Motley Fool Money - Fintech's Future, Underrated Investing Metrics

Episode Date: July 15, 2022

Earnings season has begun! (0:30) Emily Flippen and Jason Moser discuss: - Latest results from the Big Banks and tough comments from JPM's CEO Jamie Dimon - Pinterest shares rising on an activist buying 9% - Amazon's potential for dropping in-house brands - Unity Software buying Ironsource - BMW launching a SWaaS (seat warmers as a service) subscription - The latest from Microsoft, Netflix, Twitter, Disney, and The Trade Desk (20:17) Rachel Warren and Auri Hughes talk with Jared Isaacman, CEO of Shift4 Payments, about the future of fintech. (32:35) Emily and Jason answer mailbag questions about new "Night Effect" ETFs and underrated investing metrics, then share two stocks on their radar: Vail Resorts and Outset Medical. Got a question about investing? Our email address is [e-mail] Stocks discussed on the show: JPM, WFC, C, PINS, TWTR, DIS, TTD, NFLX, MSFT, AMZN, U, IS, BMW, FOUR, SQ, PYPL, SHOP, NSPY, NIWM, OM, MTN Host: Chris Hill Guests: Jason Moser, Emily Flippen, Rachel Warren, Auri Hughes, Jared Isaacman Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh, boy. Fantastic. You guys go hard, man. Daredevil Born Again, official podcast Tuesdays, and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. It's the most wonderful time of the year. Earning season has begun.

Motley Full Money starts now. That's why they call it money. The best thing. Global headquarters. This is Motley Fool Money Radio show. I'm Chris Hill. I'm Chris Hill and joining me in studio. Motley Full Senior analyst, Jason Moser, and Emily Flippen.

It's good to be in the studio once again. No kidding. I love how you emphasize the In Studio. We are back in studio. We've got the latest headlines from Wall Street. We'll talk FinTech. with the CEO of Shift 4 payments. And as always, we've got a couple of stocks on our radar. But we begin with the start of earnings season. The big banks kicked off with second quarter

reports from Wells Fargo, Citigroup, JPMorgan Chase, and others. Jason, as is often the case, the dominant headlines came from JPMorgan Chase CEO, Jamie Diamond. Who was not happy with the general state of the economy, his business, and the stress test that banks have to go through. Yeah, I feel like it's the stress test that really kind of rubbed him the wrong way. Generally speaking, the bank performed pretty well. Revenue is essentially flat at $31.6 billion for the quarter. Home lending revenue is down 26 percent from a year ago.

Investment banking revenue down 61 percent from a year ago. And I know that sounds bad, but frankly, it's not so bad in the context of a rising interest rate environment. You're seeing these banks, you're seeing that net interest income start to accelerate, which is nice. But with that said, going back to the stress test, I think that's really what got them a little bit worked up. And if you go back to just a quarter ago, right, JPMorgan authorized a new $30 billion share repurchase program essentially effective May 1st of this year. Well, fast forward to the beginning of this earning season. Now, this quarter, they actually

have to suspend this buyback program. And most of that really is due to the stress test that were recently performed by the Fed. There's the stress capital buffer or the SCB. We heard a lot of that in the call there. Ultimately, J.P. Morgan is going to have to protect themselves a little bit more, right? They're going to have to add a little bit more capital in order to meet those demands of those stress tests, which means they're going to be a little bit more conservative with capital here in the near term. Now, I stress near term. This is, I think, very short, a short-term thing that probably will resolve itself by, next quarter. But regardless, he's not happy with it. I do want to read a quote, because I think

it matters. He said in the call, I quote, we don't agree with the stress tests. It's inconsistent. It's not transparent. It's too volatile. It's basic, capricious, arbitrary, end quote. You don't hear him mince words very often, right? And that's another great example of it. And I think that's something just to keep in mind with these banks as we go through earnings season. Well, Emily, it's not just Jamie Diamond. We had Sheila Baer, the former head of the FDIC on our podcast, earlier this week. She said she's also worried about the way the stress tests are designed, because one of the assumptions built into the test was that, as she put it, inflation would magically drop.

