SPEAKER_02 0:00

All right, Dustin.

SPEAKER_01 0:01

Seems like there's never a lack of something happening and big news. How are you today? I'm good. I'm very nervous because you were hinting at some big news uh before the pod. And we we were making some some jokes that I I kind of sweated off, but I I am a little nervous about.

SPEAKER_02 0:19

No, no, not nothing to be nothing to be nervous about. Um what's your turn that's the mean was gonna fire me on air? That would be terrible. I mean, although it might be entertaining, a little bit great. That's a great finale. No, no. Um what uh what's what's our agenda for today?

SPEAKER_01 0:42

Agenda. So we both sold the same stock this week. You ended up buying a stock. I did not buy anything. We'll get into that. Um, I I have some new evidence after looking through our data on Earnings Hub and Savvy Trader that Micron may actually be cyclical. So we're gonna dig into that. Okay. And a lot of exciting news around Rivian announcing uh production numbers and early Q2 2026 results, and then as always, listener questions. Um but before we get to any of that, do you want to talk about your your big news?

SPEAKER_02 1:22

Um, well, I mean, okay, so I haven't shared this with you, but uh there's a good probability that in the coming weeks or months, but almost certainly within the next year, uh, and I don't know exactly when, but uh it'll probably be driven by um uh more details I'll shall I'll share, but I will probably make my portfolio not uh public anymore. Um so yeah, that's uh I feel like that's kind of big because there's like over 7,000 subscribers to to my portfolio right now. And uh it has been public. Every single transaction I've done in the past more than four years has been public. So uh not sharing that is is kind of a big big deal. So anyway, just thought that uh can I ask why? Yeah, yeah. So uh the the primary reason is because as my portfolio has gotten bigger, uh there's sort of um uh I'm getting more and more limited by what I can and cannot buy. Um meaning uh if I buy microcap stocks, for example, uh it would affect the price of the microcap stock, at least temporarily, briefly. Um and uh and then having people sort of uh follow into it would would definitely also affect the stock price uh in microcap. So larger companies, it won't matter. I mean, I'm just talking about companies that are maybe in the hundreds of millions of dollars, um, not obviously billions of dollars, but um or that uh companies that have very low volume, especially in the hundreds of millions of dollar uh market cap. So, you know, there's there's sort of like uh limitation in that sense, because if I'm trying to buy something slowly, let's say over the course of days or weeks, uh if I chose to do that, I haven't so far, uh, then I would be my own worst enemy by A, like raising the price and publicly sharing that information. Uh and then you know, uh the reverse is also true. If I ever tried to exit a position slowly, uh just the fact that I I announce everything you know as I'm doing it, uh doing it slowly would cause other people to potentially do it faster than I would. So uh I would end up being my own worst enemy. So the combination of these things uh kind of uh factor into where um uh it it reduces my flexibility right now. Uh and it hasn't mattered so far, uh, but it might matter in the future, which is probably the reason that I'm gonna stop sharing my portfolio. And then the, you know, plus the like primary reasons why I shared my portfolio in the first place was A, to sort of prove to the naysayers that never believe me that I've been beating the SP for over 25 years, uh, that I've been beating the SP for over 25 years, and then to test out the savvy trader platform. Uh and the savvy trader platform is pretty solid, and now we have hundreds of other people sharing their portfolio. So uh all of that is uh is goodness. So it doesn't need my portfolio on there anymore. Um yeah. So those are those are the primary reasons. Now, if I really wanted to make my own life complicated, and I'm not sure that I do, I I would consider doing a hedge fund or something to a fund that other people could invest in. Um I I've also considered an ETF. The problem with an ETF is that your hands are tied in how what kind of investments you can make and what portion of your portfolio can be given in a given investment. Uh so I don't like ETFs that could be invested in by anyone. That would be the nicer way to go. But hedge fund is better because you can do whatever, invest in whatever, and there's like less restrictions. The problem with that is that only accredited investors could invest. So um, if I wanted to make my own life more complicated, I might consider doing one of those two things. But um, but I haven't decided on that yet.

SPEAKER_01 5:40

That is that sounds like a high probability then, uh, because you love complexity. I like to what? You love complexity, is what I said. Oh, yeah, yeah, yeah. Maybe, maybe a little bit. I'm a sucker for it. So, my last question on this, and then we can move on. How is this going to change the podcast? Are you still going to talk about what you're buying and selling and looking at on the pod? Or what do you think?

SPEAKER_02 6:06

So, so you you know, um uh most most people who manage funds, like if you think of um uh you know, like Phil Ackman or uh Michael Berry, or you know, uh like there's like lots of famous uh investors who do talk about their investments. So that's not necessarily an issue, but uh, but they're not sharing when they're investing in real time, which is what I'm doing with my portfolio. So uh not only am I beating Bill Ackman's performance, but I'm sharing my my uh investments as I'm doing them, like literally within a minute of a transaction, uh, a minute or two of a transaction, I'm sharing that information publicly. So um so it puts me at a disadvantage, uh sort of, and you know, I wouldn't have that disadvantage, but I could still do the podcast. So your uh at least podcast uh co-host, the career is safe, but but also I have no plans of stopping savvy trader or anything like that. So uh that that is uh going strong, and same with earnings hub. Those are exciting products that I use actually personally to um to assess investments.

SPEAKER_01 7:19

So yeah, I think my my vote is we need to add a new setting in Savvy Trader where a portfolio can be unlisted, and everyone who subscribes now can see your trades in real time perpetuity, and then in the future, anyone who wants to subscribe in the future they can't find the portfolio, you know.

SPEAKER_02 7:40

No, no, that it would still it would still be a problem with over 7,000 subscribers. And and like by the way, at some point what one potential solution would be well, don't share a um investment until you're done adding, or uh don't share that you've sold until you're done selling. Well, that would that would make it not great for the potential followers of the portfolio. So I don't like that potential solution um to that problem. Uh you know, I um you know there's other great portfolios on Savvy Trader, and people could call those portfolios that are better than yours on Savvy Trader.

