Motley Fool Money - What’s Next for 2023?

Episode Date: July 7, 2023

Higher rates are here to stay, and some stories we expected to see in the first half of 2023 might still be ahead of us.  (00:21) Jason Moser and Matt Argersinger discuss: - Whiplash in employment data, and the certainty of rate hikes for the rest of the year. - Meta’s new app Threads and what it means for Twitter. - Some surprises from the first half of 2023 and stories to watch for the rest of the year.  (19:11) Motley Fool Money’s Deidre Woollard spoke with Smith about the cycles in digital media, his new book Traffic, and how one legacy media company has managed to stay on top throughout all the shifts. (32:04) Jason and Matt break down two stocks on their radar: Vesta Real Estate and Callaway Golf. Stocks discussed: AAPL, META, NYT, BZFD, AMZN, VTMX, MODG Host: Dylan Lewis Guests: Matt Argersinger, Jason Moser, Deidre Woollard, Ben Smith Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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The best baby! School Global headquarters. This is Motley Fool Money Radio show. I'm Dylan Lewis, joining me in studio. Motley Fool senior analyst, Jason Moser, and Matt Argersinger. Great to have you both here, guys. Hey, hey. Hey, Lynn.

All right, we've got predictions on the second half of the year, a look at the evolution of digital media, and of course, stocks on our radar. But we are kicking things off looking at the big picture. Matt, we got an update on unemployment numbers and employment numbers this week from two different sources. And I have to say, trying to pay attention to these numbers, I had a little bit of whiplash, looking at the results. Yeah, you're not the only one, Dylan. It was like a head fake on Thursday when the ADP came out, which is all about private sector jobs, and they reported a job growth of almost 500,000.

So we're setting up for Friday's Labor report thinking, wow, okay, we might get a big number there too. But no, the Labor Department came out with a report that showed payroll number. numbers rose just 209,000. That's actually the lowest number since way back in December 2020. So kind of a big disappointment there. Now, there's a methodology difference between the ADP and the Labor Department. ADP is looking at actual paychecks. Labor Department's more of a survey. So, you know, take your pick. But, you know, over time, these numbers tend to converge. And if you look at the first six months of the year going by just the BLS numbers, which also includes some downward revisions. We're now showing an average monthly gain, job gain of $2,000.

78,000. Still pretty strong, but that's actually down a lot from almost 400,000, the 400,000 monthly average we had for the first six months of 2022. So there is a slowing happening in employment. We're starting to see that. Same time, though, you've got hourly earnings, excuse me, of 0.4%. That was slightly higher than expected, 4.4% from a year ago. So there's still some inflation pressure on wages, and the unemployment rate is still near historic lows at just 3.6%. So we, unfortunately, we do this when we look at economic data. It's like on one hand, job growth is definitely slowing. On the other hand, wage growth is still high, and the employment picture is pretty strong. So I think the big question is, does this change the idea that the Fed's going to keep

raising rates? No, I don't think so. Yes, so one thing I want to ask you about, Maddie, because I was reading just the other day that we are at a point now where the rate of people leaving their jobs, right? I mean, over the last three years, we've seen people just kind of pick up and leave their job and go do something else because they've had that luxury for a while, right? It's been kind of a worker's market. It has. That rate is coming back down to pre-pandemic levels. In other words, people are not picking up and leaving their jobs just to go do whatever else anymore. Do you feel like that maybe is a sign that we're getting to a point where this jobs market

is becoming a little bit more stressed and folks kind of see that maybe it's not so easy just to go do something else as it was before? Well, I agree. I think the slack that was there is not as there as it was. And I think And that's just one of the things the Fed is trying to step on. And I think you can conclude that it's succeeding, just given the momentum we're seeing, or the trend we're seeing, I should say, in the monthly averages. But it just feels like there's still a ways to go. Matt, you mentioned that we are still seeing wages go up.