The devil is always in the details with these things, but I think it's important to remember why regulations exist in the first place for banks. And we can use an analogy. It's been said that park rangers have a hard time designing trash cans for national parks, because there's considerable overlap between the smartest bears and the dumbest humans. While Jamie Diamond and JPMorgan Chase have been great stewards of capital, there are banks out there that have maybe been less so. So regulations certainly have their place, although unfortunately in this case, when you are Jamie Diamond, when you're running JPMorgan Chase, this is a bumper that you run up

against. Yeah. And I mean, again, this is not a J.P. Morgan specific issue. Banks across the board are, they're going to need to focus on capital preservation in the near term. J.P. Morgan built up reserve $428 million for the quarter, which is, you know, we're We were talking about the tailwinds from releasing those reserves just a year ago. So it changes very quickly. Wells Fargo, same thing. They have a $580 million provision for credit losses for the quarter. And Wells, along with that, we know their exposure in the mortgage

market. They saw fees from mortgage banking fall to $287 million from $1.3 billion a year earlier. So you can see where this rising interest rate environment, it's good on that net interest income, and certainly Wells saw that accelerate as well. But for a bank like Wells Farrell, that is highly exposed to that mortgage market, it's going to be a little bit of a difficult environment in that regard. Shares of Pinterest rose more than 15% on Friday after Elliott management took a 9% stake in the company. Emily, I feel like we're going to be seeing more of this, not just with Pinterest, but with

other sort of beaten down growth stocks as well. I think that's a fair assumption. I will say, comparing Pinterest versus other companies that have decreased in price maybe confiscates the reason for this investment, which is to say, Pinterest has done a poor job on executing the thesis that they originally came out with. Whereas other stocks that are down significantly, maybe down to devaluation concerns, this is a very business-level concern for Pinterest. Their monthly active users have continuously declined.

And while monetization has increased, which is a great thing for this business, they've never really executed on the in-app shopping experience that was supposed to take Pinterest to that next level of engagement and monetization. Meanwhile, while they're struggling to come out with this shopping experience, experience, we see competitors and even other social media sites rolling out with this commerce very quickly, virtually overnight. So you have to wonder if Elliott management is looking at this company saying, what are they going up against that they can't increase this monetization and engagement the same way as their

peers? Is there something we can do to help get them there? Earning season will heat up next week, but on Tuesday morning, all eyes won't be on Wall Street. They'll be on a courtroom in Wilmington, Delaware, where the case of Twitter v. Elon Musk will begin. Jason, back in April, when Musk announced he was buying Twitter for $54 a share, we sat on this show. Everybody slow down. This is not a done deal. I don't think either one of us thought it was going to get as messy as its cotton. Like sands through the hourglass, Chris.

This is shaping it to be quite the soap opera, and it sounds like it's going to drag out for some time to come. And frankly, I think, I feel like this is probably ultimately what Musk wants. I feel like he's been looking to get this to go to court. He's probably having a little bit of buyer's remorse in the price that he offered for Twitter versus where it is now. He could necessarily have foreseen market conditions, but it is what it is, as they say. There's a lot of stuff that we just don't know, clearly, and there's going to be a lot of stuff that comes out in court.

But to me, it does feel like he ultimately wants to get either more information or he wants a lower price or he wants both. And this is ultimately going to be the way to get that. And I feel like he looks at the legal expenses in the context of this deal as a drop in the bucket. He can wait this out. I think what really sucks, honestly, the losers here are the Twitter employees and shareholders of the business, right? I mean, they're the ones that are essentially stuck in limbo as this plays out.

And it really doesn't look like there is going to be a solution anytime soon. And as soon as I say that, of course, this is just changing by the day. So we'll wait and see what Monday brings. But nonetheless, it is a messy situation. It's so hard to predict, but I agree with your assessment that when we see protracted legal battles, typically the people who pay the price are the shareholders in the companies themselves, in this case, Twitter. So I'm sure Twitter shareholders are hoping that this deal goes through.

It'd be a significant premium to where Twitter is trading today. Other people, I'm sure, are making the argument that, depending on the facts, maybe that results at an agreement, penalty fee paid, and maybe both parties simply walk away. But either way, the Twitter shareholders are the ones that are sitting here on the sidelines waiting to understand what's going to happen to their investment. More headlines this week in the business of streaming video. Disney is teaming up with the Trade Desk to help with targeted advertising across Disney's various platforms.

