In this podcast, Motley Fool analysts Ron Gross, Emily Flippen, and Andy Cross discuss:
- Earnings reports for Nvidia, Etsy, Wayfair, Walmart, Palo Alto Networks, and MercadoLibre.
- Acquisition roundup: Capital One is acquiring Discovery Financial and Walmart is acquiring Vizio.
- Two stocks worth watching: Grab Holdings and HubSpot.
Plus, Bloomberg reporter Kurt Wagner talks with Motley Fool host Deidre Woollard about Twitter and his new book, The Battle for the Bird.
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 Feb. 23, 2024.
Ron Gross: It's Nvidia's world and we're just living in it. Motley Fool Money starts now.
It's the Motley Fool Money radio show. I'm Ron Gross sitting in for Dylan Lewis. Joining me today are senior analysts Emily Flippen and Andy Cross. Fools, how are you doing?
Andy Cross: Hey, Ron.
Emily Flippen: Hey.
Ron Gross: Fools, earnings season rolls on. We've got a lot to talk about. Today, we're going to talk acquisitions and e-commerce, but we must begin with Nvidia. On Thursday, Nvidia reported results that knocked it out of the park, and management provided guidance that was higher than analysts were expecting. Andy, I'm not even sure where to begin. This was really some report. The stock's performance is outstanding. What stood out to you? Where do we go from here?
Andy Cross: Ron, these are like monopoly numbers. Nvidia has become the bellwether stock for this rally. It's up more than 60% this year alone, 275% for the past year. Since those earnings came out, team, it's added around $300 billion in market cap to be close to that $2 trillion level. That's the size of AMD. It's like a close competitor. The growth has been insane, so quickly, the fourth quarter. Revenues were up 22% from the third quarter, up 265% from a year ago. This is for a $2 trillion dollar company, don't forget. Earnings at $5.16, up 486% from a year ago. The data center revenues, that's the biggest part of their business and what is driving so much of the growth, up more than 400%.
When you think about what the world is spending on right now, it is so much in artificial intelligence technology, driven by Nvidia, the Hopper GPU for training and inferencing these large language models. With about half the revenues coming from these large cloud providers like Meta, like Microsoft, like AWS, revenue for China fell significantly, and those were really the only weak spots when you think about what happened. Growth accelerated through the year. For the full year, growth was up more than 120%. Again, 120% for the year, and more than 275% for the quarter. Jensen Huang, the founder and CEO, said we've hit a tipping point in generative AI.
Generative AI is the new application. It's enabling new ways to create software. It's a new way of computing, and this is enabling a whole new industry. Now you just see this massive growth going into the biggest part of their business, which is data center revenues. Gaming was still pretty nice, was up 15% for the entire full year. Automotive was up 20% for the full year, down for the quarter. CFO Colette Kress expects demand to far exceed supply for these next-gen products. This quarter they are expecting similar growth rates. You just don't see this kind of performance, such a large company, and Nvidia is just clearly not just knocking it out of the park, they're setting the park. If it's an artificial intelligence park, I don't know what, but these performance numbers are really outstanding.
Emily Flippen: It's actually amazing they're not more supply constrained than they are, because think about the businesses that can support this amount of growth. Like if you come to Chipotle and you're looking at a 100% increase in Chipotle, they're out of guac. They haven't had the opportunity to even meet that demand. The fact a year ago, management was talking about the demand cycle. They saw it coming down the pipeline. They communicated it to investors and they said, this is what we're ramping up for, and investors, myself included, were maybe a little bit skeptical and said these projections are insane. Here's the reality, they're not insane.
Andy Cross: It's a really interesting advantage they have is in the manufacturing because these chips they're making are so complex. They've done this for so long and invested so much into this with their partners like TSMC. They really have an edge there. What was really interesting from the call is they said that about 40% of their revenue is for the inference revenues. That's like when you do a prompt on generative AI and you get an answer, and that was really encouraging for the future growth in the chip spending for Nvidia. That was a little bit of light they shined on in the quarter.