SPEAKER_01 8:18

That's right. That's right.

SPEAKER_02 8:19

It's hard to believe.

SPEAKER_01 8:22

But yeah. Um, Adrian, I was just gonna bring you in. Hi, hi Adrian.

SPEAKER_00 8:29

Hi, we have lots of people commenting on your announcement, so I thought we should just pop those up for a little bit. Okay. Um so someone says, though I'd miss following your portfolio, it's a very responsible and thoughtful act, Hamid.

SPEAKER_02 8:48

Well, I appreciate that.

SPEAKER_00 8:50

Hello, Hamid. Could the liquidity liquidity issue be solved by adding a delay to when portfolio information is public?

SPEAKER_02 8:57

Yeah, so we I just mentioned this that I could potentially delay it, but the the issue would be like if I start selling something, especially a microcap, a large cap, it sort of like doesn't matter, but uh on a microcap type of scenario where uh my own sales uh and transactions could potentially affect the price of a stock, um, then having people do like 7,000 people potentially follow that afterwards would hurt them even more. So I I wouldn't want to uh be in that type of position where my portfolio followers would not uh like I would have a slight conflict of interest there. So I don't know, like there there might be some way to do it uh with delayed that might not be as bad, um, or maybe only share sort of like larger cap uh investments. Um I might do that by the way.

SPEAKER_01 9:50

Like they have focused portfolios that are you know avoid micro caps or smaller caps?

SPEAKER_02 9:55

Right, right. But so far it's been sort of like every public stock that I that I own.

SPEAKER_00 10:01

So okay, you ready? I have a couple more. There's two people that want to know. Um and I think maybe just clarify this: does that mean you will stop sharing your portfolio completely or back into sharing non-free?

SPEAKER_02 10:17

No, I have no plans of charging for my portfolio. So if I stop sharing it, it would be uh not shared at all. Um my intent with my portfolio was never to make money, but just to sort of like share the knowledge, but also to test out the savvy uh trader platform. Um and uh there there is a world in which I instead of just sharing everything, I share like certain things. And um and in that scenario, I might just have to change the description of my portfolio. Anything that I do, I will pre-announce it beforehand to all of the subscribers. So if you are a subscriber or if you're considering subscribing and you do that now, um, it's not a problem. I'll I'll definitely share that information before anything happens.

SPEAKER_00 11:06

Okay, here's another one. Looks like Hamid is a big whale, and we didn't know till now. All the best with your move. We will miss your guidance on transactions, but totally understandable. I will buy into your fund 100%.

SPEAKER_02 11:20

I appreciate that vote of confidence. Thank you. Um, maybe maybe uh, I'll share my email address with everyone who's who's watching. If you guys want to email me, um if you would be interested in something like a fund, uh a hedge fund specifically. Hedge fund, you'd have to be an accredited investor. So uh maybe indicating whether or not you would be an accredited investor, that might be interesting. Uh, but my email is Humid, just H-A-M-I-D at savvytrader.com. So you can email me uh and let me know your thoughts, and I'll read those emails and make a decision at some point. I'm not in a rush to make a decision, and I'm not about to just you know buy a microcat company right now. Um, but uh some stuff have come come across my um my site that I was like, huh, that's interesting. But then like it uh the valuation of the company is so low that if I were to go uh in on it in a significant way, uh, it would definitely have an impact on the price of the company. So um that that's what has triggered my uh my thoughts here.

SPEAKER_00 12:26

All right, maybe we have more, but let's move on. Just noting that there's a lot of people who have thoughts and interests and comments. So maybe people will take advantage of the email.

SPEAKER_02 12:38

If we have time at the end, we can also come back to some of those questions. Um feel free to re-ask later. Um Dustin, uh, let's let's start. What should we start with?

SPEAKER_01 12:49

Uh I mean, we're already talking about your portfolio. So I think you made four transactions since last week's episode. You sold Robin Hood twice and bought Rivian twice. So talk about it.