And Netflix chose Microsoft, not Google or Comcast, Microsoft, to help build its ad-supported tier that Netflix plans to launch later this year. Emily, I think if you're a shareholder of any of these four companies, you're probably happy with the way this week has gone. Certainly, right. Programmatic ads in general are a great industry. be invested in right now. There's big changes coming to cookies, but there's lots of alternatives available. In particular, the Trade Desk Unified ID 2.0 is really gaining traction, as you mentioned,

especially with companies like Disney. But it is so interesting to look at Netflix partnering with Microsoft. A lot of people said this is Netflix going with an established player, right? Microsoft. But Microsoft is still pretty new to the programmatic ad space. They made their first headway when they acquired Xander from AT&T in late 2021. Many people, in fact, thought this was going to be just for internal use at Microsoft. So, by any means, this isn't exactly what was expected, right, versus the trade desk or Roku for Netflix's partnership. But it is certainly interesting. Lots of different speculation going on if this is going to result in some sort of acquisitive bid from Microsoft, which I don't expect, or if Microsoft just promised to roll out

this ad tier much faster than the competitors. Jason, to Emily's point, you look at Microsoft, they're the new kid on the block in this industry. But one thing they have going for them, and apparently they stressed this when they were talking to Netflix, is, hey, we're not competing with you on content. Comcast, you know, they've got their own content that they're worried about. We're going to be all in just for you guys. Yeah. And I think that's a really important point to know, because, I mean, there is, that certainly would explain why. I mean, Netflix doesn't want to couple up with something like a Google. Because, I mean, there are competitive. There are competitive forces at

play there. And then we saw the announcements, obviously, Trade Desks, partnership with Disney. Well, now maybe Netflix looks at that and says, we're not sure that we're going to be the top priority here. And there's a lot of execution risk right now here in regard to this ad platform for Netflix, because this is something that's completely out of their wheelhouse. I mean, with something like Disney, it's more or less expected because you look at all the properties that this deal is going to cover between Hulu, ESPN Plus, ABC, Freeform, NatGeo, The list goes on, and it likely will be that ad-supported layer of Disney Plus as well. Netflix probably looks at that and say, you know what?

We want to make sure that we're at the top of someone's the list. We want to know that we are your priority, and it seems like that's what they get with this Microsoft deal. I love that point, because I'm a Roku shareholder, and I have expected this deal to go to Roku, but there's a good argument to be made that the Roku channel, which now Roku is investing money in original content, is inherently becoming competitive. And Roku, to this point, it was not. associated with any single particular streaming service, which made it powerful in his own

right. I wonder if that's changing. What will be fascinating to that comes of this, assuming that this Microsoft Activision Blizzard deal does close, you know, Netflix is making some investments there in the gaming space. I just can't help but wonder if there won't be some sort of co-opetition or partnership or just some experiments played out there on the gaming side. Maybe Microsoft opens that sieve up a little bit to let Netflix try some things with that big viewer base that they have. could be a beneficial thing for both parties. Coming up, we've got the latest in retail, software, and automotive innovation.

Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in studio with Emily Flippen and Jason Moser. Amazon has started cutting the number of private label brands it sells. The Wall Street Journal is reporting that Amazon executives are talking about getting out of the private label business altogether as a way to appease regulators. I bought things under the Amazon Basics label. I'm a satisfied customer. As a shareholder, however, I understand why they're having this conversation. I do. I do as well. You and I were very taken back to see that the private label business

the Amazon has is so robust. 243,000 plus products across 45 different house brands. And that's just as of 2020. It feels like the theme of this is perhaps at least, don't bite the hand that feeds you. What I mean by that is that when you look at Amazon's actual third-party business, that really has become such an important driver of their overall retail business. Back in 1999, third-party sellers represented 3% of Amazon's total revenue. You fast-forward to 2009, that was 31%. You go to 2018, it had reached 58%.

Amazon has a little bit of a reputation of kind of using some of that data, copying stuff, and then selling it for lower prices under their own brand. So it's understandable that some of their merchant customers are getting a little bit frustrated. And then you add to that, all of the regulatory scrutiny that the company, the big tech in general, is going through these days, this could be just sort of a throwing regulators a bone here, saying, man, we'll step out of this market and stop causing so much trouble if maybe you kind of scratch our back too. But what are we going to do?

