Rich Habits Podcast - Nvidia's $675B Guidance, Oura Ring IPO & Meta's Lawsuit

Starting point is 00:00:00 You are tuning in to the rich habits radar, our Friday episode of the Rich Habits Podcast where every Friday morning we're coming at you with the biggest headlines impacting you and your money. This episode is brought to you by VCX, the public ticker for private tech. My name's Austin Hank Witts, and I'm joined by my co-host Robert Croke. And the three things sitting at the top of our rich habits radar this week include NVIDIA's unbelievable quarterly earnings report, meta-settling a teen safety lawsuit for $17 billion, dollars and of course what to expect at jackson hole with the federal reserve taking place i guess today now robert as people listen to this episode be sure to stick around to the end where we talk

Starting point is 00:00:40 about the newest way real estate investors are making millions of dollars and that is by buying up old dilapidated hotels robert let's dig into our first story definitely invidia reported earnings early after the bell and the stock is up 10% as we're recording this episode so let's start with the numbers everyone already knew were coming, then get to the number that actually moved the stock. Let's do it. So fiscal Q2 revenue came in at $96.2 billion, up nearly 106% year over year, which blew past Wall Street's expectations of $92 billion. Adjusted earnings per share was $2.22, beating Wall Street's estimates by 13 cents per share. Now, data set of revenue, the whole ballgame at this point, hit $89 billion against expectations of $85 billion, increasing 117% year over year.

Starting point is 00:01:38 Unbelievable numbers. Gross profit margins held at 75%, which was right in line with Wall Street's expectations. The company threw off over $21 billion of free cash flow during that three-month period of time. Invidia also handed $26 billion back to shareholders during the quarter in both buyback. and dividends, and they still have $99 billion left on that repurchase authorization. So all of that's great, but that's not why the stock went up 10%. Robert, break that down. Yes, the number that broke Wall Street's model was the guidance. CFO Colette Crest told investors Nvidia expects fiscal 2028 revenue to grow 70% year over year. You heard it 70%. Analysts were modeling

Starting point is 00:02:24 44%. So off of a roughly 396 billion fiscal 2027 base, and that 70% floor puts fiscal 2028 revenue around $673 billion, which would put Nvidia ahead of Apple and alphabet and behind only Amazon and total company revenue. In the wild part is Collette Cress, their chief financial officer, said that that 70% number is the floor. And it's the floor because it's the supply constrained floor of their guidance, right? So unconstrained demand puts them closer to 100% revenue growth, which is bonkers. I mean, literally, like you're saying, 27-base is essentially 400 billion. You slap 70% growth on top of that, which gets you to 675 billion. But if they weren't supply constrained, that number could actually be closer to $800 billion in annualized revenue in 2028 for Nvidia.

Starting point is 00:03:24 which is just crazy. We've owned Nvidia now for years. We've seen this massive rise in these companies like Nvidia and Micron and all that. And to see that, and it's even funny, Austin, because we've been saying for a long time to our listeners in the Rich Habits Network and here on the podcast that we believe Nvidia is underpriced. And these numbers really show that in the current stock price. And Jeffrey's analyst, Blaine Curtis titled his note, The Emperor Strikes Back, and wrote that the 70% growth floor is 200 billion above the prior Blackwell plus Rubin framework, Wall Street had built its models around. He sees a clear path to $1 trillion of revenue in fiscal year 2029, and he kept his buy rating around that $300 price point.

Starting point is 00:04:10 But that price target is not where other Wall Street price targets are being shared right now. Evercore has a price target of $465. Their analyst is saying that Nvidia is one of the most compelling. risk-reward ratios in their entire coverage universe right now, trading at just 13 times 2027 earnings per share. For context, Robert, the S&P 500 as an index on average right now, is trading at 20 times. So, Invidia right now, is cheaper than the S&P 500, which is bonkers. There is one wrinkle. Gross margins are guided down to 72 to 73 percent for calendar year 2027, from the mid-70s previously.