Ron Gross: Earlier in the week, Etsy and Wayfair reported results. Etsy's results were mixed and shares fell while Wayfair showed improved results and the stock was up 10%. Emily, any similarities here in these reports? What's Wayfair doing that Etsy isn't?
Emily Flippen: This is a great example of don't judge a company by a single quarter, because if you look at these two quarters as you just mentioned, Ron, it makes it seem like, oh, Wayfair's executing right, those costs are coming down and Etsy is struggling. In reality, both of these businesses are struggling a bit, although Etsy has a better track record, I think, of proving out the usefulness of its platform in comparison with someone like Wayfair who has struggled to maintain its strategy, especially in the world post-pandemic. But both of these companies do have a similarity, as you mentioned Ron, which is both of these platforms right now are pretty out of favor. Wayfair is struggling to increase demand even as consumers remain relatively resilient.
If you look at just their results, their active customers over the course of the year were flat, but within the quarter as well as throughout the entirety of 2023, their lifetime revenue per active customer and their average order value all declined. The good news for Wayfair in the quarter was just the fact that they were able to cut costs. Any margin expansion is them just trying to narrow the size of their business despite the fact that their top line has been so paltry. Etsy, on the other hand, I think has struggled to maintain growth in the post-pandemic world, in the sense that its growth has continuously grown smaller than the e-commerce sector at large.
If you look at this quarter, this is their second full year of negative GMS growth, that's their gross merchandise sales. The second full year of negative growth, which of course is below industry averages. Both these companies, I think, are still going back to the drawing board to say, what can we do to drive consumers to our platform? Because it's not enough to say high interest rates are driving consumers away. Because we see time and time again from other consumer-facing businesses, people are willing to spend, just not here.
Ron Gross: Is it fair to say that Etsy is more discretionary spending focused and Wayfair has some non-discretionary and could that be impacting results?
Emily Flippen: I think that's fair. I will say I think Etsy has an understanding about where it stands in the consumer cycle more than something like Wayfair does. Wayfair has a ton of competitors. They're a known website, but they don't get as much direct traffic as say, Etsy. They spend more money to acquire those customers. They're competing with the Amazons of the world in a way that Etsy just isn't. They have a distinct brand at Etsy, which I think benefits them a bit more, despite the fact that what people are purchasing are things like gifts or presents, which can be, to your point, more discretionary.
Ron Gross: On Tuesday, Walmart reported better-than-expected earnings, a 9% increase in its dividend, and plans to acquire smart TV maker Vizio to boost its ad business. Andy, a lot to unpack here. Results look good. The acquisition is interesting to me. What's your headline here?
Andy Cross: Hard to find a mass retailer with a better quarter than Walmart. As you mentioned, e-commerce sales were up 23% for the quarter. Walmart U.S. gains in grocery and those e-commerce sales were up 17% in the U.S. Global advertising was up 33%, with EPS, earnings per share, up $1.80, handily beating estimates. Generated $15 billion in free cash flow for the year, up $3 billion. Ron, as you mentioned, boosted that dividend 9%, which was the highest in 10 years. But what was really interesting was this acquisition of Vizio. It had been rumored for a week or so. It was a $2.3 billion acquisition, so not very large for the likes of someone like Walmart.
But as CEO Doug McMillon said, "This acquisition accelerates the build-out of our advertising platform into the connected TV business," and Vizio has this SmartCast operating system. It's going to connect with the Walmart Connect ad platform. I think it's a really interesting, reasonably priced way for Walmart to continue to build out that advertising network. Interesting, you saw a lot of those adtech companies fall off on this news because now all of a sudden you have one of the best operators in the world, really making a deeper push into connected television advertising. Vizio has 500 direct advertising partners and many of them are part of the Fortune 500, so it's a really good fit for Walmart.
Ron Gross: Fifty-first consecutive year of dividend increases, 25 times forward earnings for Walmart. Do you like the stock?
Andy Cross: Yeah, I think it's really interesting. Don't expect the massive growth because they are really looking and pushing aggressively into these, what we all thought were like side businesses, but very much could be core. Also, their international business is doing quite well, too.