What are we going to do without our Amazon Basics brand? I'm not to find new underwear provider, new place to buy my cords. I mean, this is tragic for consumers, in my opinion. I don't disagree. I tell you, every time I buy batteries, they just pop those Amazon basics right at the top of the search, and I just click buy. Who knows? It'll be interesting to see how this shakes out.

Unity Software announced an all-stock deal to buy Iron Source, an app software company. Shares of Iron Source soared on the news, while shares of Unity Software did the opposite of soaring. You tell me, Emily, did Unity overpay for Iron Source? No. And that's a very strong statement, right? That does not agree with what the market is saying, right? Unity down, I think we're on 15% on this news. And history says that stock-based deals like these, especially large one, funded by shareholders, tend to not be accretive to the shareholders over long terms, right? They tend to pay too much, overestimate the synergies. But I like this deal in particular because Iron Source shareholders are actually upset. And that leads me to the no way. answer there. Because when I see people who own shares of iron source speaking out to such a large premium saying, I think this company is worth more, that to me highlights that maybe Unity is getting

a deal here. They're getting this at a price of around $4.5 billion, which is around a third of what the company went public at in terms of valuation. So relatively cheap. This is also cash flow positive, profitable, and growing faster than Unity. And it offers the opportunity for Unity to expand their monetization engine. A large acquisition is scary. I'm a share. holder of Unity down massively on that investment. But in my opinion, this might be an interesting acquisition, and that might be a strong statement. Unity Software really has come down a lot to the point where it gets thrown in there among stocks discussed as, hey, maybe now it's an acquisition target itself. Do you think this purchase

of Iron Source sort of staves off that conversation or removes Unity software from that conversation? I think it removes it, but this acquisition is almost more like a merger of equals in some sense. We're having the game engine itself. that drives the creation of these apps, plus a monetization engine. That's where Unity's really struggled. So I think it stays it off over the short term, but what they do as a combined entity is really going to be important for the future.

Some cars come with added features that cost more. One of those features is heated seats. BMW is turning the ability to warm your seat into a new subscription service. Reports out this week that in the UK and South Korea, BMW is installing seat warmers on some models at no extra cost. But to actually turn on the seat-warmer will require customers to buy a monthly subscription plan of $17 a month. Although, Jason, you can also buy an unlimited plan for a lump sum of more than $400.

I'm intrigued in the new SWAS business model for several reasons. What do you think? Oh, Chris, my car has seat warmers, and I think I would be up in arms if I had to pay a subscription for it. As we were discussing in the production meeting, this really does boil down to geography, right? It's where you live, I think ultimately the climate, because maybe you only need seat warmers two or three or four months out of the year. Then you do the math out there, and perhaps it works.

I think BMW owners tend to cycle through a little bit more often on the cars, perhaps four to five years. You see them sort of rotate into a new vehicle. So maybe economically you can justify it. But then you have your outlier events. What if it's a cold May? I mean, then you want to, you got to go back in there. There's a lot of friction involved. It just doesn't seem very customer-centric.

Emily, it does make you want to do the math and sort of think, okay, how many months? Because it could work out in your favor to do the subscription service, although a subscription service for heated seats just is patently absurd to say out loud. I can keep my tush warm all by myself. Thank you very much. But I also own a Honda Civic, right? So I think BMW is maybe speaking to their audience here, right? Maybe they know their core customer better than we do. In all seriousness, do you think we're going to see more of these micro-transaction moves by automakers?

I mean, this is something you could do for software. There are so many added features, and maybe it's something where we just start to see more of this, not just from BMW, but from others. Personally, I think, yes, we do. I think the connected cars is a big long-term trend that's really just kind of now underway. You see companies like Seren's making investments in the space, Qualcomm technology, Nvidia playing in that space as well. So I'm absolutely certain there are going to be experiments tried here in trying to figure out to sort of longer-term monetization.

Exactly. It's already happening, right? Just a matter of speed. All right. Emily Flippin, Jason Moser, we will see you later in the show. Coming up after the break, we've got a conversation with Jared Isaacman, the CEO of Shift 4 payments. We'll talk about the latest trends in FinTech and how Shift 4 stands out from other players in the industry. So don't go anywhere. You're listening to Motley Full Money. All right. Later in the show, we're going to dip into the full mailbag.

