In this podcast, Motley Fool host Anand Chokkavelu and contributors Jason Hall and Matt Frankel discuss:
- The Aug.1 tariffs.
- This year's four-day Prime Day (and whether Amazon stock is a deal).
- Elon Musk's political party and Tesla.
- Bold predictions.
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A full transcript is below.
This podcast was recorded on July 08, 2025.
Anand Chokkavelu: What are you buying today? Motley Fool Money starts now. I'm Anand Chokkavelu and I'm joined by two of my favorite Fools, Matt Frankel and Jason Hall. They we're talking Amazon's Prime Day. It's more like a prime week at this point, the latest on Tesla and Elon Musk, and we'll make some bold predictions. But first, let's update ourselves on tariffs. What's going on there, Matt?
Matt Frankel: Well, the tariff news seems to be changing so quickly. We're only recording this a few hours before it's being published, and I'm worried, if I'm being honest. The president announced a whole new round of tariffs yesterday, set to begin on August 1st for 14 countries, and that includes Japan and South Korea, which are our Number 4 in six trading partners, actually. Those both got 25% tariff rates. Some of the announced rates were as high as 40%. The president also said that the August 1st date is not set in stone. He said, "It's firm, but not 100% firm." I really think this is more noise than news at this point. Remember the initial Liberation Day tariff rates with the thing that looked like the cheesecake factory menu, [laughs] and then the pause that was announced until July 9th? This might be an effective negotiation tactic to get better trade deals. To be fair, it looks like it might be. But until anything actually goes into effect and is actually finalized and signed by both parties, it's noise. But in other tariff news, there is a good possibility that we're going to see a European Union trade deal soon. Each of the countries in the union are small trading partners, but collectively, they actually would make up our number one trading partner in terms of both imports and the trade deficit we have. It's definitely worth watching.
Jason Hall: From an investing perspective, maybe the Taco trade's real and still alive? I don't know. We've got another extension, another delay here, so there is a group that are going to say it's another chicken out moment. But I don't know if that's really investable for most of us. But thinking about the broad economic impact, I do think that for our trading partners, they're in a tough position. There's the tension between continuing to delay and avoid substantial tariffs because it seems like they keep getting kicked down the curb. But also, all of their industry and government spending, they still have to plan, too. All of the uncertainty weighs in there. But if you look at the markets, it seems like the markets are just shrugging this off is what's become business as usual. Maybe it's this fall before we really find out if litigation continues to play out, and eventually this ends up at the Supreme Court, it might have been a whole lot of work for the Supreme Court to say, hey, Congress, you guys need to do something. The president can't do this. We'll see.
Anand Chokkavelu: Jason, today's Amazon's Prime Day. We all know the deal. This is Amazon's once brilliant move to juice sales during the summer doldrums, maybe pull forward some of that back to school shopping, taking a little market share. It's grown to four days long now. It's doubled from last year. Any takeaways for investors? You know what? Is Amazon's stock priced as a Prime deal at this?
Jason Hall: You're not including the early days, the pre-Prime days deals that they do for people that can't hold off and wait for the four whole days. My wife may or may not have changed my Amazon password as an Amazon shopper. I'll tell you, there are some things that I'm looking at, for sure, but there's not much of an investing takeaway from that. It has become an event. It's become a retail event. But if we start looking at the business, the e-commerce business has really bounced back. There was some much needed restructuring a couple of years ago of expenses after the massive expansion during the pandemic. But that added scale, it's really, really paying off. It's e-commerce- revenue since 2019, so clean before the pandemic is up 77%. They've added $110 billion in e-commerce sales on a trailing 12 month basis.
Here's another interesting data point. Third party services revenue, that's also up by over $100 billion. Amazon's role as a giant in fulfillment has also exploded along with its own sales. But on AWS is still the big profit driver. Generates more than half of operating income, but only off of 17% of revenue over the past four quarters. Now, the stock, is it a Prime day deal? Maybe. Trades for less than 21 times operating cash flow. If you look back over the past decade, that's cheap. Here's the problem. They put about 85% of that operating cash flow right back into the business. But they need to right now, especially building up the tech infrastructure and R&D spending, but only time is going to tell if it can start converting those investments into free cash flow.
Matt Frankel: AWS is definitely the biggest profit driver for now. You also didn't mention the advertising that they're building out. That's one of the faster growing parts of their revenue, which is technically reported under the e-commerce platform. But it's a higher margin type of revenue than it gets elsewhere. Amazon certainly is not as cheap as it was just a few months ago, but it still looks very attractively valued, considering the recent progress with both efficiency and profitability of the business and all that growth you mentioned.
Anand Chokkavelu: Well, you got to raise the price right before you do the discount. [laughs] It's just a little stock trick. Speaking of those deals, any top prime deals for your household, Jason?
Jason Hall: I have to admit I'm eyeing a robot lawnmower. But I'm not convinced just yet, but since it's not Prime Day, it's Prime Week, like you said, I got a little time to think about it.
