On this episode of Okay, Computer, Dan Nathan interviews Gene Munster, co-founder and managing partner at Loup Ventures, to discuss Snap cratering on its earnings report (1:00), whether we will see a Tesla relief rally (8:35), Microsoft and Alphabet kicking off big tech earnings this week (13:00), why Meta has the most upside potential relative to big tech (20:00), what to expect from Apple’s report (23:15), and why Gene thinks Amazon is the wild card of the group (28:00).
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Show transcript:
Dan Nathan: [00:00:37] Welcome to Okay, Computer. I’m Dan Nathan. I am joined with Gene Munster. He is the managing partner and founder of Loup Ventures. Gene, welcome back to Okay, Computer. [00:00:47][10.3]
Gene Munster: [00:00:48] I’m a fan. Thanks, Dan. [00:00:49][1.2]
Dan Nathan: [00:00:50] Thanks bud. Well, listen, last quarter we had this great pod. It was you and me. It was one on one. We hit the big five earnings are all coming in the same week. You know what they are, they’re Apple, they’re Microsoft, Amazon, Alphabet, and Meta. And we’re going to hit all of those because they’re all reporting this week. You have positions in some you do deep research in all of them. But first, Gene, I want to take a quick step back. There are some big movers over the last week or so in tech earnings. And Netflix had that huge rally. We had SNAP that had that massive 30% one day decline after their Q3 results. And then we had Tesla, which is one which I think, you know, we’ve kind of you and I have gone back and forth on this one a lot. And I think that you have a really nuanced view in Tesla. You have a very like like steadfast long term view on it. But near-term you’ve been really apprehensive. Let’s start with SNAP because, you know, 30% in one day, there are some huge gaps in this chart here. The company announced a huge restructuring in September. Okay. Where they were going to do workforce reductions or cutting some non-core business lines. It seemed like Evan had this sort of come to Jesus event. I saw him live with Kara Swisher at the code conference in September. Were you surprised, based on the myths that they had, that the stock reacted so negatively? [00:02:12][81.7]
Gene Munster: [00:02:13] Yes, I would have expected, if you give me that press release and said, what’s the stock going to do? I have said down 10 to 15%, down 30 to me is an indictment in terms of the conviction that investors have. It was, I think, an overreaction. Keep in mind, they guided revenue down for the December quarter by 6%. March of next year probably comes down by an equal amount. So that 30% move that gap is is really multiple going away because just loss of confidence. It’s unfortunately not the first time that snap in the last year has had one of these big down days and I think that that probably plays into it. And you can keep talking about restructuring and trying different things and have this growth plan that’s well articulated on a big deck. But until investors start seeing it, I think that they are going to be apprehensive about it. And that’s why you got that big drop. [00:03:09][55.8]
Dan Nathan: [00:03:10] All right. So eight and a half dollars are traded as low as, I think $7.40 on Friday. So and right now, as we’re taping Monday afternoon into the close, it’s $8.38. So a decent bounce today after that, down 28% on Friday. But was there any silver linings? You know, we know, again, I was surprised at the magnitude of the drop because of all we knew what the company is in the process of doing. When you announce a 20% workforce reduction, it takes time, right, to work through that. It takes time to close down divisions. There’s going to be charges. These are known knowns. But one of the things that I thought and again, I was long a position coming into it, fully prepared to buy more, I actually have my average, just to be very clear, below $8. Okay. I was aggressively buying it Friday morning here. And I think that this thing has easily the potential to double over the next year, probably 200 or 300% over the next few years. And I’ll give some reasons later, maybe why. But user growth was up 19% in the quarter to 363 million daily active users well above that of Twitter’s a company that is being taken out probably at the end of this week by Elon Musk for $44 billion. And I look at SNAP similar revenue base in and around 5 billion either side. And I say to myself, okay, man, this has got a $13 billion enterprise value, too cheap of an asset. [00:04:33][83.7]