Ron Gross: On Tuesday, Teladoc reported a fourth-quarter loss that was less than expected, but sales were disappointing and management issued weak forward guidance. Emily, the stock got whacked. Is Teladoc's growth story officially coming to an end here?
Emily Flippen: I think Teladoc's growth story has been coming to an end for a pretty extensive period of time. I know a lot of people will point to the pandemic as an indicator that this telemedicine provider was always going to be something that people only used when they were stuck at home, and that of course, people go back to their doctors' offices whenever the pandemic has let up. Certainly, there has been some of that, but I think that oversimplifies the story of Teladoc, which is to say that the thesis behind this business was that they were going to spend immediately of a lot of money up front to acquire and roll up all of these smaller telemedicine providers until they were the dominant force.
They have a fair amount of relationships with healthcare plans, but that roll-up strategy ended up being incredibly expensive at a time when the businesses that they were acquiring were just trading at insane valuations, which made it really challenging for Teladoc to actually gain market share, as well as drive profitability. We're still seeing the outfall of that today. That was what we saw in this most recent quarter, which was sales growth was pretty paltry, only around 4%. Indicators for that slowdown, especially in margin expansion, to continue. But they are still looking to improve their business. Now, I will say this, that margin expansion they're aiming for, they're saying 5,200 basis points of margin expansion for adjusted EBITDA over the next three years, each year. It's always good to be like, hey, look, we're driving profitability, but gosh, 5,200 basis points with this company is not enough. In this past quarter, they had 260 basis points of expansion. That just shows you how much that slowdown is happening in terms of their margin.
Ron Gross: Coming up, we'll talk cybersecurity and an acquisition in the banking sector. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Ron Gross here in studio with Emily Flippen and Andy Cross. On Tuesday, cybersecurity company Palo Alto Networks reported results that were not met with enthusiasm. It wasn't necessarily the quarterly results, but more so a change to its strategy that's spooked investors. Emily, results didn't seem to warrant a 25% drop in the stock. What's the problem with the new strategy that has investors running for the door?
Emily Flippen: Just looking at the quarter as you mentioned, things look great, that's 16% billings growth. Whatever strategy Palo Alto has been implementing to this point, has worked for the stock, it's worked for investors. So when the management came out and said, hey, we had 16% of billings growth this quarter, but we think that's going to be 2%-3% next quarter. Investors shot first and asked questions later, which is understandable. In addition with Palo Alto falling, a lot of other cybersecurity companies start falling as well. Which begs the question of, is this a slowdown in demand for cybersecurity in general, or is this a Palo Alto-specific issue? The answer, in my opinion, is very much the latter.
Palo Alto is implementing a change in their kind of, I wouldn't call strategy, I'd say tactics of way of acquiring customers, which is to say when companies are in the process of shifting their security to the cloud, they're oftentimes working with numerous different vendors, all of which Palo Alto seeks to replace. It can make that transition challenging for them. Palo Alto historically, alongside other companies, has been transitioning and charging full up front despite the fact that that company may be working with different vendors. Under their new strategy, what they're effectively doing is providing their services for free until those existing vendor contracts end later on. This could be a period of effectively years. But management thinks that this is going to accelerate their long-term revenue growth even though it shows a slowdown in the short term and that this could theoretically be a more offensive strategy to gain market share in an industry that is becoming increasingly competitive.
Ron Gross: Price wars maybe in the future here as a result of this move.
Emily Flippen: That's what a lot of people are saying, but I think it still remains TBD whether or not companies like CrowdStrike, for instance, are really going to feel the need to provide their platform for free when they've managed to convert so many enterprise spenders with full payments right up front.
Ron Gross: Earlier in the week, Capital One announced that it would acquire Discover Financial in an all-stock transaction worth $32.3 billion. This deal would combine two of the largest credit card companies in the U.S. Andy, what's got Capital One interested in Discover? Do you like the deal?
