Tech-A-Palooza Earnings Week with Gene Munster of Loup Ventures
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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00:00 Hey listeners, it's Dan here.
00:01 I want to tell you about a company that I'm really excited about.
00:04 It's called Current.
00:05 It's a fintech company that's completely disrupting traditional banking.
00:08 I'm a new Current customer and it's already helping me and my entire family manage our
00:12 finances all from one easy to use app.
00:15 So try Current for yourself and get the app by going to Current.com/ok.
00:20 That's Current.com/ok.
00:23 Current is a financial technology company, not a bank.
00:26 Banking services provided by and Visa debit card issued by Choice Financial Group, member
00:30 FDIC, pursuant to a license from Visa USA Inc. and can be used everywhere Visa debit
00:35 cards are accepted.
00:38 Welcome to OK Computer.
00:39 I'm Dan Nathan.
00:40 I am joined with Gene Munster.
00:42 He is the managing partner and founder of Loop Ventures.
00:45 Gene, welcome back to OK Computer.
00:48 I'm a fan.
00:49 Thanks, Dan.
00:50 Thanks, bud.
00:51 Well, listen, last quarter we had this great pod.
00:53 It was you and me.
00:54 It was one-on-one.
00:55 We hit the big five earnings.
00:57 They're all coming in the same week.
00:59 You know what they are.
01:00 They're Apple, they're Microsoft, Amazon, Alphabet, and Meta.
01:04 And we're going to hit all of those because they're all reporting this week.
01:07 You have positions in some.
01:08 You do deep research in all of them.
01:12 But first, Gene, I want to take a quick step back.
01:14 There were some big movers over the last week or so in tech earnings.
01:19 Netflix had that huge rally.
01:21 We had Snap that had that massive 30% one-day decline after their Q3 results.
01:28 And then we had Tesla, which is one which I think, you know, we've kind of, you and
01:33 I have gone back and forth on this one a lot.
01:35 And I think that you have a really nuanced view in Tesla.
01:39 You have a very like steadfast long-term view on it.
01:42 But near term, you've been really apprehensive.
01:45 Let's start with Snap because, you know, 30% in one day.
01:49 There's some huge gaps in this chart here.
01:51 The company announced a huge restructuring in September, okay, where they were going
01:55 to do workforce reductions.
01:56 They were cutting some non-core business lines.
01:59 It seemed like Evan had this sort of come to Jesus event.
02:02 I saw him live with Kara Swisher at the Code Conference in September.
02:07 Were you surprised based on the mist that they had that the stock reacted so negatively?
02:12 Yes, I would have expected if you had given me that press release and said, "What's the
02:17 stock going to do?"
02:18 I would have said down 10 to 15%.
02:21 Down 30 to me is an indictment in terms of the conviction that investors have.
02:27 It was, I think, an overreaction.
02:30 Keep in mind, they guided revenue down for the December quarter by 6%.
02:36 March of next year probably comes down by an equal amount.
02:39 So that 30% move, that gap is really multiple going away because just loss of confidence.
02:46 It's unfortunately not the first time that Snap in the last year has had one of these
02:51 big down days.
02:52 I think that that probably plays into it.
02:55 You can keep talking about restructuring and trying different things and have this growth
02:58 plan that's well articulated on a big deck, but until investors start seeing it, I think
03:04 that they are going to be apprehensive about it.
03:08 That's why you got that big drop.
03:09 All right, so $8.50.
03:10 It traded as low as, I think, $7.40 on Friday.
03:15 Right now as we're taping Monday afternoon into the close, it's $8.38.
03:19 So a decent bounce today after that down 28% on Friday.
03:23 But was there any silver linings?
03:25 We know, again, I was surprised at the magnitude of the drop because of all we knew what the
03:31 company is in the process of doing.
03:33 When you announce a 20% workforce reduction, it takes time to work through that.
03:39 It takes time to close down divisions.
03:41 There's going to be charges.
03:43 These are no knowns.
03:44 But one of the things that I thought, and again, I was long a position coming into it,
03:48 fully prepared to buy more.
03:49 I actually have my average, just to be very clear, below $8.
03:54 I was aggressively buying it Friday morning here, and I think that this thing has easily
03:59 the potential to double over the next year, probably 200, 300% over the next few years.
