a result of the fact that travel is basically non-existent, both personal and business. So for MasterCard, you saw cross-border volume down 29 percent. For Visa, you saw it down 21 percent. As a result, you saw revenue fall for both companies. But as we said, improving sequentially. for Shareup for MasterCard down 16%. Visa, not as bad, down 3%.

No guidance really offered from either company. MasterCard's CEO did say we believe there's significant pent-up demand for travel. I guess that makes sense. We continue to expect to see improvements in the second half of the year. I'm not convinced that we'll follow through with respect to business travel. Personal, perhaps that's right. We'll keep an eye on it. These will come back.

These are both strong companies. You can own one or both. Visas a little bit cheaper, a little bit better. run, in my opinion, but both great companies don't own. Do you think three months from now, they're going to be at the point where they are offering guidance? Oh, boy. Let's maybe call it six months.

I think we've got to let the vaccines kind of get into arms at a little bit of a faster rate. Second quarter profits and revenue came in higher than expected for Atlassian, but shares of the collaborative software company falling a bit this week despite that. Andy, Atlassian's guidance was good, too. Yeah, Chris, it's interesting. They're really making this shift from some of their taking their customers, especially some of their large customers from a server-based business to the cloud-based business.

And they've talked a lot about that evolution. That's going to take a multi-year process to move those clients from the servers to the cloud and to the subscription business. And that's going to drive the bulk of their revenues going forward. It is now, and it will be going forward. The revenues at $501 million, up 23 percent. handily beat estimates, subscription revenues up 36%. Like I said, about two-thirds of the sales now come from subscription business.

EPS was about flat at 37% on the adjusted side, but beat the estimates. Again, gross margin at 84%, up a little bit from a year ago. R&D expenses up 40%. They continue to plow a lot into people, headcount, and into research and development. Free cash flow up very nicely, and almost 180 million, that's 36% of revenue. very profitable in the free cash flow line. They're making this shift, Chris. They talked about this, how much time this is going to take, how they have to move these clients there, but they're excited about it. They launched a new GRO service management business that has end-to-end cloud. It helps

bridge the line between IT service and software development that is really blurring. And they think that will expand their opportunity to sell more and more clients and more tech workers over time. and they hired 467 people about 9% more to their workforce. So, continuing to make those investments. It's going to take some time for this to all play out, the price of sales at 30 times for a $56 billion company. I think you'll make money going forward in Elassian, but I don't think it's going to be one of those stocks

that's going to generate really hefty returns for your portfolio going forward. On Thursday, General Motors said it plans to stop making gas-powered vehicles by the year 2035. And guys, I know that's 14 years away, but this is one of the largest automakers in the world that we're talking about. And with that as context, Ron, I'm a little surprised by this timeline. I mean, great to see from an environmental standpoint, I'm a little surprised that they're being that aggressive. Yes. Clearly, this is where the industry is going. And it's a matter of timing, as you said. And I don't know if 2035 is the right number. I don't know if it's going to be quicker. I don't know if it's going to be longer.

Biden's administration clearly wants to accelerate, replace the government vehicles, 650,000 of them with all electric models. Things like this will help accelerate the move. I do want to say, I don't think this is a winner-take-all proposition. There's not one winner here. It's not GM. It's not Tesla. It's not whoever.

It's just the way there's no one winner in the car industry right now. So there's going to be plenty to go around as the entire industry shifts to the new paradigm. Andy, are you surprised by the timeline? No, I think they have to be aggressive on this push. Like Ron said, everyone's moving there, Volvo is moving there. That's the way the direction is going. It is interesting. Tesla is about 10 times the size of GM in market cap. It sells about a 10th of overall sales compared to GM, and Tesla sells 500,000 cars. GM sells, what, 8 million cars or so? So much smaller. Obviously, the stock's, been so much explosive and really the kind of like the example. And certainly Tesla has such a

wide lead in autonomous driving in that technology, which is really driving them forward, I think. So, but certainly GM has to be really proactive and aggressive in making this kind of change. Well, we've heard from General Motors. Now, I guess we're just all waiting to hear from Stalantis. With that, time to get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week. So, following on the GM story, you know, we're going to be hearing more and more talk about renewals and alternative energy, especially under the Biden administration.

So I'm going with Next Era Energy, NEE, operates the largest electric utility in Florida, but it's also the largest wind and solar operator in the world with more than 150 wind and solar energy centers. Started really building this 10 years before other folks were in it. So they've got a great first mover advantage. We've got a great growing backlog of renewable energy projects, which gives us some visibility into future revenue and earnings growth. The CEO recently said the company's share is around 20 percent for solar and up to 25 percent

for wind, skilled management, great capital allocation, industry leading margins, increase their dividend for 25 consecutive years, and is aiming for 10 percent growth rate in dividends per share through at least 2022. Current yield 1.6 percent. I think you'll get a nice yield and you'll get capital. appreciation. Dan, question about Next Era Energy? Sure thing, Chris. Ron, is Next Era in the business of actively reducing its fossil fuel power production plants by any means, or is it just building out new renewables? Well, they're certainly trying from the electric utility side to be as efficient,

and environmental friendly as possible. The big exciting, I think, part of the business, the growth, the less regulated part of the business will be to build out those solar farms and those renewable energy farms to really, you know, not just be in 26 states and four provinces in Canada, but, you know, to really take the world by storm. Andy Cross, what are you looking at this week? Dan and Chris and Ron, I'm checking out Unity Software. I know this is a company that I think Jason's talked about before and he likes it. I'm still looking at it.

A $42 billion market cap company operates the largest third party platform to create and manage and monetize 2D and 3D games. I peoed in September at around 52 and now at 155. The company debuted in 2005. I think at an Apple conference as the exclusive Mac game developer, powers more than half the most popular video games out there. The two business segments in Creative Solutions and Operate Solutions. Creative Solutions is a subscription offering of tools that allows developers and designers

to create 2D and 3D games and operate solutions. allows them to monetize that, and then Unity takes a little lick off the lollipop to in a RevShare agreement. Some large customers like Zinga, Take-2, Electric Arts, 740 clients now have more than 100,000 in revenue to Unity. It's up 34% year-over-year. Revenue is growing 40% a year with a really nice dollar-based expansion rate of 144%. Very scalable business, starting to push outside of just a gaming platform, especially in like Auto and CAD. and that's one thing I'm watching because it might not be as beneficial for the operate solutions. But Unity Software, really exciting growth company.

Dan, question about Unity? You know, this company strikes me as almost like a software as a service company, where it's got the really excellent scalability of adapting its products to just about any sort of realm. Andy, are there any sort of products that you're really excited about that Unity has been working on lately? Well, yeah, they've signed these arrangements with the auto companies. So it's really interesting to see how they use that technology outside of pure gaming. That's exciting because it expands their market opportunity, but also a little bit of a concern because they don't have those extra revenues through the operate platform.

So that's something to watch and something to learn a little bit more about with Unity. What do you want to add to your watch list, Dan? You know, well, Chris, I think I'm going to go with Unity this time. I think both companies are really good, hence the no jokes this episode. But I like the idea of the scalability of software solutions for video game makers. All right. Andy Cross, Ron Gross, guys. Thanks for being here. Thanks, Chris. I was going to do it for this week's show. It's mixed by Dan Boyd and produced by Mac Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.