Andy Cross: Yeah, it's really about the network. So buying that Discover network, it's one of the major ones with Visa, Mastercard, American Express. Granted, it's much smaller than those, based on data from our sister company, The Ascent, reports that Visa, Mastercard, and American Express have about 96% market share of payment volume with Discovery at 4%. So it's much smaller but it's unique. Capital One now is going out to spend an all-stock deal valued about $35 billion to acquire this network and that network that they'll be able to bring into their family and start to move some of their Mastercard and Visa credit cards over to Discover family.
When you start thinking about what Richard Fairbank, the co-founder and CEO of Capital One, calls the Holy Grail, to be both an issuer and a network provider. That's real magic because it starts to connect them with those merchants that Discover has that Capital One just didn't have access to. It is not a sure thing. The stock's at about $120-ish and the deal point would be at about $140. There's some concern that regulatory issues are going to keep this deal from happening. But overall, if you're a Cap One shareholder, I think that's a good deal for you to buy this. It could dilute a little bit of the book value, but overall, I think the long-term picture for Cap One with Discover is pretty bright.
Ron Gross: Banking sector always controversial, especially within the Senate. It is an election year. Do you think we will have some senators here, some government officials here clamoring for this deal not to get done?
Andy Cross: We're already seeing it. Senator Warren's come out pretty aggressively saying don't do the deal. They do expect it to close late 2024, or early 2025. I can't see a closing this year. If it gets through it will probably be early next year. But I do think it'll get very high scrutiny and that's one reason why the stock is not really that close to the acquisition price.
Ron Gross: Would you recommend an arbitrage here?
Andy Cross: I would not arbitrage the stock. I think if you're a Discover shareholder, hold onto your shares.
Ron Gross: Sounds good. On Thursday, MercadoLibre reported solid sales results, but earnings were hurt by what appears to be two non-recurring tax charges. Emily, first, are the charges really non-recurring? Second, how do results look if we adjust for them?
Emily Flippen: To answer your question with a non-answer, yes and no. It is not recurring in the sense that the business in this most recent quarter is recognizing a lot of expenses associated with the change in tax status right up front, when less than 1% of that is actually attributable to their actions over the last quarter. You can understand why they backed that out. But yes, it can be recurring in the sense that management did say that moving forward under these new tax rules, they're going to have around $20 million a quarter in incremental charges.
In addition to that, they have this lawsuit that they are expecting that they're now going to lose it. It seems to be non-material for the business moving forward, stemming from some rather old liability associated with its business over the past decade. But all those expenses being recognized in the quarter did bring that non-adjusted number down. But even if you just back out those numbers, results still came in a bit less than what the market expected.
The good news is sales were strong, so the stock is not down massively. The thesis for MercadoLibre hasn't been broken, but they did fail to keep up with the pace of inflation in Argentina, which resulted in the margin of sales coming from that country to be a little bit lower. I think investors should continue to really watch the fintech business here, though. This is the driving force, what I believe to be the driving force behind MercadoLibre's profitability, which is their expansion of credit offerings, debit cards, bank accounts. All of which continue to explode.
Andy Cross: When you think about that fintech business that Emily just talked about, the performance of non-performing loans due 90 days or longer fell from almost 30% to 18.7% this quarter over the past year. That's a good sign. They're seeing less and less on the non-performing side. But they have increased the provision to those doubtful accounts to the highest of the year. I think there is maybe perhaps some investor concern that it is going to be a little bit more challenging environment for them. But the fintech side, aside for Mercado Libre, what I think it's just continues to be interesting is the logistics business.
They shipped 407 million items. That was up 31%, next-day items shipped was up 21% year over year. Now almost 50% of all the products they ship go across the MercadoLibre logistics business. Again, they just continue to build out that ecosystem. They've a little budding streaming business. I just really liked the way they are positioning themselves, but there are all these macro factors that investors have to watch and we certainly watch them over in Stock Advisor.
Ron Gross: On Friday, stock was down about 10%. I'm still not really seeing the reason for it. Do you think that potentially could be overblown?