Starting point is 00:04:54 NQ3 guidance came in at $108 billion, ahead of the $104.86 billion Wall Street wanted, but NVIDIA explicitly said it's assuming zero revenue from China in that number, zero. And that's not a hidden risk, that's a stated one, and they're still guiding above what the street expected. So I think it's all good news and smooth sailing for NVIDIA right now. So, Robert, break that down a little bit more.

Starting point is 00:05:19 What does this earnings now mean for our listeners, and their money. For me, I think this is the moment Nvidia stopped being the beat and guide conservatively story and started openly telling Wall Street its models are just too small. And so when a company comes out and says our floor is 70% growth,

Starting point is 00:05:36 but our actual demand is closer to 100%. That's just not corporate hedge fund speak. That's a company that has more customers than compute available. And I pulled up Nvidia on Wall Streetfavits.com this morning before today's pop, and it was a sitting at around $229 a share against the consensus analyst target of $365 a share. Over 50% upside is already priced in by the street before this print. Now bake it in at $465 price target from Evercore and a

Starting point is 00:06:09 guidance number $200 billion above that old framework. And you start to understand why the stock ripped double digits. And we here at the Rich Habits podcast believe it's going to continue to grow in the coming years. me a big takeaway is that for two years, the AI trade has had to defend itself against when does the spending stop? Invidia just answered that question with a number that no analyst on Wall Street was expecting. That paired with $160 billion of its own money, guaranteeing that its customers can keep buying, which was sort of the circular financing stuff that was also talked about during the earnings call. That's even the most confident guidance that we've heard from a company like ever in

Starting point is 00:06:48 history of the semiconductor industry or the clearest sign yet of how tightly invidia's fortunes are now wound around its own customers and the balance sheet and the circular financing you can either think of it as a good thing or a bad thing but my take is that invidia is a monster and you know robert we were talking about it a couple weeks ago we saw invidia was trading at like 192 195 a share and i was like wait invidia's priced right now as if it's like you know the cheapest name in like ever like what's going on what we'll Let's go put money. I remember before we were filming, we're, you know, outlining the episode.

Starting point is 00:07:23 And I was like, let's go put $10,000 in Nvidia real quick. And so we both did. And now it's at $2.30 a share or whatever. It's just like the entire world is being rebuilt right now with AI in mind. Yeah. Yeah. Yeah. We'll be one of the largest beneficiaries of that infrastructure buildout over the next decade, full stop.

Starting point is 00:07:39 And Nvidia's CFO just told us that that's going to be the case and is going to remain the case because the demand is just insatiable. Yeah, 100%. I agree, and I'm so glad we've been early and right about Nvidia. And so many people, you know, are sitting there, when's the next Nvidia going to happen? When's this going to happen? And I'm sitting there thinking, you know, you and I are talking about it, how inexpensive it is as a target price right now when we were talking about it at 196 and now it's a two something. And I think it's just going to continue to grow. And I love them as a company, you know, being kind of that granddaddy in the center of it all, you know, along with AMD and Micron and like Taiwan, somebody can. and you mentioned ASML. So I think that collective right there is just a great way to be in this AI trade for the long term. 100%. So let's then jump to our next story. Robert, you actually talked about this one recently. You flagged that Oakland trial of that $1.4 trillion threat for META could be very bad. Coalition of State Attorney Generals were going after META over child safety. Meadows on filings put the theoretical ceiling at $1.4 trillion in damages. All that's behind us now. 1.4 trillion was just a headline number. Walk us through it. Yeah, I definitely

Starting point is 00:08:52 wanted to follow up on this because we're fans of META as a stock and we believe there's a lot of upside. And on Wednesday, META settled with a bipartisan coalition of 51 attorneys general, which is basically built out of 47 states plus D.C. and U.S. territories ending the federal trial in Oakland before it ever even reached a jury. And the total number being reported ranges from 16.7 billion to 17.1 billion, depending on how you count it. And meta itself says the settlement includes a payment of approximately $18 billion, but here's the catch. Paid out over 10 years. So for all of us, you know, that's pennies out of the pocket of someone as large as meta. And the gap in those numbers comes down to what's bundled in. There's about $459 million tied to an old Cambridge Analytica

