SPEAKER_01 0:00

Hey, hey Dustin. Hello, Hamid. We are back again. Episode number 59. 59. That makes means what? Next week 60?

SPEAKER_02 0:11

Yeah. Yeah. I mean, then it'll be 61, and before you know it, it'll be 62. Then 63. You know, it's I we don't have to count.

SPEAKER_01 0:19

That's that's for sure. I feel like when we hit 50, that was like somewhat recent. And I feel like, but at the same time, we should be way past 60 at this point. But like going from 50 to 60, that's like a few months. If we're doing one episode a week, we took a break. So yeah. I guess it all adds up. Yeah. We have a lot to talk about. So we do. Give us the agenda today. Yeah, this week's gonna be a fun week because we're gonna talk about some stocks we don't normally talk about. We're gonna we're gonna hit on the classics. We're gonna talk about Rivian. They had some uh big delivery numbers. We're gonna talk about SpaceX having a bit of a breakout this past week. Uh Paramount and Warner Brothers finally merged. Uh Nike has been collapsing since 2021. So I want to get your perspective on that. And as always, listener questions. So if you have questions for us, put them in the chat. Let's start with Rivian. So they announced their Q3 deliveries, which was over 19,000 vehicles. If I remember correctly, I think you were hoping that the number was going to be over 20,000. Um they did beat estimates, which were 18,000. And the their deliveries are up over 46% year over year, over 58%, quarter over quarter. Um, so what do you think about uh these delivery numbers?

SPEAKER_02 1:56

Yeah, so I I was hoping that it'll it it'd be they would break 20,000. Um obviously they didn't, but um the fact that it even came in close to that, it's like 1903 or 1904 or something like that, 19,300 vehicles is pretty incredible. It's 46% year over year increase uh in a in a time when uh you know there aren't more cars being sold year to year. Um even Tesla's uh deliveries went down roughly 2%. So it's like not an overall US EV growth uh situation. Uh and uh Rivian increased 45-46% year over year uh because of the R2. So it goes to show that the R2 is getting received well, it's record numbers for them. Um all the signs are extremely positive. Now, the market sort of reacted to this in a relatively negative way. Maybe it wanted to see higher delivery numbers, but uh um, but but uh and by the way, some people I think are like getting frustrated because of how long it's taken Rivian to um to like for the stock to reflect the absolutely uh the the growth of the company's um progress, if you will. And I can see that being relatively frustrating, but my my view is always like let me assume that the market's reaction was the opposite, and it and in fact it had gone up instead of down. Uh, would I think that um oh yeah, this sort of like reflects correctly the increase in numbers and the record uh delivery numbers that are up 46% year over year? Uh and yeah, the thesis is playing out. Yeah, of course I would think that. So just because the market sort of decided to uh react negatively on the news, um, you know, how am I gonna react? I'm just gonna be patient, is what it comes down to. So um there's a lot we don't know about their numbers, which is what what did the 19, uh three or four hundred vehicles delivered mean for their revenues? So the revenues should be up pretty substantial, should be record revenues. What does it mean for their margins overall? Um are they able to make these vehicles in these smaller numbers still? Because they're still expected to grow pretty substantially over the coming quarters. But the uh have their margins been able to improve this quarter? So that those are the sort of like questions that we won't get answers to until uh their quarterly call. And then of course, uh the um uh the upcoming sort of uh uh next autonomy uh events, their progress on autonomous driving is going to be interesting. So a lot of things that uh is still you know coming that um I'm excited about. Uh, but this is another sort of like major milestone on the expected set of major milestones that we're hoping Rivian would hit, and they hit it. So, you know, I'm pleased from a progress the company is making perspective. Obviously, I'm not pleased from a you know stock price perspective. Um, so what are your thoughts on on this?

SPEAKER_01 5:03

Yeah, very similar. This was a win, but an expected win at that. It's looking like they'll hit over 20,000 deliveries next quarter, though, if you take their guidance into account. They're guiding for the total year to be 65 to 70,000 deliveries. To hit that number on the low end, they would need to have over 23,000 deliveries next quarter. So they in theory, they should have significantly more deliveries than than this quarter. Uh that's right. Time will tell.

SPEAKER_02 5:37

And on the high end, they could have 28,000 deliveries, right? Uh, if they uh get to the high end of that projection. I think part of the concern may have been that the second shift is not fully online, and that might be because of supply shortages for various different parts from their suppliers. And you know, what that might mean is that they're probably gonna be on the lower end of that guidance, uh, the 23,000 range as opposed to the 28,000 range. So, you know, uh, but but again, even at 23,000, it's a it's gonna be another massive record on top of uh, you know, beating their previous record, which was this last quarter, but roughly 20, 20% higher deliveries on the lower end of the guidance. So again, uh you you have to be somewhat patient with these companies that are not yet profitable, but um uh but you know, the progress is definitely being made, and I'm quite pleased with the progress. Now, what I want to see on the uh quarterly call uh and and when they actually release their earnings is improvements in margin, uh, how they how management talks about the future, whether or not they do expect port shortages, um, what's the progress on autonomy, uh, reassurance on all of those things would be what would help me be a continue to be a confident investor in Rivian as opposed to uh shaking my sort of like um thesis or anything like that.

SPEAKER_01 6:59

Right. Adrian, we have a question from a listener about Rivian.

SPEAKER_03 7:04

Yeah, I just wanted to sneak it in here before we move on. Meed, what are your views on Rivian's insider sell-off news?