That's slowing a little bit, but we're paying attention to that because we know that that's going to play into the long-term picture for inflation and some of the moves that the Fed winds up making. Looking at minutes from the Fed meeting recently, getting a look at those this week. I think we have to see expectations of additional rate hikes with almost no doubt. No doubt, yeah. And I think two rate hikes is easy. There's even potential now for a third rate hike, at least a small possibility before the end of the year. It's just to me, it's such a sharp contrast to where we were just a few months ago

when a lot of analysts were saying, no, actually, we're setting up for cuts before the end of the year. That is completely out the window, yet the market seems unfazed by that, which is a surprise to me. I think we have to kind of collectively go from thinking, all right, how high will rates go? And instead start thinking about how long are rates going to continue to stay high? Because I think a lot of people have the expectation this is going to be relatively short term. We were going to see a sharp reversal. Once we saw inflation moderate a little bit, it doesn't seem like that's the case. No, and it's a really different world and a different set of parameters for investors.

If you imagine a world where rates are going to stay high, this high or higher for a long period of time, I guarantee you that's not what a lot investors thought about, certainly coming into this year. It's a huge adjustment, and I think something that a lot of people are getting themselves used to as they're looking at businesses and just how things may play out for the rest of the year. Jason, anything on the rate environment or the macro environment for you? You know, in regard to rates, I just continue to wonder, I mean, going forward, we're going to see a point here where obviously, you know, folks are going to kind of settle into the jobs that they have. I mean, we're seeing the student loan repayments are going to read. The student loan payments here are going to resume. In some point, I think we're going to see 2024 a lot of numbers start to flow through the economy

that makes me wonder if we won't see a little bit more of a discussion of perhaps cutting those rates. Because I think there are a lot of things connected to these inflation numbers that kind of leave me to believe that maybe 2024. We're going to see inflation come down a little bit more meaningfully than perhaps we've been expecting it to. Switching gears and over to social media, we are seeing competition in the space heating up. This week, Meta launched its Twitter rival threads, and it is reportedly the most rapidly downloaded app of all time. Jason, are you surprised by the adoption we've seen for this new launch? I'm not. I don't know why I'm impressed with the numbers, but to me that makes sense. I mean, 50 million plus people signing up for it, that's a lot. That's impressive. Don't get me wrong.

But, I mean, Instagram's got 2 billion users. I mean, this thing is tethered to Instagram. I mean, I expected these numbers to be gangbusters, and so I'm not surprised that they are. I mean, this is the time for meta to take a shot, right? I mean, Twitter is just in a state of chaos. And, I mean, Musk has had to unwind a lot of things that were done to Twitter the platform over the years, right? And he's taking a bit of a different approach with a bit of a different philosophy. This is a point of time where Twitter is very vulnerable, and it makes a lot of sense for meta to get out there and give this a whirl. Twitter's got a ton of issues. I don't know. I don't think threads is going to replace Twitter. I mean, you and I were talking about this yesterday. I see a world where both exist, right? I think threads actually could be very complimentary to Instagram. But I don't think we're going to see most people migrate from Twitter to Instagram. And that really it's because of the free speech issue. I mean, I'm not saying you're going to get pure free speech on any platform, but I think there is a large audience out there that wants the most free speech they can get. That's not going to be.

going to happen on meta's platforms. It's just not. They've laid down that gauntlet there. And we know that with Twitter, that's really one of Musk's primary priorities, right? He wants to focus on a free speech platform, which is why he also knows that pivoting away from ad supported is not optional. That's why he knows that the clock is ticking. And he's got to figure out other ways to monetize this platform beyond just advertising dollars. And that's understandable, right? Advertisers love free speech to a degree, but you've got to be careful there. They're dollars at work, and they're not going to allow just anything to be said. So that makes a lot of sense. I think it's just going to be very interesting to see how these two platforms coexist because they are

very similar. I like one of the last points you made about the advertisers, because I do believe both of these platforms can exist. But the advantage, of course, that meta has, and Instagram has, is the advertisers kind of know, they have more data, I think, on those users, right? So if those users start gravitating over to a, the more text-based Twitter-like platform that threads is, I've got to believe meta can monetize those users a lot better than Twitter has. And that's been a big problem in Twitter. I think meta can figure it out. To that point, I mean, meta, Instagram, and threads, I mean, if you look at the terms of use,

these are data harvesting machines, right? I mean, they collect a lot of data. Now, some people care about that. Some people don't, and that's just you have to make that decision. But I think an interesting dynamic here is that Instagram ultimately wants to make threads part of the Fedaverse. Now, the Fediverse is this network of social media servers that essentially brings threads beyond just meta-social media network, right? It extends it out to things like Mastodon, and I think WordPress is a part of the Fediverse. In other words, it broadens your social media landscape, so to speak, beyond just meta-controlled properties.