Gene Munster: [00:04:35] So we we have an ETF and we own SNAP, we own it and the ETF going into the print and we continue on and haven’t changed our position on that. And it’s messy, it’s an indictment, but in the end, I think these storms do pass. And you’re exactly right. The the silver lining here was that user growth, it’s a similar type of user growth that they had last quarter. That’s off of a smaller number compared to Meta, Facebook. But they’re they’re growing their use at 2%. And so this is still like really impressive growth. And I think that the piece that gets us excited about it is beyond anything that we’ve talked about, which is the opportunity around augmented reality. And I think that even though it has become a punchline, I think that it is a logical use case for consumer tech in the next couple of years. I think Apple is going to do a lot more on it. Obviously, Meta, Google, Samsung, we’re going to Microsoft is in there going to do more on this. And I think that they have an opportunity to become kind of the first company that really is AR native advertise. And then you ask the quick question, what is what does that mean? Snap air advertising is effectively you can just use some of those filters to look at products in your house or look at shoes or women, use some of the filters to try on different cosmetics digitally. And so there’s an opportunity there. And I think it’s not being reflected in the current share. I wish they would handle their calls differently. Either some definitely cleaning up on the edges. But the substance of your view I agree on. [00:06:12][96.7]
Dan Nathan: [00:06:12] Yeah. I mean, listen, this is going to be a much smaller, leaner company that has a very, very dedicated user base. And like you said, it is growing faster than many of their peers. I guess the problem in a recessionary environment, despite the secular tailwinds of digital ads, is that, you know, advertisers are going to places where they can take it to the bank where it’s not a fickle teen. As the end receiver of that ad, I think you and I talked about that, or at least you talked about it on fast money last week as this result was coming out here. One thing I just think is interesting, again, in a world where, you know, the richest man in the world can buy himself on a platform like Twitter. If that is going to happen here, I think there’s a lot of potential for activists. I know that Evan Spiegel, the CEO, founder, has probably super voting rights and all that sort of stuff. But when your stock is down and out, down 80 percent like this and you’re well below your IPO price of five years ago or whatever, you can get pushed around by activists. And I suspect you might see some sort of activist. I think you could see some sort of individual take a large stake, I think, or maybe even a strategic after the midterms might be able to buy an asset like this, especially if Elon Musk is able to buy Twitter alone. Just thoughts on that really quickly. [00:07:28][76.1]
Gene Munster: [00:07:29] I think it’s ripe for that. I think that typically you want to have a founder in charge. But in this case, I think with some of the stumbles, I think that Evan, maybe a different role, maybe a role that’s more product related might better suit his strengths. And so, yes, I think that it is ripe for that. Always hard to call when you get shareholder activism involved. And but I think that this is probably in the top five list of companies that that consider, especially as you said, with everything that’s going on with Twitter. [00:08:00][30.6]
Dan Nathan: [00:08:01] Yeah, I know in the last point I’ll just say here is that the largest shareholder is Tencent, obviously a Chinese, you know, social media conglomerate. And given everything that we know that’s going on over there, I wonder if there is an opportunity for some sort of shareholder turnover, if you will, if you think about what’s going on with the Chinese markets. And then we also obviously can’t, you know, not talk about TikTok here, you and I, on our last pod when you were on in July, we both think there’s a decent chance that eventually, you know, TikTok were to be banned here in the U.S. And clearly, I think your thought was that benefits Meta almost ost immediately. But it would also benefit Snap [00:08:37][36.1]
Gene Munster: [00:08:38] Would benefit Snap I think the probability goes up every month, especially after last weekend. And some of the the continuation of leadership, some of the commentary, some of the changes to President Xi and his Cabinet. And I think that some of the changes that the US has done in terms of executives who work in China, in the semiconductor business, have been recalled if they want to maintain their U.S. citizenship to come back to the U.S., I mean, TikTok is right in the vortex of everything that’s going on with this. And I suspect that it’s not going to be available in the US within a year or two. [00:09:11][32.7]
Dan Nathan: [00:09:12] Yeah. Alright. Real quickly on Tesla, this one again, you know, it’s obviously always hotly debated here. They reported results last week. We know that the deliveries for Q3 had already missed. They kind of stuck by their delivery guidance for the balance of the year. It seems like it could be very hard to achieve. We know that today, on Monday, they lowered prices in China after having raised them. Not too long ago, the stock was making a new 52 week low. Today, it reversed again. There was some thought that if Elon is forced to close on Twitter and maybe some of the equity contributors that it agreed to help him on that front in the spring are no longer there because of valuations and rates and everything that we, you know, kind of spend a lot of time talking about that he was going to have to sell more Tesla stock to get that equity component to where it needs to be. Do you think that was some of the weakness post the quarter here and might we see if he is forced to close and he does have the equity and he’s got the debt lined up from the banks, might you see some pressure taken off Tesla and bounce a little bit? Because again, this stock a month ago was trading above 300 and right now it’s $210, down 40% of the year, down 50% from a year ago levels. [00:10:24][72.0]