SPEAKER_02 7:14

I I haven't I don't really pay attention to a lot of uh insider sales. So I don't know about a sell-off news in particular. Dustin, do you have any information on that specifically? Or maybe maybe you can look for look for it while I comment on insider sales. But the way um I view insider sales is that it's just part of the normal progress of uh companies. I mean, basically, insiders' uh uh, you know, the management teams of companies generally do not have huge um financial wealth outside of that company. Uh that usually even includes the CEO uh of a company, right? Like all of Jeff Bezos' wealth is from Amazon, for example, right? All of Mark Zuckerberg's wealth is from uh Meta. Uh and uh and that's true for the vast majority of the uh of the top brass, meaning the management teams don't have, they're they're not independently wealthy uh in a significant way relative to the shares that they own. So sales of the shares is the normal operating procedure of almost everybody in in these companies, not just Rivian. It's not unique to Rivian. There's insider sales of virtually every management team in every public company. So uh generally I don't uh uh put much emphasis on that at all.

SPEAKER_01 8:34

Yeah, I don't see any official SEC filings uh that have happened since like mid-September for selling. So maybe there was a news of I don't, I don't know. Uh, but nothing official happened. Right.

SPEAKER_03 8:49

Okay, we have one more.

SPEAKER_01 8:51

Let's do it.

SPEAKER_03 8:52

Just keeping on Rivian. Beyond R2, how much weight do you put on the VW joint venture and autonomy autonomy plus software revenue for Rivian's long-term value? Real moat or just hype? Hoping for a near 10X return.

SPEAKER_02 9:08

So um VW joint venture just in my view solidifies that Rivian has the right technology. It has been building the right things that obviously other car manufacturers find valuable that they cannot build in-house themselves or or they would. There's no reason for VW to part ways with over five billion dollars of cash, their own cash, and give it to Rivian if um if they could build that with those technologies in-house. So uh that goes to show you that if the largest traditional car makers in the world could not build the technology themselves and are willing to partner with a essentially non-profitable startup, uh, not yet profitable startup, to uh to bolster them and to uh buy technology from them, that goes to show you that Rivian has technology that is um that is worth a pretty significant amount of money. Now, uh, do I uh value the joint venture itself in terms of uh being an incredible revenue generating opportunity for Rivian? And is that the reason I'm invested in it? No. Um I think the joint venture helped get them some cash. Uh, and the future of Rivian has to be from the vehicle sales and from autonomy in particular. Um, and then am I excited for autonomy software? Absolutely. I think that's part of the long-term value of uh Rivian is the investments that they've been making in autonomy. Uh, they they uh I estimate that they will be the um uh second to Tesla uh in building autonomy technology, uh well ahead of all other car manufacturers, uh except for maybe Chinese ones, but um, but you know, the traditional BMW, Nissan, uh uh Mercedes and you know, GM Ford, so on. Um, so that puts them in a pretty good position. Uh, you know, going, let's say four or five years from now when everything is going to be autonomous, uh and um uh and and they've ramped up manufacturing of various different vehicle types pretty significantly. So that is the future for Rivian. That's why I'm excited about it. But um, but you know, the joint venture itself is not a main reason that I'm invested.

SPEAKER_01 11:21

Okay, let's move on to SpaceX. Uh so SpaceX, the stock price at least has been doing really well um the past week. It's up 10%. Uh let me pull it up here. But if we zoom is even more, like yeah, if we zoom out, uh well past month, let's see, past month is actually roughly the same. Oh, yeah, right. 10%. Um slightly more. But if we look at their full price chart here, I know we were saying on the podcast when they first IPO'd, you know, this this thing is pretty overvalued. And then it had a significant correction. So it shot up to $200 a share, dropped down to around $108 a share. Uh, and now it is back up to around $167 a share. With that, not just has the price moved over time, but there's been a lot of positive news around SpaceX. So Rock has made significant improvements between 4.5 to 4.6 to 4.7. They obviously uh released Grockbot as well, which has been a great product. Uh there continues to be Starship momentum. Um share lockups are slowly expiring, which will stabilize, in theory, the stock price. Uh all of this is to say, is now a better time to get into SpaceX than when it first IPO'd? What are your thoughts?

SPEAKER_02 13:06

Um, okay, so maybe we can stay on that chart for for a moment. Uh and uh, can you scroll up uh on that uh screen? Uh yeah, we're not gonna get too much here. Yeah, so but but the $2.2 trillion market cap is uh is pretty important. And then can you switch over to earnings tab uh and scroll down a little bit? So we we have um uh their last quarter's revenue was approximately uh 7 billion, 7.8 billion. And then uh not next quarter, but the following quarter, Q4 2026, they're expected to have almost $20 billion of revenue. That's almost a 3x improvement. Um, the bulk of that is coming from data center rentals, right? So if if the data center rental uh revenue continues to materialize and is a solid base of revenue that is uh a lot of these contracts have like 90-day cancellation policies in them. But if you're a SpaceX uh investor, or let's say, for example, I'm evaluating SpaceX to determine whether or not I want to become an investor, uh, my determination goes like this if that uh massive increase in revenue between last quarter and the uh two quarters from now, that extra $12 billion of revenue, uh, in order for that $12 billion of revenue to be sustainable, I would want it to be coming from uh rocket launches, uh satellites, uh, or Starlink, right? Uh, if it was from Starlink, it would be very sustainable because these are sort of like uh you know revenue from uh internet. But the bulk of that $12 billion is coming from data center rentals on these short-term agreements that can be canceled in 90 days. Okay, so what does that mean to me? What that means to me is that, you know, uh that revenue run rate, uh, which if we assume, for example, 10 billion of that extra 12 billion in uh Q4 is gonna come from data center rentals, that's a $40 billion annual run rate that could go away if the AI boom slows down, right? So you have to believe that the AI boom is not going to slow down in order to believe that that revenue is sustainable on an ongoing basis. And you have to believe that there's still more opportunity from an AI perspective for SpaceX because at $2.2 trillion on $20 billion quarterly revenue, it's still not cheap, right? Um so if I believed all of those things, meaning if I believe that the AI boom is going to continue and that the uh that SpaceX is gonna really benefit from this, um, then I have to believe that you know there's this other company, actually multiple other companies, such as Nvidia, uh such as Micron, that are also gonna benefit from this AI boom that is going to continue. Because if you know uh SpaceX is gonna have a $40 billion uh annualized uh revenue from just data center rentals in the next two quarters, $40 billion increase, then that means a lot more NVIDIA chips are gonna have to be sold. That means a lot more memory chips are gonna have to be sold. And do I want to buy one of these other companies that have a PE forward PE of 20 versus a forward PE of seven uh versus uh SpaceX at a forward PE of non-existent? They're not even expected to be profitable next year. Or even if they are, it's gonna be in a forward PE of roughly 200, right? So uh to me, the lower risk risk bet, uh, because this has essentially become an AI bet completely for SpaceX, uh, is Micron or Nvidia if you don't, you know, if you don't want to go the micron route, which in my view is a much better buy than than NVIDIA, but NVIDIA is a damn good buy at a forward PE of 20. So uh to me, SpaceX still does not feel like a buy uh because the revenue growth is not coming from the areas that um uh that are sustainable. Um it's it's coming from areas where the boom in AI has to continue. And if the boom in AI continues, then there's better buys within that AI boom, in my view. Curious what your your thoughts are on that.

