Motley Fool Money - The Next Amazon May Already Be Here

Episode Date: May 5, 2017

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

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I'm Chris Hill and joining me in studio this week from Million Dollar Portfolio, Jason Moser and Matt Argusinger, and from Motley Fool Explorer, Simon Erickson. Good to see you, as always, gentlemen. We've got the latest headlines from Wall Street. Pulitzer Prize-winning reporter Charles Duhigg is our guest, and as always, we'll give you an inside look at the stocks on our radar. But we begin with the biggest public company getting even bigger. Apple's second quarter profits rose more than 10%. Revenue of just under $53 billion, Maddie. and the stock hitting an all-time high on Friday.

Yeah, the numbers are so big. It's almost hard to kind of put them in context. But this is still, I mean, this is the iPhone story. iPhone, which was 63% of revenue, of course, Apple's most important product. The unit sales there fell 1% to 50.8 million, which is still, again, a massive number. But I think the anticipation there of the newer iPhone is probably affecting that a little bit. But what I like to pay attention to is the average selling price for the iPhone, which was $655 this past quarter up from $642 last year.

I think that is one of the key numbers you want to watch. I mean, as important as the iPhone is to their revenue and to the business, we want to see that ASP remain high. If we see any degradation in that, we're going to start worrying about whether or not the smartphone market is becoming commoditized and if the iPhone can maintain its competitive position. I'll also point out that the services revenue, which Tim Cook was kind of touting, up 18% to $7 billion.

Now, it's a small number relative to everything else Apple does, but just to put that in perspective, it's still $7 billion. Think about it. It's more than double what Netflix does in revenue in a given quarter. And so great numbers, I think, and again, this is, again, becoming a capital allocation story, though. We know the cash poured. We know that management up their buybacks by $50 billion. They're going to return $300 billion total.

In buybacks and dividends, they raise the dividend. And so a lot to like, again, though, paying attention to those iPhone numbers, that's key. And speaking about capital allocation, how about we throw acquisition targets on that as a potential, too? I mean, we're starting to talk about a 10% potential repatriation tax. That would give Apple over $220 billion to work with for either acquisitions or buybacks here in the States. Citigroup just listed seven companies that could be potential takeouts on that list. Netflix, Walt Disney, and Tesla. I don't know.

I mean, this is a company that historically doesn't make big acquisitions. No, and I think that's really the big question, because we've looked at the last five years as Tim Cook has really, I think, done a good job managing the business. But it's becoming clear that they're lacking sort of that innovation that existed when Steve Jobs was still alive. So like Maddie said, this is becoming really a capital allocation story. And as it stands right now, it just doesn't seem like he's really up to that task, at least looking outside. of returning money to shareholders. So we'll see share repurchases. We'll see dividends being juiced a little bit here and there. But it is still an iPhone story. And one thing I'm noticing is that as iPhones progress, we get to the 6 and the 6S and the 7 and yada, yada, yada,

those phones get better, which means we can use them for longer periods of time. And I started thinking about that just in regard to my phone. I think I have the 6, and I feel like I've had it for about five years. And honestly, I don't know that I have any desire to upgrade it because it still works just fine. Now, I will say, I've also refused to upgrade the operating system because they fooled me enough times on doing that. At some point, it just turns your device into a brick and you're forced to upgrade. But it is kind of one of those things where it's a solid piece of hardware. I think they'll maintain that competitive position. The brand stands for a lot. But as these phones get better, I don't think people

are feeling the need to upgrade quite as frequently. I think I'd like, above all, I'd like to see Apple pay a, and we rarely see this, but I love it when I see it, is a company that pays a dividend based on its profits in a given quarter, given year. And, you know, Apple, like many companies, is, you know, increasing the dividends, a steady dividend. It's something almost a 2% yield that shareholders can depend on. I would just say with a business like this, because you don't know if that iPhone is going to fall off the cliff, you don't know if those services of revenue are going to grow and become a real strong recurring revenue base for them, just pay out a dividend. Pay out of

dividend, pay out a massive dividend, but make it kind of a percentage of profits in a given year. And I think that would be a big boost for shareholders. Hey, even Costco went out there and paid like a $7 special dividend. Granted, they borrowed $3 billion to do it. But I mean, as long as we're talking about big balance sheets, I mean, Apple could certainly afford squeezing out a couple of big special dividends there. I think shareholders would like it. Facebook's first quarter profits and revenue both came in higher than expected.