Gene Munster: [00:10:25] I think he probably is selling. I think that’s putting pressure on the stock. I think that you will see a form of a relief after everything comes to fruition here. And what’s the reason why you mention All those different factors in terms of raising money. I think the the piece about some of the money coming from outside of the US seems to have raised some eyebrows in Washington, and I think that that element is probably the most stressed piece of it. So I think that there is some he probably is raising some money here. There wasn’t enough in negativity, I think in the in the quarter in their commentary to suggest that this kind of continues to fade when the overall market is kind of holding up. And so I suspect that there is some other X factor going in. And as you said, I would expect for the stock to reverse. And ultimately, I come down to maybe beyond just to kind of a quick a bump back up in shares. I think that there’s still this bigger question about where Tesla is. We may have a little bit of a different opinion. I think that what we saw in the September quarter was was a wake up call. I think for for people who believe in the story, people who see where this is going, including myself, you typically beat numbers. They have made a habit of that over the last two and a half years. And now you have a situation where they’re they’re not doing that. And I think that that is usually a sign of just a piece where investor expectations are to they just need three or six months to just to kind of rerate themselves. I remember Apple went through this period with the iPhone when its growth started to slow and it took a step back beforeit could take a step forward. [00:12:01][96.7]
Dan Nathan: [00:12:02] Yeah. So lastly on Twitter again, so the judge in Delaware had given both sides, Twitter and Elan to October 28, that is this Friday, to close this deal. The the headline that you referenced about the government eyeing this deal, maybe about where he was getting some of the capital. And he’s also been really active, you know, with the former president of Russia, you know, talking to him on Twitter in an open conversation about the war in Ukraine and some of the commentary has had towards, you know, China and stuff. I mean, all to me, it just looked like a ruse to kind of maybe draw some more attention to the fact that the best case scenario for him is that that if the feds did block the deal because he doesn’t want to buy it for 44 billion, his equity contributors don’t want him to buy it for 44 billion. The banks who provided the debt don’t want him. The only people who want are are Twitter shareholders. The people at Twitter probably don’t. They don’t own enough stock. And he’s already said that he’s going to fire maybe 75% of them. So to me, I still think there’s a chance this thing doesn’t happen. But I’m the only idiot out there who does think that. [00:13:06][64.0]
Gene Munster: [00:13:07] I would say there’s a 5% chance it doesn’t happen, but the 5% can hit. [00:13:10][3.3]
Dan Nathan: [00:13:11] All right. When we come back, we’re going to go through all of this week’s massive tech earnings. Current Ad. Masterworks Ad. Taboola Ad. This is kind of like the Super Bowl tomorrow night after the close on Tuesday, we have Microsoft and Alphabet reporting. I think Microsoft is probably the one that’s more interesting to probably both of us. I know that you own Alphabet. So Alphabet is results are interesting to you. But as far as trying to kind of read the tea leaves and kind of extrapolate what one of the largest companies by market cap, by revenue, all of the geographies they touch, the dollar exposure, the enterprise exposure. Right. Lot of things going on here. Talk to me a little bit how you’re thinking about this Microsoft quarter. The stock has, you know, underperformed the S&P a little bit. Obviously, it’s the second largest component in the S&P also the second largest component in the NASDAQ, but, you know, down about 26% on the year. The Nasdaq 100 down 30%. The S&P is down 20% year. Is this like the big kahuna? Is this one that going to set the stage for the whole week? [00:16:29][197.4]