04:04 I'll give some reasons later, maybe why.
04:07 But user growth was up 19% in the quarter to 363 million daily active users, well above
04:15 that of Twitter's, a company that is being taken out probably at the end of this week
04:20 by Elon Musk for $44 billion.
04:23 I look at Snap, similar revenue base in and around $5 billion either side, and I say to
04:29 myself, "Okay, man, this has got a $13 billion enterprise value, too cheap of an asset."
04:35 So we have an ETF and we own Snap.
04:39 We owned it in the ETF going into the print, and we continue to own it.
04:43 We haven't changed our position on that.
04:45 And it's messy.
04:46 It's an indictment.
04:47 But in the end, I think these storms do pass.
04:51 And you're exactly right.
04:52 The silver lining here was that user growth.
04:55 It's a similar type of user growth that they had last quarter.
04:58 That's off of a smaller number compared to Meta, Facebook.
05:02 But they're growing their DAUs at 2%.
05:05 And so this is still really impressive growth.
05:08 And I think that the piece that gets us excited about it is beyond anything that we've talked
05:14 about, which is the opportunity to run augmented reality.
05:17 And I think that even though it has become a punchline, I think that it is a logical
05:23 use case for consumer tech in the next couple of years.
05:27 I think Apple's going to do a lot more on it.
05:29 Obviously, Meta, Google, Samsung, Microsoft is in there.
05:33 We're going to do more on this.
05:34 And I think that they have an opportunity to become the first company that really is
05:38 AR native advertising.
05:42 Then you asked the quick question, what does that mean?
05:45 Snap AR advertising is effectively you can just use some of those filters to look at
05:51 products in your house or look at shoes or women use some of the filters to try on different
05:58 cosmetics digitally.
06:00 And so there's an opportunity there.
06:01 And I think it's not being reflected in the current share.
06:04 I wish they would handle their calls differently.
06:07 There is some definitely cleaning up on the edges, but the substance of your view, I agree
06:12 on.
06:13 Yeah.
06:14 I mean, listen, this is going to be a much smaller, leaner company that has a very, very
06:16 dedicated user base.
06:18 And like you said, it is growing faster than many of their peers.
06:22 I guess the problem in a recessionary environment, despite the secular tailwinds of digital ads,
06:27 is that advertisers are going to places where they can take it to the bank, where it's not
06:32 a fickle teen as the end receiver of that ad.
06:35 I think you and I talked about that, or at least you talked about it on Fast Money last
06:40 week as this result was coming out here.
06:43 One thing I just think is interesting, again, in a world where the richest man in the world
06:47 can buy himself a platform like Twitter, if that is going to happen here, I think there's
06:54 a lot of potential for activists.
06:56 I know that Evan Spiegel, the CEO, founder, has probably super voting rights and all that
07:01 sort of stuff.
07:02 But when your stock is down and out, down any percent like this, and you're well below
07:06 your IPO price of five years ago or whatever, you can get pushed around by activists.
07:11 And I suspect you might see some sort of activist.
07:13 I think you could see some sort of individual take a large stake.
07:17 I think maybe even a strategic after the midterms might be able to buy an asset like this, especially
07:24 if Elon Musk is able to buy Twitter alone.
07:27 Just thoughts on that really quickly.
07:29 I think it's right for that.
07:31 I think that typically you want to have a founder in charge.
07:34 But in this case, I think with some of the stumbles, I think that Evan, maybe a different
07:40 role, maybe a role that's more product-related might better suit his strengths.
07:46 And so, yes, I think that it is right for that.
07:49 Always hard to call when you get shareholder activism involved.
07:54 But I think that this is probably in the top five list of companies that could see that,
07:58 especially as you said, with everything that's going on with Twitter.
08:00 Yeah, no, and the last point I'll just say here is that the largest shareholder is Tencent,
08:06 obviously a Chinese social media conglomerate.
08:09 And given everything that we know that's going on over there, I wonder if there is an opportunity
08:13 for some sort of shareholder turnover, if you will, if you think about what's going
08:17 on with the Chinese markets.
08:19 And then we also obviously can't not talk about TikTok here.
08:22 You and I in our last pod when you were on in July, we both think there's a decent chance
08:27 that eventually TikTok were to be banned here in the US.