Simon, but Wall Street was unimpressed. Shares of Facebook down a couple percent this week. unimpressed, how can you be unimpressed for the company that's doing $8 billion of revenue growing at 49% year over here? That's pretty impressive Wall Street, if you ask me. I think the next step for Facebook, though, is, I mean, they have nailed it already with advertising and with mobile advertising. I think the next step for them, in my opinion, is going to have to be about transactions. We've seen things in the past, like the buy button directly on Facebook pages. We've seen David Marcus come over from PayPal, try to build out some of these APIs,

so that companies can book things like Uber directly on the Facebook Messenger and things like that. But I think that advertising is great. The even better thing is when people are actually buying things on Facebook, that's more valuable to an advertising customer. That's what I think is the next three years of this company. Closing in on two billion users. Amazing. Well, and when you think about everything you just laid out, particularly with respect to transactions, I mean, they don't need that many of their users to make it meaningful.

His first quarter revenue was 32% higher than a year ago. The company also raised guidance for the full fiscal year. That's encouraging, Jason. They're also spending a lot of money over there in Zillow. Yeah. And guidance that raised was very, very slight. So I'll just throw that in there. And I grow more and more conflicted with Zillow every quarter. It feels like as time goes on, on the one hand, it's plainly the brand that everybody knows in online real estate. It is the brand that people know. The platform was built for a mobile existence, and it's a great experience. I think things like the Zestimate, not a big fan. I almost wonder if that doesn't hurt the cause in some respects, because it really isn't an appraisal in any

sense. But like you said, all of this growth does come at a cost, and they have to continue that spend here for the foreseeable future to drive all that traffic. And when we talk about traffic, the traffic is certainly going there. I mean, visits to Zillow group brands, mobile labs over the quarter were up 18 percent, more than one and a half billion visits in the first quarter this year. They are ratcheting back sort of this focus on growing out the number of Premier agents and really just focusing on the highest spenders. And even there, the number of Premier agent accounts that spent more than $5,000 per month in the quarter grew by 98%. So that basically almost doubled. That's a big deal. These guys are doing something right.

The biggest question is, will they be able to drive that traffic when they pull back on that spend? When they pull back on that spend, that really, I think, is going to expose whether they have a sort of sustainable advantage in this market or not, because as it stands right now, they've had to spend a lot of money to drive that traffic, and that's what's driven those results in the stock by no means as any kind of a steal today. That's so key, because I think what we're all waiting for is for Zilla to really turn on the cash flow and the profits, but they can't do it.

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

3, which is set to start deliveries later this year and continue into next year. Elon Musk thinks he can ship 500,000 of these every year, which would put it in the race for being one of the best-selling vehicles in all of America. If that demand is true and all of Tesla's spin that they're putting right now into the Gigafactory, into Fremont's production lines, upgrades. I mean, these are multi-billion dollar spins that are putting the Cappex. Ultimately, it's going to be the market that deems whether or not that was a good decision. Don't you think that the other automakers are kind of keeping their powder dry in terms of going after Tesla? Because Tesla was, you know, up until the Model 3, very much a luxury

automaker. So if you're Ford or your GM or Toyota, you can just sort of sit back and say, well, no, they're really competing with, you know, Rolls-Royce and Lamborghini. spaghetti and that sort of thing. If they're coming out with a mainstream car, I think, I don't know, I think the knives are going to start to come out. Yeah, and there have been fast followers for the EVs. There's no doubt about that, that all of the other automakers are following Tesla's lead that they've had on this. But I think that even in addition to that, Chris, something we've always been watching is just, is the auto industry changing right now? Are people really willing to spend $50,000 for a luxury vehicle up front when it's just being parked 95% of the time?

When we've got this new mobility as a service, buzz we're rolling around. This is Uber without the drivers, so you might be getting 20, 30 cents per mile just to get from point A to point B. That really changes a lot of things. Earnings Palluza rolls on after the break. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Matt Argusinger, and Simon Erickson.

