PayPal, Square, and 3 New SPAC Deals to Watch

Earnings season is now well underway, and not only have we heard from two of our favorite fintech heavyweights, PayPal (PYPL 0.64%) and Square (SQ -1.57%), but we also learned that Square is making a monster acquisition. Plus, in this episode of Industry Focus: Financials, host Jason Moser welcomes Fool.com contributor Matt Frankel, CFP, who discusses three recently announced SPAC deals he's watching -- Nextdoor, Vacasa, and Sky Harbour. 

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This video was recorded on August 2, 2021.

Jason Moser: It's Monday, August 2nd. I am your host, Jason Moser. On this week's financial show, we get some more earnings to get to. Square is making a big bet on "buy now, pay later," and we'll have a few stocks for you to watch as well. Joining me as always or almost always, he wasn't here last week, but we're glad he's back here this week, it's Certified Financial Planner, Mr. Matt Frankel. Matt, how's everything going?

Matt Frankel: Pretty good. I'm not sure you could say as always, but I missed I think two or three shows over the year. I can't make them all.

Moser: It rounds to zero. No, it's good to have you back here. I'm glad you were able to go on plug last week and have a little vacation with the family; sounds like you guys really enjoyed it. As is the case, I think with a lot of us, even when you go on vacation, you're never fully able to unplug. I have to believe you are keeping an eye on some of these earning stories that we're going on during the week, but let's open the show first. Today let's talk about PayPal, because PayPal earnings came out late last week. It was a fairly muted reaction from the market stock, which was down a little bit. The stock has obviously done tremendously here over the past several years. It seemed to all-in-all like it was a strong quarter, shocker. It seems every quarter they just continue to announce these just tremendous numbers and this gross payment volume that is now on a run rate of over $1 trillion. Matt, looking through this PayPal release, what stood out to you in the quarter?

Frankel: Nothing. I guess that's what you were really pointing to there. Nothing was really that surprising. They reached the key milestone where they have over 400 million active users, which is a crazy accomplishment. Don't get me wrong. I think Square just announced Cash App has 40 million and that's a big deal.

Moser: Wow.

Frankel: PayPal has 10 times the amount of Square does. That was definitely a big deal. They raised their guidance slightly for payment volume throughout the year. I think a lot of that has to do with consumer spending really coming back a lot quicker than people thought it would. But we already knew that. We've talked about that over the past few weeks. Remember, Bank of America reported that consumer spending is up 22% year-over-year, something to that effect, and we're seeing that reflected in some of these payment processes. I got to say PayPal's starting to get into the category of Visa and Mastercard now with its size.

Moser: Well, it's better than the $300 billion market cap now, so you're really not far off.

Frankel: Just the sheer size of the businesses and just the ecosystem they've built. They've just set the barrier to entry so high, I don't know if anyone is going to be able to compete with PayPal really for any of the online payment processing business. You said now they're over $1.2 trillion in annualized revenue or having an annualized payment volume that is.

Moser: Yeah.

Frankel: That's a staggering number.

Moser: It is a lot. Now, to your point earlier, over 400 million active accounts now and I mean that obviously a massive goal, massive accomplishment there, and really those are 400 million. There are a lot of folks that are using this platform on a regular basis. They even raised guidance for the net new additions they're calling for 52-55 additions here in fiscal 2021, and obviously Venmo is a big part of this. I don't know if you were able to look at those Venmo numbers, but it was pretty impressive just to see with that one network alone pushing through $58 billion in total payment volume for the quarter, over 76 million active accounts now and just to your point about Square and it's not to take anything away from Square and Cash App. But the Venmo numbers, I think it at least puts that into perspective for all that Square has done so well, you look at really what PayPal has done and it's really pretty amazing.

Frankel: I have to announce. I finally joined Venmo during this quarter, so I was one of the new adds.

Moser: Did you have to get some money for one of your kids or something? What forced your hand?

Frankel: We recently bought a vacation rental, so I got it so people could pay us when they stay there and stuff like that.

Moser: Yeah. Good idea.