Matt Frankel: In the past few years, we've bought the kids the new Fire tablets because they're so cheap on Prime Day. I haven't looked yet, but I'm sure my wife has and has a plan. I like it when she does the shopping, because then when a bunch of packages show up and it's like Christmas.
Anand Chokkavelu: We've got a kid who never brushes his teeth and has destroyed his previous electric toothbrush, but we still waited a week to see if there are any deals. Spoiler alert, no deals on the specific toothbrush [laughs] we wanted. We also looked at Walmart and Target who do similar Remora to the Amazon Shark sales. But we'll see. I'm sure we'll be buying a bunch of stuff.
Jason Hall: Well, Anand, do you know what you call a kid that won't brush their teeth?
Anand Chokkavelu: What?
Jason Hall: A kid.
Anand Chokkavelu: [laughs] Exactly. But this is where he's beyond the normal distribution.
Matt Frankel: I was going to say you've won, too. [laughs]
Anand Chokkavelu: Right. At least versus his brother and all of his cousins. Let's move on to the boy who may have cried wolf on focusing less on politics and more on Tesla. What's up with Elon Musk today, Matt?
Matt Frankel: Oh, I assume you're talking about the new political party that he's starting the American Party, because there's a lot that's up with Elon Musk. Between Tesla, between SpaceX, between xAI, between all the other things, there's a lot that's up with Elon Musk. He wanted to add one more thing to his plate by creating his own [laughs] political party. To be fair, he ran a poll on X, formerly Twitter, asking who would want a third party. Overwhelmingly from millions of votes and not just like his own followers, through millions of votes 80% or so said yes. One of the party's stated goals is to get Republicans out of office who voted for Trump's bill. We all saw the big public fallout between him and the president. That's really what led to this. He describes the party as a tech centric, budget conscious, pro energy, and centrist party with the goal of drawing both disaffected Democrats and Republicans. Now, this is easier said than done.
This is not the first attempt to create a third party. There are actually like four or five of them already in existence that don't have any traction. It's very difficult to gain any traction as a third party. You would essentially have to set up a political party in all 50 states because all the local rules and things like that, it's all different. You need a lot of money, which fortunately he has. How much he wants to spend on this is another issue. But he has the resources to do it if he wants to.
Jason Hall: I think the investing take, if we circle back around to Tesla and is honored as you joked there at the beginning, the boy who cried wolf, clearly, Tesla shareholders, as much as from a political perspective, I'm sure there's a lot of people, no matter your political affiliation, that are so frustrated with the environment that support the idea of this. Tesla needs to figure out how to start selling more Teslas. They need the resources from selling more Teslas to pay for so many things. The company is at a major inflection point right now. Dan Ives talked about this with where they stand with trying to start bringing robotics to commercial use in the next few years. We've seen what's going on in Austin with autonomous driving. That's such a massive future part of the business. You got to start selling more Teslas and generate the cash flow to fund these things. There's even more headwinds now with some things in the spending bill that was passed that are going to gut a pretty important part of Tesla's profitability with emissions credits. There's a lot of reasons for investors to certainly be concerned about this wherever you stand as an engaged citizen.
Anand Chokkavelu: Elon Musk is famous for his bold predictions. After this break, we'll have some of our own.
Time for a segment we call bold predictions. Jason, start us off. What's your bold prediction?
Jason Hall: I'm going to stick with the theme from the show today, Anand, and talk about Tesla. I think Tesla's stock in the near term, it's probably going to rebound. But those robotics ambitions, the autonomous driving ambitions, I think they might be about as successful as the Solar Roof has been so far, and that's to say not very. At least not within the next five years' time. Now, a couple of reasons why. Number 1, I think we've seen some very ambitious, you talked about Musk's predictions about things. They've accomplished a lot of great things, but always years and years later. I think that's going to continue to play out.
But I think the concern that I have, and this is really at the heart of the prediction is that while the stock might rebound in the near term, I think the next few years are going to be really, really tough for Tesla and probably tough for Tesla shareholders because there's so much of those future prospects that are baked into today's price. I think as the realization comes out that those things are going to take longer and longer to monetize, and they might be harder to monetize if Tesla can't start selling more Teslas instead of less Teslas, then shareholders may be really in for a tough time in the next five years or so.
Matt Frankel: I'll make a very bold prediction, and I'm going to say that the Fed is going to surprise the market and cut rates this month when they meet at the end of July. The market's only pricing in about a 10% chance of that happening right now. But based on what the Fed governors have said, other than Jerome Pell, it's more likely than that to happen. I think there's a lot of economic data between now and then, a lot of trade deals that can be settled between now and then to calm the Fed's nerves. I think it's going to happen earlier than people think.
Jason Hall: That would be positive for Tesla.
Matt Frankel: True.
Anand Chokkavelu: Here at The Motley Fool, we live on feedback and Amazon gift cards. Be part of that feedback or to ask a question. Email us at podcast at fool.com. 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. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards. It is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes.
Anand Chokkavelu: Jason Hall, Matt Frankel, the entire Motley Fool Money team, I'm Anand Chokkavelu. My bold prediction is that we'll see you tomorrow.