You ask, why would they do that? Well, I mean, it's going to give them an opportunity to collect data on a bunch of users that they may not even have on their platforms to begin with, and ultimately it just gives them an opportunity to monetize even more. So while they're not even advertising with threads right now, you know that's coming. And I think that Fediverse angle is just an interesting one, and it tells you a little bit of the longer-term aspirations for meta in regard to monetizing these platforms. Looking at the dynamics here, I can't help but see meta as just a more flexible and dynamic competitor in the space.

They have a cash cow business, despite all of the missteps they've had over the last couple of years. And I think they can kind of afford to be a little platform agnostic here, Jason, because this is not the only game in town for them, whereas Twitter, a little bit more resigned to the fact that this is the app and Musk has to make it work. Meta does not need this to succeed at all. Twitter doesn't need it to fail, but I guarantee you Twitter doesn't want it to gain traction because you're right, man. I mean, the one competitive advantage that meta has, it's just a massive user base, and they can scale. anything virtually overnight, as we've seen. And if Zuckerberg can succeed in replacing Metaverse, which investors hated with Fedaverse, which I didn't even know existed, hey, that's quite a rabbit to pull out of a hat.

Fediverse. It's a thing. You learn something new every day, right? It's all about branding. Earlier this summer, sticking with tech, Apple unveiled its latest product, the Vision Pro headset. This week, we got an update on the company's plans. It will be reducing its production targets for the device, apparently because manufacturers were having a hard time with the device's complexity, Jason. What does this news do for your expectations of the Vision Pro? Apple building a complex device? I mean, color me, shocked.

Yeah, I mean, this thing looks like it's got a lot of moving parts to it. So I'm not terribly surprised. I mean, Apple is very methodical in the way they move into markets like these, and we knew this was going to be a very slow process, even if everything went according to plan. I mean, clearly, there are going to be some delays here. supply issues or some problems with the displays there. What I think is more fascinating, and I mean, we've been talking a lot about this and the cost of this device. We're already

talking about the cheaper version. When is it coming, right? They're already saying, well, they're working on a cheaper version. That's two years out. And it goes back to, I think, this expensive first device, this is really to kind of set the tone, help developers build experiences that make this device relevant and ultimately attractive to consumers. So when they start rolling out those more affordable devices, it's a little bit of an easier, a little bit of an easier sale. Yeah, this was never going to be a mass market device. And I wonder, does it just make sense for Apple to get this right? Because the people that are going to be the early adopters are going to be the ones that are really shaping the narrative around this and the use cases for

this. And that's why we're seeing them ratchet some of these production volumes down. I think that's exactly right. And that's why you're seeing companies like Microsoft, Unity, and Adobe jump all in, really on developing experiences with this device, because they know there's going to be something there, but the only way they can get something there is to ultimately have the experiences, right? The technology is fascinating, but we go back to what are the use cases for these headsets? Kind of a solution in search of a problem. All right. After the break, we've got surprises from the first half of 2023 and some things to keep an eye on for the rest of the year. Stay right here. This is Motleyful Money. I'm

Dylan Lewis here in studio with Jason Moser and Matt Argersinger. This is our first show for the second half of 2023. And so I thought it might make sense. sense for us to look back at the year that has been so far and maybe also what investors can expect for the rest of the year. Let's start with the rearview, Jason. Looking back so far on 2023, what is something that surprised you? Something that surprised me. We probably even talked a lot about. It deserves more attention. The state of Disney today is not great. I mean, they are really going through some growing paints. The juxtaposition between Netflix and Disney share prices year-to-date and over the last 12 months is pretty fascinating. Year-to-date Netflix's up about

50% trailing 12 months. It's up about 140%. Disney, 2% and down 7.5% respectively. That's just fascinating to think about, particularly when you consider the enthusiasm. Not all that long ago as they were launching their streaming service. But you look at that, right? They got off to a great start with the streaming strategy. That was a lot of growth pulled forward very quickly for obvious reasons. Their theatrical releases are not performing well. ESPN is in a state of chaos. The strategy there still isn't fully clear. They're mass layoffs. They've gotten rid of a lot of talent, restructuring the business. And now, just yesterday, we see word on the street is that Iger wants to extend his contract out beyond 2024 when it expires. Guys, it's only mid-20203. I mean, I don't know about you,