SPEAKER_02 13:03

Those are paired transactions. I I basically sold Robin Hood to buy more Ribbian because I wanted to sort of maintain my cash position uh relatively close to the same and um rather than using my cash to buy more Ribbian. Uh so let's let's talk about Ribbian for for a moment because lots of stuff have happened with Ribbian since the since the last podcast. So since the last podcast, they came out that um uh that they basically exceeded their um delivery, uh both production and delivery guide guidelines that they had given uh by pretty significant amount. Actually, do you have those numbers? Yeah, there we go. So they they um they produced 12,600 vehicles, delivered 12,100, uh, and then they raised their um their guidance. But by the way, the estimates were that they were going to deliver somewhere between 9 and 11,000, and they delivered 12,194 vehicles. So pretty substantial beat on deliveries. And then they raised their uh delivery guidance for the entire 2026 to 65,000 to 70,000 vehicles, um, up from I believe 60 to 65,000 vehicles before. So they increased it by roughly 5,000 vehicles. Um so really, really good news there. That happened on July 2nd. Uh, and then uh their stock price has been sort of like on this upward trend. Uh, and well, when was it Monday that they announced uh or uh their on Monday their stock price broke $20 a share and after the close, uh, which had closed over $20 a share, they announced that they are uh raising um or selling 75 million shares on the open market. Uh and uh or not the open market, they're they're selling 75 million shares in in a placement to raise more funds. Um they also announced their um their quarter estimate of revenue is between 1.55 billion and 1.65 billion. So uh the estimates prior were 1.44 billion. So they're gonna have at least 100 to 200 million dollars more revenue than they were expecting, uh, or the analysts were expecting. So there it's a comfortable beat on revenue of between 7 uh and 15 percent. Fantastic beat, uh, fantastic raise in sort of like guidance on deliveries. Uh the guidance on deliveries estimate, by the way, going uh to up to 70,000 vehicles means that in the second half of 2026, they're gonna deliver 100% more vehicles than the second half of 2025. So that's a very, very substantial increase in uh in deliveries, which is gonna result in a very, very substantial increase in revenue. It's not gonna be quite 100% more in revenue because the R2 is a lower priced vehicle, but it is going to be pretty substantial, at least 50-60% more revenue in the second half of 2026 than 25. So all of this good news has happened. Um, the Monday news was, you know, in my my view, extremely welcome. The reason they did that additional 1.1 billion raise, which we now know it was priced at uh a price point that ended up raising 1.2 billion for them. The reason they did that 1.2 billion raise is so that they can accelerate their Georgia plant and start using the uh uh the loans, the Department of Energy loans, they get access to four and a half billion dollars there to build the uh the plants to expand their manufacturing capacity. So um all of this is like fantastic news from uh like the company, the progress, the R2 uh sort of uh production ramp, all of that is you know just phenomenal. You couldn't you couldn't ask for better execution uh and growth for a company than than what Rivian is doing. Now, since Monday, the stock has tanked from the $20 uh closing point to where it was um around 15 and changed earlier today. Uh I think it closed the day, what, at $16? We can't see it on that graph there. $165. So um, you know, it's uh it's down substantially from the $20 mark, but with lots of good news added. And, you know, sometimes the market does that, where good news means that the stock gets uh sold off. And uh some Rubian investors, surprisingly, are extremely upset about the news, about the raise, about the fact that they're gonna get diluted, you know, six to seven, seven and a half percent. Um and my view is that dilution is part of the game when you're in a stock that is uh in a company that is not profitable. What would you expect them to do? Like shut down and declare bankruptcy? Because that's the only other option. When you're losing money and you're eventually going to run out, you either have to raise money and dilute existing investors, or you have to shut down and declare bankruptcy. There are those are your two only only two options. You can also uh you know take out loans, I guess, but uh but in Rivian's case, they're also doing that. So uh they're combining raising money from uh capital that you know is not loans. This is the $1.2 billion is not a loan, uh, but they're also taking out loans from the Department of Energy, for example, to build their next manufacturing facility. Um and they have $5.2 billion in cash as well. So they're very well funded now for at least the next year, and uh and the next year should be so positive for them that the valuation should go up. Uh, there should be an opportunity to uh raise more money, which means more dilution will come, by the way. If you're a Ribbian investor, you should know that up front. Don't invest if you don't think it's gonna get diluted any further. Um, but but hopefully at much higher valuations, which would, which will mean uh lower dilution percentages. So you know, I've seen this play out every time for you know, every company that is not yet profitable raises Tesla had to do that multiple times, uh, several times during the time that I owned it between 2015 and 2019 or 2020 when it became profitable. Um, you know, Rocket Lab has had to do that several times. And every time these companies get hit too, like when they announce that they're raising or uh that there's gonna be some dilution coming, they their stock price usually takes a hit in the short term, but eventually it recovers and and then um it moves up from there. So I'm very excited about Ribbian, and uh and now I'm more excited about Rivian than I am about uh Robinhood, and therefore I exchanged some of my Robin Hood shares essentially for Ribbian.

SPEAKER_01 19:55

So yeah, circling back to the dilution bit, because when you were saying uh you know the company's either gonna go bankrupt or they have to dilute, that sounds very negative. And I just want to be clear that dilution is not a negative thing, it is a a part of uh any company that is not profitable, uh, they need to have the ability to invest in themselves. Um and that creates this dilution effect. But even if uh you own uh a smaller percentage of the company, the idea is the value of the shares you own over time will actually be greater than what it is today, if done. That's exactly right.

SPEAKER_02 20:43

So that's exactly right. Yeah. Yeah, no, I mean basically every company like that's not profitable, take OpenAI, Anthropic, you know, SpaceX, et cetera, they're they're they've all been raising throughout uh you know, and their entire life, essentially. And from SpaceX K series A. Yeah, I think like I don't know, SpaceX might be on Series X. But uh you know, yeah, exactly. They they raise and in every single race, uh in SpaceX's case, it's over 20 years of uh 20, you know, I think they were uh founded in 2002, if I'm not mistaken. So 24 years of uh not being a profitable company, every race has triggered some level of dilution. Um and uh and the idea that uh you know, like that that Rubian just raised $1.2 billion and that's a bad thing somehow, uh, is just uh uh baffling to me. You know, it's just it just makes the company that much stronger. So um I'm quite excited about their future.

SPEAKER_01 21:46

Yeah, I'm also very positive. Um to me, all the news was either great or predictable. All the numbers that they announced I thought were great, and the dilution piece was predictable. Um It's funny because I think a week or two ago we talked about how uh Ribbian's kind of been in this range for a couple of years now between the $10 and $20 mark. And they haven't been able to really break out of that. And this is just another example of that. Um, I don't think that's a bad thing. I think it just creates more opportunity to buy um my gut, which could be wrong because it's really hard to time these things, is I think we're towards the end of the rate of it ranging now with the R2 out. Um, but you never know. These things could last way longer than anyone um expects. And then the last thing or the last thought I have is I think part of the reason why it's dropping back down to around this $15 mark, uh, in addition to dilution fears, is the raise that they're doing. I think it they're it's closer to $15 a share, not $20 a share. Um so I think the market is kind of going back to that range because that was where they're raising.