SPEAKER_01 17:22

I think it's great perspective to call out that not all revenue is created equal, right? And it's not just that this revenue is at risk from uh an AI bubble bursting, which I is not my base case, to be clear. Right.

SPEAKER_02 17:39

Yeah, it's all I agree with that as well. I don't expect the AI uh bubble to burst in the next year, but it's also at risk of what if your customers decide to build their own data centers?

SPEAKER_01 17:51

What if your customers decide to go and use someone else's uh data center like Iron or Nebius, as they have more data centers that come online? So there's more risks to that revenue than the than just the AI bubble bursting. And I think those scenarios are more likely to happen. Uh the other interesting dynamic, and obviously this part is in SpaceX's control, but part of the reason why they started selling their data center capacity is because no one was really using Grok at the time. But now all of a sudden, that now that Grok has gotten a lot better, people are using it uh in in cursor because that's pretty much the default model now. Uh people are using grokbot, like we mentioned before. So there's a world where SpaceX actually needs their capacity for themselves. Right. Now again, they have control over that. They could always, you know, um not sell the the extra capacity, but then how does that revenue math work? I'm not sure. Right. Um but in terms of are they would I buy them right now? Uh it's still a no for me. And it's not even the where the revenue's coming from, because regardless of their revenue, I think the stock price is still kind of crazy for what it is. Um, but it it's just um it's too duplicative of my other investments, which I bought in at better valuations. So like Rocket Lab on the on the rocket side of things, uh Meta and Google on the AI side of things. Um it just it just doesn't make sense, at least for my portfolio.

SPEAKER_02 19:46

Yeah. The the other uh thing that might be uh people might be enthusiastic about is that is um merger rumors have restarted again between SpaceX and Tesla. And I think Tesla is also up because of that reason as well. So you know, and again, Tesla is another company where the forward PE is over 200, and you know, it's not super exciting. There's no revenue growth there from vehicle sales. Um, the revenue growth basically has to come from robotaxis and uh Optimus robots. And of course, um there haven't been any Optimus robots delivered yet. There's almost no talk of that, uh no updates about that for the past you know, six months, maybe longer. And then uh uh and then Robo Taxi maths just simply doesn't uh move the needle in any significant way, at least for the next couple of years. So um, you know, the question is where is revenue growth going to come from in the short term? My my view on Tesla has always been that I wish they hadn't abandoned the car business while they were building these other businesses because they could have been selling uh 50% more cars this year than last year if they just had more models, because you know, Tesla vehicles are just so awesome, right? So um yeah.

SPEAKER_01 21:05

But yeah, I I do think that merger is going to happen. Um like at the all in summit, I think Elon heavily implied it was gonna happen. There's two companies then, yeah, right. Uh so I I would be surprised if that didn't happen. Now, what what does that mean for the stock price and how that works out? I I've no idea, or like which stock is better to hold before the merger. I don't know. Right. Uh speaking of mergers, let's move on to Paramount and Warner Brothers. So this is a story that we've covered several times on the podcast, but we haven't really talked about it in a while. Uh so just to get everyone up to speed, originally Netflix was going to buy the studio division of Warner Brothers for $27.75 per share. So there was still going to be the television division that was going to be its own company. So share, uh, if you were a shareholder of Warner Brothers stock, you would still own that television division and you would own or you would have $27.75 a share for your stock. And this deal was like they accepted the offer and they were working towards that deal going through. And then a couple months after that, Paramount, who initially started this whole thing, because they offered, I forget how much, but they offered they offered some amount for Warner Brothers, and then Netflix outbid them. So after, I guess, uh strategizing a bit, Paramount came in with a new offer, which is basically like a hostile takeover offer of $31 a share for the entire company. So it's more money, but it's also they're getting more out of it. Uh and the board then had to do what was best for shareholders, and they decided that that offer was the best. Now I did not think that this was going to go through. Uh there were a lot of lawsuits, uh, 12 lawsuits or 12 different states filed a lawsuit against this merger, uh, which was settled weirdly fast. Um, like I don't even know if the lawsuits were around for a full month before they were settled. Uh, and there were a couple of uh contingencies and agreements that Paramount needed to make. The biggest one was they had to pledge that they were going to release 30 movies a year. Uh because that they were a big concern was like how this would hurt the theaters, the movie theater industry. Um they're not going to release as many movies because now it's just one big studio. So I don't I don't and the fine is for every movie they don't release it's like a $30 million fine, which I don't think is it's it's a significant fine, but I don't think it's that big relative to like the amount of debt they had to take on for this deal, which is in the billions.

