Big Tech CEOs Give Investors Something to Think About

In this podcast, Motley Fool Senior Analysts Matt Argersinger and Jason Moser discuss:

• Layoff announcements and a sober prediction from Microsoft CEO Satya Nadella.
• The market's positive reaction to the December jobs report.
• Key things they're watching in the tech industry.
• Newest unveilings at CES in Las Vegas.
• The latest from Stitch Fix and Constellation Brands.
• Bed Bath & Beyond's real estate footprint as the company seems to near a bankruptcy filing.
• Two stocks on their radar: Amazon and Bentley Systems.

Malcolm Ethridge, host of the Tech Money podcast, weighs in with predictions of two more interest rate hikes, why megacap tech is the key to a stock market rally, and what he's watching for this earnings season.

Looking to get a jump start on your 2023 financial goals? The Motley Fool's flagship service, Stock Advisor, is open to new members for just $99 a year! Access this special offer by visiting www.fool.com/intro.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

  

This video was recorded on Jan. 06, 2023. 

Chris Hill: All eyes on Vegas for the start of CES, and the market ends the week on a positive note. Motley Fool Money starts now.

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From Fool global headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me: Motley Fool Senior Analysts Jason Moser and Matt Argersinger. Good to see you as always, gentlemen.

Jason Moser: Howdy.

Matt Argersinger: Chris.

Chris Hill: We've got the latest news from Wall Street. Malcolm Ethridge from the Tech Money podcast is our guest. And as always, we've got a couple of stocks on our radar.

But we begin with the big picture on a shortened trading week for investors. Three of the most influential CEOs in the tech industry dominated the headlines. Salesforce CEO Marc Benioff announced his company would be laying off 8,000 employees. In a memo to staff, Andy Jassy announced Amazon will be cutting 18,000 jobs. And in an interview with CNBC's network in India, Microsoft CEO Satya Nadella painted a sober picture of the business landscape, saying, "The next two years are probably going to be the most challenging."

Matt, I understand any investor who hears this and thinks, well, this is just one industry. It's not healthcare, it's not energy. But these are influential businesses. And in the case of Microsoft and Amazon, you've got two of the biggest companies by market cap in the world. So given all of that, should investors temper their expectations for the next year or two?

Matt Argersinger: I think they should, Chris, and what's interesting is everything you laid out is such in stark contrast to what the market is doing on Friday with this jobs report that came out, which was stronger than expected, showing big job gains in places like leisure and hospitality, healthcare, construction, and other places.

But as we've talked about actually on the show, the layoffs that we're hearing about and seeing are coming from the big technology companies like the ones you named, financial services companies. Ultimately, I think, even though we can say, well, maybe this is going to be a white-collar recession, or Jason had a great term for it earlier, the "rich-session."

Jason Moser: Rich session, yeah.

Matt Argersinger: But ultimately, you're talking about fairly highly paid workers. As you mentioned, influential companies, a big industry that dominates the market. Eventually, this has to roll downhill a little bit. I do think consumer spending, which is, of course, really dominated in this particular group, it's going to be affected. To me, it's worrisome. It doesn't take away the recession equation that we think we're probably facing this year.

Chris Hill: Jason, to Matty's point, we did see a positive reaction from investors on Friday after the jobs report, in part because wage growth came in lower than expected. I think that's probably why we saw the market pop on Friday.

But to his point, when you hear these CEOs making these comments, making these moves, particularly in the case of Amazon, where the raw number of employees is larger, more than double what we saw from Salesforce. But on a percentage basis, it's really just about 1%, maybe a little more than 1% of all of Amazon's employee base.

Jason Moser: I think it's fair to say we are, well... Do we have to be closer to the beginning of this than the end of it? It does feel like these are just the first announcements of job cuts that we'll likely see through the course of the year, at least the first half of the year. I think that we've seen these... tech companies have been on the radar all year, basically, last year. Certainly the back half of the year as they struggled to cut costs and right-size workforces.

Really, I think a lot of that is a product of just cleaning up the mess really from these past few years. We saw a lot of growth pulled forward. We saw a ton of stimulus go out into the economy, and expectations certainly got out of whack to a degree, at least in absolutes. It turns out people aren't fully changing how they do everything.