Shares of Mercado Libre up big on Friday after first quarter profits for the e-commerce company rose 60%. percent. Maddie, this was a stock on your radar a couple of weeks ago. Was a 60 percent rise in profits on your radar? Not quite that big, but I've been excited about Mercado Libre for a long time. And this is going to sound a little hyperbolic here. But of any company I watch closely out there, this looks like Amazon about a decade ago. It's a company that's investing heavily in building out a two-sided network effect, consumers, merchants. And by all accounts, it's working beautifully. You know, unique buyers was up 20% to 13.3 million in the first quarter. Items sold across the platform, which is a way I kind of look at my proxy for normalized revenue growth,

up 38.6% to 53 million, and that includes 50% growth in Brazil, which is their largest market. Transactions across Mercado Pagau, which is their payments platform, up more than 60%. And the net revenue in U.S. dollars up 74%. That's the fastest growth in U.S. dollar. terms in over five years. So, by all accounts, Macaulibre is just getting it done. And yet, here we are. The stocks up, I think, 70% year to date. I look at the enterprise value, $12 billion. They've got a lot of cash. It just doesn't seem very big to me weighed against the opportunity. If they truly are sort of an early Amazon, that's dominating the region. How do you think eBay is feeling right now?

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

that a lot towards more of an Amazon-like platform with payments and shipping. and now free shipping. So, yeah, I put a lot of chips. He owns a lot of the company, but certainly no one can be in Jet Bezos' League. Mattie, I would just like to chime in and say, excellent Espanol. Good job on the pronunciations. You've gotten a crash course with Mercado Libre last couple. Been forced to. I'm forced to. Shake Shack's first quarter profits came in higher than expected, but same store sales fell two and a half percent. Jason, they were working off a little bit of

a tough comp, but you never want to see same store sales falling. Well, Chris, let's be clear. It's same shack. sales. Yes. If Zillow can have the Zestim. Call it what it is. Then they can have same Shack sales. Yeah.

I think, listen, Shake Shack has 127 stores worldwide at the end of this quarter. So I think there is the potential there for some growth. But I think you have to take that with a grain of salt. Because when you look at that 127 store base, a big percentage of them are licensed stores. And I think those licensed stores just simply aren't nearly as meaningful to the top. line. So the top line, this quarter, was driven by new stores, right? Same shack sales were a little bit off the mark. Now, part of that was, may come as a surprise, weather-related. They also ran a big promotion on their new app, which took a lot of promotional activity,

gave away a lot of burgers that way. I'm not conflicted here. I mean, I really enjoyed when we went up to New York City and ate there. I think it's delicious food. I think you have to really look, though, at the store base. You have to look at the economics of the business and understand that even at just a bit more than $1 billion market cap. I just don't know that the same kind of growth is there for something like a Chipotle where they own all of the stores and the economics are far different. Does this brand elicit the same kind of brand loyalty? I don't know. I don't think it really does.

I think burgers are pretty easy to replicate in a lot of places do it really well. These guys are doing okay. I'm still kind of surprised to see the stock where it. is today. I just feel like it's very, very optimistic for what looks like, maybe not as big of growth opportunities as some might like to believe. I'll give them a slight pass on the weather just because so many of the stores that fall into the same store sales category, they've been open for more than years. So many of them are concentrated in the Northeast. So you get a little bit of a pass, but as far as I'm concerned,

that pass is now gone. No way. That pass is now gone. Absolutely. Good week for Fire Eye. The Cybersecurity Solutions. company's first quarter results were better than expected. That, plus some encouraging guidance, sent shares of Fire Eye up nearly 20 percent this week. It was a good quarter, Simon. They kind of need to keep it going, though. That's right, Chris. Fire Eye is in a transition right now as a company. They originally had some really big hits by selling cybersecurity products to deep-pocketed customers, like

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

pretty good shape. In terms of the stock, this week, is it, is it, is it, still looking cheap to you? Or, again, do they kind of, do you want to see a couple more quarters like that? It's volatile. I mean, this is a company that you constantly will see 20 or even more than that. Stock go up or down 20 percent based on earnings releases. But I think that longer term, as you see, what I'm watching as an investor is paying attention to Helix and CloudMVX. Those are their recurring subscriptions. If they're continuing to win those, I think you're in good shape. This weekend is the Berkshire Hathaway Annual Meeting. We've got a couple members of our editorial team in Omaha. So if you are looking for coverage,