Frankel: They process, I think, $58 billion in payment volume during the quarter. That's more than Square did in the merchant side of its business. That was 58% growth year-over-year. Venmo's still growing very rapidly.

Moser: It is.

Frankel: If you remember, that's the side of the business they haven't really figured out how to monetize great yet. Most of their revenue still comes from PayPal, not Venmo. As Venmo scales, the ability to monetize, that's going to get greater and greater. The importance of monetizing, that's going to get greater and greater. That's what I'm going to be watching going forward is how well they are monetizing Venmo. It's not just about building up the users. They can build it up to a billion users. If you can't monetize them, then I'm not that excited.

Moser: Well, that's a good point. To that point, one of the buzzwords, one of the buzz phrases we've been seeing over the past several quarters coming from PayPal management, it's every quarter in investor presentations that we hear more and more talk of the super app. They talk about this PayPal experience, this platform where ultimately you can pretty much get anything accomplished that you need to in your financial life. I don't know if we can expect that here during this coming quarter, but it sounds like over the next several months at least. So if not this quarter, then leading into the all important holiday quarter and on into 2022. We're going to see something roll out here that will be a bit of a different experience because it's going to incorporate all sorts of different financial services into this one grand PayPal experience.

Frankel: That sounds really familiar because a lot of fintech's are doing the same thing. I know Square when Sarah Friar was CFO of the company said that she wanted Square to be able to do anything a bank can do.

Moser: Yeah.

Frankel: I think David Solomon, when he was, I think just president of Goldman Sachs, said the same thing about the markets platform, that he wanted to essentially replace traditional banks for people. It's an interesting strategy and it's really a great path toward customer retention and because PayPal has, like I said, 10 times the active user base of Square, I think they have a big edge going into that if they could pull off the all-in-one financial app. No one's been able to do it yet, completely replace the traditional bank in one single app yet. But if PayPal can pull it off like you just mentioned, it's going to be a big sticky business for them.

Moser: Yeah, I'd imagine. I think it's probably a bigger opportunity for up and commerce in the workforce. I don't know that they're necessarily going to be convincing me to move all of my brokerage stuff and bill pay stuff and banking and stuff and all it. I don't know that it's going to be really that attractive a proposition for someone like me, perhaps even you, but we're fairly well established in our financial lives and the routines and the accounts that we have. But the up and commerce that are just starting to establish banking relationships, a lot of those Venmo, that demographic that Venmo really focuses on, it does feel like that's going to be the real opportunity for the super app mentality. It's for those younger customers that are just starting to step into that financial independence world, so to speak.

Frankel: It feels like the Lemonade insurance model, like renter's insurance; lend them while they are in their 20s, and then you have a customer relationship for the next 50 years because everyone always needs either renters or homeowners insurance. Everyone always needs financial services. But like you said, guys like me and you, like I have my investment accounts at TD Ameritrade, I have a Wells Fargo bank account. I used five or six different institutions for my financial life, and I've gotten used to them. I never thought I'd become one of those older guys who said in his ways, but I'm definitely on my way there.

Moser: Well, it's a lot of work to shoot that stuff down and everything over.

Frankel: It's a lot of switching. It's a big switching experience. But if they can lend someone like me 20 years younger, that's a customer for 50 years, they could eventually build up into a big client.

Moser: Sure.

Frankel: People in their early 20s don't have a ton of money for the most part, but that's not the point. The point is you land that customer and keep that relationship for decades and it really will pay off of the long run.

Moser: Yeah. Well, it certainly sounds like that's the intention there, given all of the features and services that will ultimately be incorporated into this experience. Be something worth keeping an eye on and speaking of broadening the experience and more features and services, Square last night announced that it's going to be acquiring Afterpay, the Australian company known for its "buy now, pay later" platform. We call that BNPL. Matt, this is a big deal. Now, Square also dropped earnings as well with this release. We'll get into the earnings side of the story here in just a few minutes but let's talk about the Afterpay acquisition because I understand the enthusiasm here, I really do. "Buy now, pay later" is a tremendous opportunity. $30 billion is a tremendous price tag for this business.