but that tells me that he realizes they've got a lot of problems, and it's going to take a little while to fix them. So to me, this has just been fascinating to see Disney go from such a wonderful story to not such a wonderful story. Jason, Disney is one of those cornerstone stocks where I think a lot of people start out early investing, buying them. And I think a lot of people would look at Disney at an $160 billion company, look at Netflix at $195 billion and say, what gives? When you look at the business right now, is this something that hits value-play territory or is it more value-trap territory? I mean, it's a very good question. I think, to me personally, I think it's value opportunity just because they've got too much going for it, right, between the properties and in the IP and the

streaming platform, I think it's going to take a while, right? I think the most would say opportunity, but they have to figure out the economics of the streaming business, and that's going to take some time. But you look at the company today, it's valued around 23 times normalized full-year estimates. I mean, that's not crazy cheap either. I mean, you go back to 2019, they chalked up better than $6 in earnings per share. I mean, this year's going to be half that. There is dividend catalyst potential, right? They have had that dividends to spend it for a while, Also, we expect that to resume it by the end of the year. And I would imagine that the street would receive that news well also.

Matt, looking over at the first half of 2023, what jumps out to you? Well, I'm so surprised where we are today, given what just happened in the spring, which is we had Silicon Valley Bank, Credit Suisse, First Republic, a few other smaller banks fail. There was real fear that we're going to have this financial contagion. Americans, especially small businesses, started to worry about things. they really had not worried about in the past, like uninsured deposits. There were fear that banks were going to pull back for the lending market.

There was the boogeyman of commercial real estate and the office space, especially, with all the debt that was coming to do. And yet here we are a few months later, and it doesn't seem like that risk is on any investors' radar right now. And to me, it just seemed very palpable at the time. And so most banks have kind of weathered the storm. The housing market has been incredibly resilient. despite mortgage rates being at multi-decade highs, I think to me that's the biggest surprise.

We went through this really kind of tumultuous time where there was just really big fears about the financial part of this market in the economy, and it didn't come to bear. Shifting our gaze a little bit to the future, do you think that this is something that can materialize in the second half of the year and people should continue to be paying attention to? I think so, but the problem is I think it's going to be very staggered and uneven. So, yes, there are a lot of office properties that will be foreclosed on. debt will get extended or renegotiated. Some banks will have higher chargeoffs, right?

But it's going to be kind of rolling across the economy in the markets, as opposed to something that's happening all at once and kind of dropping a big bomb on everything. Jason, as you're looking forward to the rest of 2023, what are you keeping an eye on? Yeah, I think something to keep an eye on is student loan payments. They're set to start back up in October. Don't overlook this, right? They're about $44 million with federal student loan debt today. The data I've been able to dig up says about 18% of those kept paying during the pause, which means a lot of people weren't paying over the last three years.

Estimate around a $250 monthly bill, and that's a lot of money that may not be going back into the economy, typically retail and services here going into 2024. And then you add to that the excess savings that American households accumulated during the pandemic. That has now essentially been depleted. It just puts the consumer in a tougher spot here going to 2024. So keep an eye on those impacts. Do you think that may factor into some of the credit crunch stuff Matt was just talking about? It absolutely could.

I think it also could help bring that inflation number down, because they certainly are a, they definitely are correlated. Matt, what about you? What are you looking out for for the second half of the year? Earlier or last month, I should say, on the show, we talked about some of the parts of the market that really aren't participating in this rally that we've had. It's been a really impressive rally. I mean, there's financials, for obvious reasons we just discussed, energy, real estate.

And momentum is a powerful force in the market, so I'm not expecting big turnarounds here. But if you let me be a homer for a second, I think I'm going to zero in on commercial. real estate. I mean, if you look at the XRE or the Vanguard real estate ETAF, real estate has just really underperformed, really for about 18 months now. It's trailing the market by about 1,500 basis points, depending on what measure you use. And I think that's partly justified. We know the situation with office real estate in this sort of post-pandemic, you know, work-from-home world that we live in, but it's not a monolith. You've got industrial, you've got hotels, retail, self-storage, data centers, multifamily. A lot of these markets are performing really well.

and Barron's actually had a really lengthy report this past weekend about some of the values they're seeing in the commercial real estate space. Office is a much, much smaller part of this $1 trillion public reeds market. It's around 3% now. So if you think about what's happening in the industrial space, near-shoring, or what's happening in the multifamily space, the housing market's still going like bonkers, this is going to play out for years, but I think it starts in the second half. The Renaissance for Commercial Real Estate starts in the second half.