Gene Munster: [00:16:29] I don’t think it will set the stage for the whole week. I think that it is going to obviously, along with Google is going to have a big impact on it. But I think there are some factors that are impacting Microsoft that investors will probably say are more related and obviously that’s on the Enterprise. You mentioned about Musk cutting 70% or 30% or 80%, whatever the number is, he’s going to let some people go at Twitter. That’s been a pretty common theme among some of the information workers is some of these headcount reductions. We’ve heard a lot about that from big tech over the last few months, very different than what we think about the bell curve or the labor curve and think about other jobs that you don’t hear about companies laying off. You don’t hear Chipotle laying off people who are working in their stores or trying to find people to do that. And so I think that, you know, this kind of rationalization in terms of what’s going on in the enterprise, I think Microsoft is at more risk. They are at risk. I think that they will I think they’ll probably talk about some of that risk in the quarter. I don’t know this I believe the stock is going to implode because there’s no other place for these businesses to go. They are the still the gold standard in terms of work tools. But the I think that that is a factor and I think we’re going to see more of that. Even if GDP growth is good. And the most recent quarter, I still think that businesses are starting to cut essentially informational workers, and I think that Microsoft’s at risk. [00:17:53][83.5]
Dan Nathan: [00:17:53] We did see, you know, in Q2 results, a deceleration in cloud growth among Microsoft. You know, AWS right. That was kind of a theme throughout. So I wonder if that’s kind of something that we look back at at the end of this week and just say, you know, maybe that was a little bit of a canary in the coal mine. And then when you think of some of these SaaS companies that sell your licenses to seeds, if you’re starting to see, as you call them, information workers being laid off, I mean, that’s the sort of thing I think that people like me are really looking for because we haven’t really seen that yet in the enterprise. And I know that back in June, I think you and I talked about it, I think it was like the Service Now, CEO, Bill McDermott had kind of made some comments about slowing enterprise demand, at least from what they were saying. But it wasn’t really confirmed among many of its peers at the time. [00:18:39][46.0]
Gene Munster: [00:18:40] It wasn’t. And it’s in some cases, you know, just this idea of a slowdown in terms of hiring, it sounds out of touch with reality. But if you if you’d rewind nine months ago, a year ago, and say that the housing market’s going to slow down, that would have seemed like a comment that’s out of touch. [00:18:54][13.7]
Dan Nathan: [00:18:54] Yeah. And lastly here, so so Microsoft again, you know, the stock was trading a year ago above 340. It’s trading just above 240 right now, trading about 24 times this year. I think high single digits expected EPS growth, maybe 10% sales growth, flat margins expected 68% here. Obviously, you know, like all the stuff that generates tons of I mean, things are going just fine here. Does 24 times bother you at all this year and 21 times next versus an S&P that’s likely to troughed somewhere 13, 14 times if we really are in a recessionary environment some point in the next, let’s call it couple of quarters. [00:19:31][37.1]
Gene Munster: [00:19:32] Yeah, I think you can find better places to to to have outperformance. So we own some of large cap tech and we don’t own Microsoft. And I think that does 24 times bother me. I’d much rather own Apple just given some of the other opportunities that they have longer term than something like Microsoft. I think Google better optionality value. I understand that Microsoft has, of course, a stable business, but for E to kind of earn and retain and grow a multiple, you’ve got to be inspiring investors. And I still think cloud isn’t enough to inspire. They’re just not doing enough in AR. And it’s still a relatively straightforward, dare I say, boring business right now. And I think you need a little bit of spice to keep the multiple up. [00:20:17][44.8]
Dan Nathan: [00:20:18] Yeah. Alright. Let’s talk about Alphabet. They report tomorrow after the close and, you know, expected. We’re just looking at out years, you and I, at this point. Right. So if we’re just talking valuation, 2023 expected EPS growth, about 15%, maybe similar, a little less on the revenue side, trading about 18 times about as cheap as you’ve probably ever seen Alphabet, right, if you think about it. Very stable margins. Talk to me about this one because again, you know, you can look at you can you can take what, you know, Snap had to say in some other ad platforms. You should try to extrapolate that to Google. I think probably you following this company for more than 15 years, you tell you that’s usually a fool’s errand because they’re the ones kind of setting the stage. They’re not the ones being displaced. Hearing their thoughts on Google again, the stock’s down 30% of the year. It was trading at an all time high, a new all time high after they reported their Q4 back in February. Remember that huge gap there? Yeah. Filled out the whole thing and now in memory. Yeah, well, it just it’s just fascinating to me because again, I know that a lot of the fears that a lot of tech investors had about valuations at the time, because they were certain that interest rates were at least going to come off of that zero, you know, interest rate bound. I don’t think many thought rates would be as high as they are resetting valuations. This valuation looks reasonable. The question is, can they achieve double digit earnings and sales growth next year because then 17 18 time seems reasonable for Alphabet. [00:21:37][79.8]