We've got radar stocks up next to CEO Jared Isaacman. But first, a message from our friends at Bigger Pockets. Real estate investing is one of the best ways to build long-term wealth. But to be a successful investor, you need to know what news and trends to pay attention to and what's just noise. I'm Dave Meyer, real estate investor, and VP of Analytics at Bigger Pockets. and in my new show, On the Market, a Bigger Pockets podcast presented by Funrise, we bring you expert perspectives in a digestible format so you can make informed investing decisions. And we make it fun.

I promise you, on the market is definitely not another boring news show. Each week, I chat with a panel of experts about the latest news and trends affecting the real estate investing world. We touch on things like government policy, 3D printed houses, investing in the Metaverse, and more. So join us every Monday for On the Market, the podcast designed to help you invest with confidence. Just search on the market in your favorite podcast app. That's On the Market. Welcome back to Motley Full Money. I'm Chris Hill.

When you buy a hot dog at a baseball game, there's a good chance your transaction is being handled by Shift 4 payments. The company trades on the New York Stock Exchange under the ticker symbol appropriately, F-O-U-R. Shift 4 processes more than 200. billion in payments a year from stadiums, hotels, and e-commerce companies. CEO Jared Isaacman is hoping he can scale the company internationally and beyond. No, really. Shift 4 Payments is partnering with Starlink to process payments, presumably to get ready for space internet. He joined Motley Fool contributor Rachel Warren and senior analyst Ari Hughes to talk about trends

in FinTech and how his company stands out from other, players. To start off, I'd love to hear a bit more about your background, the story behind the founding of Shift 4. And then maybe you can also explain to our audience, you know, what the company does and its various businesses with those entail. Oh, for sure. So it all began with my hatred for high school. So I, you know, my siblings are 15 years, 13 years, and 10 years older than me. So, you know, while I was in high school, raising my hand to get permission to go use the bathroom, they were out either finishing up their higher education or already well into their careers. And I kind of admired the independence and said, I got to get on this fast track.

Early days, got exposure in the late 90s to the payments industry, which was incredibly immature at that time period. Basically, at that point, banks were prioritizing just getting credit cards in your wallet so you could go spend. And they just assumed that the other side of the equation, which was enabling businesses to accept credit cards of form of payment, would just short itself out. Like, you create enough demand, people will fix it. And ultimately, that was the case, except it was just done really inefficiently.

There was a lot of outsourcing. It just wasn't a good commerce experience. So while banks were focusing on card issuing, we began focusing on powering commerce from an acceptance side of things. And in the beginning, in the early days, the basement days, we just tried to literally bring everything in house, quite literally. It was my parents' house. and it worked reasonably well. I would say we were a generalist. We were just trying to find

efficiencies and deliver a better experience for our customers. But we quickly realized in the early 2000s that commerce was not going to just be this binary thing of an approval or a decline of a credit card. It was going to involve so much more that you were going to connect payment rails into software. And that software would tell you more about your customers. It would enable e-commerce transactions, omni-commerce. You would have indexed. venue, you'd have online payments, you have mobile payments, but that software was going to be a critical component to this, because it opens up the door to a lot of other things, whether it's like gift and loyalty transactions or business intelligence. So we began connecting our payment rails

into software. And now over 425 different software integrations exist across predominantly restaurant industries, hotel industries, stadiums and theme parks. So where does that bring us today, you know, 23 years later, we handle about a quarter of a trillion in payment volume, just in the U.S., which is pretty sizable. About a third of all restaurants in the U.S. use some form of our payment technology, about 40% of all hotels, most skiers or it's half the Las Vegas strip, and a lot of the cool theme parks and stadiums that you would go to. And that's all powering what we call integrated payments, which is completing a commerce experience between software and the consumer. And now we're about to embark on our next phase, which is expanding

internationally. So that's our 23-year history of payments in like a minute or two. So just getting familiar with the company on my end, I've seen you guys have done really well acquiring these sporting venues and stadiums, also kind of making your mark in this hospitality sector as well. I know I've been traveling and I've seen shift forward terminals while I've been out. So the question I have, are your payment system set up to kind of particularly address these specific needs of these type of clients? Or is, Is there an edge there? Could you help me understand that? The last two years have been pretty interesting for fintech.