Matt, Jason, we'll see you guys a little bit later in the show, but up next, We've got a look at the digital media landscape. Stay with us. This is Motley Full Money. Welcome back to Motley Full Money. I'm Dylan Lewis. Over the past two decades, few industries have changed as quickly as media. From blogging to the rush into social media and subscription everything, Ben Smith has seen it all.

He was a columnist at the New York Times and the founding editor-in-chief for BuzzFeed. Motley-Fle Money's Deidre Willard spoke with Smith about the cycles in digital media, his new book, traffic, and how one legacy media company has managed to stay on top through all the shifts. I was excited to talk to you because I read this book and it was a bit of nostalgia for me. I worked at web blogs, which was a Gawker competitor during the like early odds. You just capture so much of that energy and the moment. And I think people sometimes they miss how revolutionary blogging was at the time. How do you feel that the kind of the professional first blog networks, how did they change the news landscape? Yeah. So it's, I mean, I feel exactly the

same way. And it's funny to think now, because I think now when I tell people about blogs, particularly young people, I feel like I'm referring to some technology from the distant past. Right. You know, like we're blogging. There was this thing called blogging back in the day. But no, I mean, it was, I mean, I don't think I thought about it in quite such abstract terms at the times, because I think when you were there, I was at, I was writing blogs for like the New York Daily News and the New York Observer. But similarly, this very new thing. And I mean, fundamentally, you know, for a long, you know, for a long time, the, if you had something that you wanted to report on or say, you needed either a printing press or a broadcast tower to get it out. And suddenly

you didn't. And that was a, and I think that was a big change. And, you know, and people, and for me, it was sort of like political scoops and reporting. I mean, there was just something so incredibly invigorating, but just talking directly to your sources, actually, in my case, into your readers, kind of around the traditional distribution, around your bosses and the editors and what they thought. I mean, it was very liberating. And I think it was a very kind of utopian moment, actually. Like I felt like, ah, this is the future and it's all positive.

So the early days of high traffic websites, so much of it, you talk about in the book, so much of it was about being sticky, right? So how do you get people to kind of stay around, you know, be on the site longer, visit more frequently? And then, so that's sort of the first wave. Then you've got the second wave that comes with social media changing all of that. So how did that change the world of blogs?

Yeah, well, let's see. I mean, right, there was this sort of world that was in some ways blogs were proto-social media. People had relationships with their commenters that were sometimes for better and for worse, like a little like Twitter and talk to other bloggers, you know, in a very kind of a clunky way. Like I would write some attack on Ezra Klein and then I'd email Ezra and say, hey, I attacked you. Would you mind linking me when you, and I linked, I gave you. you a good link. Please link me back. And if you were in that world, as you were too, like,

you really felt all the traffic, the readers, the energy moved to social media in this very kind of tangible way if you were living in it. Suddenly everybody was over there and I found myself writing for Twitter, writing blog posts in the hopes that they would go viral on Twitter, basically. And so in my, and I think, you know, in all these online publishers of that era, in to differing degrees, saw that coming. Probably the person who saw it most, clearly was Jonah Peretti who created BuzzFeed and hired me in 2012. You know, after this conversation at first, he was talking about all this sort of futuristic mumbo-jumbo.

I didn't really understand. But the notion of a consumer who opens Facebook, opens Twitter, rather than opening your website, really was where people in politics were already living. And the notion of doing a news organization whose front page was Twitter, which was what BuzzFeed News really launched as, was very compelling for me. Let's talk a little bit about when you went to go work for Jonah, because you weren't sold on the idea at first. Yeah. I mean, I think, you know, I sort of looked at BuzzFeed and thought, like, huh, this is a cat website and what is news doing here. But I think the thing that Jonah Paredes, Kenner had seen was that the sort of early most amateur and silly beginnings of social content and social media, which were cat pictures and memes and dominant.