SPEAKER_02 23:07

Yeah, a couple of things about the raise. Um, I think uh the price was based on yesterday's close and it was at a 6% discount. Uh the raise is actually preferred stocks, and though the um buyers get an option to buy additional, I think 11 million shares uh in addition to the 75 million. Uh and they have like something like 30 days to exercise it. So you know, the buyers are clearly thinking that 15, whatever 65 that they paid for it is a bargain. Uh, so that you know, obviously nobody's investing $1.2 billion without thinking they're gonna make some some amount of return. Um, but uh but but in Rivian's case, for the past two years, there's a lot of frustrated investors because the um stock has been basically flat. Uh and the stock has been flat because there's been three things that have gone against it. They their uh revenues have been relatively flat, their deliveries have been down to flat uh year over year, and then uh they've had negative margins. All of those three things are about to change, right? With the R2. So deliveries we already know is going to be up 100% year over year in the second half of 2026, unless something goes dramatically wrong. Uh, this is what they have guided to, so this is not uh unexpected. Um, their margins are expected to be uh positive by the end of Q4 as they sort of like again bring volumes up on R2. Um, and um their revenue are is about to sort of like skyrocket as well. So the combination of these three things makes it super exciting. Now, my preference for their future raises, by the way, is that they would raise at the money or what what they what is known in the industry as ATM. Uh Rocket Lab has been pretty good about doing this. So when they, for example, announce Rocket Lab announces that, hey, we're gonna raise a billion dollars or whatever it is, um, they usually go down, they take a hit right there. But they don't have to sell at that hit, you know, like uh at that at that moment in time. They can wait until their stock price recovers and then sell slowly a little bit at a time over the course of the next you know six months or whatever amount of time frame that they want, which is what they have been doing. And Rivian should do that in going forward in the future, in my opinion. So they should, you know, their next time they announce that they're gonna do a do a raise, hopefully not anytime soon, but like let's say within the next six months, they should just come out and say, hey, you know what, we're gonna do 100 million shares at the market, ATM. We'll decide when to do it uh based on our needs going forward. Uh and they'll take an immediate hit on the stock price, most likely, because that's just what happens. But again, they don't have to dilute right away based on that stock price. They don't have to give preferred shares, they can just do common, uh, and then they can uh they can sell that over time uh into the market. And as the uh as they crush their sort of like numbers and estimates, then stock price should go up, and those would be opportunities to sort of like sell a little bit, sell a little bit and and raise the additional funds that they'll need in the future. So you know, the ATM method I think is probably better for a company that is starting to uh grow revenues rapidly and and crush their estimates, but um, which is what Rocket Lab has been doing. I kind of like that uh method better than issuing preferred stocks at a discount, giving additional warrants and options.

SPEAKER_01 26:36

It's just uh not ideal. I think that's a great call out and um an important nuance uh that not everyone recognizes. Uh okay, so I also sold Robin Hood. I didn't buy any Rivian this week, um, but I sold around 20% of my Robin Hood position. This is one of many uh set sales I've been doing. So I sold at $117, almost $118 a share for a 1,382% gain. Very lucky. Um and Robinhood is now about 2.5% of my portfolio. Um the reason for the sale, and I talked about this last week, there's I believe we're in the middle of a very pivotal point for the short-term story of Robinhood with uh their world is flat crypto event just wrapping up on July 1st. We have the uh Kid accounts from the government, which Robinhood uh worked with them on launching uh or launched July 4th. Uh I think there's a lot of exciting news on the surface that maybe isn't as exciting when uh you look a little deeper into it. Uh, I'm not saying I'm bearish on Robin Hood by any means. I'm long-term very bullish on Robin Hood. It's just I think there's a lot of uh over exuberant energy around the stock right now that I don't think is necessarily uh called for. So I'm I'm curious to see what the stock does. Um, I mean, it is down a little bit since I sold. I think it went back to like one, okay, it's at 113 right now. I think it went down to like maybe 112 or 110. Uh, but it's at 113 right now. Um I will probably continue to sell if it really keeps climbing. Um, but I'm also happy with the the current um allocation size I have right here. Um I did not buy anything with the the cash. My cash position is a little uh rich for my liking. It's about 23% of my portfolio. Um and I would like to do the same as mine. Yeah, I I just I would like to utilize more of it. Not not a crazy amount, um, but I think maybe by next week's episode, um maybe I'll make some purchases. Okay, very cool. So we will see. All right. Let's move on to the next topic. This is a very exciting topic. Um so I was digging through uh the Earnings Hub, and we have this view in Earnings Hub where we show the annual returns for a stock, uh, which is pretty cool to see. And every once in a while you can kind of spot a pattern. And I'm looking at Micron's uh data, and I'm like, I don't know, this this looks pretty cyclical. So let me let me show you this.

SPEAKER_02 29:51

Okay.

SPEAKER_01 29:52

I know we've been saying it's not cyclical, but like since 2015, every four years the stock is down.

SPEAKER_02 29:59

There's a down down year, which is kind of incredible. Wait, 2026 down six percent. Well, yeah, that that can't be right. I mean, that that looks like every four years it's down some, but uh oh you know you're right.

SPEAKER_01 30:18

This is a this is why I don't like doing a live show because sometimes I mess things up. Okay, there's no going back, but uh yeah, I think you're right. This is not this is not micron's data, but okay. So then who who is this?

SPEAKER_02 30:33

Oh this is oh meta.

SPEAKER_01 30:35

This is meta.

SPEAKER_02 30:37

Okay, that was cute. It's it was funny that you have it prepared meta uh headline instead of the micron headline.

SPEAKER_01 30:44

Oh, it keeps it keeps going. So that's interesting. So I don't really hear many people talk about meta being meta being cyclic cyclical, but since 2015 over the last decade, it's it's had you know three green years and then a red year. Um but here, let's let's get into uh micron here. Okay.

SPEAKER_02 31:07

Oh wait, uh micron's that's not micron either. Oh okay. What what other stock is this?

SPEAKER_01 31:14

As Britney Spears once famously said, oops, I did it again. Okay, now we have Google. So you could see now this 2026 clearly should be a red year, not investment advice. Uh I don't necessarily believe it's gonna be a red year, but um, you could see it's the same pattern as Meta, um, funny enough, where it's a red year and then three green years. Uh and now this is actually Micron's uh data. As you can see, at least from a price perspective, there's not really much of a pattern. Um, you know, some years it's red, some years it's green. This is going back to uh 2007 for Micron. Yeah. But I just thought this was interesting because and I know that a lot of the conversation is not necessarily about the price movement, it's about the revenue being cyclical. Um that's what I was just about to say. Yeah, but I no one ever talks about how Meta and Google happen to be fairly cyclical because it's it's arguably a silly argument.