Starting point is 00:09:41 claim mixed into the bigger figure, plus a separate $1 billion, Texas settlement. on its own outside of this group deal. Yeah, right. So let's kind of talk about how this $18 billion that META is now going to have to pay in damages, who it's going to, how much is going where, and what are the stipulations around that. So the participating states in this lawsuit get about $12.7 billion, which is about 70% of that total. It's guaranteed and it's paid annually over to Roberts Point a decade. The remaining $5.3 billion, so that 30% percent,

Starting point is 00:10:17 Delta only gets paid out if YouTube and TikTok also agree to make the same kind of changes that meta just agreed to. Those changes include daily time limits for teens, age verification technology, and a night mode. And now this is interesting, Google and TikTok would each have to pay an amount matching that remaining 30% themselves. So meta basically just said, hey, I will settle with you, no problem. We can make sure this does not go to court. But I also want to make sure my two biggest competitors are also adopting the exact same restrictions on their platforms, or meta doesn't have to pay that last big chunk of $5 billion. So, Robert, I think this is pretty clever, right?

Starting point is 00:11:00 So, hey, I'm not going to play by these new rules if my competitors aren't also playing by them. Yeah, I think this settlement is really good news for the American families that are out there that are worried about their children and what's happening on the internet. And by having these guardrails and these restrictions like night mode and all that, I think it's really good long term for social media because I feel it's long overdue. And meta says it will take roughly $10 billion legal charge in Q3 of 2026 for this. And it's money that wasn't previously baked in any of Wall Street's financial models. And here's the market reaction that tells you everything and matters most. Meta stock actually rose on the news.

Starting point is 00:11:40 So maybe there's a little bit of relief there. Maybe people are worried that that $1.4 trillion number could be somewhat real and it wasn't. And CNBC reported that shares were up about 4.4% in pre-market on the news because Wall Street read an $18 billion decade-long spread-out payment as a massive win compared to a jury trial that had $1.4 trillion sitting on the table as the worst case scenario for meta. Yeah, that's crazy. This, though, doesn't mean that all of MEDA's legal problems go away. There's still thousands of personal injury claims and a consolidated nationwide school district case that has been widening right now through federal court. 3,300 cases in that one MDL alone. Plaintiffs' lawyers have said flatly that they're not backing off META.

Starting point is 00:12:30 They're not backing off TikTok. Snapchat, YouTube, like this settlement closes one very expensive door for the company, but not all of them. So Austin, I think this is really good news, probably settles things a little bit for meta, because that was the big headline everyone was talking about. So walk us through, what does this mean for you and your money? I think this was a masterclass in how mega cap massive big tech companies can de-risk a big event like this. 1.4 trillion was obviously never a realistic outcome. The company is only worth 1.4 trillion, right? Like, that doesn't make sense.

Starting point is 00:13:04 But the states themselves had reportedly floated something closer to $200 billion as a lot. a more grounded target for their lawsuit. But even that $200 billion was sitting over META's head as a jury trial possibility, that's now gone, right? So it's now $18 billion, which is less than 10% of what they, you know, we're looking for for that $200 billion. And it's spread out over 10 years against a company generating $46 billion of free cash flow. Now, if you pull up Wall Street Favorites.com and you type in META in the deep search,

Starting point is 00:13:35 you'll see that the Wall Street price target is $700. $27, which represents a 30% upside that Wall Street thinks META can experience in their stock price between the next 12 to 18 months. Robert, we were talking about META before we recorded here. I'm buying at 500 bucks a share. This thing's going to be $8, 9, maybe $1,000 a share by the end of the decade. I'm going to go double my money while everyone worries about some crazy lawsuit that obviously was not going to be the case. Yeah, I think the biggest takeaway for me is that markets don't punish companies for paying fines. They punish uncertainty. We talk about this all the time.