dominated by sites like NineGag, which you may remember, like real kind of bottom of the internet, weird, copyright free zones, that they were starting to sort of move, that this world was starting to move into professional content, move up market, and into news. Well, I think that's an interesting thing because you've got, you've got Gawker, which is sort of doing both gossipy stuff and then trying to do news. BuzzFeed sort of has that beginning in, you know, in cat videos and, you know, top 10 lists and things like that and then evolves into a more serious space. You start to get things like Huffington Post winning Pulitzer's. What was that marriage like between the traffic getting

stuff and the more serious stuff? So I would say, you know, at first it sort of had this really clear logic to it. Like, wow, like Facebook, Twitter, they're swallowing everything. And let's do news. And by the way, consumers love it. Consumers think it's cool that on their Facebook feed, there's a New York Times article and a picture of a cat and an update about their friend's kid. Like what a fun mix, right? And I think there was this period when the Facebook News Feed, in particular, was sort of a fun novelty that people liked. BuzzFeed was built to sort of reflect that content mix.

And God bless, you know. And I think the thing that, you know, ultimately I think those publishers and Facebook never really recovered from was at some point that just turned into this nightmarishly toxic stew that nobody really wanted a part of. And consumers, ultimately, more than business types or journalists said, hey, wait a second, we would like to sort these things out. Facebook, you know, bumbles around for a while and does a lot of damage. But ultimately, it's essentially by throwing news off the platform. Like if you open your Facebook feed, you're not going to see any news now. And I think that direction of travel changed very abruptly for reasons that had, I think, a lot to do with the politics and culture of the 2010s, which they fed, but also were very shaped by.

So how did Jonah Prady adapt when that started to happen? I mean, I don't think any of these companies adapted successfully. Like I think if you look around now, you know, BuzzFeed's trading at 50 cents and being threatened with delisting, Vice, you know, is going to collapse into one of its lenders, essentially, is going to own it. And you kind of go through the roster of those companies. And, you know, they were basically a bet on a certain kind of future for digital in which digital would be like cable. content companies would build on the backs of distribution companies and kind of share the winnings. And the distribution companies had no interest in sharing the winnings.

And then the distribution companies themselves, I think, will not endure as long as cable did or has. And so I think when you say, like, wow, like these big fundamental pieces of that vision didn't work. You can then, I think all these companies, and Jonah and I and others made all sorts of mistakes. but it's actually hard. I mean, the fact that they've all sort of come to the same place suggests that there's sort of a bigger challenge. Well, you also talk in the book about the New York Times and you kind of talk about that moment where it was floundering.

Now it's kind of, it's reinvented itself. What do you think the Times eventually figured out about doing new media? You know, it's so interesting. Like, I went out to write this book about sort of the birth of internet media and the winner turns out to be the New York Times, where I was working at the time, actually. Kind of depressing.

But no, I mean, they, you know, what was sort of interesting, just as a business story, there is this strategy in the business world of fast following, you know, that you can win, you don't have to be first if you follow fast.

And the Times did not do that. They followed slow. And they watched other places, notably the Washington Post, kind of flail around chasing internet gurus and internet trends. And they, you know, lost a lot of money.

They preserved their, like, core value proposition, which was great journalist. they essentially weighted out the period in which it was impossible to do a subscription business on the internet. And that wasn't like a sort of a cultural shift, ultimately Netflix and Spotify, in particular, trained people to pay. And the Times had been patient, had retained its relationship with its readers, retained its brand. You know, I had to sell off assets. It was essentially, you know, lease out floors their building.

They were kind of throwing the furniture into the fire to keep the, you know, to keep the room warm. But ultimately emerged with this incredibly strong business, strong subscription business. And I think, and meanwhile, yeah, and then build around that, in some ways, reassembled the old news bundle and built crosswords and cooking. And in a weird way, it's sort of like all the stuff that you used to get in a print Sunday paper. Do you think there's any lesson we can learn from the way that online content has evolved into, maybe how streaming is going to shake out. Gosh, that's a really great question

that I don't have a clear answer to. I actually think people tend to sort of overlearn the lessons of the last war, you know? Indeed, yeah. And I think there was in fact, I mean, I think the overlearning was advertising is terrible and dead. Subscriptions are the only possible business for media.

They are pure and good. And you saw that in streaming. You saw that in sort of the substack world. And then you learned the old lesson that the sort of incremental subscription business gets harder and harder and harder and harder. And growth gets really, really hard and expensive and churny. And the advertising business actually, like, you know what, has a lot going for it. And so I actually think, like, the media business is tough business.