Frankel: I think this is the biggest acquisition that either Square or PayPal has ever made.

Moser: Yeah, I think you're right. They say it's a $29 billion all stock deal and I think it's great, at least Square is doing this at a time when the stock is close to all time highs. It's a fairly cheap form of currency but still, that's a big price tag for a business that is growing by leaps and bounds, but it's still a small business.

Frankel: It's an all stock deal, so Square's diluting shareholders by doing it. Apparently, the market likes to steal the stocks up 11% today. This makes Square almost over $155 billion company all by itself. They are really adding to their outstanding share count. Now, after today's pop it's over $30 billion they're paying for Afterpay because it's all stock. It's based on their stock price, so giving a set number of shares. Afterpay, if you're not familiar, they're based in Australia. They're probably the most comparable competitor to Affirm in the "buy now, pay later" space. "Buy now, pay later" is when you see the little button when you're about to checkout that says, break this into six monthly payments of $100 instead of one $600 payment. That's a buy now, pay later service. PayPal has already built its own.

Moser: Yeah.

Frankel: Affirm is pretty big, especially in the U.S. Peloton is their big customer. Afterpay, they're an Australian company, but the majority of the revenue is from North America. Why they offer interest-free financing, no credit checks, standard buy now, pay later features that appeal to customers. The no credit checks really are appealing as opposed, people always ask the question, why wouldn't I just use a traditional credit card? Because then you have to go through a credit check in the process like that. With buy now, pay later, you just click the button and it's set up and done. 98,000 active merchant accounts, little over 16 million active customers. They're growing fast, those numbers are up 78% and 63% year-over-year. They're growing pretty quickly. Almost $16 billion of gross merchandise volume was financed through Afterpay over the past year. Pretty big company, almost $700 million in revenue, Square is paying a pretty hefty multiple of that.

Moser: They are. I was looking at this earlier just to try to keep things in context and because you had mentioned Affirm. I mean, Affirm, a very similar business focusing on a little bit of a different market opportunity, as you said. But regardless, Affirm, generally, the same business, pretty similar size as far as revenue, at this point. Similar models and that they are still working toward profitability and whatnot. But you look at Affirm. Affirm, $15 billion company today. Just to see the premium that Afterpay is getting versus something like Affirm, it's noteworthy, I think, for a few different reasons. It makes you wonder exactly what they saw in Afterpay really to offer such a premium. Perhaps, part of that is Afterpay and other founder-led business, it seems to be two very similar cultures, though. That's one thing that really stood out to me with Afterpay and with Square, very similar cultures and reasons for existing, focusing on economic empowerment and economic inclusion and equality. Acquisitions always present a fair share of risk when it comes to merging two cultures, it feels like maybe these are cultures that should mesh together fairly well.

Frankel: There are a bunch of good reasons. I mean, I read through the investor presentation there. There are some good reasons. They want to integrate Afterpay into both the seller side of the business and CashApp, making it available for all in Square seller accounts which is in the millions. I mentioned Afterpay has 98,000 active merchant accounts, Square has three or four million. I'm not sure exactly, they don't really announce that number, but it's in the millions. They want to make Afterpay service available to every merchant on Square's ecosystem. They want to integrate it with CashApp to make it easier for buyers to make their payments and things like that. They're going to be a "buy now, pay later" service because Square is focused on not just online businesses, they're focused on in-person merchants as well. Buy now, pay later will be available to anyone who accepts Square for in-person purchases, which is a pretty unique feature. Afterpay, I mentioned, they only have 98,000 merchant accounts. Most of Afterpay's customers are large customers. I mentioned Affirm has Peloton. Afterpay also has a lot of enterprise clients. Square would love to build relationships with bigger clients. They break this down in their earnings reports every quarter. How much of their revenue comes from small businesses, mid-sized businesses, larger businesses. The larger business portion has been steadily increasing over time. This could give that little shot in the arm. It expands their merchant relationships on both sides. It's a pretty big market that they could go after.