Gene Munster: [00:21:38] I don’t know if they need to achieve double digit growth next year. I agree. I’m looking out 6 12 months from now. I don’t know if they need to do that. I think they need to continue to show that they is. So there’s some similar aspects to what Microsoft’s doing a steady business that’s kind of boring search is kind of boring, but they’re just finding ways to continue to improve the search experience and therefore improve the monetization of it. And so I think that in part what we’re going to see this week is a little bit of a relief, although as you said, a lot of investors are looking beyond what happened with Snap, but it’s still in the back of your mind and you can kind of parse through what was said. And there’s still some overall risk relative to the macro to Google. And I think that that has been weighing on the multiple. So I think if you just start to release some of that stress on the overall macro, presumably in the next six months or a year, I think that Google’s multiples are going to go up. Remember, they still have other bets. They’re still doing a lot in AI. They still have TensorFlow. They’re basically within Google Cloud, allowing you to run different AI models within that. That’s pretty unique. Other companies are doing it, but not to the same extent that Google is. And so I think that, in other words, kind of putting it together, I think it deserves a higher multiple, even though multiple much higher than its growth rate, given some of the optionality. [00:22:56][77.5]
Dan Nathan: [00:22:57] Alright. Well, here’s here’s one you just mentioned Meta here. Here’s here’s one that it’s expected growth rate, both earnings and sales is trading very near its p e multiple. And that’s Meta. That report that reports Wednesday after the close. The stock is down 61% on the year, down more from its all time highs. And again, this is one that was easy to kind of extrapolate after the snap results. It was down immediately in sympathy. We know they got a lot of problems, a product transition of epic proportions going on here. I think some people that absolutely love this story, even a year ago, even a year ago on the announcement of the name change and the change of focus are really not happy with the stock. The funny thing is and used to play this kind of ratings game all the time when you were an analyst on the other side, there are still 42 analysts this is per FactSet that rate the stock a buy there’s only 14 holds and four sell so the analyst community is still overwhelmingly positive. The valuation has never been cheaper. The expectations and the sentiment are just just horrible. So talk to me. Are we going to see anything that they might be able to buck some of the at least the sentiment trends that we have right now about digital ads and I guess their their outlook for their business, their core business and where they want to go? [00:24:12][74.5]
Gene Munster: [00:24:13] I think so. And if you look at big tech more broadly over the next probably six months, this probably has the most upside potential. We own Meta. We have not owned it all year. We’ve been buying it more recently and I’ve had a storied pass on this. I don’t like their products, I think pretty clear about that. But I think that there is this kind of reached a point where when you’re getting down close to ten times next year’s earnings number, it just felt like there’s there’s a positive risk reward here. The piece that doesn’t add up, I would say this is about as straightforward as upside potential as I’ve seen. The piece that doesn’t add up is pretty obvious. Pretty obvious that they have a a world class 40% of the the global Internet population looks at one of their properties daily. Yeah, that’s really important to advertisers. They’re going to be around for a long time. But, you know, the stock still just doesn’t doesn’t move. That’s a little bit concern, but I think when you put it together, I think we’re going to look back two years now and I’m probably going to say I don’t like their products and I think the stock’s going to be higher. [00:25:18][65.2]
Dan Nathan: [00:25:18] Yeah, well, it’s interesting. I mean, I almost feel like if this thing had one more gap, like one more gap lower, where, you know, and then you had like a downgrade of just guidance, a downgrade of just, you know, like ratings on the sell side. Investors just kind of finally hate sell it. You know what I mean? [00:25:35][16.2]