Starting point is 00:14:10 Markets don't like uncertainty, whether it's headlines or fines or whatever it may be. And secondarily for me is meta-converted an unknowable, potentially civilization-altering number into a fixed 10-year, budgetable line item, and the stock went up. And that's the lesson for any name you own that's facing a legal overhang. The number rarely matters as much as removing the unknowns. Couldn't agree more, Robert. So, Austin, before we jump. bump into our third story today. Support from the show comes from VCX,

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Starting point is 00:16:01 listen to this podcast. So we're filming this on Thursday afternoon, August 27. By the time we're listening to this on Friday morning, or maybe Friday afternoon, Fed chair Kevin Warsh may have already spoken at Jackson Hole or he's about to. So some of what we might say could be old news by the time you hit play on this episode, but here's why we wanted to break it down anyway. Because the setup going into this speech tells you almost everything about where the market actually stands right now. So, Robert, walk us through it. Yeah, the Kansas City Fed's Jackson Hole Symposium runs through August 27th through the 29th, up in Grand. Teton National Park. And this year's official theme is financial innovation and payments like stable

Starting point is 00:16:43 coins, tokenized deposits, that entire stratosphere of the financial world. But nobody's really there for the academic papers. They're there for one thing. Kevin Warsh's speech expected around 10 a.m. Eastern on Friday, his first Jackson Hole keynote as the new federal chair. And here's where the stakes are unusually high for a speech, because on paper, it's just a philosophical address, but Warsh took over as Fed Chair back in May with the narrowest confirmation vote in the position's history, 54 to 45. And since taking office, he's deliberately stripped down Fed communication. Post-meeting statements are half the link they used to be. He's the first Fed Chair since the Dot plot was introduced in 2012 to decline submitting his own rate projections.

Starting point is 00:17:30 At his July press conference, he described his own upcoming Jackson Hole speech as like a blank sheet of paper. He genuinely hadn't decided what kind of speech it would be yet. And this vagueness definitely has consequences. The Fed held rates steady at 3.5% to 3.75% in July for a fifth straight meeting, but on a 9 to 3 vote, the most hawkish descent the committees produced since 2016. And three regional Fed presidents, Hammock, Koshkari and Logan, voted for an immediate hike citing five years plus of above target inflation. In the bond market noticed. The 30-year Treasury yield jumped to its highest level since 2007, the day of that vote, and it's been sitting near 5.27 percent heading into this week. July non-farm pay rolls came in

Starting point is 00:18:19 at a negative 23,000. One of the worst reading since the pandemic against a forecast of a positive 85,000. That alone knocks September hike odds from near 60 percent down to about one in three, 30, 33% or so. July CPI printed right at that 3.4%. Double the Fed's 2% target. PPI showed a hidden acceleration in core prices. So, Robert, you've got a labor market that's telling the Fed cut, cut, cut. You've got inflation that's telling the Fed hold interest rate steady or even raise them higher.

Starting point is 00:18:53 And that's now landing right on Warsh's desk at the exact time. And now he has to go to Jackson Hole and look everyone and say, listen, here's what's going to happen. Now remember, Robert, last year when Jerome Powell went there, he said, and this was like a really big, you know, kind of shift in the narrative, Jerome Powell said the threat of the labor market deteriorating was more important than inflation at the time, which is why we started cutting interest rates. Now, who knows what he's going to say? Because whatever gets told at this symposium, I mean, that's really going to move the markets. Yeah, and definitely, and then the Treasury waited right into the mess. Two weeks ago, the same week the national debt formally crossed

Starting point is 00:19:36 $40 trillion. Treasury Secretary Scott Besson announced without warning that the Treasury would more than double its bond-vi-back operations to try and bring long yields down. It worked for about 48 hours. Then yields erase the entire move and climbed right back. Analysts at Evercourt called it a weak form of operation twist, and RSM's chief economist argued it actually undermines the Fed if Treasury is artificially suppressing the long end of the curve that muddies the signal the Fed's own rate policy is supposed to send. So, Robert, what does this mean for you and your money? Here's the honest framing. By the time you all hear this, you may already know what he said.