It reminds me, takes me back to something you and I were speaking about earlier in the week. A good lesson I think we could all take away from this. At least something to reiterate is to be careful in investing with that absolute mindset and saying, well, things are just going to change from this to that. We're going into the digital economy. Everybody is going to be working remotely now. Everything's going to be done via Zoom and Slack, and we don't ever have to go anywhere anymore. You can just do your exercises from home now. Who needs a gym?

Well, we've certainly seen with Planet Fitness. I mean, there's a recovery going on there. I think it's because consumer behavior is starting to normalize, at least somewhat. There was this mindset over the last few years that we could be headed toward this permanent change or shift, and I think now we're seeing that change or shift is a little bit more modest. It's like hybrid as opposed to saying we're all going to be working in person or we're all going to be working remotely. It feels like hybrid is the mindset going for the way most things are going to be going forward. and these tech companies, I think, are coming to that realization and they're having to restructure their businesses accordingly.

Matt Argersinger: I think Jason nailed it. Going back to what you said, Chris, about just Amazon specifically. That 18,000 layoff numbers seems big. But from the end of 2019 to the peak in first quarter of 2022, Amazon hired 800,000 workers. They more than doubled their workforce.

Now to Jason's point, all these trends and things I think we saw it in the immediate aftermath of the pandemic, they're starting to slow or reverse a little bit. E-commerce is even slowing down. I was looking at data from Forbes, and they're projecting that e-commerce, as a share of retail sales, it ended around 20% in 2022. That's big. It's a big share. But I think especially in the aftermath of COVID-19, I just remember seeing projections that e-commerce was going to account for more than a third of retail sales, even 50% of retail sales, and I think it's a near certainty that companies like Amazon saw those lofty projections, and it made its way into their hiring plans.

Jason Moser: I think to that point just, what you're talking about -- Salesforce. I mean, you look at it, the hiring that's gone on at Salesforce versus the growth that the businesses witnessed. In looking at just as of January 31, 2020, the company had more than 49,000 employees, and they reported revenue over that stretch, over that year, of $17 billion. Most recently, we saw in October that they had 80,000 employees, and for that trailing-12-month period, they recognized reported revenue of $30.3 billion. So you see, over that period of time, revenue grew 78%. That's outstanding. Employees grew 63%. That's a lot of hiring.

Now you consider over that stretch, too, we saw margins decline across the board. Costs are starting to get a little bit out of control, and now management is seeing these headwinds on the horizon. What they see going forward is a big slowdown. That growth that was pulled forward, that 78% revenue growth, that wasn't normal. That was exceptional, and we're starting to see that normalize now. That growth wasn't because they hired more people. They hired more people thinking that growth might continue, and now we're seeing clear signs that it won't. And so going forward, they're going to have to account for that. That really just comes through whittling down the cost structure, whittling down your employee base, which just, traditionally, that's one of the most expensive things a company has to maintain, is its employee base.

Chris Hill: I think it's going to be interesting to see not only where the other big tech companies go in terms of staffing and potential layoffs. You think about Alphabet, Microsoft as well. But also if Salesforce gets to a point where they feel like they need to cut even more jobs, because on a percentage basis, what Benioff announced was a reduction of 10% of the staff. That's a pretty sizable percentage. Maybe not quite a rip-the-Band-Aid-off approach but pretty close to it. I think it's going to be noteworthy if we get another cut in jobs from Salesforce, whereas I think the three of us are very much expecting more announcements of reductions at Amazon.

All that being said, Matty, thinking forward within the tech industry, what is something you're going to be watching this year?

Matt Argersinger: I think when it comes to tech, I feel like there's been rumors about this for years if not decades. But I feel like this year could be the year where Apple does enter that virtual reality, augmented reality space. They're calling it, I think, their mixed-reality headset. If that comes out -- and I'm not saying it's going to be a game changer like the iPhone was, certainly not. But I think it could finally lead to some mass adoption within that space. It's something that we've been expecting for a while, and I think Apple could be the one to do it.

If it does become the mass adoption platform, then imagine the third-party applications, the experiences that could be developed for Ford in the near term. I think it could be massive, and it could be a catalyst that ignites a new tech bull market. I think that might be a little pie in the sky, but I think that's what tech almost needs. They almost need a new platform, a new marketplace, and I think something like a VR set, a mixed reality set from Apple could be that if it does again mass adoption.