Emily Flippen: I think there's an expectation now with those impending tax charges that their margin's going to be just mildly lower than what analysts expect. That combined with the failure in expansion of profitability and inflation, Argentina, probably just lowered expectations.
Ron Gross: All right, Fools, we'll see you a little bit later in the show. Up next, a conversation with Bloomberg reporter Kurt Wagner about Twitter and his book, The Battle for the Bird. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Ron Gross. Motley Fool Money's Deidre Woollard caught up with Kurt Wagner, a Bloomberg reporter covering social media companies and author of the new book, The Battle for the Bird. They discussed Twitter's early days, lessons from Musk's takeover, and what makes the old Twitter so hard to replicate.
Deidre Woollard: I love this book. I love the idea of the history of Twitter, and you go back before everything really started getting crazy. I want to take the listeners back because I want to start with a couple of alternate universe questions because you talk about 2015. Twitter's casting around for a new CEO before bringing back Jack Dorsey, and they look at Andy Jassy, who now of course is Amazon CEO, but was running AWS at that point. Probably a better move for him. But what might Twitter be like with someone a little more organized at the helm?
Kurt Wagner: Maybe more traditional.
Deidre Woollard: Traditional is a good word.
Kurt Wagner: Traditional business mind. Well, certainly, a more lucrative decision for Andy Jassy to stay working at Amazon. But the reason the board came to this conclusion as they thought at the time that Twitter's biggest issue was the product. They really thought if they could figure out how to grow the product, how to create maybe some killer features that the business would follow and so as a result, Jack Dorsey felt like the product choice here, Andy Jassy felt more like the business choice.
He was someone who obviously had a ton of success, but in enterprise software, not necessarily consumer products, and so they ultimately went with Jack Dorsey. It's a fun thought experiment to think like what would Twitter have looked like? Actually, a lot of people don't realize there's a decent chunk of Twitter's business that was related to the API into data-sharing and things like that, and maybe that would have become a much larger thing under someone like Andy Jassy, just given his background, but we'll never really know. They thought that Jack was the product guy that they needed and that's obviously in the direction that they went.
Deidre Woollard: Another alternative universe question I have for you is about when Disney and Salesforce were hovering around thinking about buying Twitter. Disney got pretty close, which I found surprising. I know that they, at one point, were thinking of almost buying BuzzFeed. What do you think Twitter would have been like if the deal went through with Disney, would it still exist?
Kurt Wagner: Yeah, I think it would have because the way that Disney was thinking about Twitter at that time was as a streaming service. A lot of people might not remember. But in 2016 when these conversations were happening, Twitter was really pushing into live video. They wanted to be like a TV on the internet. They were streaming Thursday Night Football games. They were making deals with all kinds of other content partners and that was what attracted Disney, was this idea that maybe they could take their catalog of high-quality content and get it to people through Twitter. You look at what Disney+ is right now, for example. It's possible that, that could have been like a role that Twitter played had this acquisition happened or in some way, maybe Twitter would have shifted and looked very different than it does today. But I do think it would have existed because the thing that Disney wanted it for is something that the company is still very much doing.
Deidre Woollard: Well, I find this fascinating with video because Twitter, they got it early on, they got it ahead of everybody, and they struggled with it. You've got the shutdown of Vine and Periscope. You've got these repeated mis-swings. You just talked about the Thursday Night Football. They keep building it, but then they keep not really being successful with it. What made this so hard to master for them?
Kurt Wagner: Yeah, the execution was obviously poor. I think when you think about what the Vine, for those who might not remember Vine was this short, six-second looping video. The people who used it were very creative. There was a whole community and culture that had been built around Vine, and it was very reminiscent, or sorry, very similar, I should say, to what we now see with TikTok. Twitter at the time had TikTok in the building, but they didn't nail it, and the biggest I think issue that I gathered was around this time, they were doing three different video offerings at once. All three were led by different people.