08:31 And clearly, I think your thought was that benefits Meta almost immediately, but it would
08:36 also benefit Snap.
08:37 It would benefit Snap.
08:38 I think the probability goes up every month, especially after last weekend and some of
08:44 the continuation of leadership, some of the commentary, some of the changes to President
08:48 Xi and his cabinet, and I think that some of the changes that the US has done in terms
08:54 of executives who work in China in the semiconductor business have been recalled if they want to
08:59 maintain their US citizenship to come back to the US.
09:02 I mean, TikTok is right in the vortex of everything that's going on with this, and I suspect that
09:08 it's not going to be available in the US within a year or two.
09:11 Yeah.
09:12 All right.
09:13 Real quickly on Tesla.
09:14 This one, again, is obviously always hotly debated here.
09:16 They reported results last week.
09:18 We know that the deliveries for Q3 had already missed.
09:21 They kind of stuck by their delivery guidance for the balance of the year.
09:25 It seems like it's going to be very hard to achieve.
09:28 We know that today on Monday, they lowered prices in China after having raised them not
09:33 too long ago.
09:34 The stock was making a new 52-week low today.
09:39 It reversed.
09:40 Again, there was some thought that if Elon is forced to close on Twitter and maybe some
09:44 of the equity contributors that had agreed to help him on that front in the spring are
09:50 no longer there because of valuations and rates and everything that we kind of spend
09:55 a lot of time talking about, that he was going to have to sell more Tesla stock to get that
10:00 equity component to where it needs to be.
10:02 Do you think that was some of the weakness post the quarter here?
10:05 And might we see if he is forced to close and he does have the equity and he's got the
10:10 debt lined up from the banks, might you see some pressure taken off Tesla and bounce a
10:14 little bit?
10:15 Because again, this stock a month ago was trading above $300 and right now it's $210,
10:20 down 40% of the year, down 50% from year-ago levels.
10:25 I think he probably is selling.
10:27 I think that's putting pressure on the stock.
10:28 I think that you will see a form of a relief after everything comes to fruition here.
10:35 What's the reason why you mentioned all those different factors in terms of raising money?
10:39 I think the piece about some of the money coming from outside of the US seems to have
10:45 raised some eyebrows in Washington.
10:47 And I think that that element is probably the most stressed piece of it.
10:51 So I think that there is some, I think he probably is raising some money here.
10:55 There wasn't enough in negativity, I think, in the quarter and their commentary to suggest
11:02 that this kind of continues to fade when the overall market is kind of holding up.
11:06 And so I suspect that there's some other X factor going in and as you said, would expect
11:10 for the stock to reverse.
11:12 And ultimately I come down to maybe beyond just a kind of a quick bump back up in shares.
11:19 I think that there's still this bigger question about where Tesla is.
11:22 We may have a little bit of a different opinion.
11:24 I think that what we saw in the September quarter was a wake-up call, I think, for people
11:31 who believe in the story, people who see where this is going, including myself.
11:36 We typically beat numbers.
11:37 They have made a habit of that over the last two and a half years.
11:40 And now you have a situation where they're not doing that.
11:43 And I think that that is usually a sign of just a piece where investor expectations start
11:51 to, they just need three or six months just to kind of re-rate themselves.
11:55 I remember Apple went through this period with the iPhone when its growth started to
11:58 slow and it took a step back before it could take a step forward.
12:02 Yeah.
12:03 And especially on Twitter again.
12:04 So the judge in Delaware had given both sides, Twitter and Elon, to October 28th, that is
12:10 this Friday, to close this deal.
12:13 The headline that you referenced about the government eyeing this deal, maybe about where
12:17 he was getting some of the capital.
12:19 And he's also been really active with the former president of Russia, talking to him
12:25 on Twitter in an open conversation about the war in Ukraine and some of the commentary
12:29 he's had towards China and stuff.
12:32 I mean, all to me, it just looked like a ruse to kind of maybe draw some more attention
12:37 to the fact that the best case scenario for him is that the Feds did block the deal because
12:42 he doesn't want to buy it for $44 billion.
12:44 His equity contributors don't want him to buy it for $44 billion.
12:48 The banks who provided the debt don't want him.
12:50 The only people who want are Twitter shareholders.