Starting point is 00:20:15 But regardless of the outcome Friday, what this whole setup tells you that we're in a genuinely split decision with the Fed for the first time in many, many years. And that's different from the last two years where the direction was fairly obvious, even if the timing wasn't. So for me right now, you've got real hawks on the committee, a Treasury Secretary getting involved in ways that usually spook bond markets, and a chair who's chosen opacity as his actual strategy. So for your portfolio, that argues for not making big directional bets on rates in either direction right now. If Warsh comes in dovish, long bonds and rate sensitive names like home builders and small caps could rip. And if he comes in even mildly hawkish, that trade reverses very, very quickly. Yeah, for 15 years, the Fed told you exactly what it was going to do before it did it. Warsh has broken that pattern.

Starting point is 00:21:07 Less forward guidance. No dot plot submission. A blank sheet of paper, quote. You know, like, biggest speech of the year. I don't know what I'm going to say. Figure it out when I give it. Right? It's like whether that's strategic, a nice little reset, maybe it's adding unforced uncertainty into a fractured committee.

Starting point is 00:21:22 We're going to find out. Again, it's Thursday. Excited to see what they talk about tomorrow. So I'm sure whatever it is. We'll talk about it next week. and if you want some, maybe faster insight, join the Rich Habits Network, because I'm sure we'll be talking about it in there. Yeah, for me, I think there's two words that really play into all of this with Warsh, and that is forward guidance. Like him or hate him, but with Jerome Powell, we had a guideline and we understood what we were looking at,

Starting point is 00:21:48 and we could make some pretty educated guesses going into these fed meetings, and now that's all gone. This whole blank sheet of paper, I'm not sure what's going to happen without giving us any guidance ahead of time or any insight ahead of time really makes it harder for people to gauge which way the markets are going to go. So we'll see what happens. So hopefully we get some good news as we produce this podcast. All right, Robert, let's now jump to our radar points. I've got three. You've got three. And I'm excited to dig in. I'll be talking about Cisco giving their 90,000 employees, their own personal AI agent and the implications around that. I'll also talk about Stan Drucken Miller using AI recently to talk about Scott Bessent and his Wall Street,

Starting point is 00:22:28 journal op-ed. And finally, I'll be covering OpenAI's head of data center heading out for the door right before an IPO, which I think is really interesting. So let's talk about Cisco. Cisco rolled out something called My Agent to every one of its 90,000 global employees earlier this week, which is a personalized AI agent accessed through desktop, mobile, or WebEx chat that pulls real-time context on you through secure enterprise connectors and calls on over 800 sub-agents on the back end to actually get things done. Employees have used it so far to manage their inboxes, summarize and filter emails, drafts and responses, analyze market news, forecast variances and sales numbers. But here's the part that I think is the most interesting headline of the week for me.

Starting point is 00:23:17 Here's the part. Ready? Listen up. The design is locked down. Agents only take requests from their assigned humans. They don't talk to any other agents and anything external needs a human sign-off. have a policy server that blocks agents from deleting data or leaking it to third-party models. And Cisco built their own intelligent router that sends requests to the cheapest capable model, not OpenAI, not Anthropic, the cheapest capable model, which means 50 to 60% of these tokens are getting routed to Cisco's own open weight models. Say that again, open weight. They're not using Claude or ChatGPT.

Starting point is 00:23:58 they built their own models on their own GPUs rather than paying for an anthropic or an open AI model provider every time they want to have some intelligence. First example, my opinion, of a good rollout for agents at the enterprise scale. And it's the kind of demand that's, you know, really, you know, these GPUs are obviously Nvidia's GPUs, right? Like a, or so like that's good for Nvidia, but it just goes to show that like, as excited as you might be about Cloud or chat GPT, these enterprises are saying those tokens are expensive, let's go use these open weight tokens over here. So I'm sure I'll have some feedback on that, but before I get it, let's talk about Stan Drucken Miller, which