All three were competing for resources internally, there was no real cohesive effort. They had Periscope, which was live video. They had this professional produced live stuff, the TV stuff we talked about with the NFL, and then they had Vine and there was just no cohesion between those three. They were competitive. This, in my opinion, is one of the biggest mistakes that Jack Dorsey made when he came back was not figuring out a way to bring this strategy together. As a result, even though they were early to a lot of these things, they didn't execute on them well enough to ultimately establish themselves, I guess, as the premier place for them.
Deidre Woollard: I feel like they didn't give it enough time, either, especially with Vine because what you just talked about, I mean, you had proto-influencers. You had people that were doing stunts and things like that. It was pretty sticky and Periscope was less so, but Vine was interesting.
Kurt Wagner: Well, and one of the big things I think with Vine is, I don't think they ever did enough to convince creators that that was worth their time. Imagine you're a young internet creator. You're creating these fun videos, you built an audience on Vine. Well, at a certain point, you're looking to make money. Twitter and Vine were not offering them the ways to make money that YouTube was, that Instagram would eventually go on to do. If you're someone who that is your livelihood, you're going to go to the place where you can make some money and so I think they were just too slow to recognize that, hey, we have this great community. We need to figure out how they can stay self-sustainable, and they just didn't pivot quick enough to do that for them.
Deidre Woollard: Well, before Elon enters the room, we've got Elliott Investment Management. They pop up in the book. I've seen a lot of Elliott in the news lately. They've been looking at Crown Castle, which is a tower REIT I follow. They've been looking at Match, Phillips 66. What did you learn about Elliott's style by researching what they were doing with Twitter?
Kurt Wagner: It's a pretty simple style, which is what can we do to make the most money? They don't really worry a ton about the collateral damage. In Twitter's case it was, OK, we have this service that's incredibly popular, but we have a guy who's running it who has another full-time job like this just does not equate. Like the thought was, Twitter would simply be worth more money and would be more valuable if the person running it did it as a full-time job.
It's a hard thing to argue. Most companies of that size should have a full-time CEO, and so they came in with that mindset like, hey, it's nothing personal. Jack, we don't dislike you as a person But the fact that you're running two jobs, it hurts the value of this company and we need to figure that out. I really liked this chapter and I really liked to digging in on this because it was a really fascinating business clash to watch this activist investor try and boot the CEO from the company while the board of directors is actively fighting to keep him. Ultimately, I would say the board won in the short term, Jack got to keep his job.
They had to make a bunch of I guess, concessions to Elliott in order for that to happen. But in the long term, I think Elliott actually got what they wanted, which was they got a much more focused company. They got some very specific goals around the business, around user growth, around revenue, things like that, that Twitter had never had to do before. Ultimately, Jack Dorsey left the company about 18 months later, and I think a big reason was that this had burnt him out and this had really bothered him. Even though he got to keep his job short-term, I think Elliot got what they wanted in the long term, which was that full-time CEO for Twitter.
Deidre Woollard: Well, you mentioned that it was nothing personal, but he took it personally and I think that's something that he has in common with Elon Musk, is this idea of taking business things really personally. So the relationship between them is interesting and we knew that Musk loves Twitter, but the relationship between Musk and Dorsey I found really interesting in the book because it gives us a good flavor that there's a mutual admiration society there. But then it seems like there's been less of that over time. So I think I see some of the ways that they're similar but tell me a little bit about where they're similar and where they differ.
Kurt Wagner: I'll start with the differences because I think they're more striking. I think the way that these two choose to manage and lead is very different. Jack was very thoughtful, almost to a fault. He was generally slow. He was hands-off. He didn't like to make a ton of decisions. He'd like to empower the people who reported him to do that. He served as an advisor, if you will. Then Elon is the exact opposite. He runs a million miles per hour. He makes all the decisions himself. He doesn't necessarily care too much about the feelings of his employees. He's just working toward his ultimate mission and if you get in the way, you either run with him or you get run over. So I think from a management standpoint, they were incredibly different.