Moser: Very big market, indeed. What do you think as far as, and we'll move on to Squares' earnings here in just a minute, that old saying, "Sometimes, it's easier to buy it than to build it." It feels like in this case, maybe Square felt like, you know what? This is going to be something that's going to be easier to buy than to build. But the flip side of that is, I don't know, it feels like maybe building it wouldn't have been all that tough if that was something they felt like doing. We've seen PayPal build out their buy now, pay later offering and they're witnessing a ton of success. I guess I wonder, do you feel like Square may be feeling a little pressure here, a little pressure on the time side, they needed to get into this market opportunity sooner rather than later?

Frankel: Maybe. That's the really big reason I could think of, time. Because you mentioned PayPal, I promise you, PayPal didn't spend $29 billion to build out their own buy now, pay later platform. 

Moser: No, I don't think they did.

Frankel: That seems like a big price to pay. The natural question is why couldn't Square just build it themselves if they had that much money to throw at it and sees that much value in the "buy now, pay later" business. I mean, obviously, they're not starting from zero, and now, this buys them $700 million of annual revenue.

Moser: Absolutely.

Frankel: They're not starting from zero but that's a hefty price to pay. I'm not totally sold on it. I like the deal, I don't like the number. I think that's a hefty price to pay. 

Moser: It is a hefty price to pay, there is no doubt about it. We'll have to follow this one. A lot of different ways it could work out. It's very interesting to see the competitive jockeying going on in the space, particularly between two companies, PayPal and Square, that are proving to be really the leaders in this space. There is Stripe but we can't really talk so much about Stripe because it's not a publicly traded company, at least not yet. Stripe obviously holds a big presence in this fintech payment space but for now, it does feel like you've got PayPal that's done so much and it feels like Square, they're making a lot of decisions to stay on that same path which ultimately could work out very well. But in regard to the quarterly results, because earnings came out along with this press release, and I was looking through those numbers for the quarter, Matt, it was another really impressive quarter. I do think that the market likes this deal and perhaps, that's part of the enthusiasm behind the stock today. But I also believe that this was another strong quarter and really showed a rebound, particularly in that physical retail side, like you've talked about before. There was a pretty strong rebound in spending through Square's networks.

Frankel: You really hit the nail on the head there because there is a big rebound here. Square, unlike PayPal, is more based on physical merchants. There's a lot of online businesses at Square, but they're very concentrated in physical retail. Gross profit was up 91% year-over-year. It's not that they grew by 91%, it's that the business rebounded because the second quarter of last year was pretty terrible for any type of physical retail. They were very profitable this quarter, that was a big standout to me was just the profitability of the business. Over $200 million in net income is one of the highest totals the company has ever posted. Comparing things to a couple of years ago, if you look at the gross payment volume of $38.8 billion in the seller ecosystem, that's almost 50% higher than it was at the same quarter in 2019 before the pandemic.

Moser: Wow.

Frankel: They are up by 50% over pre-pandemic levels. They still have almost seven billion dollars in cash on the balance sheet, which remember, they're not spending a dime on the Afterpay acquisition, that's all stock, so they're keeping that. One stat that stood out to me, and I'll end with this on Square's earnings, on the CashApp side, I mentioned earlier that they hit 40 million active users. Their gross profit per active user now was $55 in the second quarter, so $55 per active user. That's 2.5 times as much as it was pre-pandemic. Square is doing a much better job of monetizing its CashApp user base, which is the key to profitability, as we're seeing reflected in the results. I like the quarter, I'm much more of a fan of their quarterly numbers than I am of the Afterpay acquisition. I'm not totally sold on the acquisition. I think it's a good fit, but I think they might be overpaying a little bit, but the numbers look great. Their business keeps growing and they're clearly rebounding. They're clearly a big beneficiary of the reopening. I can see that continuing for the rest of the year. Because if you remember, the first half of the second quarter was still pretty socially distant and masked up with capacity limitations. It wasn't until midway through May or so when most places started lifting their requirements.