SPEAKER_02 24:26

But that's a good motivator to to release movies because you you know, like a typical movie has especially um some movies have can be made with $30 million budgets uh versus the the other thing, and I don't know the details of this, is I know part of the thought from regulators is okay, if they need to release 30 films, that means there needs to be all these people that are hired to create, right?

SPEAKER_01 24:55

Like and film these these movies. I wouldn't call this a loophole necessarily, but like they can also just buy a film from like a film festival and release that.

SPEAKER_02 25:10

Right.

SPEAKER_01 25:11

So like, which isn't necessarily a bad thing. Like I think it's it's good that the that those films will see the light of the day when maybe they wouldn't, but it's not necessarily going to be that Paramount is going to uh fully produce 30 films. Again, I don't know the exact details of what they're allowed to do and not allowed to do. There might not be any restrictions on that. Um, but it is like this little loophole.

SPEAKER_02 25:39

Um so the merger has now closed.

SPEAKER_01 25:42

It's it's a closed, yeah, closed as of I think yesterday.

SPEAKER_02 25:46

So do they trade under the ticker Pesky?

SPEAKER_01 25:50

That's what I thought. But it it it's it's uh a new ticker. It's uh let me look it up. Okay. It's under so they they also rebranded to Sky Dance. Before it was like Paramount Sky Dance or Sky Dance Paramount. Now it's just Sky Dance. Uh it's SKYD is the new ticker. Okay. So WBD, Warner Brothers, gone, P S KY, gone.

SPEAKER_02 26:20

So it's Sky Discovery, essentially. Uh Sky Dance Discovery. Um just Sky Dance. Or Sky Dance, yeah. Yeah.

SPEAKER_01 26:30

Okay, that yeah, no, that makes sense. Yeah.

SPEAKER_02 26:33

So um any any thoughts on this? No, I haven't given them uh any thought. You know, there's just been so much going on in the AI world and tech world that like I haven't been paying much attention to any of the others. Um I know we're gonna be talking about Nike as well in a little bit, but I haven't paid attention to anything outside of this this sort of like AI world.

SPEAKER_01 26:57

So uh any additional thoughts from you on it or no, I'm just I'm just surprised how quickly it resolved and uh that it went through.

SPEAKER_02 27:06

I agree.

SPEAKER_01 27:07

What what the states could have done, because there were clauses in the merger agreement where if if they if the merge didn't happen, I actually think it was some October date, I forgot the exact date, that uh Paramount would have to start paying Warner Brothers a fine of like X million dollars, I think, per month that this deal wasn't going through. Uh, which Paramount really couldn't keep up. So I'm just like if the states really didn't want this to happen, they could have just twiddled their thumbs for a bit longer. Um, so I I just don't it I don't I don't know what happened, but it's it seems like it worked out too cleanly.

SPEAKER_02 27:48

There might have been some outside pressures, uh yeah, interesting. Yeah, for sure. Okay, let's not speculate there, but uh now let's move on.

SPEAKER_01 27:57

Okay, let's let's go to Nike. Um so Nike, let me pull up their chart, has just been deteriorating from a stock price perspective over the last five years. Uh they had a high of roughly $170 a share, and now they're at like $34 a share.

SPEAKER_02 28:22

Wow. In such a short period of time, too. 77% decline in five years. Yeah.

SPEAKER_01 28:29

That's unbelievable. Yeah, and pretty much like straight down that whole time. Uh so my dad uh works at Adidas and Reebok and Fila, like he's been in this space his entire life. So I have somewhat of a unique perspective to it because my family's been very involved. And one thing that is seems to be always true is these brands come and go, and it doesn't matter what brand you are. Uh and Nike always felt like the top dog, and that you just couldn't beat them. But you know, over time the these brands change, what they stand for change, what they mean when you when you wear their their logo changes. Um, and you also have new brands like uh on and hoka are doing phenomenal. Uh and like I don't really remember there being strong newcomers, you know, uh years ago. So yeah, yeah. So like I'm not saying that this was inevitable by any means, but it's not surprising that the tides are kind of changing from a brand perspective. Now, from a stock perspective, uh let me pull their EHS up here. Their PE is at a 22, which is like normal to slightly high.

SPEAKER_02 30:05

So especially for an apparel brand that's not growing, yeah.

SPEAKER_01 30:10

Right. So to me, the stock price is actually fair. And right if if anything, it like technically it could go down more, and its PE would still be like totally fine.

SPEAKER_02 30:22

Higher than Meta, for example.

SPEAKER_01 30:25

Right, or Micron.

SPEAKER_02 30:26

And three times higher than Micron. Yeah. Um but so remember, Micron is cyclical, Nike is not cyclical.

SPEAKER_01 30:37

So it's almost like uh the price was way too exuberant over the past five years, and now it seems to be coming back down to reality as opposed to it being worth these prices, uh, you know, and and having a real uh correction.

SPEAKER_02 30:58

Yeah. I suspect its profitability has probably also been on a decline as its revenues have not increased, but expenses probably have. Um, so if we go to EPS there, uh yeah, so it do do four years. Yeah, so you can see the profitability is pretty substantially below. Was around a dollar per quarter, and now it's around what uh 30, 40 cents.

SPEAKER_01 31:24

Well, the last one was like 50 cents, but 20, 35, 53.

