Motley Fool Money - Earnings Season Hits Overdrive

Episode Date: April 29, 2026

The flood of earnings has begun and there are some surprises to investors. Spotify, Robinhood, and SoFi all dropped after results failed to impress, but these are still solid businesses. Plus, we covered Bloom Energy’s rise and whether there’s risk in energy today.Travis Hoium, Lou Whiteman, and Rachel Warren discuss:- Spotify and streaming prices and ads- Robinhood and SoFi drop- Bloom Energy and the AI energy bubbleCompanies discussed: Spotify (SPOT), Netflix (NFLX), Robinhood (HOOD), SoFi (SOFI), Bloom Energy (BE).Host: Travis HoiumGuests: Lou Whiteman, Rachel WarrenEngineer: Dan Boyd, Kristi WaterworthAdvertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices⁠⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Has the AI bubble turned into an energy bubble? Motley Fool, Hidden Gems, investing starts now. Welcome to Motley Fool's Hidden Gems Investing. I am Travis Hoy. I'm joined today by Lou Whiteman and Rachel Warren. We have a lot of news, especially in the world of AI and energy. We're going to get to that in a moment. But I wanted to start with one of the, I think, more notable earnings reports yesterday came from Spotify.

The market wasn't super happy with what they saw. But, Lou, the interesting dynamic here is Spotify is not something. saying, hey, we're in trouble, we're losing customers. It reminds me a little bit of Netflix. It's more a matter of how fast are we gaining customers, and is that growth just isn't quite as impressive as it was a few years ago. They're maybe not getting into ads as quickly as investors had hoped, maybe not able to push those prices as high as people would hope. And so it's kind of become this ho-hum business that you take a step back and you go, man, this is a great business, but the stock has not done particularly well.

recently. So are we just entering a new phase for these great companies that are just going to be kind of high, single digit, low double digit growers? It's hard to believe that efficient markets were caught off guard by a number of people on the planet Earth, isn't it? I mean, isn't that what's happening here? Travis, you said, let's talk about Spotify. I was like, oh, wow, look at that drop, but let's see what went wrong. And I still don't know. You're going to have to tell me they added 3 million premium subscribers. They're expected to add 6 million in the current quarter. But because that total is 299.4 and not the 300 that Wall Street had expected, suddenly we're just going to sell the thing off. I mean, like you said, there are natural limits here. I would say for a mature

company, growing premium subscribers by 9% still feels pretty good. But yeah, I guess we just need to adjust expectations. I'll say, you know, I don't know if this is screaming by yet. I'm not a customer or a shareholder, but it's now below 30 times forward earnings. It was at 70 last summer. So maybe slowly and painfully we are making that adjustment to just a well-run mature business versus a hyper-growth story. Yeah, Rachel, when you look at these businesses, and I think Spotify and Netflix kind of fall into the same category, they're winning, you know, in video and audio respectively. But how do you think about these and what sort of prices these stocks need to trade at for them to be attractive? Yeah, it kind of just makes me think that that era of very explosive

viral subscriber growth, maybe for Netflix and Spotify, has drawn to somewhat of its natural maturation and deceleration phase. But also, I think that there is a level of irrationality in the markets. We're at a time where businesses that are very mature, that are incredibly financially well run, as we see in the case of Netflix and Spotify, that deliver, you know, solid results, right? They're not the eye-popping figures we saw a few years ago. But that just isn't drawing the same response and excitement for investors that it did five, six years ago. I mean, you've got Netflix, right? They're still adding millions of users. You know, there is this element where I think the law of large numbers and high market penetration means some of that easy growth is gone.

But also, you know, they're focusing on, you know, Netflix's case. They're growing average revenue pre-user through password sharing crackdowns. You've got Spotify with their strategic price hike. So my takeaway is I think we've reached a maturation point where the metric for success isn't necessarily how many people you sign up for free trial or subscriptions, but how much cash flow and profits that you can squeeze out of a really mature base. Yeah, and those things seem to be improving for both of those companies, even though the numbers aren't necessarily as high as they once were. And currency is complicated this too. I think on a reported basis, Spotify's revenue is up 8%. But on a constant currency basis, it was up 14%, so the weak dollar is really changing how

we're looking at some of these things. Lou, the other thing that I wanted to bring up is the advertising business, because we know Spotify actually has more ad-supported users than it has premium users, but these numbers are a little bit wild. In the most recent quarter, the premium business generated 4.1 billion euros worth of revenue that was up 10% year-over-year, but the ad-supported business, $385 million, so less than a tenth, despite having more users, and that revenue is in decline. Does that need to pick up for Spotify, for Netflix, for some of these companies that used to be just the premium supported?

And what can they do? They said they rebuilt their stack, that these things should be getting better. We've heard this for quite a while from Spotify. But that seems to be both an area of opportunity and also an area where, I don't know, should They just outsource it to somebody that does advertising better than they do, like a Google or a meta? It seems like there's low-hanging fruit there. Probably.