Moser: Yeah. Even just a little bit. One thing I noticed, and I'd be interested in your perspective here because I am wondering if this is something that would be more temporary in nature just given what we've gone through over the past year and the economic stimulus that's been passed along, I saw inflows per monthly transacting active customer. Those inflows nearly doubled compared to a couple of years ago. They noted that these inflows, the gross in the inflows to the CashApp customer, is really the primary driver of CashApp gross profit growth. We've seen a lot of inflows here for obvious reasons, plenty of stimulus. Square has proven itself to be a part of the solution in giving people quicker access to their money. But I wonder if there is a law on those inflows that we should expect over the course of the next year as we see monetary policy tighten a little bit? Obviously, the stimulus won't be as significant. The flip side of that is that the employment picture continues to gain steam and people are just using those tools that Square is providing through CashApp. Those inflows keep coming. I wonder if there is maybe not one ahead there on the horizon in regard to those inflows.

Frankel: That's a good point. The goal is for Square to convert those inflows into lasting relationships that use other parts of their business. It's a question of whether they'll be able to do that successfully. Think of it in the context of Zoom. Obviously, not everyone is going to have virtual meetings forever and ever after the pandemic, but it gets people into their ecosystem that they can then use to sell other products and services to, and that's really where the big value is coming from. The same thing applies here. It's the pandemic really. It's not going to last where people are saving their stimulus checks because I don't see three or four stimulus checks per year coming indefinitely.

That's not the point though. The point is that that money brought people into Square's ecosystem because they made it very easy for people to deposit their stimulus checks and things like that into the accounts and really could bring people into their ecosystem that they could cross-sell different services and products. It's like, "Oh, you deposited your stimulus check?" Become a brokerage customer, make some investments through here, buy some Bitcoin. Engagement is really the key and it seems so far like they've been able to engage their new users really well. It's a question of whether that will continue. The influence, there will absolutely be a low, unquestionably. We'll see what happens with the customer engagement and how well that all the new people they brought into the CashApp ecosystem in the past year and a half or so will translate into revenue down the road.

Moser: Well, before we take off this week, Matt, you have got not one, not two, but three SPACs to watch for our listeners. This is, as you said, the secret to spectacular returns. I'm quoting you there. That's what you said. I'm just kidding. But really, this could be the secret to spectacular returns. You've got three specs that are going to be out there in the markets for investors to look at. In lieu of two to watch, we're giving you three to watch, and Matt has a list of all three here. These are three SPACs. Matt, go ahead and just start it off here. What are the companies that you've got on your radar here and why should we be watching them?

Frankel: Well, starting to order from when the deal was announced. A few weeks ago we learned that a company called Nextdoor is going public through a SPAC deal. Are you familiar with Nextdoor? Do you use it?

Moser: I do not know. I don't use it but have heard of it, yes.

Frankel: They're like the social network for neighborhoods. People report on neighborhood watch programs, you operate on Nextdoor. People post things for their neighbors to read on Nextdoor, items for sale, things like that. They're merging with a SPAC called Khosla Ventures Acquisitions (KVSB), the ticker symbol is KVSB. It values the company at $4.3 billion. Just to put that in context, that is very small for a social media platform. Snap is valued at over $110 billion. Pinterest, even after its recent fall, is valued for something like, I want to say $37 billion. A little over $4 billion is not a high valuation for a social media company, especially with some of these impressive numbers. Listen to this. One out of three U.S. households has a member registered on Nextdoor. One out of three.

Moser: Really?

Frankel: They're in over 275,000 neighborhoods in the U.S. Over 60 million verified users, 27 million weekly active users. We mentioned Square's CashApp has 40 million active users. They're pretty close. Speaking of Square, you know who the CEO of Nextdoor is?

Moser: If you tell me Jack Dorsey, I'm going to go ahead and end the show right now.

Frankel: Fools, it's Sarah Friar.

Moser: Oh, wow. Well, there is a connection there.

Frankel: That's why she left Square. She left Square to be the CEO of Nextdoor.