12:53 The people at Twitter probably don't, they don't own enough stock.
12:57 And he's already said that he's going to fire maybe 75% of them.
13:01 So to me, I still think there's a chance this thing doesn't happen, but I'm the only idiot
13:05 out there who does think that.
13:06 I would say there's a 5% chance it doesn't happen, but that 5% can hit.
13:11 All right, when we come back, we're going to go through all of this week's massive tech
13:14 earnings.
13:15 Hey, Dan.
13:17 What up, guy?
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13:43 That's Current.com/okay.
13:46 Current is a financial technology company, not a bank.
13:48 Banking services provided by and Visa debit card issued by Choice Financial Group, member
13:53 FDIC, pursuant to a license from Visa USA Inc., and can be used everywhere Visa debit
13:58 cards are accepted.
13:59 Hey, it's Dan here.
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15:36 This is kind of like the Super Bowl.
15:39 Tomorrow night after the close on Tuesday, we have Microsoft and Alphabet reporting.
15:45 I think Microsoft is probably the one that's more interesting to probably both of us.
15:49 I know that you own Alphabet, so Alphabet's results are interesting to you.
15:53 But as far as trying to read the tea leaves and extrapolate what one of the largest companies
15:59 by market cap, by revenue, all of the geographies they touch, the dollar exposure, the enterprise
16:05 exposure, a lot of things going on here.
16:07 Talk to me a little bit how you're thinking about this Microsoft quarter.
16:10 The stock has underperformed the S&P a little bit.
16:14 Obviously, it's the second largest component in the S&P, also the second largest component
16:18 in the NASDAQ, but down about 26% of the year.
16:22 The NASDAQ 100 is down 30%.
16:23 The S&P is down 20% a year.
16:25 Is this like the big kahuna?
16:27 Is this one that's going to set the stage for the whole week?
16:29 I don't think it'll set the stage for the whole week.
16:31 I think that it is going to, obviously, along with Google, it's going to have a big impact
16:36 on it, but I think there are some factors that are impacting Microsoft that investors
16:41 will probably say are more related, and obviously, that's on the enterprise.
16:45 You mentioned about Musk cutting 70% or 30% or 80%, whatever the number is.
16:50 He's going to let some people go at Twitter.
16:52 That's been a pretty common theme amongst some of the information workers is some of
16:58 these headcount reductions.
16:59 We've heard a lot about that from big tech over the last few months.
17:01 Very different than if you think about the bell curve or the labor curve and think about
17:05 other jobs that you don't hear about companies laying off.
17:08 You don't hear Chipotle laying off.
17:10 People who are working in their stores are trying to find people to do that.
17:14 I think that this kind of rationalization in terms of what's going on in the enterprise,
17:19 I think Microsoft is at more risk.
17:23 They are at risk.
17:24 I think that they will probably talk about some of that risk in the quarter.
17:28 I don't necessarily believe the stock is going to implode because there's no other place
17:32 for these businesses to go.
17:33 They are still the gold standard in terms of work tools.
17:37 I think that that is a factor, and I think we're going to see more of that.
17:42 Even if GDP growth is good in the most recent quarter, I still think that businesses are
17:47 starting to cut essential informational workers, and I think that Microsoft is at risk.
17:53 We did see in Q2 results a deceleration in cloud growth among Microsoft, AWS.
18:01 That was kind of a theme throughout.
18:02 I wonder if that's something that we look back at at the end of this week and just say
18:08 maybe that was a little bit of a canary in the coal mine.
18:10 Then when you think of some of these SaaS companies that sell licenses to seats, if
18:15 you're starting to see, as you call them, information workers being laid off, that's
18:19 the sort of thing I think that people like me are really looking for because we haven't
18:23 really seen that yet in the enterprise.
18:25 I know that back in June, I think you and I talked about it, I think it was like the
18:29 ServiceNow CEO, Bill McDermott, had kind of made some comments about slowing enterprise
18:34 demand, at least from what they were seeing, but it wasn't really confirmed among many
18:38 of its peers at the time.
18:40 It wasn't, and in some cases, just this idea of a slowdown in terms of hiring, it sounds
18:45 out of touch with reality.