SPEAKER_02 31:30

And before it was like uh what 80, 90, 103, yeah. So profitability is down substantially over the past four years as well. Um, so it might be ref, you know, the PE might might might have been higher back then because revenues were still growing, and now as revenues are declining, the PE seems actually still kind of high. You're you're right. I mean, like the I I this st still seems doesn't seem like a great stock to own at a PE of 22. Yeah. What would make it exciting is if there was a founder who was going to come back and re re like rebuild the brand from scratch with the same ideas on how it became so uh amazing, such a such an amazing company. But um, you know, I don't know how old uh Phil Knight is at this point. I don't think he's coming back uh to to rebuild Nike, but uh it's probably past his time.

SPEAKER_01 32:24

But yeah, yeah. When I when I saw the five-year chart, I was like, should I invest in Nike? And then I did a bit more digging, and like I know that uh like I retail is not a space I want to be in, or the apparel space uh is not is not a space I want to be in. Like when you invested in uh American Eagle, which is slightly different where they're not athletic apparel, but still apparel. Um it's just it's a really difficult spot.

SPEAKER_02 32:51

Yeah. Um Lulu is also in a similar sort of boat, right? Like they they have been struggling over the past few years as well. Their five-year chart is also down. Holy cow, 77%. Um what uh what else do they but their forward PE, for example, is only 10 as opposed to Nike is 22. So Lulu seems like a better deal here. Um but yeah, but even I also think they have better products, but I know that's just personal preference. Well, I mean, I think when I think of Lulu, I think of the uh clothing and and and when I think of Nike, I think of the shoes. So I I do think they have complementary products. They should probably merge and and you know, and and get founder energy back in there somehow.

SPEAKER_01 33:42

I don't think that the Lulu doesn't have their founder, I don't think.

SPEAKER_02 33:45

No, no, he he was uh he's been out for a long time as well. But uh you you need somebody who can like own and make decisions at a high level uh on these two companies, but um yeah, neither one seems super exciting at this point.

SPEAKER_01 34:03

Okay. Uh before we get to listener questions, I just wanted to remind everyone that we released a new product, Portaris, and we're running a deal for all of our listeners. If you want 75% off for your first year, you could use the code BIHLDRANTH ONEWER. Um, it is the best way to track your portfolio and net worth, and we're constantly adding new features to it. And we showed it off last episode if you want to check it out.

SPEAKER_02 34:34

Um by the way, side note, uh Nvidia has been making new highs. It's uh almost a six trillion dollar market cap, which is pretty pretty cool to see that Nvidia is finally like um starting to gain its stock is finally starting to reflect its actual performance again.

SPEAKER_01 34:55

Yeah, it's like slowly breaking out of that range it's kind of been stuck in over the last year. But it's it's at its old all-time high, roughly, of 235. Right, right. So I would I would go ahead. I would want to see a meaningful breakout above this point. This is my technical analysis side. I want it's for me to say, okay, the trend is is broken, they're they're going up from here, as opposed to it being uh another rejection off this uh the all-time high line.

SPEAKER_02 35:32

Yeah, but that that uh previous uh 235 number was hit in May, which like more than six months ago, where uh or about six months ago when they had way less revenue and way less visibility into their next year's uh revenue uh growth and so on. So, you know, they've just continued to uh execute for the past six months. So there's like way less uh risk factor in in there.

SPEAKER_01 35:58

Absolutely. I mean I I've been actual results. I've been debating on buying NVIDIA. I'm not going to, but I've been debating it.

SPEAKER_02 36:06

I'm not either. I'm I'm I'm invested in Micron. So if they're gonna continue to do well, so will Micron. So that that's the way I'm viewing it right now. Um Adrian, what uh what questions do we have?

SPEAKER_03 36:20

Hey, I we have an Italian listener who's asked this two weeks in a row. So I'll give it I'll give this question to you. Hi, Hamid. Are you back from Italy? What have you liked the most?

SPEAKER_02 36:35

Uh oh, I uh I had a great time in Italy. Um the highlight of the trip was probably uh a scuba diving session that I did in uh Sicily uh that um uh gave me an opportunity. It was like my first real scuba diving session uh after certification. And um uh I got certified a few months ago, but at like local lakes, which was terrible visibility, terrible scuba conditions. Uh and in Italy I got an opportunity to see an octopus, so that was really cool. But uh yeah, it wasn't a phenomenal scuba session, but we'll keep this thing focused on financials. Let's go on to the next one.

SPEAKER_03 37:15

Okay. Here's back to Rivian. What is your take on Rivian with delivery vans? Do they make money on it? It was strange that FedEx went with General Motors bright drop, even with Rivian vans being on the market for a while.

SPEAKER_02 37:29

Um, I haven't been paying a lot of uh close attention uh on the details of the uh delivery vans. I I suspect they're making money off of it, but um, but I think a lot of their profitability or margins on Rivian's vehicles in general has to do with getting the volumes up so that they can divide the cost of the manufacturing facilities and uh the capital expenditures that they have had to make in building all of these vehicles uh onto a higher number of uh vehicles built. So uh, you know, just think about it from the perspective of if you have uh $1,000 uh of CapEx and the number of things that you're making is 10, then the cost per thing is $100, right? Uh whereas that if that same $1,000 can be divided by uh by 100 uh units of things that you're building, then that $1,000 can be divided by $100 and the cost per thing is only $10. So the more vehicles that they can make, the more profitability that they can have across all of their vehicles. Um so that that is uh that that has been sort of like a uh major thing that Rivian has been working towards is to build up the volume. Um and uh the number of delivery vehicles for their uh vans uh is still pretty substantial. I mean, I think they're in the 40,000, 50,000 total delivered and mostly to Amazon. Uh and they're they're gonna do very well. Uh and they're basically at max capacity for manufacturing. They're as they're bringing on their uh extra manufacturing capability, it's all going into the R2 line, so uh, which they should have really good margins on, assuming they can get the volumes up high enough. So for the same reasons. Um so you know, uh as to why General Motors went with uh, or I'm sorry, FedEx went with General Motors Bright Drop, I have no idea. But I'm not again, I'm not super concerned. The future is EVs, and we're gonna have multiple winners. That newcomers into that space is not gonna concern me.