It went from a time where like every fintech is going to change the world, a lot of exuberance and probably evaluation to now like, I'm not sure where the relevancy is and don't they all just do the same thing? There's a lot of commerce in the world. You have industries that maybe never took, you know, credit cards as a form of payment before, you know, education institutions. You know, if you're going to pay that big college tuition bill, you might as well get enough points to get a free trip to Disney World along the way. There's new industries that are

appearing all the time. And what I'd say is they're all generally connected through software. And those software integrations are super scarce. They're very rare. They're very hard to achieve because software companies care about making their software better to sell to their end customers. They don't like spending time doing lots of payment integrations. So Shift 4 is in a landscape of few in that we've accumulated software integrations very specific to restaurants, hotels, stadiums, a little bit in gaming, and a little bit in specialty retail. And that gives us a very unique right to win in those verticals and why we're able to deliver pretty extraordinary volume growth within that space. Now, there are companies that we all know like Square and PayPal,

and they have software that appeals to very specific verticals as well. And you wouldn't find ship for there. You'd find us in those hotels, you'd find us in those stadiums. And it's based on the products and the software integrations we have that are uniquely suited for those verticals. Okay, thank you. That's very helpful. You know, something I was also thinking about as well, as we've seen the rebound, you know, from the COVID-19 pandemic and how that's impacted, you know, consumer spending. We've definitely seen more sales and ship force core restaurant bar and hospitality markets. This has unleashed a lot of pent-up demand among consumers to go to concerts, you know,

sporting events, gaming venues, and so forth. And I'm curious to hear from your vantage point. How has, you know, the pandemic, the recovery period that followed, And then this recent prolonged period of inflation, shifting consumer spending habits. How has that impacted your business as well as the broader fintech space as a whole? It all depends on that slice of time that you look at it. I mean, take 2020, every one of our customers was totally leveled. So, you know, your hotels were at 40% of their, you know, pre-pandemic volume levels.

Your restaurants were at 60% pre-pandemic levels. But we grew overall in 2020, our first. volume by 10%. Now, that was purely a factor of just taking share and not any way related to our customers being healthier immune to the realities of the pandemic. Now, 21 was like a different story altogether. 21, you had a lot of stimulus field exuberance. People were locked up in 2020 and they wanted to get out and party in 21. And you saw like volume come out of South Florida, like you'd never see. Like South Florida eclipse Las Vegas in terms of hospitality and restaurants spend. But it was very isolated to specific regions where people wanted to,

where all that pen-up demand was released. So you'd have some markets that were super hot in 21, and then you had like Midtown Manhattan where people were not back in the office yet, and those restaurants were pretty quiet, those hotels were still shuttered. As pandemic restrictions slowly released, you had the last little bit of setback from Amacron,

and I mean, pretty much everyone who went to like a New Year's party or Christmas party pretty much got Ammocrat at that point in time, that kind of created a short-term slowdown. Now, 2022 is a whole different animal altogether, because the inflation is very real, helpful to our industry, and that we make spread off dollars, up to the point where consumers no longer go out and spend. And that's what you don't want. Now, I express caution coming off our Q1 earnings that, look, we're not seeing anything that consumers aren't healthy and still excited to go out and spend. We set volume records

literally every weekend. That said, just like looking at it from like a, you know, I don't know, a rational perspective, I don't know how long consumers. consumers are going to tolerate $100 stakes because that's what we've seen essentially happen. So you're hearing it from everybody in FinTech, all the card brands, the banks are saying the same thing, which is there's plenty of reason to believe that consumers are going to slow down. And if we probably talk about it enough, they will. But there's a lot of cash in bank accounts and people are still spending. So it just hasn't shown in the data yet.

And based on like, again, the records we're seeing every weekend, it hasn't shown yet. But at some point or another, you got to think some of these costs are going to come down, that some of this demand is going to be reduced, and $100 stakes will become normal priced. We can only hope. Yeah. Well, as well, beyond that, you know, looking at this space and then looking at some of the dynamics that are at play right now as we see inflation continue to rise, as well as broader competition within the fintech space, what are some of the biggest competitive threats?

that you see as being present for your company. And what are the solutions that you're leaning into there? The big shift, I mean, I've been around like 23 years in the space. So I've seen all the 1.0, 2.0, 3.0 evolutions of fintech. I mean, first, there is just a ton of commerce out there to capture. And when you start thinking about it on a global level, rather than, you know, country by country or regional, the opportunity is even more immense. That's a very high priority from us. I would say, like, there are winners and losers, for sure. I mean, the losers are the ones I've been around a really, really long time that consolidate a lot of old tech. We refer to kind of those non-integrated or legacy acquires.