18:47 But if you'd rewind nine months ago, a year ago, and say that the housing market's going
18:51 to slow down, that would have seemed like a comment that's out of touch.
18:55 And lastly here, so Microsoft, again, the stock was trading a year ago above 340.
19:01 It's trading just above 240 right now, trading about 24 times this year.
19:05 I think high single digits expected, EPS growth, maybe 10% sales growth, flat margins expected,
19:12 68% here.
19:13 Obviously, you know, like all this stuff that generated tons of cash.
19:15 I mean, things are going just fine here.
19:18 Does 24 times bother you at all this year and 21 times next versus an S&P that's likely
19:24 to trough somewhere 13, 14 times if we really are in a recessionary environment at some
19:29 point in the next, let's call it, couple quarters?
19:32 Yeah, I think you can find better places to have performance.
19:39 We own some of large cap tech and we don't own Microsoft.
19:42 And I think that does the 24 times bother me?
19:45 I'd much rather own Apple, just given some of the other opportunities that they have
19:49 longer term than something like Microsoft.
19:51 I think Google, better optionality value.
19:55 Understand that Microsoft has, you know, of course a stable business, but for you to kind
20:00 of earn and retain and grow a multiple, you got to be inspiring investors.
20:04 And I still think cloud isn't enough to inspire.
20:07 They're just not doing enough in AR and it's still a relatively straightforward, dare I
20:13 say boring business right now.
20:14 And I think you need a little bit of spice to keep the multiple up.
20:17 Yeah.
20:18 All right.
20:19 Let's talk about Alphabet.
20:20 They report tomorrow after the close and, you know, expected.
20:23 We're just looking at out years, you and I at this point, right?
20:25 So if we're just talking valuation, 2023 expected EPS growth about 15%, maybe similar, a little
20:31 less on the revenue side, trading about 18 times, about as cheap as you probably ever
20:35 seen Alphabet, right?
20:36 If you think about it, very stable margins.
20:39 Talk to me about this one, because again, you know, you can look at, you can, you can
20:43 take what, you know, snap had to say and some other ad platforms.
20:46 You can try to extrapolate that to Google.
20:48 I think probably you following this company for more than 15 years, you'd tell you that's
20:52 usually a fool's errand because they're the ones kind of setting the stage.
20:57 They're not the ones being displaced here and here.
20:59 Thoughts on Google.
21:00 Again, the stock's down 30% of the year.
21:01 It was trading at an all time high, a new all time high after they reported their Q4
21:06 back in February.
21:07 Remember that huge gap there?
21:08 Yeah.
21:09 Filled in the whole thing.
21:10 And now, you know, yeah, well, it just, it's just fascinating to me because again, I know
21:14 that a lot of the fears that a lot of tech investors had about valuations at the time,
21:19 because they were certain that interest rates were at least going to come off of that zero,
21:22 you know, interest rate bound.
21:23 I don't think many thought rates would be as high as they are resetting valuations.
21:28 This valuation looks reasonable.
21:30 The question is, can they achieve double digit earnings and sales growth next year?
21:35 Because then 17, 18 times seems reasonable for Alphabet.
21:38 I don't know if they need to achieve double digit growth next year.
21:42 I agree.
21:43 I'm looking out six, 12 months for now.
21:44 I don't know if they need to do that.
21:46 I think they need to continue to show that they, there's some similar aspects to what
21:51 Microsoft's doing, a steady business that's kind of boring.
21:54 Search is kind of boring, but they're just finding ways to continue to improve the search
21:57 experience and therefore improve the monetization of it.
22:01 And so I think that in part, what we're going to see this week is a little bit of a relief.
22:07 As you said, a lot of investors are looking beyond what happened with Snap, but it's still
22:11 in the back of your mind and you can kind of parse through what was said and there still
22:16 is some overall risk relative to the macro to Google.
22:20 And I think that that has been weighing on the multiple.
22:22 So I think if you just start to release some of that stress on the overall macro, presumably
22:27 in the next six months or a year, I think that Google's multiple is going to go up.
22:31 Remember they still have other bets.
22:32 They're still doing a lot in AI.
22:35 They still have TensorFlow.
22:36 They're basically within Google Cloud allowing you to run different AI models within that.
22:42 That's pretty unique.
22:43 Other companies are doing it, but not to the same extent that Google is.