Yeah. I mean, I don't know why they have to be the master of ads. We've seen Netflix do this. I think we learned this with Yahoo back in the day or Tumblr. Ad-supported business isn't necessarily going to be the path to success. I think this is a nice ad on, but no, it's not going to offset. I actually think they have more wiggle on pricing power than they do on ads. terms of a market mover. I don't know. I mean, like I say, I'm not a customer. I don't really see

them having as much pricing power as Netflix. The algorithms are good, but you don't have that, you know, exclusive content. I have to buy Netflix to get stranger things. I don't really have to go to Spotify if I want to listen to my stupid 90s alternative music. But I do think there is opportunities there more than there is advertising. Advertising is a something they should do, but that's not the answer here to turn it back into a hypergrowth story. Yeah, be interesting to see what the market thinks about these going forward. Because I think it's hard to argue that these are bad businesses, but the stocks have not been winners, at least recently for investors.

When we come back, we're going to get to a couple of stocks that are also struggling today, Robin Hood and SoFi. You're listening to Molly Fool, Hidden Gems, Investing. Amazon presents Jeff versus Taco Truck Salsa, whether it's Verde, Roja, or the orange one. For Jeff, trying any salsa is like playing Russian roulette with a flame thrower. Luckily, Jeff saved with Amazon and stocked up on antacids, ginger tea, and milk. Habaniero, more like habanier, yes. Save the everyday with Amazon. Welcome back. Two of the big earnings reports for today, or at least in the last 12 hours or so, is Robin Hood and SoFi. And both of the

stocks, Rachel, are down double digits as we're recording. These are both still technically growth companies. If you're looking quarter over quarter, maybe things don't look like that with Robin Hood. But the sentiment around them have both turned very negative very quickly. So when you look at this earnings report and kind of the trajectory of these companies, what are you thinking? Yeah, I think it's an example of the shift we've seen and how the market values these high growth fintech businesses the last few years, right? I mean, for a long time, companies like Robin Hood, like SoFi, they had these speculative multiples because they sort of promised to disrupt the banking establishment with viral, you know, high velocity trading and

lending models. And maybe we're seeing investors rewriting them more like traditional financial institutions, although I think the business models are entirely different. You know, it's interesting. You know, Robin Hood, their revenues are still growing significantly. They had about a 47% collapse in crypto revenue. So I think we're seeing how much they still rely on, you know, volatile retail trading. So-fi, they gave a more conservative outlook, I think, than the market was hoping for. They left their 2026 revenue forecast unchanged. So maybe investors see that as a signal of a slowdown in the latter part of the year. Maybe these are both companies that are expanding their user bases. I think that the market is really no longer willing to pay a premium for potential. They want

predictable, disciplined profitability. Robin Hood is evolving into a wealth management tool, a quality one, but I think they're finding that maybe the boring, growth and subscriptions and retirement accounts doesn't command the same valuation as it did a few years ago. And so far, I think, is also discovering that maybe being that kind of one-stop shop for finance is a bit of a double-edged sword. They have a long streak of profitability, but their growth is becoming more predictable. It's maybe even capped by the broader economy. So, you know, these aren't stocks that I own, but I do think if you're an investor looking at these businesses, there are some nuance to what we're seeing right now. I do own both of these shares. So rough day for me.

but I think you look at these earnings reports and what sticks out to me is are you looking at it short term and based on analyst expectations or what does quarter over quarter growth look like or are you looking at it long term? And, you know, Rachel said it. The assets in retirement accounts at Robin Hood are up 90% year over year. People say, we don't want you doing all this yolo trading and prediction markets and now they move into this, you know, more stable business and the market goes, ah, we don't really like that either. Then you look at it's, SoFi, 41% revenue growth, it's hard to match that if you're looking at any sort of financial institution. Yeah. You know, sometimes we're the problem, Travis. It's not the company that's the

problem. Oh, no. Oh, no. Don't turn it on us. But in this case, I'm going to say you're the problem, pal. To your point, nothing is wrong with either of these companies. SoFi first. SoFi's earnings, they were better than fine. They were pretty good. The issue is we don't seem to be willing to admit that they're a bank. And banks, especially as they grow, have limits to how fast they can grow. That is by design. It is hard to innovate in financial services. I keep making this point, but 99% of what we call fintech innovation is just some new marketing thing. That's by design. Regulators like it that way. So if I seem to defy gravity when it was smaller, the denominator made a huge difference there. as they grow, these marketing strategies, just the rate of return on this is going to go down.

So, you know, at some point, we're just going to say, okay, this is what they are. They're at bank. I will note, even with today's drop, their multiple of book is double that of Alli Financial. Their forward P.E is triple that of Ally Financial. Ally Financial is a really good online bank. So there's no red flags. But again, I mean, I don't know what SoFi is going to do to check. change the calculus and turn into some hyper-growth machine that the market wants them to be.