Gene Munster: [00:25:36] They haven’t had the snap capitulation point on Meta yet. [00:25:38][2.1]
Dan Nathan: [00:25:39] Yeah, and I’m kind of with you. You know, I took a shot and I tried to buy some earlier this summer, and I don’t like anything about the company. I don’t really like, you know, Zuckerberg either and what his vision of the future is. But, you know, if you’re just thinking about a divorce of all of that sort of stuff, you know, I would think if the if there’s one more gap, maybe down 15, 20% or something like that, above 100 bucks, like, you know, I’m hard pressed to think that this thing won’t be a double at some point in the next 3 to 5 years. All right. Let’s hit this one. This is this this is actually the big kahuna. I said it before. I mean, that was, you know, Microsoft’s the big kahuna for Tuesday. But this is always the big kahuna. As Apple reports, Thursday after the close, the stock has massively outperform the market this year, down only 15%. It seems like even on down days when things are getting, you know, shot and, you know, like this one is always just like money just coming into it. It’s coming out of other stuff and it goes right into Apple. And again, let’s talk about geographic exposure, dollar exposure. Obviously, China supply chains just not only depending upon obviously the manufacturing there, but also the sales outlet. Right. We know that Europe is obviously a huge region for them and we know that, you know, that’s a bit depressed. To your thoughts on Apple, is there a scenario where Apple in this brings me back to remember early 2019, I think it was like the second trading day of the year in January where Apple had their first negative preannouncement, I think over a decade. And it was specifically on China and you probably know came on this morning that China related. Yeah well no this was pre-pandemic this was week. Oh yeah. This was just China’s slowdown. I mean, so how is it is this company so much better managed than they were, let’s say, three years ago that they’ve been operating in a very difficult environment? Where are the products just that good with the demands always there. I was never a big believer in these super cycles, the next 5G phone or whatever, but like the relative strength is something that it would be stupid to ignore. [00:27:32][113.7]
Gene Munster: [00:27:34] And I think one of the ironies about their strength and what’s happened in the stock is that the piece that has been historically criticized, which is the hardware hit and miss boom and bust type of a cycle mentality with investors after some of the pain that happened in the smartphone hardware world years ago, some of that, I think that those issues are starting to become more clear that that’s a strength of the company. No other company. I mean, it’s a it’s the tagline for the company hardware, software and services for the only other company that I think does it to that extent is Tesla and different topic, but that’s pretty rare for companies to do all three and do them with excellence. And I think that’s a piece. And what does all that mean? It’s not just recycling some of their marketing language. What it means is that they make products that people like and that work really well and that obviously our lives are becoming more dependent on that. This is a similar thesis to ten years ago. It’s still plays out today, it still resonates true. You get other aspects. I mean, today they announced that they’re raising their price. If you look on their services, it’s about an average of about a 16% price increase that’s going to probably add about two and a half percent, 2.5% to overall earnings. So to put that into perspective, is this this price increase can add almost 2 billion, and that includes a 20% churn onto their bottom line and not very many companies that can flip a switch. And and all of a sudden, 2 billion in earnings shows up over four quarters, and investors love that. And then you also have some of the optionality about other things they can get into longer term. [00:29:09][95.4]
Dan Nathan: [00:29:10] Well, I’ll tell you one thing. I bought the first Apple Watch price seven or eight years ago. I had it for two weeks. That really bugged the crap out of me. I remember you and I have a conversation in the green room of CNBC’s Fast Money. This was years ago and you had one on your wrist and you were singing the praises for a whole host of different reasons. And then every year, you know, a new one come out and incrementally a little better. But it’s still the same form. Factors still look the same. Well, look at this bad boy, this new ultra for $800. This thing is dope, it’s the first one that I’ve had since the first. And I just. [00:29:40][30.8]
Gene Munster: [00:29:41] I got watch envy here Dan. [00:29:42][1.0]
Dan Nathan: [00:29:43] I saw it. You know what’s funny? I know you know Rick Heitzmann. He had a FirstMark of then at the NYSE a few weeks ago. And I saw a guy sitting next to me was wearing one. I’m like, What the hell is that? And then Rick had one, and the next day I got to get one of those. So yeah, you probably have to. [00:29:58][15.3]