You've got to be really connected to an audience, really telling people interesting things for them. And then pretty, like, non-ideological about revenue. And I think that's what the big media companies are now realizing having had this kind of blinkered ideology. about the only possible business is subscription. Thinking overall about traffic in general, that's sort of like you call it the tide of human attention and your book cover has this sort of wave. So like taking that wave idea,

rise of blogs, social media, newsletters we talked about, is the next wave video content? Is it something else? Is it maybe? Is it the metaverse? I don't think it's the metaverse, but what might it be? I mean, I think the news business is a sub, you have to sort of know what you're talking, sort of be clear with each other kind of what we're talking about.

I mean, I think obviously short video is this dominant medium right now. Right. TikTok, huge. But I think if you're trying to get really useful information about equities or understand what's happening in AI and or in politics, short video isn't necessarily the best way, right? Text remains a pretty useful technology. Audio is useful. And so I'm not sure that. I mean, yeah, and, you know, there will no doubt be very cool things in the metaverse. But news which, news which among other things just isn't the most lucrative business in the world is not going to be the one building the most elaborate, you know, three-dimensional spaces for us all to live in.

Given that news isn't the most lucrative business, what is it about it that has kept you going at it and coming back to it and still being excited about the next story? Oh, man. I mean, I'm just a total. I'm a total junkie, right? Like I love some. scoops. I like knowing what's going on. I'm wake up every morning, totally curious. So yeah, I'm, I was, I was, we were, we did probably like lowest stakes journalism that, that you're going to do. We, we covered the advertising conference in Cannes last week, which was interesting and useful for this media newsletter that I write with Max Tani. And in some point I was like, you know, there in Cannes, at 1.30 in the morning, cheerfully like editing the newsletter. And he's like, we were sharing an Airbnb.

It's like, I'm going to sleep. What are you doing? And I was like, you know, I think I would probably do this if nobody paid me. Nice. Like, I'm having a good time. And actually, that is something that I think I took. And maybe you did too from that early era, which is it was kind of amateur in like a Oh, it was definitely amateur.

Like in the sense of that word that like you're doing it because you love it. Like it didn't feel like it was you were making widgets for a factory. Like you were talking directly to people who were interested in what you had to say. Ben Smith's book, Traffic is out now, and you can catch Ben's latest efforts at Semaphore.com. Coming up after the break, Jason Moser and Matt Argersinger return with a couple stocks on their radar. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against.

So don't buy or sell stocks based solely on what you hear. I'm Dylan Lewis, joined again by Jason Moser and Matt Argersinger. We are going to get to our radar stocks in a second, but first, Amazon's Prime Day is next week, and we're getting an early look at deals ahead of the official start on July 11th. Jason, as you're thinking about Prime Day and you're thinking about Amazon's business and these two things coming together, what are you paying attention to? Well, it's nice when you can just hit a switch and turn on sales like Amazon can, and it's pretty impressive. I mean, Amazon Prime now has over 200 million Prime members around the world. Now, the U.S. accounts for around 75% of that total, so maybe it's a little bit saturated here, but certainly plenty of global opportunities.

but to give you an idea of what Prime Day means to the business, I mean, it's not insignificant. Sales during Prime Day in 2022 reached over $12 billion. They sold the average Prime subscriber spends about $1,400 per year. So when you look at this and couple that together with the fact that Prime, really, it's only available in 23 countries, which honestly I thought it was more, but maybe that also speaks to the opportunity that's still out there. Matt, Jason mentioned that we're starting to see a little bit of maturity in North American market. When you look at Prime and its role with Amazon, is this a loyalty play? Is there something else that people should be factoring in here?

Well, yeah, it is a loyalty play. And if you look at the retention rates are amazing. I think for U.S. members, it's 93% kind of renew their prime membership. It might be reaching a point where it's no longer really a growth opportunity in the U.S., but that's okay. I mean, I think Costco is an example of where the membership ranks aren't really growing there either. But the reliable cash flow, the spending that those members bring, and the pricing power that Amazon and Costco have within for those members is still really powerful.

So it's fine if that is the kind of the future for the business is just a retention cash flow, at least for the U.S. With Costco, the focus on the member, right? That's one thing they do so well. I think Amazon does that pretty well also. It's just the focus on the member. It's so important. Got to be obsessed with the customer experience, right? Well put it.