It's a similar story for Robin Hood. You're paying twice the multiples that you get for Charles Schwab. Robin Hood tries desperately to innovate. They tiptoe all over, you know, lines in the sand from regulators. Yeah, there's a lot of great areas if you're talking about prediction markets and some of the things like that. Yeah. Right, right. But at some point, they are what they are and what they are is a lot more similar to Charles Schwab

than maybe investors want to admit. I think that at some point, either these companies are going to have to discover magic fairy dust, or we're going to have to admit that we know what they are and we know how to value them and they should be valued maybe at a premium to some of the slower growth ones because they are still faster growth in their sector. But the in their sector thing is the part that I think we've kind of lost track up. Yeah, these stocks have not done well, but at some point, you have to look at the business, and it does seem like they're both doing very well from a kind of fundamental basis. There's a little bit more volatility in Robin Hood, but, you know, so far, it's hard to argue

with 40% growth. The question is, what does the market want to pay for those things? And I think that's kind of what Lou is getting at eventually. Maybe there is some value there, even for somebody like Lou. When we come back, we're going to get to the potential bubble building in energy. You're listening to Molly Fool, Hidden Gems Investing. It's never too early to plan your summer story in Europe with WestJet, from rolling countryside to cobblestone streets.

Begin your next chapter. Book your seat at westjet.com or call your travel agent. WestJet, where your story takes off. Welcome back, and as we talk about earning season, we have to talk about the hottest stock in the market. Lou, that is Bloom Energy. A few years ago, this was the company that was going to bring hydrogen to everybody. we're going to be making hydrogen out of water.

Now it just seems like they are selling these fuel cells that are actually taking natural gas to any data center at any price. Is this just another bubble building around the AI bubble, except this time it's in energy? To be fair to them, those generators are hydrogen capable, right? So at some point they could be. But yeah, I think this is saying what we already know on steroids. These data centers are creating a huge problem in terms of energy, and companies that are in position to solve that problem or address that problem are attractive to investors.

Stock is up 180% year-to-date, Travis. It's still April, so that's a pretty good year. 180%. Let's go back a little bit further. One year, it is up 1,350%. Yeah, that's not bad. We'll take that most of years. But, look, I mean, not to be the wet blanket here, but a lot of that momentum is tied to a deal

to plug into Oracle databases. I don't know if you've checked on Oracle recently, but Oracle is down way big on investors wondering if they should and if they will actually turn those data centers on. I think that's a huge, I don't actually say red flag, but that should be something that we should be aware of, especially when you're trading it 160 times expected earnings. I hope for this. I think we need this. We certainly, we know the grid is not prepared for this and we know there's huge energy needs. I don't know how I can get my little brain around how this makes sense in the long term. So yeah, I guess to answer your first question, is there a bubble here? There's a really decent company here and also a bubble. Buying a company like Bloom Energy at 32 times sales,

typically energy stocks don't trade for those kinds of multiple. Yeah, yeah, the valuation's a bit bridge for me. I think part of it is we're seeing the fact that the market's really waking up to the reality that these AI factories are effectively giant power-hungry heaters that the current utility grid can't support, right? And so Bloom offers this grid independent solution. You know, companies can deploy Bloom's fuel cells to generate high-density power right on site. And so we're seeing them shift into more of maybe an officiary in that essential AI infrastructure category. And we're in an era, I think, where the most valuable commodity in tech isn't just, you know, the algorithms you build. It's really guaranteed access to electricity. So we're seeing that

hyperscalers are willing to pay a premium to bypass the traditional slow moving energy infrastructure of yesteryear. And by providing a way to generate massive amounts of power without a traditional grid connection, they could be positioning themselves as a bottleneck breaker in the AI industry. It doesn't mean I would personally invest in this business. But I do think that driver of the enthusiasm for the stock that we're seeing the need for its solutions. I do very much look at it as a function of the AI era that we're living in, and I don't see that diminishing. Lou, let's end on this. You and I have been following industrials and energy for a very long time. Have you ever seen prices like this, multiples like this, and does that ultimately worry you as an investor?

It definitely worries me. Have we seen it? Yeah. I mean, look, if we're going to see it, we see it in little pockets like this. And again, there's a there. Bloom Energy has a, a potentially interesting business, but just always know what you're paying for a company. Valuation is always, how quickly can they get there and how many hurdles do they have to jump to get there? If you look at all of the chaos and data centers right now, let's at least wait till the end of the week and see what the hypers say about their rollout plans before jumping in at these levels. What about when you look at the energy market more broadly? Because if you look at a heat map of the S&P 500, tech stocks not necessarily doing great.

A lot of companies are struggling in the market, but yet energy is holding things up. And you look at these multiples from on mobile to utilities. And they're higher than they've been in a very long time. I guess that's what I'm wondering if this is, Bloom Energy is like a symptom. But is this a bigger problem that ultimately, you know, energy typically doesn't trade for 30, 40 times earnings. And that may eventually normalize. Yeah, and also there was an elephant in the room with the Middle East, too, that is driving up energy prices. I will say this broadly on energy.

I don't know if this applies to bloom, but these are the times that you're glad you have energy in your portfolio. These aren't the times you buy energy. You deal with years of underperformance, so you have that exposure in times like this. I would not be personally running into energy right now. Again, I think this is why these are times where you're glad you put up with the down times, It's not times to rush. Energy can struggle for decades and have one great year like we have in 2026. 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 to buy or sell stocks based solely on what you hear. All personal finance content follows the Monty Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou, Rachel, and Dan and Christy behind the glass. I'm Travis Hoyam. We'll see you here tomorrow.