I'm intrigued by the possibilities there. Who knows if it gets off to a great start or how many versions you have to get to before it does reach that mass adoption, but I do think it's something worth watching.

Chris Hill: Well, the iWatch was not a big hit when it first came out, and they just kept iterating, kept improving, and now it's bringing in a decent chunk of revenue.

Jason, what about you? What are you watching within the tech industry?

Jason Moser: I'm going to go a bit bigger picture. It's less company centric and more industry focused. And that is just looking at revenue per employee.

I think, going back to that point I made earlier about tech companies really realizing that they're having to rein in those costs, revenue per employee is always an interesting starting point, I think. You can get an idea of how productive a company is being, but you can also see trends. If a company is overhiring and it's not resulting in growth, then you see, over time, that revenue per employee go down.

But I think it's a good starting point there, and you can take it down the line then to look at how profits are being impacted. How are margins being impacted? Particularly in a time where revenue growth might be a bit more muted, as I think we all agree it will be at least in the near term. It's really just keeping an eye on how efficient these companies are.

Back to your point there on Salesforce and the rip-the-Band-Aid-off moment, I wouldn't be surprised to see many of these companies go back to the well when it comes to these job cuts because they hired so much over the last couple of years. It's not to target Salesforce or Amazon. I think companies across the board did it. Everyone's guilty. You just have to go ahead and atone for that, or you have to pay the price and deal with a really rough next couple of years as opposed to just a kind of rough next couple of years.

Chris Hill: After the break, we're heading to Las Vegas to check in on the latest news from CES. Stay right here. This is Motley Fool Money.

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Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Matt Argersinger. I hope the new year is going well so far.

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Shares of Stitch Fix up 12% this week on the news that company founder and former CEO Katrina Lake is returning to the corner office. First order of business was cutting 20% of the staff. Jason, how many more lives does Stitch Fix have?

Jason Moser: "I don't know" is the short answer. This is a tough one. Stitch Fix appears to be a business that has hit its ceiling, I think. With as many online subscription businesses that exist now, it's just facing a slew of competition that is clearly having an impact on the business.

Ms. Spaulding had a year and a half on the job there in very difficult conditions, I might add. You fast-forward and Ms. Lake coming back, it's hard to fully pinpoint what her end game is here. She still holds a significant amount of the business, better than 8.5% of the shares and considerable voting interest, so the dual-class share structure but as was noted in the announcement, Lake coming back, cutting 20% of the workforce.

Ultimately, when Ms. Spaulding took over, she had implemented some job cuts that left Stitch Fix with around 1,700 salaried employees as of June 2022. This additional cut, it's going to be 340, 350 additional jobs that they're going to whittle down. What was surprising to me was to see that this business has almost 8,000 employees to begin with. That just seems to be excessive.

But with that said, it makes sense that the standout quote in the announcement was that the focus for the team is squarely on creating a leaner, more nimble organization. Again, going back to businesses with bloated cost structures, obviously, Ms. Lake understands what's at stake here. They're also going to be closing down there Salt Lake City Distribution Center. A company that's clearly on the defensive these days.

Chris Hill: Challenging end to 2022 for Constellation Brands, the parent company of Corona beer and other beer, wine, and spirits brands. Saw sales growth in the beer category in the third quarter but that was offset by supply chain problems. Shares of Constellation Brands down nearly 10% this week, Matt.

Matt Argersinger: It's all about the beer, Chris. If you look at depletions, they were 5.7% in the quarter. It's down from a range of where they'd been, about 8% to 9% over the past several quarters. That means retailers are buying less from distributors because they're seeing lower sales at the storefront.

I think this is an example and maybe one of the rare examples or not rare examples of this era we're in where there's a product like beer which is more price elastic than others. You raise prices enough, and demand is going to fall. Constellation has been raising prices because of, like you said, increases in things like energy and aluminum related to their supply chain issues. It's having trouble transferring the full brunt of those prices onto its customers.

I think the bigger question for me, though, when I think of Constellation Brands and other alcoholic beverage businesses is younger people -- are they drinking less these days? I've heard it anecdotally, but there is some data I dug up from Gallup and a medical journal called JAMA Pediatrics. It's a journal focusing on young-adult and adolescent care. Younger people are, in fact, consuming alcohol at a lower rate than previous generations. Don't know if that holds up, but it just means that I think the three of us are going to have to pick up the slack.