Moser: That's right. Now I remember that.

Frankel: She is personally participating in the PIPE investment round, as well as being the CEO. They have a big opportunity to monetize. I mentioned that impressive membership base with over 60 million registered users. The average active user generates about $10 in annual revenue for Nextdoor. That's about one sixth of what the average Twitter user generates. Big opportunity to monetize. They are not a profitable business yet, but in the social media world, as long as you're growing and delivering the growth numbers, no one really cares about profitability just yet. At some point, people will, but right now, they grew 49% year over year in 2020. If you're delivering numbers like that, profitability will come eventually.

Moser: Yeah.

Frankel: Eventually, when the merger goes through, hopefully later this year, the ticker symbol will be KIND, K-I-N-D. Nextdoor's mission is to create a world through neighborhoods, and that's where the ticker comes from. But the user engagement statistics are just off the charts with this one. They're getting almost $700 million of cash in this SPAC deal. I am really curious to see what Sarah Friar can do with it because she was an absolute rock star at Square. I'm really curious to see where she takes this on. It could be the next great social media company.

Moser: It really could be. For neighborhoods, maybe it's social media for older people or maybe that's just Facebook now, I don't know. I don't know, is it just something that you use?

Frankel: I'm registered. I wouldn't call myself an active user, but I'm registered.

Moser: I'm going to have to go check this out. I wonder if our neighborhood is on there.

Frankel: I would bet that it is. It's an interesting company and I think it's got some great days ahead of it, especially if we can figure out how to monetize that big user base.

Moser: Well, what's the next one up?

Frankel: Next one is Vacasa. I own a vacation home. I don't use Vacasa, but I have a lot of friends who do. They have nothing but good things to say about it. Vacasa is the largest full-service vacation rental management company in the U.S. They are a property management company. They don't do long-term rentals, they just do vacation rentals. They're emerging with a SPAC called TPG Pace Solutions, the ticker symbol is TPGS, a valuation of $4.5 billion. In the vacation rental world, Airbnb has a valuation of about $80-90 billion depending on when you're looking at it. It is a pretty small company. They're getting almost half $1 billion of cash in the deal. They manage 30,000 vacation homes mostly in the U.S. They have a very small presence in Belize and Costa Rica. Most of their operations are domestic. I mentioned that they're the biggest vacation rental management company. Check out how fragmented this market is, 30,000 homes is less than a 1% market share of the vacation homes. That's the biggest company.

Moser: Wow.

Frankel: That's a big opportunity to grow and expand and really dominate the space. They have some strong revenue. They generated $757 million in revenue last year on $1.6 billion worth of gross bookings. Vacation rental management, if you're not familiar, has pretty high margins. If I hire a property manager to manage my long-term rentals, the standard split is 90%-10%. I get 90% of the rent, my manager gets 10%. With vacation rentals, the industry standard is about a 60-40 split, so the manager gets 40%. There's a lot more work to do with a vacation rental. They have to clean after every person, they have to manage bookings instead of just signing one lease with a tenant. There's a lot more to do. Great gross profit margins. They don't expect to break even for at least 2023. But unlike Nextdoor, they actually mentioned a break even point. Nextdoor said, "We're going to be losing money for the foreseeable future." They didn't even try to make an effort that they were going to be profitable. Interesting business. I like the 60-40 split that they're getting, that's a pretty nice gross profit margin. We'll see how much they can translate that into actual profits down the road.

Moser: Well, if we don't see an advertisement for a Vacasa with the tag line, and I'm going to go ahead and give them this one, Matt, "Mi casa, su casa, Vacasa." I mean, that writes itself. You're welcome, guys. You want to get to profitability, boom, there you go.

Frankel: It does, and I'm going to send the clip of you saying that to them, and we'll see what happens with that.

Moser: All right. Well, I'm able to do that. What's No. 3?

Frankel: No. 3 was just announced this morning. I haven't had too much time to really dig into it yet, but we're going with it. One of our favorite companies, Boston Omaha. You know Boston Omaha?