SPEAKER_02 32:23

You know, what's funny is that one of the one of the best and worst um capabilities of humans is pattern recognition. And unfortunately or fortunately, we see pattern recognition, like we we use our pattern recognition abilities everywhere. And um, you know, so so with respect to micron, we've noticed that, oh, look, their revenues go up, uh, you know, and then they they kind of go down a little bit and then they go back up to the same levels. And uh that has happened at least three times in the past, and therefore it's gonna always continue to happen, and therefore it's cyclical and da da. Um, similarly, we're like, oh, uh, for the past uh three years or whatever it's been, you know, Rivian keeps uh going down to like $12 a share, going up to $20 a share, back down to $12 a share. And we we think that, okay, because it has done that for the past three years, uh, if it hits 20, sell, and if it goes to 12, buy. And you know, like it's as simple as that. And and it turns out that it's not that simple. At some point, uh breakouts happen and changes happen, and uh the the reality uh is all in the in the uh details, right? Like um what has happened uh for Micron to suddenly have um this massive revenue increase uh over the past couple of years that is kind of unprecedented in any company ever in history. And to try to still pigeonhole it into this pattern that you saw for the previous 15, 20 years or whatever it is, it's kind of weird, right? Like so something has definitely changed. Uh, and that change means uh that you have to adjust your pattern recognition ability and and be able to accommodate a new shift uh that that is happening. Um that new shift, of course, is AI. Uh now that doesn't mean that a new type of you know um stability or or potentially pattern again doesn't re-emerge, but it's certainly not going to re-emerge at previous levels just because um so much has changed, and it does not seem like we're at the sort of tail end of the AI boom or growth, or at least from a usage standpoint. Um, you know, uh company revenues and uh um semiconductor uh aside, from a usage standpoint, it doesn't seem like we're at the end of AI, meaning like this is not the maximum usage of AI that's ever going to happen. If we were to fast forward 10 years, virtually guaranteed, unless, again, we've had some major wars or some events that uh are extremely catastrophic, there's going to be hundreds, if not thousands, of times more AI usage 10 years from now than there are today. Um, just because it'll be like literally prevalent in everything, in every device, and everything that has hardware in it, uh, that has any kind of computing power is gonna have AI in it. Because who wants a dumb machine? Nobody wants a dumb machine that has uh microprocessors in it. Um so that usage is gonna continue to grow. Uh, and what does that mean for semiconductor industry? We don't know. But the people who are in it think that the demand is nowhere near uh, you know, capped, and it's not even remotely close to sort of like being finished. Uh and therefore, you know, I am just as excited about Micron. So Micron crushed its revenue uh targets and guidance for last quarter. It raised its guidance for this quarter. These are the things that have changed in the past month. Uh, that it was expecting 40 billion in revenue this quarter. Now it has raised to 50 billion. Um, what has changed since their announcement, since their quarterly report? Other than that, and the fact that they're gonna have way more profits, they were expecting profits of $24 per share, if I'm not mistaken, this quarter. They've raised that to over $30. Uh, and analysts have raised it to even more than $31, and they're guiding even higher for the next quarter, besides this quarter. So these are the things that have changed. What has the stock price done? The stock price is down 25%. Now you can pick up micron at a future uh or a forward PE over the course of the next year that is estimated to be under seven. So a forward PE of seven means they're gonna make one-seventh of their entire market cap in profits over the course of the next year, right? That's just a great potential company to own, in my, in my view. And uh, you know, that's why uh I haven't sold a single share since their um earnings report. And uh at these prices, I don't intend to sell any as well. So uh it continues to be exciting for me.

SPEAKER_01 37:24

You know, I like to buy when stocks really drop. So even though it's at over $900 a share, there is a chance I actually buy more micron here, um, which is exactly what I did with my first purchase when I think it dropped maybe like 28%. I could be wrong with that, but roughly 28%. Um, and then I I bought around $350. So I might do the same thing here.

SPEAKER_02 37:49

After Q1 report.

SPEAKER_01 37:51

Yeah. And yeah, I I totally agree with you. Like these patterns often are real and there's underlying reasoning behind them. But if you take a step back and you question, well, is there a reason why this pattern might break? Uh yeah, there's a real reason. Um, and as long as you believe that AI use is going up and not going down in the future, um, Micron has a pretty safe uh uh place here. So uh yeah, I just thought it was a fun way of of looking at things and putting things into perspective. Uh okay, let's get to listener questions.

SPEAKER_00 38:34

We've got lots of questions, so we'll see. We'll keep an eye on the time. Um going back to uh let's this person wants us to dive a little more in. I'm curious as the if this is the dip for micron and what might be the timeline for Rivian. I do appreciate your recommendations and guidance.

SPEAKER_02 38:57

Uh I I guess I'm not sure what what that means. Um, if this is the dip for Micron. I mean, certainly it has gone down 25% uh since the quarterly report, which was fantastic. Um and from uh the timeline on Ribbian perspective, or just any company that uh that I jump into it, uh one thing is that I always remind myself that the market is uh not necessarily rational at any given moment, uh, and could stay irrational in my view, in my uh in my personal opinion, of what a company should be worth versus what the market thinks it's worth. Those things are oftentimes not aligned for years. Uh in Tesla's case, for example, when I was invested in Tesla, uh for roughly five years, the market and I were not aligned in terms of what I thought the value of Tesla was versus what the market thought the value of Tesla was. So the market can be irrational for a long period of time. So I can't answer timeline perspective on what might be the timeline for Rivian. But uh the company seems to be firing, I was gonna say firing on all cylinders. I actually made a uh note on my purchase of additional Rivian today, but I said, but instead I changed it to uh Rivian seems to be fully charged now to try to make a cute little pun for Dustin over here. But thank you. I love it. But uh but it's it's executing perfectly, right? Like it's now it now has a mass market uh product that is being very well received by the market. It's starting to deliver them, it's delivering the them uh the the $60,000 version of it. So it should be uh able to eke out pretty decent uh margins out of it. Um and uh it's well positioned, it has tons of pre-orders to be able to sort of like carry it well into 2027. Uh and then uh between now and 2027, all these cars should be on the roads and they should get additional new buyers excited and like there should be sort of an influx of new buyers coming online. Exactly what happened for the Model 3 and the Model Y for Tesla. So um, you know, uh the the coming years for Rivian feels uh like uh they're gonna all be positive years, at least for the foreseeable three or four years from now. And then what happens beyond that is kind of hard to predict. Any thoughts on that, uh Dustin?