Jason Moser: I think you make a great point there, Matty. You also see a lot of these companies, beer in particular. You're seeing more nonalcoholic options being served, and you've seen this new little niche market in hoppy seltzers. You're getting that hop flavor that you like from a beer in nonalcoholic seltzer form. It's really interesting to see all of the different experimentation these beverage companies are undertaking.

Matt Argersinger: I've always wondered what's the point of those nonalcoholic beers and things, but you're right, I guess there's a market for them.

Chris Hill: This week, over 100,000 technology enthusiasts descended upon Las Vegas for the Consumer Electronics Show. Among the early headlines from public companies, Roku unveiled a branded television, and Sony unveiled the prototype for an electric vehicle in partnership with Honda that's due on the market in 2026.

Jason, we've got about a minute left. Anything catch your attention?

Jason Moser: I thought that car looked really cool. Now, you might say, Sony, a car? But let's remember it's in partnership with Honda. They've got some experience there to help them steer their way forward on that one. No pun intended.

The one that stands out to me: Honestly, the Roku TV, it seems misguided. They're pivoting away from being a hardware company to being...a hardware company? This -- color me skeptical -- this is a business for a long time we said, well, the idea was to not worry so much about the hardware. That's a loss leader. It's all about the platform.

To hear management explain it, again, they know that the core of the business and the advertising revenue that they generate from their distributed platform there, that's the business, that's the market share. Making their own TVs is an effort to gain more market share. But remember, they license that technology to other TVs too so now that puts them in direct competition with them. It's not certain this is the right call.

Chris Hill: Jason Moser, Matt Argersinger, guys, we'll see you later in the show. But up next, more of what investors should expect this year with Tech Money podcast host Malcolm Ethridge. Stay right here. This is Motley Fool Money.

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Welcome back to Motley Fool Money. I'm Chris Hill. Malcolm Ethridge is a Certified Financial Planner, an executive vice president with CIC Wealth, and he's the host of the Tech Money podcast. He joins me now from the greater Washington, DC, area. Thanks for being here.

Malcolm Ethridge: No, always glad to get a chance to sit and talk markets with you, my friend.

Chris Hill: After the worst year for investors since 2008, what is your optimism level right now on a scale of 1 to 10?

Malcolm Ethridge: I appreciate you assuming I have some optimism. I do, but I appreciate you assuming my optimism is probably at about a 7.5 to 8, believe it or not. I'm pretty high, I think, on the optimism scale compared to a lot of the folks I listened to and read and watch.

Chris Hill: Why is that?

Malcolm Ethridge: I think the statistics of market corrections like the one we just dealt with, the one we're in, I guess I should say right now, the bear market cycle, that just because the calendar has turned over, doesn't mean the market cycle has. I got to remind myself of that and not talk about it in past tense.

But statistically, it takes about 14 months to work our way out of a 20% drawdown in the S&P. The one exception to that, the outlier, would be the tech wreck, so '01, '02, that was about 30 months. But we also don't have the same level of what's the word I would use, I hate saying "volatility" because it said so much, it means nothing anymore. I'll say "consternation" this time, and that'll be the word I use.

We don't have that level of heartburn the way we did in the VIX back then, and the NASDAQ fell something like 80% at that time, and we haven't gotten anywhere close to that. I just feel like that one outlier case doesn't really apply here. If we just look at the fact that 14 months, on average, is where we tend to be, November 2021 is where we all benchmark this whole thing started to get really ugly from, we're pretty much at the tail end of that average time period.

Then if you think about the fact that the S&P 500 tends to turn positive four to five months before the broader economy does, that also is encouraging, because that means that even though sentiment is very negative right now out on the street, the market itself can and will start to turn positive before we start to feel good about the markets as investors again.

Just from those statistics, I look at it and I say, I think we've already taken the whipping that we're going to take, and we can start to turn the corner and be a little more positive about the prospects going forward.

Chris Hill: Let me go back to tech for a second, because earlier in the show, we talked about Salesforce and Amazon kicking off the year with layoff announcements. I'm curious if you think whether it is big tech companies like them, or companies in other industries. Do you think we're in four months of these types of announcements?