The founding idea of Amazon. All right, let's get over to stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Matt, you're up first. What are you looking at this week? All right, I've got to give credit to my man, Tyler Crow, a longtime full contributor. He kind of mentioned this one to me earlier this week. Vesta Real Estate, VTMX is the ticker.

It's a new IPO to the U.S. market. They listed their American depository shares just at the end of June. It's the largest U.S. IPO by a Mexican company in more than a decade. That's according to Bloomberg. So Vesta is a major developer operator of industrial real estate in Mexico. So think industrial parks, warehouses, logistics, light manufacturing, more than 200 properties, 33.7 million square feet, occupancy rate of almost 97% as of the end of March. If you think about the trends of bringing back manufacturing capacity in North America,

near-shoring, supply chain redundancy, there's a huge need for that kind of space. And Mexico is the perfect place for that for North American manufacturing. So you've got a business that is really growing impressively, pays a nice dividend. I think it's a company that's in the right spot and now at the right time for U.S. investors. Dan, a question about investor real estate? Not really. A question, Dylan. More of a comment. I think bringing a week-old stock to stocks on our radar is kind of cheating as what could be more interesting than a brand new big IPO. Yeah. I mean, he's kind of good point. I love that. I love it.

First, I thought he was, you know, it was going to be like a back-handed company. Yeah, it was going to bite. Rip. But he, yeah. I thought he was going to be weak-old as like me. I'm weak and old. Well, I think what he's doing is he's teeing you up for a very hard pitch here, Jason, for your stock. It's always a hard pitch with Dan. I like his comments and not his questions. His questions are difficult to answer. But Dan, I'm going to give this one a whirl here. Hopefully you've been to Top Golf before, but my radar stock this week is Top Golf Callaway Brands, ticker is M-O-D-G.

Dan, when I'm not thumbing through the latest issue of watercolor artist, I'm likely catching up on the latest issue of Golf Digest. Exciting stuff I know. But I found a fascinating data point just the other day in reading through my latest issue of Golf Digest. I'm not even lying here, guys. I really like that. The National Golf Foundation noted that for the first time ever,

the number of off-course golfers has surpassed the number of on-course golfers. Now, an off-course golfer is someone who likes to hit golf balls and likes the game of golf, but they don't want to go play a round of golf on the golf course, right? Whereas, like, I love to go play golf, so you're going to catch me on the golf course. But there are a lot of folks that just love to go hit golf balls. So they would be on versus off.

But of the 41.1 million total, there are 15.5 million off-course golfers versus only 13.2 million on-course. The remaining is a combination. Like, I would be on-course off-course. I like to go to Topgolf and I like to play golf. I like to play golf. Exactly. I don't think this is an outlaw. You like to put-puttut, too.

I love it all, man. I don't think this is an outlier, though. I think this is a trend we may see continuing. I think a driver of this trend, see what I did there. Hey. Yeah. I think a driver of this trend is Topgolf, which Callaway acquired a couple of years back. Calloway is a keystone brand in the golf world.

I hit Calloway Irons, Maddie. Callow Iron. I use an Odyssey. You are a man of the sport. Well, that's the brand. Bringing Top Golf into the mix here, I always kind of thumbed my nose at golf as an investment, having me experience in the industry. I know it's just, it's a tough game, it's an expensive game.

But bringing top golf into their universe, I think it gives them an opportunity to grow in a different direction. Kind of think like a Dave and Busters for golfers, which I think it's just very fascinating. It takes golf beyond just that traditional on-course golf demographic. So I'm digging more into Top Golf Callaway brands here to see if it's worthy of a recommendation. Dan, a lot of narrative flare, a lot of personal experience there. A question about Calloway Golf. No, I have a comment, so Jason will enjoy this. I am not an on-course golfer. I've actually never played golf on course, but I've been to Top Golf many times.

So he's an off-course golfer. Yeah, and if you guys ever want to go see a grown man swing a golf club like a baseball bat because I have no idea what I'm doing. Let's go to Top Golf. I'm all in. Sounds like we have similar technique, Dan. Which company is going on your watch list, Dan? I'm sorry, Jason. As much as I love Top Golf, I just love a new IPO, especially one as big as Vesta. Nice.

Jason, Matt, thanks so much for being here, bringing your stocks on the radar. That's going to do it for this week's Motleyful Money Radio Show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll see you next time.