SPEAKER_01 39:35

I haven't looked too much into their uh financials for the vans, but just anecdotal, I see the vans all over the place, uh at least over here. Um, so and and I mean there is uh right now their their biggest uh consumer of those vans is Amazon, and Amazon has a significant stake in Rivian. So um there's some synergies there, and that might be this is total speculation. That might be why uh FedEx maybe didn't want to go with Rivian because in this indirect way they're helping out a competitor.

SPEAKER_02 40:14

Uh that's actually a great, great point. Yeah. Thanks.

unknown 40:21

Okay.

SPEAKER_03 40:22

Hameed, did you get invited to autonomy day 2.0?

SPEAKER_02 40:27

I don't I don't believe it's been announced yet.

SPEAKER_01 40:29

So we had some people in the chat say they announced it for December 9th, but I haven't looked into it yet.

SPEAKER_02 40:34

Oh, okay. Uh December 9th might actually uh we it might conflict with something that we might be doing uh ourselves. So uh that might not uh I might not be there. We'll we'll see.

SPEAKER_03 40:50

Okay, let's do this one. This is a fun one. If if you became Netflix CEO, what would you do to attract more customers? Would you explore areas like AR or AI or VR as Beta did beyond social media? Would you pivot into new space?

SPEAKER_02 41:08

Yeah, that's a great question. I I'm not sure what I would do. Um, maybe Dustin, you can you can answer, but like historically, I've been surprised that Netflix has just avoided the whole sort of like live TV space, uh, meaning sports and um other things that the life factor would be important for. Um they have never like really tried to play in that space. And like to me, that's a that's a big opportunity that's sort of like sitting there. Uh, why give those opportunities to NBC and CBS and you know, like others? Um but that I I'm not sure what their reason is for that. Dustin, what are your thoughts? What would you do if you were in Netflix's choice?

SPEAKER_01 41:50

I definitely would not think about VR at all just because the uh there's not enough consumers in that space for it to grow your business substantially. This wouldn't necessarily attract, well, maybe it would attract more customers, but I think by far the number one thing they need to do is put their good movies in theaters, um, which they started to do a little bit. But you have like the uh knives out series where they produced uh the latest two movies, not the first one. Um and they put them out in the in theaters for like a couple weeks at a time or something, if that, and then released it on Netflix. But there's a big difference there of you either put it in theaters and you make literally millions of dollars on it from ticket sales, and then you put it on your platform. And when you put it on your platform, you're not it's not generating any new revenue, it's just keeping people on the platform. And if anything, if you have the movie out in theaters and it gets it generates hype, that's just marketing for when you put it on your platform that people might want to subscribe because now they know they're they already know about the hype around this movie. Um, so I think Netflix has been a little too stuck in their ways of being a streaming service, and they actually need to do a bit more of a legacy play of again, just the good movies, just the good movies. Um, but they they if they could put the good movies out um in theaters, that would dramatically help them. Um, which it seems like they wanted to do with that Warner Brothers merger, by the way. Yeah, for a bit. But I don't know if they're going to continue down that road. The one other thing, again, this isn't necessarily attracting more customers, but just like being a bit smarter with their finances, again, from my perspective, which you know, take with a grain of salt, is they feel like They just kind of green light anything and everything, and the quality of their productions is lower than an Apple TV or an HBO Max. I would think it would be in their best interest to not spend so much, to not green light everything and to be more focused. Now you will miss out on uh like Tiger King would not have happened if they had that strategy. Squid Games probably wouldn't have happened. Um uh Demon Hunters, whatever that one is that my son loves, uh probably wouldn't have happened. But you I think it would be a better business decision. All right.

SPEAKER_03 44:47

Um, before we move on, HBO is doing that with the have you guys heard about the new Theranos documentary?

SPEAKER_02 44:56

Yeah. Yeah. So is it specifically on Elizabeth Holmes? Is that out yet?

SPEAKER_03 45:02

Yeah, it's it comes out on October 16th, I think. I'm excited to see it. But uh HBO, it's through HBO, but they're putting it in theaters.

SPEAKER_00 45:11

So that's just yeah.

SPEAKER_03 45:15

Um, okay, Dustin, feet to the fire. What's your plan with Fumble and how long are you planning to keep them?

SPEAKER_01 45:24

You make it sound like I want to sell them. Um I mean there, so I don't have a plan. Well, okay. There's two parts to this. The first part is I probably will do some tax loss harvesting at some point before the end of the year. Um, so I will sell some of my position, which I may or may not buy back. Um, but then the other part of uh my shares, I am planning on, yeah.

SPEAKER_02 45:57

Well, before you go on to the other part, I was gonna say for tax loss harvesting, it makes sense to just hold off as long as possible until the end of the year, right?

SPEAKER_01 46:05

Like you know, that's what I tried last year, and that didn't work. Like it didn't work as well for me.

SPEAKER_02 46:13

Yeah. Well, that's a good thing. If the stock goes up, then you're like, thank god I didn't sell, right?

SPEAKER_01 46:18

Like that well, no, because I still need I still did the tax loss harvesting. It was just uh I got less of a benefit for it.

SPEAKER_02 46:24

Um but but then you got more per share, like that's a good thing. Yeah, yeah, yeah. Uh on the portion that it has gone up, you actually are net better off as opposed to worse off.