Moser: Oh, yeah.

Frankel: They sponsored a SPAC called Yellowstone Acquisition. I'll give you 10 seconds to make a joke about the TV show.

Moser: Well, no. I'm not making jokes about that show. It's great. But this is one you've talked about before though on this show I think. I remember you speaking about Yellowstone before.

Frankel: I'm equally excited as a Boston Omaha investor as I am as a Yellowstone investor, because Boston Omaha was pretty much the only way that everyday investors could get on the sponsorship side of the SPAC game. Everyone can buy shares like Chamath's SPACs or any of the other 500 or whatever SPACs in the market. But you couldn't be a SPAC sponsor. The economics of SPACs really favor the sponsors so I'm really thrilled to see this. Boston Omaha is my third largest stock position, so I'm very happy to see this from that point of view. Yellowstone announced that they are merging with a company called Sky Harbor. They are a company that builds out private aviation hangar campuses. Essentially, they give rich people places to park their jets.

Moser: How big of a market opportunity is that, Matt?

Frankel: My colleague, Dan Caplinger and I were talking about it this morning. I asked him because I know he's a private aviation guy. He has a small plane that he flies around up the North East. He said this is a big market opportunity, he said most hangers are really not built to any sort of building code. It's nothing but a prefab metal building that quite frankly, people don't want to park their private jets in. He said if you fly into one of these nice airports, which I'll get to the airports they target in a second, it could be really hard, really expensive to find private space to put your plane. They are operational in the Sugar Land Airport in Houston, which he said is a big private aviation hub. They are under construction in the Miami area airport and the Nashville International Airport, which are big private aviation terminals as well. Entered into lease agreements in a Denver area airport, which is like the Aspen Gateway, he says, and one in Phoenix. They're building these private hangar campuses, which are really interesting from a real estate perspective. I'm curious to see how this is going to translate into actual profits. They haven't released anything in terms of revenue yet. The press release says that an investor presentation and a full SEC filing are about to be published. They have not been published as of this recording, by the time you're listening to this, it might have been, but we don't have too many details about the business. But here's just the economics of it. 

The valuation of this company is by far the lowest of the three I'm talking about, a $777 million valuation in the SPAC merger. That includes $238 million of cash they're getting. Very low valuation. This is a micro-cap business. $138 million is coming from the SPAC. Boston Omaha is putting another $55 million of its own cash in, $45 million guaranteed backstop. If they can't raise any extra money, they're going to put another $45 million in. There's no pipe announced yet, which is a unique part of the SPAC deal. They're planning on trying to raise an additional pipe, but that's not a condition of this deal going through, which in a lot of SPACs, that's a big deal. We talked about the pipe around with pretty much all of these. They also plan to complete at least $80 million bond offering in September to raise some additional money. From what Dan tells me, this is a really cost-prohibitive business, and they're raising all this capital to be able to finance it in a very attractive way that no one else will be able to match. I love this investment for Boston Omaha because it's right up their alley. They love infrastructure investments first of all. They're building out rural broadband and things like that. They wanted something that is in their wheelhouse, which definitely is but doesn't overlap any of their current business lines, which this doesn't, so I really like this. On the surface, I want to see some of the more similar numbers before I really give my stamp of approval. But this seems like exactly what they were looking for when they launched Yellowstone. I like this one and I'm sure a lot of investors will as well. I think it's a really interesting business and I'm curious to hear more.

Moser: We will absolutely keep an eye on all three of those. I appreciate you bringing those all to our attention. Matt, I think that's going to do it for us this week, pal. It is always nice getting you back into the "studio." Glad you had a great week off and even happier to have you back. Thanks again for digging in all that stuff and sharing your time with us today.

Frankel: Of course, always happy to be here.

Moser: Remember folks, you can always reach out to us on Twitter @MFIndustryFocus, or you can drop us an email at [email protected]. As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Thanks, as always, to Tim Sparks for putting the show together for us. For Matt Frankel, I'm Jason Moser. Thanks for listening and we'll see you next week.