Where I think they were similar is that I think jack had this idealistic vision for Twitter about what it could be or maybe should be, if it wasn't a publicly traded company and I think Elon bought into that or agreed with that. I think where they met was like, OK, we manage things differently. We treat people differently, but our vision for what Twitter could be or should be is the same and that's where they shook hands and seemed to be on the same page. Now, obviously, I don't think that's materialized in the way that certainly Jack Dorsey had envisioned but I think there's also something to be said about being rich and being a founder. It's a small crew, it's a small social circle of billionaire tech founders. So I think sometimes people who are in that circles gravitate toward one another simply because there's very few people in the world who can relate to what they go through, what their life is like, and I'm sure that there was some of that as well.
Deidre Woollard: Let's talk about when he comes in. He comes into this company, he brings a sink in the building, it's all nuts. It's like a how-not-to, because there's layoffs, there's chaos, there's a climate of fear, there's just bad communication, there's threats. Is there any positive lessons that we can learn from the general disaster that happens when he decides to take over?
Kurt Wagner: I'll maybe give him two, I don't even know if they're compliments, but I'll maybe say there's two things that maybe were on the right track at least to start. The one is like when you take over a company like this, being very dramatic in terms of your changes, I actually think is an OK thing to do. Twitter was in a rut. It had spent a long summer as we've talked about with the lawsuit and all these things and I think the idea of coming in and really trying to be radically different is actually OK. I don't think he executed on this idea very well, but I think in theory, being radically different wasn't necessarily a bad idea. The other thing that I think he did or at least the intentions were there to do, was he moves very fast.
Twitter had a history of moving very slowly, of second-guessing themselves, of taking forever to launch things and this idea that Elon had came in and wanted to move quickly and was willing to literally sleep at the office to get things done, set it set that example for people. I don't think that's healthy work-life balance by any stretch, but I do think there's something to be said about his willingness to move fast in the tech world can be somewhat commendable sometimes. Now, again, I don't think he executed either these things very well. I think he didn't really have a set plan when he came in and then the moving too quickly actually got them into more trouble because there was no plan that he was following. But I think on paper, those two things could have been positives had they been handled a little bit differently.
Deidre Woollard: The new X, it's a different place. I've been on there, I think I joined Twitter in like 2008. I tried to move on, I'm trying -- I've tried Threads, Jack Dorsey's got Bluesky. Nothing has quite measured up so far. So is Twitter like a time-and-place phenomenon, do you think? Or is there room for the next big short message social media service? If so, do you see anything? What are you using? Are you still on Twitter?
Kurt Wagner: Yeah, I am still on Twitter. Now X, of course. I like to think that I'm mostly there because I cover the company, but to be honest, I still do get some real value out of it. I'm a big sports fan and like the sports news and sports community on Twitter, I think is one of the things that has actually been able to stay somewhat strong. But I've been thinking a lot about this, like can Twitter be replicated? I'm not so sure that it can, for a couple of reasons. No. 1, the thing that made Twitter so unique and great was that pretty much everyone felt that they needed to be on it in terms of celebrity. So if you're a politician, if you're a musician, if you're a journalist, if you're a celebrity of some kind, there was this feeling that you had to be on Twitter because that's where people talked about things in public. I'm not sure you could convince that collection of people that they need to be anywhere in 2024 or beyond.
I think we've gotten to this point in social media where people, 10-15 years ago thought it was a necessity. Now people have realized, well, there are pros and cons of social media, but it's not something I have to do. So that's what to me made Twitter so unique was like the collection of people who you could hear from, quite frankly, on a regular basis. I just don't think you could convince all those people to come back and then as a result, you're never going to have that community in one place again. I think we're seeing that right now with how things are starting to splinter. As you mentioned, Threads or Bluesky or even Instagram. Obviously, it's not Twitter, but it's a place where I think people have migrated or said like, OK, I don't have my Twitter anymore. I'll focus on Instagram instead. So it's hard for me to imagine all those groups coming back together in one place again.
Ron Gross: Coming up after the break, Emily Flippen and Andy Cross return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money.
Mick Jagger: Please allow me to introduce myself. I'm a man of wealth and taste. I've been around for a long, long year. Stole many a man's soul to waste.