this weekend, we've got you taken care of. You can go to Fool.com as well as the Motley Fool's Twitter feed for the Motley Fool's coverage of Berkshire Hathaway. The big news heading into the annual meeting on Friday was Warren Buffett admitting that he has sold about one-third of his stake in IBM. Jason, Big Blue was one of the big four. Looks like Warren's taking a little bit of a pass now. Do you feel like maybe he's thinking he stepped a little bit outside of his circle of competence? I mean, he's never really that big a fan of tech. And he's, you know, he's never really that big a fan of tech, and maybe he got a little bit lost and asked Watson what to do, and Watson

just gave him the straight suit. You got to sell. Maybe buy something like Apple is a little bit more reliable. I just think this, we talked about this, I think, a month ago, but I just feel like it wasn't so much a tech. I just, outside of a circle of competence in terms of just being a company that's not doing well, changing its business structure, highly competitive, which he admits right now. I think there are a lot of reasons for more and above it not to invest in IBM. I'm glad he's selling. Warren, I'll buy your shares. I'll take the other side of the coin on this one. For 12 times earnings, I think IBM continues to lose a lot of its legacy business and revenue continues to fall. But earnings are continuing to grow, as Watson and that AI is continuing to

be a more important part of the business. I think they got a lot upside. A big deal in the home services industry this week. Angie's list was bought by Interactive Corp, also known as IAC, the parent company of brands like College Humor, Daily Beast, and Dictionary.com. IAC is going to merge. Angie's List with its Home Advisor Unit and spin it out into a new public company. Shares of Angie's List up 80 percent on the buyout. Let's go to our man behind the glass. Steve Broido. Steve, you're an Angie's List customer. Were you surprised by the news? I was a little bit, especially because I used to pay them, and then they stopped charging me.

And it was all free. Do you think that had anything to do with why they had to sell? I think it's exactly what happened. Well, I noticed looking at the financials, there was a clear point where the top lines started to decline. I mean, obviously sales were slowing down. So I guess that was just The sales stopped, my friend. They didn't slow down. They stopped. All right, guys. We'll see you later in the show. Up next, bestselling author Charles Doohigg is going to take us inside the Snob Wars. Stay right here. This is Motley Full

Mother. Because I've got a golden ticket. I've got a golden chance to make my way. All right, before we get to Charles Duhigg, I want to say thank you to Slack for supporting this week's Motley Fool Money. Slack is a messaging app that brings together all your team's communications in one place, and it makes your working life simpler and more productive. We use Slack here at the Motley Fool. We've been using it for a few years, and it's fantastic. It connects the tools and services you need in one place. It allows you to work with your team using real-time messaging, video, voice calls. You can share files. There are searchable

archives. It's super easy to use. Major companies use it, like, Capital One and electronic arts, and like I said, smaller companies like ours use Slack. It saves you time and it's going to make you more productive. Here at the Motley Fool, our internal email was dramatically cut because we were able to use Slack. You don't have to search through emails for that one follow-up or look through multiple systems to find what you're looking for. No more switching across multiple tabs and platforms to keep updated with your work. You can tailor Slack to your work with over 900 apps.

They've got the mobile app for iOS and Android that syncs seamlessly. You can always pick up right where you're left off no matter where you are. So check it out. Slack where work happens. Find out why. It's Slack.com. Welcome back to Motley Fool Money. I'm Chris Hill. Charles Duhigg is a Pulitzer Prize winning reporter for the New York Times. And the bestselling author of The Power of Habit and Smarter, Faster, Better. the secrets of being productive in life and business.

And he joins me now from New York City. Charles, welcome back to Motley Fool Money. Thanks for having me on. There's a bunch of things I want to talk to you about. So let's start with the most recent thing you've written for the New York Times, which is the battle between two financial titans, American Express, and Chase. And it comes with the fantastic headline, Amex, challenged by Chase, is losing the snob war. on the surface, I've got to say, the snob war doesn't sound like a war you necessarily want to win

until you realize that you're in the business of selling credit cards to affluent customers. That's exactly right. First, before we get into the story itself, how did you get into this topic? Well, I have a new column at the time, it's called Adventures in Capitalism, and I was looking for something to write about. And I was talking to a friend of mine who has the Chase, Sapphire, premium, the Sapphire Reserve card, right? This, this card that it's made out of metal, and he was saying how amazing and life-changing it was.