Malcolm Ethridge: I think we are to a point. I think we'll continue to see those announcements coming out of the tech world. Because the tech world also got extremely greedy and built up recruiting networks that it didn't necessarily need.

If you really look under the hood of the leaked memo from Amazon, it's less software engineers and program managers and folks like that that are really instrumental to the organization. It's more recruiters and HR staff and folks like that. They are an important piece to the puzzle, but they're much more important during boom times, when we're hiring anybody with a pulse and a degree in X, Y, and Z versus now where we're being a little bit more thoughtful and methodical about who comes in the door aad we're figuring out ways to be happy with the workforce that we have.

I think those layoffs are really just... I hate to say it this way, because it's literally people losing their jobs that we're talking about. But it's from a number's perspective. It's just trimming the fat. It's cutting headcount for the sake of we don't really need this headcount to serve this function anymore. Versus folks who are actually doing the work and building the products and moving the organization forward. What we'll see now is productivity per employee, which, again, has a very cold metric that only CFOs appreciate.

But from an investor standpoint, productivity per employee will go up in 2023 for these tech companies where software is the service that they're selling. They've got a ton of operating leverage. It doesn't cost you anymore to deliver Malcolm the newest version of XYZ software than it did for you to deliver it to Chris. That added customer is now just one more layer of icing on the cake. The productivity per employee goes up because you shrink the headcount, take your medicine in January and we can move forward now.

Chris Hill: Last year, you and I talked a lot about interest rate hikes. We weren't the only ones, really 2022 was the year of interest rate hikes. When you think about the year to come, the FED meeting in early February: What, if any, expectations do you have either around the size of interest rate hikes or how long they may continue into the year?

Malcolm Ethridge: I try my best not to let my optimism as an investor creep into my expectations as an asset manager, so do with that what you will. But my thinking on this is that we're likely going to see two more raises in the first quarter of the year at 25 basis points. Because that's where the expectations and the consensus and the dot plot is. I think if you look at what Powell has done, pretty much the second half of 2022 and beyond. It's been perfectly in alignment with where the dot plot told him he needed to be and where the Street's expectations where anyway.

He has said language that's extremely aggressive and extremely hawkish, and we're looking for this, and we're going to do that. One good report doesn't tell us that we got to stop and mission accomplished. But his actual behaviors where the decisions he's made haven't really been all that aggressive in comparison to what the expectations were all along.

I think we're probably going to see two hikes to start out 2023 and then a pause following that. I'm not in the camp that thinks we're going to get this pivot, and suddenly there at the end of the year, I think that's nonsense. But I do think we will see a pause is the announcement that we'll get that makes the difference there.

Chris Hill: Obviously, with the market decline that we saw in 2022, particularly with the NASDAQ being, what 10, 12 percentage points greater than the S&P 500. Not everything is cheap, but certainly, some things are cheaper on a valuation basis. I'm curious if there are particular areas in the market that are looking attractive to you right now.

Malcolm Ethridge: I am, again trying not to sound too much like, I'm talking my own book because I do own quite a bit of tech stocks individually, and then our clients also in aggregate on a considerable amount of tech. Just the nature of the way the market is shaped right now, the S&P is shaped.

But I am of the opinion that there can't be a meaningful rally in 2023 that doesn't involve megacap tech. I think the term "megacap tech" has gotten smaller, the number of companies that it includes. It used to be Tesla. I don't think it includes Tesla anymore. It used to be Netflix. I don't think it's Netflix anymore.

When you look at companies like that, who do you have left? You've got Apple, you've got Google, Microsoft, Amazon and maybe a couple more that for some reason just are not drawing immediately to my memory. But those are the companies that I think make all the difference in weather we have a recovery that's single-digit percentage by the end of the year, or a meaningful recovery by the end of the year, where we're now talking maybe double digits that filter -- hoping for, because obviously we want to recoup some of what we lost in 2022. But we can't have a real meaningful recovery, in my opinion, that doesn't involved at least two out of the four mega-cap tech names that I just mentioned.

Chris Hill: Let's go to the near future, then. Earnings season is going to kick in later this month. What are you going to be watching for, whether its actual results or guidance and commentary from company executives?