Ron Gross: 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. Welcome back to Motley Fool Money. Ron Gross here with Emily Flippen and Andy Cross. Fools, we've got time for one quick story before we hit stocks on our radar. Beginning Feb. 26, KFC is introducing for the very first time in the U.S., its international smash hit Chizza. Featuring two 100% white meat, extra crispy fillets topped with marinara sauce, mozzarella cheese, and pepperoni. So Fools, what do you think? Would you try it? Will it be a hit in the U.S.? Emily, you are up.
Emily Flippen: Did you just asked me if I've ever had Parmesan chicken? [laughs] That's what this is. You're breading a piece of chicken, covering it in marinara sauce, and then putting cheese on it, then selling it as a "limited time offering," like I've never had chicken Parmesan.
Ron Gross: That's fascinating.
Andy Cross: Emily is not doing the piece of pepperoni.
Emily Flippen: That's true.
Andy Cross: Add that into and it's a completely different animal, plus you got to eat it on just with at the bottom. How do you hold the thing to eat it on a piece of paper? I'm just curious in how you eat it.
Ron Gross: Knife and fork, I'm guessing.
Andy Cross: Knife and fork? No way. [laughs] You just devour that thing.
Ron Gross: All right, Fools. We've got a couple of stocks on our radar and I'll bring in our man, Dan Boyd, to ask a question and pick his favorite. Emily, you are up first. What do you got?
Emily Flippen: The stock on my radar this week is Grab. The ticker is G-R-A-B. For investors who are unfamiliar, Grab is based out of Southeast Asia. It operates a little bit like Uber Eats or Grubhub, where they have mobility, they have transportation, delivery, logistics. A one-stop shop of sorts. They came out and they posted their first ever quarterly profit this quarter, fourth quarter 2023. They also approved a $500 million share repurchase plan, which is really interesting. The company doesn't have absurd stock-based compensation, but it does have a ton of cash on its balance sheet. So what they're saying is effectively, well, in the meantime, while we figure out what to do with this cash, why not reward some shareholders through share repurchases? What I'm continuing to watch, though, is just how they manage their incentive payments to drive expansion in both active customers and the number of orders. They've had a 12% increase in transacting users over the last quarter, which is great. But I want to see those incentive payments continue to come down.
Andy Cross: Dan, you got a question about Grab?
Dan Boyd: So I'd never heard of this stock before Emily brought it to the show. I was looking it up and I still don't really understand what they do. Emily, could you give us a quick primer?
Emily Flippen: Have you have you gotten an Uber before? Have you ordered Grubhub or Uber Eats? Have you sent a package to somebody you love? There you go. You got Grab.
Ron Gross: I'm still not sure what they do. Andy, you're up. What are you looking at?
Andy Cross: Team, I'm looking at HubSpot, H-U-B-S, a subscription CRM tool, customer relationship management to more than 205,000 customers who rely on that tool, especially small, medium-sized businesses, $30 billion company, $600 stock price. The stock's up 55% in the past year. It's growing about 25% and sells for about 14 times multiple on those sales. What's really interesting is they have recently announced a new pricing scheme. So they provide these hubs that around operations, content management, customer service for these clients, sales of the big usage of them. They are now doing a new pricing plan that removes some of the seat limitations. It's easier to upgrade, aligns the pricing with some of the new CRM tools and some of the new AI stuff there they're inputting for. So that's going to hit in March, so I'm really watching to see how that impacts both their subscriber base as well as some of their revenue numbers.
Ron Gross: Dan?
Dan Boyd: So this company, they don't make hubcaps?
Andy Cross: They do not make hubcaps. But I believe they probably help a company that does make hubcaps.
Ron Gross: Dan, we've got Grab Holdings and HubSpot, neither of which you understand, what are you putting on your watch list?
Dan Boyd: This is a tough one, Ron. I'm going to go with Grab just because, I don't know, Emily's made more sense with her explanation.
Ron Gross: All right. Emily Flippen, Andy Cross, thanks for being here. That's going to do it for this week's Motley Fool Money. Thanks for listening. We'll see you next week.