Gene Munster: [00:29:58] Admit it’s not the the people or climbing mounds is definitely a statement. And they I think they’ve got something to watch as it’s going to rebound. It’s been struggling in the last couple of quarters, but I think it’s going to rebound nicely. [00:30:10][12.2]
Dan Nathan: [00:30:11] While the service things interesting too, because we know that they’ve been decelerating, obviously had that huge growth. You know what I mean? Like when they really started to kind of kick in a few years ago. But it’ll be interesting to see that mix shift [00:30:20][9.6]
Gene Munster: [00:30:21] It’ll pop back up on this news. [00:30:22][0.3]
Dan Nathan: [00:30:22] Yeah. No, and and I know that, you know, that’s been one part of the bullish thesis for you is just kind of that mix shift. And as it becomes a greater percentage of their revenues even as the rate of iOS. Right. Like their installed base. You know, it’s just you know, it’s not what it was five years ago. That’s where those services really start to kick in and help the margin there. So, again, I’m with you. Alright. Real quick, because I know we got to get out of here. Amazon’s the last one. This one to me is just so curious because after the huge ramp right in during the pandemic, the stock then went sideways for the second half of 2020, where a lot of megacap tech was still going berserk. It didn’t do anything last year, went sideways still, and then had this precipitous drop this year. At one point it was down from a high of from last summer, 2021 at 188, and it traded just above 100. It had a huge rally this summer when the Nasdaq rallied 20%. It rally like 40 some percent. Your thoughts on this one? Because this is the one of the mega caps that I think I would love to kind of own in and around this kind of $100 level if it were to get back there. I know it’s well above that, but that’s where it was just a couple of weeks ago. Thoughts on Amazon into the print and maybe kind of looking past the print. [00:31:34][71.5]
Gene Munster: [00:31:34] So into the print. This for me, it’s a wild card. Feel good about Google, feel good about Apple, feel surprisingly good about Meta stock. But I just don’t know how this one’s going to play out just because of the the other the crosscurrents related to costs and what’s going to happen with consumer demand, what their commentary is going to be in December. So there’s it’s hard to kind of judge that, but I would come back to, you know, there’s just some what we call an undeniable truth, which is no one’s going to compete with Amazon. And when you kind of zoom out, look at this longer, I mean, the largest piece of it, who would have ever imagined five years ago or focusing on logistics is one of their competitive advantage. It’s a huge advantage. And others, they overbuilt more recently. They’re going to tighten that up. But still, no one’s coming even close. And so I think that, you know, when you just fast forward 6, 12, 24 months from now, I think that this is going to be a great position. And just because they really don’t have any competition, I don’t consider other e-commerce companies really competition for Amazon. [00:32:38][63.4]
Dan Nathan: [00:32:38] All right. So one last question to you before we get out of here. I think we played this game last quarter into the Q2 results. If there was one of these stocks that we just mentioned, the five they’re reporting this week, that is down, let’s say, ten plus percent on a disappointment that you want to buy. And then one that’s, let’s say, up five, 7% or so. That’s up on a great quarter and guidance that you want to buy up. Okay. So one that you want to buy down, that you want to look past whatever headwind is near-term and one that you want to buy that’s up. [00:33:08][29.9]
Gene Munster: [00:33:09] So I would if Apple is down 10%, I would be all over it. I think that that would be that would be a gift. I don’t think we’re going to get it, but that would be a gift. And then the second one was one. That’s a gap up where you want to buy more of it. [00:33:22][12.8]
Dan Nathan: [00:33:23] Yes. [00:33:23][0.0]
Gene Munster: [00:33:24] Be Meta [00:33:24][0.2]
Dan Nathan: [00:33:25] Okay. All right. Fair enough. Right. Gene Munster, you’re the man from Loup Ventures. Really appreciate these conversations. We all get smarter, alright, man, well, let’s have you back, and we’ll just do a little bit of a recap at some point when the dust settles. Thanks a lot, Gene Munster. [00:33:38][13.0]
Gene Munster: [00:33:38] Thank you. [00:33:39][0.4]
Dan Nathan: [00:33:43] Thanks again to our presenting sponsor Current and our supporters Masterworks and Taboola for bringing you this episode of okay Computer. If you like what you heard, make sure you hit, follow and leave us a review. It helps people find our show and we want to hear from you. Email us at contact at risk reversal. Com. Follow and connect with us on Twitter at. Okay Computer pod. We’ll see you next time. [00:33:43][0.0]
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