They're not growing payment volume. They're probably growing fees and they're reducing expenses, but they're not winning volume, which is really, really, you know, generally hard to do. Like, you need real product and tech differentiation that helps businesses can, you know, better conduct commerce with their customers. Like the game of trying to save a couple basis points is no longer. really relevant. You're winning because you add a lot of value to the, to the commerce experience. I'd say like just because there's, you know, a lot of names out there in the, in the fintech space, that it's not as necessarily competitive as it might appear because you have kind of the old guard that's, that's like, I would say the equivalent of like pot pots lines,

like old copper lines, like with people's phones in their houses. Like, if you have it, you're probably not ripping out your phone, but you're not going to ever move into a new house and probably have a landline again. There is a portion of the, you know, of the fin we came called fintech, the payment space that represents that. That's not really competition. And then within the actual true fintech space, I'd say like this pangia event has happened where these continents had broken away and they're very clear what they're good at and where they're going to continue to win at for the foreseeable future. Shopify is going to do just fine in e-commerce for a long time. Like, that's going to be a first choice. Square is going to

do just fine with your small, you know, your small mid-sized, your bakeries, your coffee shop, shops, your food trucks. No one's going to encroach on that space. And I'd say with respect to like the more complex and demanding end of commerce, where you need lots of software to make it happen. So that's your hotels, your big restaurants, your stadiums and such, and specialty retailers. Shift 4 is going to do really well there too. And we're so confident we're going to do really well there in those particular verticals that we are extending our reach globally into a landscape that's very thin, very thin air of who can play in that space and kind of try and bring that success we've had in the U.S. and other markets. Coming up after the break,

Emily Flippin and Jason Moser return. They got a couple of stocks on their radar. So 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. sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Emily Flippin and Jason Moser in studio. Our email address is Podcasts at Fool.com.

Got a question from Mike in Ohio who writes, I know ETFs are not as popular as stocks for you, fools, but I'm wondering what you think about these new ETFs that trade after hours. And Mike sent a link to a story about night shares, which is a new ETF business, trying to take advantage of the so-called night effect, where overnight markets possibly deliver higher returns than daytime trading sessions. Mike writes, it seems like it's too good to be true, but I'm a skeptic. What's the catch here? Emily, what is the catch here? This is conceptually a really interesting idea. What these funds are doing are buying futures contracts right before the market closes, selling them right when the market opens, collecting

any gains over that period. But what's worth noting is they call out risk-adjusted returns. It performs better on a risk-adjusted basis, and they have evidence to point to that going back since 2008. Now, this is an interesting thing because liquidity in the overnight markets have only picked up in recent years. So you can buy into this idea, but what you're buying into is the idea that the aftermarket activity over the next 15 years is going to be very similar to the way it was over the past 15 years. And there's good evidence to show that as liquidity in the night markets pick up, that the risk part of the risk-adjusted returns will probably start to rise, volatility will increase, thus make those numbers look a little bit less

impressive. Just something to kind of marinate on. Again, conceptually very interested in the idea, but in practice might not live up to those high stated expectations. Yeah, I love that take there. And the other thing to think about too is just as technology just changes everything. I wonder if at some point here, sooner or rather than later, we don't see markets essentially trend towards basically being open 24-7 anyway. A lifetime ago, that really wasn't practical. Now, it seems like it could be done just at the clear. click the button, so it wouldn't shock me if that is the direction we're headed. I got an email from Sarah in Pennsylvania who writes, I'm in my 30s. I've been investing

for a few years, and I love it. Even with the market performance this year, I'm in it for the long haul. Part of what I find interesting about investing is getting the chance to learn about businesses in different industries. With all of the metrics in investing, PE ratios, etc., what is a metric that you think is important but doesn't get as much attention? Jason, what do you think? Yeah, congratulations, Sarah. Great perspective. Thank you for the question. I think one that stands out to me, a lot of people hear it, share count outstanding. And the reason why I bring that up is because we always hear in the headlines, companies announcing share repurchase plans or authorizations. Share repurchases are part of the deal. But you never see that next layer of,