And I was thinking to myself, when's the last time that someone said a credit card was life-changing, right? Like, I'm carrying like five or six of these things in my wallet, and I don't really feel like my life has changed by it. But then I started going online and realizing there's, like, this whole chorus of people out there who talk about Chase and this new credit card.

They get, the Sapphire. and how amazing it is. And it occurred to me when I was a kid in the 1980s, that was Amex. Remember all those commercials that Amex used to play? Absolutely.

The membership has its privileges. Right. And it was like, if you've really made it, if you're successful, the way you show that is you have an American Express in your pocket. It realized. It really was such an amazing sign of prestige.

And I, you know, we're about the same age. I remember those ads as well. And at no point did I think, it was necessarily snobby. I just thought, well, you've made it if you've got one of those Amex cards. That's exactly right. And, in fact, I went back and I started looking at some of the ads that they used to run in the 80s and 90s. And if you get a chance to look them up on YouTube, they're amazing.

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

That was like, that was like the way you show success is you're so busy and important that you just, You have to pick up a toy on the way at the airport and your amics will get accepted anywhere because you're that important. And what was amazing to me is I thought that this kind of snobbery had totally fallen out of favor until I realized, no, it hasn't fallen out of favor. It's just changed. For millennials, that attraction of snobbery still exists. But the way you show it now is not the amics that your dad had. It's by having a Chase Sapphire card, this metal. kind of like dot-com, Silicon Valley, cool card.

Because the Chase Sapphire card shows that you like to buy experiences rather than things. And that's what snobbery is today. Snobbery is about what you can do rather than what you can buy. Well, and that's one of the fascinating things in your article is that the people at Chase really figured out how to appeal to the next generation of affluent. spenders because that's what you want if you're in this business. You don't just want someone who's affluent. You want someone who's affluent and younger, and you want to lock them in for three, four decades, if possible. And Chase figured out this is the way to appeal to millennials. And I got to be honest, Charles, I was shaking my head at some of the things in your article about

Amex and the way within the company, just from the standpoint of the business of American Express and the people who are running it, you did not paint a pretty picture in terms of the struggles inside that company. It's an old company. It's a company that, you know, the chairman of the company has been there for 16 years, the president who's sort of overseen the expansion of Amex. There's this one scene that I described where an executive head had described this to me, a bunch of them were in a room talking about how do we go after the millennials?

How do we get this new? How do we change, how do we take advantage of people's spending habits and get inside their head while those habits are up for grabs, which is what happens in our 20s? And the phrase, FOMO came up. And they're talking there and they're all going, what does FOMO mean? I keep on hearing the kids say FOMO. What does that mean? And so one of them finally says, well, just Google it.

And they Google it, of course, it means fear of missing out. And nobody in the room saw the irony of a group of old Amexxxxxx. Googleing FOMO and finding out it means fear of missing out and nobody knowing what that means. But that's what's going on right now. You bring up this great point, which is why are all of these credit card companies focusing on millennials? And in part, it's because when we're in our 20s, when we're in the age where millennials are right now, we form our spending habits. If I can get a credit card into your hands when you're 23 or 24 and you start using it, you're going to use that credit card for the next three or four decades. And you might not be that problem.

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

That's cool. And Amex has struggled to keep their image up with how times have changed. Is this one of those situations where if you are a customer, not necessarily a dot-com millionaire in your 20s, but if you're just someone who's shopping around for a credit card, are you kind of in the driver's seat? Because both of these companies, and for that matter, anyone else in the credit card space, wants your business? Oh, absolutely. Absolutely.

And this is all because of what happened during the financial crisis. So what's interesting is that coming out of the financial crisis, some of the reforms that are passed by Congress, they make it much more difficult to make money on the things that banks used to do to get big profits. Right? All of a sudden, your mortgage business is much, much smaller.