SPEAKER_01 41:32

Uh no additional thoughts on the Rivian side. On the micron side, um this isn't the dip for micron, but this is certainly a dip for micron. And when I again when I first bought uh micron shares, I did this post kind of showing how uh NVIDIA had several fairly large drawdowns on its way up. And I'm not saying Micron is going to be as uh astronomical of a move as NVIDIA, but it has certainly been very volatile. And these volatile stocks tend to have these volatile moves on the way up. So it is very common to drop over 20% um every once in a while and still be in the bull run. Um so I view it as a yeah.

SPEAKER_02 42:27

Read read uh show that again and read it so so that for people who are listening that they can get a sense as to what you're talking about. Nvidia's uh drawdowns were uh as much as 22% in September, October of 23. Then again in 24, another 22% in March to April. Uh then in 24 again in June to August was 30 down 35%. January to April of 24, 2024, it was down 43%. And uh October uh of 25 to today is down 21%. So I today that was March 30th, the post. Okay, and and and yet the stock is up 1300% over that same time time span. So lots of huge drawdowns, yet uh the stock is up pretty substantially. Um and and that's an important thing to keep in mind is that the market does not uh go in a smooth trajectory ever. So um, you know, despite uh so there's a lot of noise basically that you have to ignore as I unrest.

SPEAKER_01 43:34

And and that's another thing um where like sometimes I'll see people say, like, oh, your year to date performance is like no good. And it's like, well, sure, but I'm not investing for my year to date performance to be incredible. I'm but I'm investing so my future self has incredible performance. And this is just like one of the many downturns or whatever um that I'm going to have. Um, but you know, I'm always Investing for tomorrow, not for today. Right, right, right.

SPEAKER_00 44:05

Okay, let's move on. Um, diving more into Rivian. Hamid, why buy Rivian today at 16, but not mid-May at 12? Surely we knew back in May that Rivian revenue would be looking very good in H2 and beyond. Maybe you need to be more like Dustin. JK.

SPEAKER_01 44:25

Plus one. No, no JK. No JK.

SPEAKER_02 44:28

No, no JK. Uh maybe the J stands for Justin. Uh first of all, yes, we should all aspire to be more like Dustin. Um, he he nailed his purchase uh when he bought it. Uh what did you add it around 12s in the 12s?

SPEAKER_01 44:50

In the in the 12s, uh, I'll tell you exactly. It was 1269.

SPEAKER_02 44:55

Oh, very cool. But uh so from my perspective, I I already had a lot of Rivian, and uh um obviously I've been very optimistic about Rivian, but sometimes you you know you kind of like um you've made your investment, you've made your bets, and then you just gotta like wait it out to see whether or not you were right, right? There's always the probability that I'm wrong in any of my investments, by the way. Uh you know, uh I I know I I sound full of myself sometimes, but but I have been known to be wrong uh occasionally. Um and uh in Rivian's case, what we found out in the past week is that uh they, you know, let's say the past three weeks, we we have had a string of good news uh from them. One is R2s started getting delivered. They started getting delivered in numbers that exceeded at least their expectations to where they delivered more vehicles in Q2 than they were anticipating. Um, and then their revenues are between $100 and $200 million more than they were anticipating. So all of this is like additional positive news, um, which uh from you know, you know, and the stock was starting to approach $20 or actually hit $20. And then the announcements of the race came, and then the stock sort of like took this uh drawdown to by roughly 20%. Uh and that's what got me uh excited is like, okay, now we have additional information that um uh makes the company more attractive to me. Uh some of the theories that I had before that they were gonna start to like crush their numbers um are starting to come to fruition and reality is like matching up. Uh and uh and suddenly the stock is 20% cheaper. Um, yeah, I want to own more of it. So uh that was the sort of uh thought process behind it. Uh in May, we didn't have that information. So uh that's the that's the main reason.

SPEAKER_01 46:54

Yeah, the the reason why I bought in May, obviously the stock took a massive hit. Um, and I thought it was a great buying opportunity, but it was also like a couple weeks before the R2 launch. And while we didn't know how much of a success it would be, I think, at least for me, I had pretty high conviction that it was going to be fairly successful and it was gonna show that fairly quickly. Um so I was just trying to anticipate what's the most likely outcome uh that's gonna happen next. And that doesn't mean the market's going to recognize it. Arguably, while the stock is up from $12 right now, the market doesn't even fully recognize what's happening because it's back down to the 16s. So um you never really know what the market's going to do. But if you could kind of, you know, try to anticipate at least what the company's going to do, you can kind of um make smarter moves that way. And I try to do that more often, but it's often very hard, you know, to be bad or whatnot.

SPEAKER_00 47:57

Okay, here's this one. Hello, question for Dustin and Hamid. How do you go about valuing a non-profitable company like Rivian, especially when finding a similar company is without success?