okay, well, you're repurchasing all those shares, but ultimately what is that doing to the share account outstanding? Because the reason why share repurchases should matter is they should bring that share count down. We know that's not always the case. So it's easy to find that. If you look at a 10K or a 10Q and you just search the word Outstanding, it's going to probably be the very first one you see at the top of the report there. But share count outstanding is one to pay attention to. Emily, you got a metric? Yeah, I'll mention enterprise value. Things like price to sales, price to earnings, focus on the market cap as the price. And in a lot of cases, businesses that have sufficient amounts

of debt or cash, the better way to think about them is actually looking at that. their enterprise value, which is their market cap plus the debt minus the cash that a company has. And what it's getting at is the value of the company itself, if you were to come in and acquire that entire business. And it can give a better picture of valuation for a company if they do have large amounts of cash or debt outstanding. Podcasts at fool.com, people. That's the email address. Keep the questions coming. Podcasts at fool.com. It's time to get to the stocks on our radar. Our man behind the glass, Dan Boyd, is actually behind the glass this week, because we're back in studio. Jason Moser, you're

up first. What are you looking at? Yeah, one I've mentioned before, outset medical ticker is OM. They are the purveyor of the tablo dialysis console that is breaking down barriers, making dialysis more accessible, affordable, and effective. A great example of the potential of the internet of medical things. It's the first hemo dialysis system on the market with FDA clearance for two-way wireless data transmission. Now, in mid-June, outset dropped some news of a shipping hold for the in-home use only. That resulted in the share price falling somewhere in the neighborhood of 35 percent, just that one day. And the reasons cited were additional FDA rigor for enhancements they made to the in-home

offering. This is a dialysis machine that focuses on in-home use, as well as acute or in-hospital settings. But it's worth mentioning the acute demand remains very strong. The in-home demand still remains very strong, and there are zero same. safety issues. This is just extra rigor with the FDA to make sure that those enhancements are in line with the ultimate goal that the company and the FDA have set out. So I actually think this extra FDA rigor could work out in time. And I will tell you, I bought the dip.

Chris. I bought the dip. Dan? Question about outset medical? You know, I have sent a lot of technology to contributors at the Fool over the years to get them to record at home and do things. And one thing I've noticed is that they don't know what the heck they're doing. Jason, what makes you think that medical patients who need kidney treatment are going to do better with their tablo from outset medical? Well, generally speaking, it seems like the feedback is very positive. Folks like the opportunity to be able to not have to necessarily go to the hospital or an acute setting in order to deal

with dialysis, which is a relatively consistent and cumbersome and expensive offering. Emily Flippin, what are you looking at this week? Well, not quite living up to outset medical. I am looking at avail Resorts, the tickers M-T-N. They're a skiing company. They own a lot of different skiing lodges and mountain activities for the adventurous folk. And I've never been skiing myself. But for the people who do Vail Resorts, it's really seeing some seasonal strength. Demand has picked up as the pandemic has wanes. And the company actually just made an acquisition that expands its resorts to Europe for the first time ever. So as they move towards this season pass, I think that

Vail Resort still has a lot of, you know, I'd say uphill in front of it. But I think a lot of people will probably skiing downhill, but uphill in terms of its stock price in front of it. Dan, question about Vail Resorts? Not really, Chris. I have more of a question for Emily's preferences on winter sports. So you say you've never been skiing. Have you been snowboarding before? And if not, would you be more interested in skiing or snowboarding?

Dan, I grew up in Texas. You couldn't pay me to get on a mountain, but I will buy the Rer Resort stock. That's as close as I'm getting to outdoor winter activities, though. Medical technology and outdoor winter mountain sports. sports, very different businesses, Dan. What would you like to add to your watch list? This is a tough one, Chris, because one company has tanked recently, and the other one is a winter sports company, something that I also don't really care about. So I probably will go, I'm going to go with Vail, I guess, and just because it seems more fun than dialysis.

Jason Moser, Emily Flippin. Thanks so much for being here. Thank you. Thanks, Chris. That's going to do it for this week's Motley Full Money Radio show. The show is Mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.