Your investment banking and your private wealth management, those are all shrinking. So what do you start looking to? as a reliable source of revenue, credit cards. And that's why you see JPMorgan Chase. That's why you see Citibank. That's why you see all the big banks starting to plow into credit cards

in a way that they never did before. It's because suddenly that's a much more important revenue stream. And then the question becomes, okay, if you're putting out some Citibank or some Chase Visa or MasterCard, how do you differentiate yourself, right? Visa and MasterCard, you can get those things for free. So how do I convince you to pay 400 or $400,000, $500 a year for a credit card that you could normally get for free. And that's where the Chase

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

use all your points to fly to the Bahamas. And we're going to create these crazy advertising campaigns that make it seem like all you have to do is spend and you can live out the experiences of your dreams. This is what millennials, according to their market research, love. They love to buy experiences. They think that buying things is what their grandfathers did. If you're new and you're young and you want to live life to the fullest, you want to build up points and experiences that let you go out and buy a life. And so that's what they've designed. And all the banks now are moving into credit cards like you would never believe. And for Amex, that's really risky. Because Amex has always made its money on credit cards. And now suddenly they have all these competitors that are huge

with huge marketing budgets, huge balance sheets, the ability to go in and start taking business away from them. And Amex isn't a really difficult position. Well, and if you think about one of the big stories in partnerships and even in the retail space over the last couple of years is that long-time partnership they have with Costco that went away a couple of years ago. And in the case of Emacs, they also had a partnership with JetBlue. And those are both gone now. So it's not just appealing to the individuals. They've got some work to do on the corporate partnership front. It's exactly right. And what's amazing is that the fact that we're having this conversation is a testament to what AMX has become. Because if we were talking 30 years ago, we wouldn't even

think of Amex as a financial BMF, right? It wouldn't be something that's on our consciousness. AMX was almost like an obscure product that businessman used. The concept of credit cards and luxury credit cards and travel credit cards, Amex basically created that. And it's a testament to their success that today we think that they compete with Citibank and J.P. Morgan Chase. These huge, huge financial organizations that are much larger than Amex. But like many, many giants, the giant eventually becomes so old that they have trouble navigating the landscape. And that's their question right now. Can Amix turn the corner and stay as big and powerful

as they've been, but become a younger, more nimble, and more exciting company? Earlier in the show, we discussed Apple's latest earnings report, and there's so much focus on the next iPhone, which will presumably be unveiled sometime in the fall. Apple's a company that you've studied and written about. When you look at Apple, what do you wonder about and it may be the iPhone, but I'm guessing it's not. Well, so the big question I think for me with Apple right now is, are they going to continue to be this amazing innovator that made the company, or are they a now mature firm that kind of becomes like Microsoft?

And it's interesting, right? Walt Mossberg, who's kind of the dean of tech reviewers, wrote a piece where he said, I'm going to call it. Apple is not an innovative company anymore. Like they've lost the Steve Jobs magic. Now, if you look at their business, iPhones make up the vast majority of what drives revenues to Apple. And they are positioned better than almost any other company out there. They have an enormous war chest, right?

The news came out earlier this week, the fact that they're sitting on a quarter of a trillion dollars in cash reserves. They could go out and do almost anything. They announced just today a $1 billion. fund to go and invest in advanced manufacturing in the United States of America. They can do almost anything. And so the question then becomes, how do they translate this huge, magnificent might, into products that excite us as much as the iPhone did when it came out over a decade ago? Because in the decade since then, they really haven't released anything that changes the

world the way that the iPhone did. Another company reporting earnings this week is your company, the New York Times. The big story was the rise in digital subscriptions. You've worked there for over a decade. I'm not asking you about the business of the New York Times, but I'm curious what has been the biggest change in your work that you've seen during your time there? It's a great question. I will actually say that my life now at the New York Times is almost completely different

from what it was when I started here 10 years ago. And, you know, I think everyone who reads the paper or consumes news, they've seen this transition. So I'll just describe to you like what I do now. I wake up and I start doing reporting and I have no idea which part of the newspaper is going to go into. I don't even, when I say newspaper, I don't even know what that means anymore, right? Because it's going to show up in the printed version someplace, but I probably never meet the editor who's going to figure out what page it runs on.

Instead, I'm focused on like where it's going to go. on the homepage. Are we going to push it with a digital alert to everyone who has the app? I'm doing a podcast that we're going to be releasing this summer. Most of my time now is spent just collecting information and trying to come up with like more and more creative ways to present it to the world, whereas it used to be that I would just sit down at my computer and write an article. Now, honestly, from day to day, I don't know exactly how that reporting is going to make its way into people's brains. And that's super duper exciting, but it's also, a reflection of the fact that the news industry, as you guys know, is just changing so much and so quickly.