Malcolm Ethridge: Again, I like tech, but I'm going to move away from megacap tech this time and point out the fact that you just mentioned Amazon, the behemoth, is slated to cut 18,000 workers. Salesforce slated to cut something like what was it? Five thousand, I think.

Chris Hill: Ten thousand.

Malcolm Ethridge: Ten thousand workers, and then all of the ones that were announced last year that layoffs that FY has been tracking. It's like north of 125,000 people that have been laid off. The thing I'm interested to see now is who among the tech companies that are larger, but they're not... Microsoft... are mentioning the fact that they are looking to hire, and not in a meaningful way where we're bringing on 18,000 people, that just doesn't make any sense.

But in a market that's as soft as this one is in the tech space where people are being laid off, anybody who's showing strength and saying we want to bring people in the door. That would be a very interesting little nugget to get out of their earnings call. That would say to me, and I'm thinking about like a Spotify, for example, could be somebody who's in that direction. I think Spotify's taking the beating it's going to take.

I think folks in the cybersecurity space would be good candidates for that as well. There's rampant... "fraud" is not the word I want to use, but there's rampant security breaches that are happening and are going to continue to happen, and will continue to increase, so cybersecurity is not going anywhere. Those are the companies that I think could and probably will be looking to add a few key people to their teams while they're leaving these other companies that don't have a need for that talent, but they're talented people.

Chris Hill: You would have to think that it would almost be a double win in some cases, because if companies have the financial resources to be hiring at a time when some companies are laying people off, and they're also doing it in the environment where people are being laid off, it's almost the other end of the spectrum of what we saw 12, 18 months ago, where all these companies were doing as much hiring as they could, and you had people job hopping because they could get a little bit of... could get to 10% salary increase over there as opposed to where they were at any one moment. In a layoff environment, it seems like companies that are doing hiring, they're more in the driver's seat.

Malcolm Ethridge: ADP had a report that they released this morning, I think it was, that showed that the average person who stayed in their job last year saw a wage increase of something like five-point-something percent. Then the people who decided to job hop instead to get that increase saw double the wage increases of the people who stayed put. I think you see a little bit of an increase, still, in wages for these highly skilled technical workers. But nowhere near double what people are going to be getting in 2023 who actually stay at the company.

If 5% is the number, let's say, let's just anchor there for a second. They're going to end up with that 5% elevated salary coming in the door at the new company, above and beyond what they had at the old company, but not 100, 115, and beyond. I think those days are over and behind us. The same way that the days of the sight-unseen, 24-hours-to-bid-after-the-open-house real estate market is well behind us at this point.

Chris Hill: Season 3 of the Tech Money podcast is starting later this month. Just give me a quick sneak preview of what you're working on.

Malcolm Ethridge: Yes. Still going to have the same focus on investments and helping to make tech workers smarter about their money, our tagline.

But one of the things that we've decided from feedback from the audience and everything else is that there's this interest in conversation being had out there in the ether about financial independence and how to get there. We want to focus in a little bit more of the conversation that we're having, and the guests were having on so forth in that financial independence realm. Not just investing for investing's sake, but how do we use this portfolio we're building up to help by a few extra years of life versus work. And those little undertones will be woven through the season, which I'm really excited about, because that's a whole other side that I'm excited to be able to explore more.

Chris Hill: Malcolm Ethridge, always appreciate your time. Thanks so much for being here.

Malcolm Ethridge: Thanks for having me.

Chris Hill: If you're listening to the show on one of our many radio station affiliates, thanks for listening, and check out the Motley Fool Money Podcast for even more content. Later in January, we'll be bringing our podcast listeners conversations with Charles Schwab Chief Investment Strategist Liz Ann Saunders, best-selling author Morgan Housel, and a lot more. Follow Motley Fool Money on your favorite podcast app with just the click of a button.

Coming up after the break, we're going to pour one out for a long-time consumer business, and Jason Moser and Matt Argersinger are coming back with two stock ideas for your watch list. Don't touch that dial. You're listening to Motley Fool Money.

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As always, people on the program may have interest in the stocks they talk about on the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear.

Welcome back to Motley Fool Money. Chris Hill here once again with Matt Argersinger and Jason Moser.