SPEAKER_01 46:36

So um, but we'll we'll talk more about tax loss harvesting, I'm sure, as we get closer to the end of the year. Um and then for the for the shares that I'm planning on holding, I it's what I said during their last earnings. Like I want to ideally, I'm waiting to hear more details about this product overhaul. That is what I'm fully judging them on. Um, at a certain point, if they don't give uh enough details, yeah, will I sell? Sure, but I don't know when that point is. Like I understand like things get delayed in software, especially for a company of that size. Um I would have personally would have handled it differently and I would have been a bit more transparent um with you know the direction of the product because they've kept their cards very close to their chest. But um, I'm still very excited about in theory what they're building, the opportunity in the dating app space. Uh, and I think the stock has been overly beaten.

SPEAKER_02 47:47

So I'll I'll provide a slightly different now that uh I don't have the sherry's uh anymore. But uh like I I agree the transparency issue is a pretty major issue. Um, and then I'm surprised at the lack of progress on the product side. Uh I I would have expected the product to have already matured to some extent. So but but uh I'm also surprised that the stock is as low as it is. Like when I sold, I thought for sure I I have probably timed the bottom. Uh and I think I sold around 270 or so, and now it's made new lows. Yeah. Yeah, to even hit 240s at some point. Yeah, it hit high 240 earlier today, and then I think went back up to 250. So, you know, that that is quite surprising that it would go down an additional uh 10 or 15 percent from where I sold it. And you know, they definitely need to have a very good result uh and commentary around it, you know, in order for or if the financials are not there, then the commentary around the new product release dates, that sort of thing needs to needs to be pretty clear.

SPEAKER_01 49:01

Well, that's the problem, right? Like the financials are not, I don't see how the financials get better until they release this new product, right? Which we've seen time and time again with their earnings reports, but they haven't they haven't given us anything outside of, yeah, the business is slowly deteriorating, which is not the real picture, because it's really a turn in theory, it's a turnaround story.

SPEAKER_00 49:25

Right.

SPEAKER_01 49:25

But they're not they're not painting that the turnaround, they're just talking about the deterioration. Yeah.

SPEAKER_03 49:34

Okay, Dustin. Let's have you talk about Iron. Can you talk about Iron and today's news that made it drop more?

SPEAKER_01 49:43

Yeah. Uh so I forget the what the Twitter account's name is, but there was this prominent Twitter account that follows uh like data center news. And they basically did this hit piece on Iron saying that uh I believe several of their data centers are having issues um that are going like days without power. Um it seemed like an overly negative hit piece to me. Um and you know, I it you'd gotta kind of trust their word or not. And I don't, um, but it did move the market. Um, but if if I was interested in buying more iron shares right now, I would I would probably just buy from this dip, not be uh afraid of this, you know, being anything meaningful. Like to me, what's meaningful are is that they delivered uh their first uh uh checkpoint of data center capacity to Microsoft. The what's real to me is that Nvidia has been a fantastic partner with them uh and has given them a bunch of like uh meaningful certifications in what they're doing, not this random Twitter account. And I I don't mean to necessarily bash the Twitter account because I I don't really follow them, but um I you know I'm I'm just leaning on the real news as opposed to the Twitter news.

SPEAKER_02 51:22

Also, uh having data center be down days for power outages just seems like something that the company would have to comment on. It's pretty material, sounds pretty material. So if it's if the company has not commented on it, I would be surprised if it's a real thing. Yeah.

SPEAKER_03 51:41

Okay, let's go to more talk on data centers. If hyperscalers are locking up HBM capacity years ahead, are we accidentally creating an AI oligopoly? If all the HBM is already spoken for, how does a new player even scale? Bring its own memory?

SPEAKER_02 51:59

Well, it depends on what you mean by uh a new player, a new data center player? Well, yeah, it's going to be tough for new data center players to um to be able to compete with Amazon and Google and uh Microsoft and uh Oracle and SpaceX, right? These are like five or six of the largest companies in the world building data centers, and uh that would be tough competition. But if what by new competition um or new player, you mean like somebody utilizing AI or utilizing these technologies to build something cool, then um then most of these companies are actually uh creating these clouds so that they can rent them to any player who wants that wants access to them, not not just the largest players. So uh there's plenty of opportunity for new players to play.

SPEAKER_03 52:54

Justin, did you have anything?

SPEAKER_01 52:57

Okay, meaning call.

SPEAKER_03 53:00

Uh what defensive stock to buy to diversify from AI?

SPEAKER_02 53:07

Ooh, that's a great question. I think uh if the AI bubble were to burst, I think it's gonna cause everything to go down. Um so the best stock, in my view, just my opinion, not investment advice, to buy to secure yourself or diversify yourself from AI is cash. Um so you know, it's a good answer.

SPEAKER_01 53:37

Um, yeah, I'll I'll take it a little differently. I I agree if if an AI bubble were to burst, everything is probably going down, um, at least temporarily. Uh with that said, if you for a defensive stock, I wouldn't do something that's like necessarily the antithesis of AI, but rather just something that has nothing to really do with AI as much as possible. So for example, talked about this stock several times on the podcast, once upon a farm, which does like kid food, baby food, they're on my watch list. And often when my portfolio is fully red, they are the only thing that is green by like, you know, 1%, 2%. Um so, because it just has nothing to do with anything. So it's stocks kind of like those. Now I'm not saying to invest in them specifically, um, but that that's what I would kind of look at.

SPEAKER_03 54:37

Okay, this is for Hamid, but I think both of you might have an interesting take. What is your take on the open AI math release yesterday? Them noting the province, them noting the problems were each solved with a few hours of Chat GPT pro subscription compute is interesting. What does this mean for Micron?