SPEAKER_02 48:11

Yeah, that's that's always uh challenging. Um but uh basically VCs do this all the time, right? Uh venture capitalists are investing in uh companies that are pre pre sometimes pre-revenue, uh almost always pre-profit. Uh and um and and the focus on pre uh pre-profit companies is all around the growth curve. Um and in in a lot of cases, you have some um some other sort of uh companies that you can compare it to. So for Rivian, for example, the comparison set of companies would be the car industry. But uh because they're specifically in the EV business and uh there's a lot more technology that goes into EVs and they're like software-driven vehicles, the most closest comparison point would be Tesla. Um, and um and when when you compare it to Tesla, it's extremely cheap. And you know, a lot of people will say, well, that's an unfair comparison because Tesla uh is not really a car company and it's like um now getting a lot of its valuation because of robotaxis and um Optimus robots and so on. Um and that's a fair point, but at least half of Tesla's valuation uh and uh it is certainly not because of those things. And Tesla reached a trillion dollar valuation before uh robotaxis were even uh a realistic timeline on their on their sort of production. That they hit over a trillion dollar valuation back in 2021, sort of roughly five years ago, and Optimus was not even on the map. Uh it was not in uh visibility back then. So so for a company that is the closest sort of like uh company that we can compare Rivian to uh being Tesla, a 10, 15 time revenue multiple for a fast growing, it has to be fast growing, uh, is not um uh unrealistic. This is the type of valuation that Tesla had before its revenue stopped stopped growing, by the way. Uh and uh before Optimus and these other things were um and AI and sort of like data centers were were as much of a uh uh thing. So uh Rubian uh growing, let's say at 50% over the course of the next six years. And uh this is something that uh it's kind of hard to imagine 50% growth over the course of multiple years. So I did some math, and uh if you can grow a company at um at roughly 50% for six years, you have more than 10 times the revenue after six years. So 10 times Rivian's current revenue run rate is roughly uh you know $55 to $60 billion. It's actually closer to 11 times the revenues when you grow 50%. Um so it would be somewhere around $55, $60 billion of revenue run rate. And then if you get similar sort of uh uh gross margins and net margins as to Tesla, then you're you're you know uh you're producing pretty decent amount of profits from that as well. Uh and um and then you also have a company that is in this technology uh position of being able to offer robotaxis and self-driving vehicles and and so on. Uh, possibly just one of only two companies, Tesla and Ribbian, that can create these robotaxis at scale using their own manufacturing facilities compared to like Waymo or Zook's, where they have to uh retrofit other vehicles or you know uh partner with a manufacturing facility, it puts them in a sort of like unique position that should give them a pretty substantial premium. Uh the premium of 10 times revenues does not seem unreasonable to me. So if they had $50 or $60 billion of revenue, a $500 to $600 billion valuation does not seem crazy unreasonable. Tesla is currently at $1.6 trillion valuation, uh, and um and their revenues are not even growing. So um, yes, it's hard to value a company that is not yet profitable, but it's not impossible. VCs do it all the time, the public markets do it all the time, and uh a lot of time it comes down to sort of like showing that proof of growth, but also a visible path to profitability and then and then sort of like the investors will come.

SPEAKER_01 52:44

So sorry, you were you were uh your mic was off for just a second. We couldn't uh in addition to looking at the price to sales, um, I also like to look at the price history, which I know Hamida's not as big of a fan of. But you know, if there's a lot like with Rivian, we see okay, it ranges from $10 to $20 over the last X many years. Um that doesn't mean that's what its value should be, but that is what the market has valued Rivian at. So I'll I'll take that into consideration. And if you know Rivian's in the lower half of that band, I think it's a reasonable time uh to buy. Even if it's in the upper half of that band, long term, it's a reasonable time to buy, non-investment advice. Um in terms of free revenue companies, what I've learned over time is to just not touch these. Um, at least for me, it is just too hard um to to value them. Um and mainly because the business is just totally uh unproven, uh, being that they have no revenue coming in. So it's it's better to for me to be late um than to be early.

SPEAKER_02 54:01

Slight distinction to revenue versus pre-profit.

SPEAKER_01 54:05

Yes, yes. So like Ravian is pre-profit, they have plenty of revenue. Um pre-revenue means that that there's no real business um yet. They're still figuring out the technology or manufacturing, or you know, uh they're still figuring it out.

SPEAKER_02 54:21

So yeah. They're basically a startup. Yeah. Yeah. Okay. What else do we have? I figured.

SPEAKER_00 54:30

Do another one on Rivian. Hi, Hamid. On Rivian, don't you see a huge competition from Chinese car makers hurting future profits? Stillantis and other European makers are struggling closing factories and reducing workforce. Another person also asked about if you're worried about the um for Rivian about because of the Volkswagen cost cutting, too.

SPEAKER_02 54:55

Um, okay, so uh I actually wrote a piece, it's it's been probably like nine years ago, uh, that I I believe uh that the vast majority of existing car companies are gonna go out of business. Um these are companies that are making sort of engine-based vehicles um because the future is is EBs. And I speculated that that time frame is probably somewhere in the 15-year time frame, so maybe another six years left. But I may have been overly uh like uh predicting it to happen way more quickly than it would happen, but I suspect it's probably not more than 10 to 15 years away where we cross that 50% mark threshold of 50 more than 50% of vehicles being EVs. And therefore, uh all the existing um car makers that are still just making gas-powered cars are gonna have to reduce their staff and lay off and shut down uh various different production lines pretty substantially and possibly go bankrupt in some cases. Um that I still believe is going to happen. Uh you know, it's hard to say exactly when these things will happen, but uh but it will happen as the transition to EVs accelerates and uh hits a certain threshold, probably 50% mark. The the companies are gonna start to, we're gonna start seeing some consolidation and uh and or bankruptcies. Um so uh that's to sort of like answer the question of like where's the EV versus you know, like that doesn't concern me that you know Volkswagen is you know struggling because you know I I expect all car companies that are not EV 100% are gonna struggle. Now, within the EV space, every EV company has also struggled. So, you know, that uh you know, but that doesn't mean the future is not EV. So Lucid has been struggling and you know, continues to struggle and um and and uh hasn't been able to sort of cross that chasm. Uh Rivian has obviously been struggling, but like now I feel like it's about to cross that chasm uh um where uh the growth sort of starts to accelerate and show its potential and become more possible uh more obvious that it's going to hit uh uh future profitability at some point. Um and then uh and then the Chinese companies have been showing that uh this is going to happen. Basically, Chinese, the the entire China automaking industry is EV-based. So they completely bet on EVs being the future, and they've done exceptionally well. Now, um, does it concern me that uh the Chinese might do a way better job than uh European and American companies? Yes, that is a concern, but also uh US and Europe cannot afford to allow Chinese automakers to just dominate and kill their entire car industries because that's roughly one and a half trillion dollar trillion dollars worth of products being sold every year by European and American car makers. So if you let that get destroyed, that's an incredible amount of um uh economic uh and financial power and number of jobs that you're giving away to the Chinese companies. So I just don't see US and Europe being able to afford to do that. And therefore, they'll balance that by putting significant tariffs on Chinese imports or not allowing them to import. One of those two things are going to have to happen and have been happening, by the way. And that's why you don't see any Chinese EV makers in the US. So uh that doesn't concern me as much. Uh you know, I I do I do think the Chinese are formidable competitors in in the space and they've done a great job, and they have the you know cost advantage as well because labor is so much cheaper, and uh the EV industry has been backed by the government as well. So they they've had um uh excessive funds being invested into EV technology that uh we haven't had in the US and Europe hasn't had either.