And we're rushing to keep up with how our readers and consumers want their news now and how we can get them to pay for it. You can read him in the New York Times. He is one of the most interesting people to follow on Twitter, which is where you could probably hit him up with suggestions for his next bestselling book. Charles Dohigg. Thank you so much for being here. Thank you for having me on, Chris. Really appreciate it. Coming up next, we'll give me an inside look at the stocks on our radar.

This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy ourselves stocks based solely on what you hear. Welcome back to Motley Full Money, Chris Hill, here in studio once again with Jason Mozer, Matt Argusinger, and Simon Erickson. You can catch Motley Full Money every weekend on radio stations across America, on iTunes, Stitcher, Spotify, anywhere you find podcasts.

And you can also listen on the Amazon Echo and Google Home. And I'm happy to share that the Motley Fool's stock watchlist skill is now available on both Google Home and Amazon Echo. So if you want to know how your watch list is doing, just ask your device. All right, let's get to the stocks on our radar. And our man, Steve Brodo. We'll hit you with a question. Matt Arguson, you're up first. What are you looking at this week?

Sure, sure. Well, I'm looking at Proto Labs, ticker PRLB, a company I've talked to in the past, but haven't mentioned it lately. They had a tough 2016, but they had a nice, bounce back quarter so far this year. Revenue was up 10 percent, customer count up 12 percent. This is a company that does kind of prototyping and low-volume manufacturing services like 3D printing, injection molding. So I was happy to see kind of broad-based growth across their service envelope and across regions. And so I think this might be an inflection point for their business. So paying attention again. Steve, question about proto labs?

Are we moving to a world where people own fewer objects? I think about everything now. I just own a lot less stuff than I used to. I think that's absolutely true, but the objects that they do own, I think they're going to be highly customized, very personal. And I think that actually fits right into ProLabs Wheelhouse. Jason Moser, what are you looking at this week? Yeah, one we talked about before, Trip Advisor. Ticker is TRIP. They have earnings coming out on Tuesday after the market closes with a call the next morning. And they just hit a big milestone with half a billion reviews and counting now on their mobile site.

And I think this is an extremely strong network, but they are going to have to start showing some traction here with their investments in their instant booking product, which I think it's a good product. It allows you to book directly from their site. It really sort of just continues that sort of chain of investigating where you might go and then going ahead and booking where you want to stay. think it's a great product. I think that over time, they will start to show some traction there. We're going to be looking for that in the form of growth in hotel shoppers, growth in revenue per hotel

shopper. If they are able to prove this out and that investment does start showing bearing fruit, then I think that you look at today's price. It is a very attractive one for what is a really good business. Steve, question about TripAdvisor? Is it possible for companies like Travago? I can't believe I'm asking this, but I've seen so many commercials for Travago to disrupt that business just with ad spends. I think there's no question about it. Really, I think TripAdvisor has felt the pain of pulling back on that ad spend last year. So we're going to see him spending a little bit more this year. Simon Erickson, what are you looking at this week? Chris, I'm going with Twilio. Ticker is TWLO. This is a company connecting the users of mobile platforms. So if you've ever used Uber,

it gives you the notification your driver is here. If you've ever used Airbnb, it tells you that your room is ready. But I think that the street hung up on Twilio this last week because the stock was down, 30% on news that they wouldn't be continuing some of their business with Uber. Outside of Uber, revenue was up 60%. They added 4,000 new customers. And I think it's a pretty good acquisition target for a lot of the legacy providers that are kind of interested in this new sharing economy. Steve, question about Twilio? Does the mobile, do mobile device makers like Apple and Android devices, don't they want to just own that space themselves? Potentially, but it's more for the kind of the software and the networks themselves, the Airbnb is, the math, and the

Match.coms, Facebook Messenger, that kind of stuff. I think it's more of those online destination, Steve, than the mobile providers themselves. Protolabs, Twilio, TripAdvisor. You got a stock you want to add to your watch list, Steve? I might go Proto Labs, Matt. He's been a compelling case. There we go. Steve, I just have to ask. You mentioned you're owning fewer objects. What are the last couple of things you've gotten rid of? I just got rid of a teeter hang-up, one of those inversion table things. I was having some back pain. I bought one, and I just reached it.

I was thinking about getting one of those. Yeah. You should have talked earlier because I just had to send a 4,000-pound box back. You guys can talk after the show. All right. That's going to do it for this week's edition of Motley Full Money. Our engineer is Steve Broido. Our producer is Matt Greer.

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