Starting point is 00:24:36 actually ties back to our third story. So legendary hedge fund investors, Stanley Drucken Miller, wrote a Wall Street Journal op-ed rep ripping Treasury Secretary Scott Bessent over that bond buyback intervention that you were just talking about, saying there was no real dysfunction to justify it. Inflation and runaway debt are exactly what's driving up yields. The internet Slewes then took his op-ed and ran it through AI detection tools and said, I think Stanley Druckenmiller just used AI to write this. What the heck? And when they confronted him, he said, yeah, I was a B student in English, but A plus in economics. Which like more power to you, dude. He said that he's been, you know, holding these same ideas for 15 plus years. He thinks AI is like

Starting point is 00:25:18 using a speech writer or a calculator. All of his family offices use AI. The Wall Street Journal's editorial, you know, backed him on this. They said that the real question is whether the argument is genuinely his, which no one doubts that it is. This is his argument. He just used a little bit of AI to make it sound easier, easier to read for the common folk on Wall Street Journal. So I like that. Shout out Stanley Drucken Miller, who's a, what is it, 73-year-old investor using AI. He's 73. What's your excuse? Come on. And lastly, Chris Malone, the executive who oversaw OpenAI's entire data Center buildout, including Stargate, left OpenAI last week, and he's not alone. He joins the chief revenue officer, their C.O, and Sam Altman's own second in command all who left

Starting point is 00:26:03 in recent weeks. Four major executives leaving right as OpenAI heads towards a big IPO, trillion-dollar IPO in 2007 to compete with Anthropic. Really interesting stuff. I don't know why that's taking place, But I thought that I'd put that on people's radar. I love your radar points today. And my question is in something to consider. And I'd love to hear your takeaway. So Cisco's got 90,000 employees that get their own AI agent that's going to make them more efficient. Now, my question is, are they using these and paying for these AI agents to train the AI agents on exactly

Starting point is 00:26:43 what each employee does? And then they're going to do a massive layoff six, nine months from now. And the agent itself is going to fight. its own human or will the management actually do it? I know that's not funny, but it's a crazy thought that all of a sudden Cisco is going to have this agent helping you, but yet we keep hearing about all these massive firms using agents to replace humans. So interesting radar point that I really, really enjoyed. Yeah, no, I agree. I wonder how that's going to take place. You know, it's funny. I was talking to Ireland. I was like, oh yeah, just like, you know, why don't you use your

Starting point is 00:27:15 Claude or your chat GPT or whatever to like go analyze your inbox and tell you. You know, it's what you have to get done or whatever. Like, we're just like, the simplest thing that I've been doing, and I'm sure you've been doing, a lot of people have been doing with AI agents for, I don't know, nine months now, six, nine months now. And she's like, oh, I can't do that. And I was like, why? And they're like, oh, we don't have like the enterprise version of Claude to like do this

Starting point is 00:27:36 because like co-pilot doesn't or whatever. And I was like, how dumb is that? Like, why doesn't everyone have an agent that's working for like, they'd be so much more productive. And I was talking my accountant about it. It's like, oh, yeah, we don't use AI at all for this stuff because we don't yet know how secure it is to share this with Anthropic or OpenAI. And so it's really telling to me that Cisco built their own open weight model on their own GPUs and rolled it out to 90,000 employees.

Starting point is 00:28:02 Like I'm saying it right now in this podcast. We are going to see that times 100 over the next 12 to 18 months. Every single Fortune 1000 company is going to have their own open weight model. They're going to have their own intelligent router. And they're going to be using their own everything for their own employees and a lot of this, you know, anthropic open AI, like, don't get me wrong, I'm still excited about these companies, but a lot of these companies are getting more weary about wait a second. And we talked about this a couple months ago, maybe weeks ago, Robert on the show, where Palantir's CEO, Alex Carp had that big spas on CNBC. He's like, I'll say the quiet part out loud because none of these Fortune 100 companies want to say it. Everyone's terrified that