SPEAKER_01 59:03

So um yeah, those are some rough thoughts about the industry.

SPEAKER_00 59:15

Okay, so we'll just do um a few more, just a couple more. Um this one's about meta. Will meta compute help create a glut in compute? Sorry, will meta compute help create a glut in compute? When the third biggest buyer of compute becomes a seller, the dynamics of the cloud market could shift.

SPEAKER_02 59:40

So we we touched on this last uh in last episode as well, but uh a lot of times the market sort of uh uh is triggered by a rumor or a story that is um that is unconfirmed by the company itself. So last week um it was rumored that Meta might be selling excess compute to others, but literally two days prior to that, there was another story that had indicated that Google had refused to sell additional compute request capacity to Meta. So does Meta want additional capacity that it cannot get from Google, or does it have excess capacity that is putting out there to sell? Which one is it? Both of those stories came out like literally within days of each other. Neither company has commented on this stuff. So you got to remember that like a lot of this stuff is not actual facts that we know for sure. This is like kind of speculation. Some of the stories are contradicting. Um but assuming that Meta had excess capacity, uh, would that mean that uh that there would be like all of a sudden a glut of excess compute? Well, no, there wouldn't be because we know for a fact that OpenAI and Anthropic are throttling and not releasing things that they could otherwise because they simply do not have enough compute to do it. Um so some of that might go to address their needs. Uh, and that's the way I would look at it right now is that we just do not have everyone in in the industry is saying we do not have enough compute. So that that is what I would go by as opposed to journalists.

SPEAKER_01 1:01:20

I think the other angle to think about is we don't know who all the buyers are or will be. For example, Anthropic was around a year ago, but they are they weren't the dominant player they are today. And very much a year from now, there could be another uh AI company that no one's really talking about right now, that all of a sudden needs a ton of compute and has been totally killing it. Um, so I I think this is an example of if you build it, they will come uh type of situation, not that we're going to have uh an excess here. And it goes back to our earlier point with Micron of AI usage is only going to increase as well. Um, these models are going to get hungrier, there's going to be more uh use cases like robotics that aren't really a thing today. So I think there's a lot of real opportunity here. Um, and it just because Meta maybe at the moment isn't uh having as much usage with their models and maybe doesn't need as much compute again, maybe. I don't think that's an indicator for the entire AI market.

SPEAKER_00 1:02:40

Okay, let's do just we've got some people asking about the SK Hean shares on our IPO on Friday. Someone's wanting to know do either of you plan on plan to pick up some SK Heenix shares on Friday? They trade at a lower forward PE than Micron, if not mistaken. This could add downwards pressure on Micron stock if people rotate out. Another person also asked what you think about the IP on Friday.

SPEAKER_02 1:03:07

Um yeah, I'm SK Heinex, if I'm not mistaken, but um I am not interested. Uh I would uh personally I'm personally focused on US-based companies. Um and they're both in the same business, Micron and SK Heinex. They they they uh they make this similar sort of chips. Um I know Micron's business a lot better because I have had uh and dived through their sort of like financial details and like vetted their uh CEO and listened to all their calls and interviews and so on and so forth. So uh I'm not interested to look at another company that is South Korean-based that I would want to invest in, in addition to Micron, both of which, both of whom have similar risks and sort of move up and down in a similar fashion. Um and I wouldn't want to like sell my American-based company in order to buy a South Korean-based company. So that's my thought on it. What are your thoughts, Austin?

SPEAKER_01 1:04:11

I agree, and we've talked about this before. Um, I'm not interested in holding two stocks that are too similar. So if I were to buy SK Heinex, I would be selling Micron, which I'm not interested uh in doing. In terms of forward PE, I'm not sure how much the IPO is going to move the stock price. So that may be true today. It might not be true on Friday uh after the IPO. But I do think there is a real concern that Micron's share price could potentially have some downward pressure because of this IPO. Uh, it's similar to what we've maybe seen with Rocket Lab. I say maybe because you never really know, but the stock price is down after the SpaceX IPO. Presumably, some of that came from uh Rocket Lab shareholders selling to buy uh some SpaceX. So I do think that is a real, not necessarily a concern, but something to definitely look out for, especially while we're already in a bit of a downturn. And by the way, this could be one of the reasons why Micron is currently uh dipping, is people are expecting this. So it's going down, and this is a reverse by the rumor, sell the news. This is sell the news by the rumor, where people would be buying, you know, after this. I'm not saying that's what's gonna happen. I'm just saying I wouldn't be surprised if that happened. Right, right.

SPEAKER_00 1:05:34

Um okay, before we close, someone's asking where to get the savvy trader hat that Justin was wearing last week.

SPEAKER_02 1:05:42

We need to have a merchant rumor. Yeah, we don't have one uh right now, but uh yeah. Awesome Earnings Hub hats. Yeah, we haven't made any of those yet. That's true. The the uh I like the triangle logo of Earnings Hub. Uh the three bars around the pyramid. Um, all right, so we'll we'll end it there. Uh thanks everyone for listening. Dustin, did you have any closing thoughts, wisdom to share?

SPEAKER_01 1:06:12

Wisdom. I I ran out of wisdom after minute one of this episode. So I have no wisdom. Thank thank you all for listening. Uh we we appreciate it as always. Appreciate it. Bye everyone.