Shares of Bed Bath and Beyond fell to a 30-year low this week after the company warned investors that it is almost out of money and seriously considering bankruptcy. Matt, for a retailer in this much trouble, Bed Bath and Beyond has a massive footprint, with more than 700 stores across the U.S.

Matt Argersinger: That's what you think about is what happens when all of a sudden those stores go dark. Your national inclination say well, OK, another retailer will come in, or an adjacent retailer might take up more space.

But this is a problem we've been struggling with in the U.S., is that in this country, we have so much more retail square footage per capita than anywhere else. In fact, we have about 4 to 5 times the amount of retail space per capita than most other developed countries. It's possible that most of that real estate, and you said it's a massive footprint, it's probably heading toward obsolescence. I just don't think it's a surprise that Bed Bath and Beyond is here, just given the retail climate like I just said, that the fact that we saw too much retail.

What I think is sad to me, Chris, is that my last memory of Bed Bath and Beyond -- it's been around for decades and it's a well-known brand -- is that the fact that last summer, for a brief period of time, it became this meme stock that quadrupled overnight. There was a university student who made like $100 million in it, and you had the chairman of GameStop involved. I don't remember the exact story, it was one of those things that reminded me that if you had any delusions that the stock market was an efficient market, that probably got rid of it for good. And that's my last memory of Bed Bath & Beyond as it teeters toward bankruptcy. Sad.

Chris Hill: Let's get to the stocks on our radar. Our man behind the glass, Rick Engdahl, is going to hit you with a question. Jason Moser, you're up first. What are you looking at?

Jason Moser: I've been digging into a company called Bentley Systems. The ticker is BSY. Bentley's mission is to provide innovative software and services for the enterprises and professionals who design, build, and operate the world's infrastructure, so think roads, rails, airports, water, oil, gas, hospitals, campuses even.

Something interesting that Bentley has, they have this platform called the ITwin platform, which allows their customers to develop digital twins. so this is an interesting business. I think it really establishes identity is the infrastructure engineering software company. This is why I like that focus, and they cover all stages of the infrastructure life cycle, so design, construction, maintenance.

Interesting in that it's a family business. You really are getting on board here with the Bentley family. They control shares through a dual-class system. But a neat company. It's still fairly new to the public markets, but continuing to learn more about it.

Chris Hill: Rick, question about Bentley Systems.

Rick Engdahl: I'm not going to let that just fly by. You said something about digital twins. What the heck is that? Is this an AI play or what?

Jason Moser: More like a virtual reality immersive technology play. Think about building another Rick. And let's look at that digital Rick, and let's see what we can do to make Rick even better. I mean, let's not kid ourselves. We can't make Rick any better than he already is. But if we could, we would probably do it by creating a virtual Rick.

Chris Hill: Shout out to the Rick and Morty fans who are listening right now. [laughs]

Matt Argersinger, what are you looking at this week?

Matt Argersinger: I'll keep this one quick. Amazon, AMZN. We've already talked about it during the show, but the stock has been in absolute free fall and could almost certainly go lower. But I just think the stock has gotten to a point where I think there's probably pretty good value there.

If Andy Jassy can right the ship in terms of the companies cross structure -- I know that's a big if -- I think Amazon should be more than capable of generating $4 and $5 in earnings per share in a couple of years. And you put a 20 to 25 multiple on that, and you quickly, you've got a $100 stock.

If Andy Jassy doesn't right the ship, maybe Jeff Bezos comes back, and maybe that's another catalyst. I think there's just a lot more upside Amazon from today's price than downside.

Chris Hill: Rick, question about Amazon?

Rick Engdahl: I'm all for it. I like your optimism. Just what's Amazon's next big thing? Are they going to get into some new technology or something? They're resting on their laurels right now.

Jason Moser: It's super exciting, Rick. They're going to get into cost-cutting. That's the next big thing for Amazon.

Chris Hill: Rick, what do you want to add to your watch list?

Rick Engdahl: I may well regret this in the near future, but I'm going to go with the digital Rick.

Jason Moser: I like that. There we go. I think that digital Rick is better than a digital Dan Boyd, by the way. Nicer, less evil. He's not listening. It's OK, he's not going to listen to this.

Rick Engdahl: Shots fired. I don't want to be in that battle royale, I have to say.

Chris Hill: We're out of time. Guys, thanks for being here. Thanks, everyone, for listening. We'll see you next time.