Starting point is 00:28:41 Anthropic has everyone's data now. And everyone wants to have and own their own data. They don't want Anthropic to be building models on their own like IP and their processes as a business. And so everyone's like, how do we do this and make it open weight? Cisco figured it out. So Robert, I've yapped enough. Let's jump over to your radar points. But maybe before that, let's talk a little bit about uncertainty and the markets. Remind everyone, what's been our plan? Yeah, it's never been more important in these uncertain markets to have a plan and stick to it. And if you're a long-term investor like us and you've been following along in the Rich Habits podcast, and a rich habits network, you know that it's never been easier to come up with and implement

Starting point is 00:29:20 dollar cost averaging and ride the wave in your portfolio. That's right. We've been talking about how important it is to dollar cost average for years now. And when the market feels shaky and it's hard to see your progress, that's exactly when you need a portfolio tracker in a social platform like Blossom Social. On Blossom, you're able to see your entire portfolio in a simple, clean way, including your holdings, performance, and dividends. Yeah, you're also, able to follow other long-term investors on the platform like Austin and myself, helping you stay motivated during these uncertain times. Not to mention the portfolios on Blossom are all verified. So if you're seeing someone buy or sell a name, it's because they actually did it in their own brokerage account, which is attached to their Blossom profile. I'm on Blossom. Roberts on Blossom profile. Our portfolios are over there. So if you want to join us, just search Blossom Social on the app store.

Starting point is 00:30:11 Head over to Blossomsocial.com. Follow myself. Follow Robert. Link in the show. notes below and be sure to use their AI tool that analyzes your portfolio with AI. It's pretty interesting. I think it's called Beavis. Go check that one out. So Robert, I need to hear your radar points. Tell me about these hotels. What's going on? I'm excited about it. This has been something I've been talking about for years now. And there's a strategy that wealthy real estate investors have quietly figured out. Go find the hotel with the worst online reviews. Buy it cheap, flip it into something nice. So JMI Realty did exactly that. They bought a rundown on Houston Hilton Garden Hotel.

Starting point is 00:30:47 The guests called a complete nightmare. And they paid around $100,000 per room. They put another $65,000 per room into renovate it. And one buyer is literally running AI on negative trip advisor and Yelp reviews to help source these deals. I thought that was genius. The worst complaints, the more attractive the price is. So what a really, really cool hack?

Starting point is 00:31:09 And it's working because of a supply squeeze. New hotel construction is running at just about a half percent of existing apply this year, which is way below the expected 1.6%. So if you can't build new, you buy old and broken and you just fix it. And debt-strapped owners who've been skipping required renovations for years are finally being forced to sell rather than upgrade. Park hotels just sold in New Jersey Hilton for $12 million. Less than half what was mandated renovations would have cost them. And overall, U.S. hotel sales are up 28% this year, as investors realize the fastest, way into hospitality right now is in building. It's buying someone else's project. This is my favorite

Starting point is 00:31:51 radar point today because living in Florida where I do, there are older hotels everywhere that might only be 12 units or 24 units or 36 units, but they're on a beach or they're in a beautiful area near the beach, but the owner's in his 80s and hasn't touched it in 30 years. And you can really buy these for reasonable door prices, value at and renovate them, make them trendy, and just make a ton of whether you keep it as a long-term project or you buy it, renovate it, and flip it. So I love this radar point. Number two for me today is ORA ring is about to go public at $16 billion. Orr-Ring, the smart ring that tracks your sleep, heart rate and recovery is targeting a September IPO that could raise up to $3 billion and value the company north of $16 billion up from $10.9 billion just two years ago.

Starting point is 00:32:42 Goldman Sachs and Morgan Stanley are leading it. And that valuation isn't just hype off of nothing. Orr rings have sold over 5.5 million units and is on pace to surpass 5 million paid subscribers this year, with revenue up over fourfold over the last two fiscal years. The company did roughly $1 billion in sales in 2025. And CEO Tom Hale says they're on track for close to $2 billion in 20206, basically doubling again. And what makes their model so interesting is they're not just selling this $300,