SPEAKER_02 54:59

Uh so what I what I know about this uh OpenAI math thing is that they apparently solved a whole bunch of open math problems uh that um is pretty incredible. And and they did it with relatively uh low amount of token usage, meaning like with a Chat GPT Pro subscription or like a $200 a month subscription, you could have potentially used it to solve some of these math problems that have been open for uh some for many years. So uh, you know what I mean? Basically, all it does from from uh it's just confirmation that AI is useful, right? And we we're going to be living in a very different world when you fast forward 10 years or you know five years from now, and it's kind of unpredictable. Uh, but certainly uh AI is going to be playing a very major part in our lives going forward, and that does not seem to be uh slowing down in any way, shape, or form. Uh, as for uh what it means for Micron, um you know what I would say is that like it this doesn't change anything for Micron. The fact that AI continues to grow is a good thing for Micron in general, or any chipmaker that is making something that um that is needed for AI's growth. Um so the story on Micron doesn't change because of this in any way.

SPEAKER_01 56:29

Yeah, the the math stuff is cool, but to be frank, over my head um and not necessarily meaningful in the sense that like I I want to see it solve software problems, uh, not these math problems, which I know kind of go hand in hand. But where I'll pivot this to, which I think is interesting, is I'm seeing more and more uh posts about AI being used to decompile old like games and software, uh and people are able to like fully uh modify the the uh these old programs. And this kind of goes back to like what moat uh are the software companies going to have in the future? And it's just another way of thinking about it where if software can decompile any code and you could then create your own version or modify it however you want and then ship it, like it it it makes you kind of think where where's the moat? Um right, because it's not it's not in the software, it's kind of everything around the software um where like for savvy trader where you can um follow people's portfolios up, right? Like if someone were to have our raw source code for Savvy Trader, it would be fairly meaningless because the value is the investors behind it. Um so there's like a real moat there. But for you know, other programs, it's it's uh very interesting where all of this is going to go because it's hard to be so defensible. And I know this isn't really this isn't really what the question asked, but uh, I just kind of see this as like where it gets very where is it all going? It gets very philosophical very quickly. Yeah. Like what I guess it's like, what's the point? What what's so exciting about it solving these math problems? And to me, it's like what's so interesting about the the the future and where this is all going.

SPEAKER_02 58:56

Yeah, I mean, right now it's the math problems, but soon hopefully it'll be like healthcare-related problems, right? Like and we just need more compute for for that. And you know, uh I'm hoping that in my lifetime we'll get like a lot of uh common diseases out of the way, uh, possibly extend longevity, you know. Um, as I get older, that becomes very important to me.

SPEAKER_01 59:22

You know, and uh forest gump, how he like gets rich off of Apple stock, and he's like, well, that's one less thing to worry about. We cure every chronic disease. Well, that's one less thing to worry about. Right, right.

SPEAKER_03 59:35

It's funny. Uh Kate, Dustin, your reputation has preceded you. This is our last question we'll do today. But Dustin, I know you catch stocks at good prices. What price would Rivian be a buy for you?

SPEAKER_01 59:49

Yeah, I did get lucky a few times uh this year, but emphasis on lucky. Um so someone was asking me something similar to this in my Savvy Trader uh community earlier this week, uh, where they were like, why aren't you buying after the stock has been dropping and the delivery numbers have been up? I'm like, well, I was fortunate enough to buy, I increased my position by 70% when the stock was like at $12.80 back in like May, maybe. Um, so if I didn't do that, I would definitely be more interested in buying here. But I I have like an the Rivian shares that I want. So either for me, uh it needs to go back down to like those levels or lower, or I just need more cash to buy more. But let's say I didn't have any Rivian shares and I wanted to buy Rivian, uh, what would I do? I think the current, and again, this is just for me, this is not financial advice. I think the current price is like totally uh valid uh to buy more shares or start a position.

SPEAKER_02 1:01:07

Um like I wouldn't necessarily one step above that and say, uh by the way, uh same thing came up in my community, and I answered almost identically, except I said that I bought some shares recently in the 16s and close to 17. So I already have been following my portfolio. The uh the I already have the number of shares that I wanted. But what I would also say is that uh the current price of Rivian relative to where this company is from a performance standpoint, and that is the number of vehicles made, the number of uh you know, charging stations they have, the number of sales and service centers that they have, the number of different vehicle types that they have, and the customer satisfaction that they have, and where they are on their technology for autonomy. So, like these are like a whole bunch of categories of different things that you might measure a potential EV company uh from or any car company from. Uh, based on all of these metrics, they are the best they have ever been. And their stock price is, you know, like just barely above the lows that it has ever been. So this might be the best stock price for Rivian based on where it's at uh that has existed. So yeah, if I was interested at in Rivian at any time in the past, uh, I think I would be more interested in it right now. Now, things can change, right? Like, meaning uh if their margins do not improve, that's a really bad negative red flag. Uh, if their um projections for the future are are shaky, or if the demand changes, or you know, if they're not making progress on autonomy uh for various different reasons, those things could be bad, but we don't know any of that stuff right now. Hopefully, we'll get some snapshot on on those things uh with the quarter report, uh, which I think comes out in early November. So, you know, that yeah. But but uh Dustin's uh price uh you know identifying a good price point is has been pretty spot on a couple of times.

SPEAKER_01 1:03:10

That's that's what happens when you do a little bit of TA. Um but maybe but to be fair, if I'm looking at their their price chart right now, you know, I can make an argument that says I I could see them going back down to like around $13. But what's the risk reward, right? Like, is it worth waiting for it to go to around $13, which they might not do? And then you totally missed out. Probably not. Like, you don't need to get in at the best price. Uh, you just want to get in at what is a good price. And I think right now it happens to be a great price. Um so those are my two cents. Okay, with that, um that is it for episode 59, and we'll do episode 60, then 61, then 62 in the following weeks. Um don't forget if you want to try out our new product, Portaris, you can use the code BIHDRANT to get 75% off uh your first year.

SPEAKER_02 1:04:17

Awesome. Thanks, everyone. Bye.