Starting point is 00:33:14 ring once. It's selling the recurring subscription model that everyone complains about online inside of the app for the insights, which is why the revenue keeps doubling. So I like it. I think Oro's cool. Elizabeth swears by it. I don't personally own it, but we'll definitely be keeping an eye on this IPO. And then lastly for me today is you can now use your Bitcoin as collateral without selling it to back a mortgage. I think this is really, really cool. Better mortgage and Coinbase just took their crypto-backed mortgage nationwide for Coinbase 1 members after closing their first ever Bitcoin-backed Fannie Mae loan back in June. Here's how it works. You get a standard confirming mortgage under Fannie Mae guidelines, but you can pledge crypto towards the down payment,

Starting point is 00:33:59 and instead of selling it and triggering a taxable event, Coinbase 1 members can get approved and also get a lender credit worth 1% of the loan up to $10,000. And the demand here, this is what shocked me, Austin. Demand is real. A wait list opened in June and generated over $260 million in projected loan value with 76% of respondents already having Coinbase 1 members, and 60% of them planned to buy within six months. So I really love this because what people need to realize, just like if you have a stock portfolio,

Starting point is 00:34:33 you can now take your Bitcoin, if you have a bunch of Bitcoins sitting in your Coinbase 1 membership, you can now borrow against it for a very low interest rate, and use that as your down payment without having to sell your Bitcoin or having that taxable event. I think this is a really smart move by better loans and also Coinbase to be able to allow people to do this. So many people out their own Bitcoin and now they can borrow against it very inexpensively. Great radar points. I think ORARing going public will be an interesting tell because it kind of reminds me of Fitbit or, you know, because like at the end of the day, it's like what has to happen?

Starting point is 00:35:11 Ora Ring has to sell more rings so they can make money and either keep the subscription price the same so they can keep that recurring revenue or increase the subscription price every single year like a Netflix kind of does. So you're paying $300 to buy the ring and then you're paying $70 a year to like keep the ring and operate it. I guess the question's like, does that 70 go up more? Because like you think the only way businesses are really successful is if they make more money and more profits for their shareholders. So I'd be curious to know like what is ORA? like what's their strategy for achieving that? Is it is it selling more rings? You know, can they go from one billion in sales? They talked about two billion this year as they're a road to five billion. You know, how much, how many people are going to buy a $300 ring and keep something like that?

Starting point is 00:35:54 It's especially now with the K-shaped economy. Like I'd just be really curious to see how this shakes out. I'm not a shareholder in aura. Congratulations to those that might have invested early. I won't be buying the IPO, but I'll certainly be keeping an eye on the stock. Yeah, I agree with you because technology is moving so fast. And I don't really understand what ORA's moat is because I don't believe the technology is any different than any of the bands that you wear on your wrist. And so I believe there could be a world where ORA gets disrupted

Starting point is 00:36:20 and they'd have to dramatically change their business model to where it's a different kind of a wearable. Maybe it's a stick-on patch that you wear, like I wear my G7 patch or something like that. So it's less cumbersome because the ring, you know, especially if you're active and it's more active people, the ring is metal. It does get slippery.

Starting point is 00:36:38 It's not great. when you're sweating or in the water. So it'll be interesting to watch. I know they're crushing it right now. But like you said, I don't know if they can continue this growth or if they'll get disrupted because I don't believe they have enough of a technological moat to be able to protect it long term. Yeah, I mean, you think about whoop, you think about Fitbit,

Starting point is 00:36:57 you think about Apple Watch. Like, I don't know. It'll be interesting. I've got a ton of friends that have aura rings, but I also have a ton of friends that have whoops and the other things. It'll be cool to see. Everyone, thanks so much for tuning into this week's episode of the Rich Habits Radar. If you learn something, please consider sharing this episode with a friend and do us a favor.

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Starting point is 00:37:31 So yeah, we're doing some cool stuff over there. Two-hour weekly live stream. Today, actually, we're hosting a webinar with Katie Stockton, a CNBC regular. to talk about a new ETF that she's come up with. Like, we're doing a lot of cool stuff in the Rich Habits Network. So please, seven-day free trial. Go check it out. You're not going to regret it.

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Rich Habits Podcast - Nvidia's $675B Guidance, Oura Ring IPO & Meta's Lawsuit

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