22:46 And so I think that in other words, kind of putting it together, I think it deserves a
22:51 higher multiple, even though multiple much higher than its growth rate, given some of
22:56 the optionality.
22:57 All right.
22:58 Well, here's one.
22:59 You just mentioned Meta here.
23:01 Here's one that it's expected growth rate, both earnings and sales is trading very near
23:05 its PE multiple and that's Meta.
23:08 That reports Wednesday after the close.
23:10 The stock is down 61% on the years, down more from its all-time highs.
23:14 And again, this is one that was easy to kind of extrapolate after the snap results.
23:18 It was down immediately in sympathy.
23:21 We know they got a lot of problems of product transition of like epic proportions going
23:26 on here.
23:27 I think some people that absolutely love this story, even a year ago, even a year ago on
23:32 the announcement of the name change and the change of focus are really not happy with
23:37 the stock.
23:38 The funny thing is, and you used to play this kind of ratings game all the time when you
23:41 were an analyst on the other side, there are still 42 analysts.
23:46 This is per fact set that rate the stock a buy.
23:49 There's only 14 holds and four sells.
23:51 So the analyst community is still overwhelmingly positive.
23:55 The valuation has never been cheaper.
23:57 The expectations and the sentiment are just horrible.
24:00 So talk to me, are we going to see anything that they might be able to buck some of at
24:04 least the sentiment trends that we have right now about digital ads and I guess their outlook
24:09 for their business, their core business and where they want to go?
24:13 I think so.
24:14 And if you look at big tech more broadly over the next probably six months, this probably
24:18 has the most upside potential.
24:20 We own Meta.
24:22 We have not owned it all year.
24:24 We've been buying it more recently and I've had a storied pass on this.
24:27 I don't like their products.
24:28 I've been pretty clear about that.
24:31 But I think that there is this kind of reached a point where when you're getting down close
24:36 to a 10 times next year's earnings number, it just felt like there's a positive risk
24:43 reward here.
24:44 The piece that doesn't add up, I would say this is about as straightforward as a upside
24:49 potential as I've seen.
24:50 The piece that doesn't add up is pretty obvious.
24:53 Pretty obvious that they have a world class, 40% of the global internet population looks
24:58 at one of their properties daily.
25:01 That's really important to advertisers.
25:03 They're going to be around for a long time, but the stock still just doesn't move.
25:09 That is a little bit concerning.
25:10 But I think when you put it together, I think we're going to look back two years from now
25:15 and I'm probably going to say I don't like their products and I think the stock's going
25:18 to be higher.
25:19 Yeah.
25:20 Well, it's interesting.
25:21 I almost feel like if this thing had one more gap, like one more gap lower where, and then
25:25 you had like a downgrade of just guidance, a downgrade of just like ratings on the sell
25:31 side, investors just kind of finally hate sell it.
25:34 You know what I mean?
25:35 We haven't had the snap capitulation point on meta yet.
25:39 Yeah.
25:40 And I'm kind of with you.
25:41 I took a shot and I tried to buy some earlier this summer and I don't like anything about
25:44 the company.
25:45 I don't really like, you know, Zuckerberg either and what his vision of the future is.
25:50 But you know, if you're just thinking about a divorce of all of that sort of stuff, you
25:54 know, I would think if there's one more gap, maybe down 15, 20% or something like that
25:58 above a hundred bucks, like it, you know, I'm hard pressed to think that this thing
26:02 won't be a double at some point in the next three to five years.
26:05 All right, let's hit this one.
26:06 This is, this, this is actually the big kahuna.
26:08 I said it before.
26:09 I mean, that was, you know, Microsoft's the big kahuna for Tuesday, but this is always
26:12 the big kahuna and it's Apple reports Thursday after the close of stock has massively outperformed
26:17 the market this year, down only 15%.
26:20 It seems like even on down days when things are getting, you know, shot and you know,
26:24 like this one is always just like money just coming into it.
26:27 It's coming out of other stuff and it goes right into Apple.
26:30 And again, let's talk about geographic exposure, dollar exposure, obviously China's supply
26:35 chains just not only depending upon obviously the manufacturing there, but also the sales
26:42 outlet, right?
26:43 We know that Europe is obviously a huge region for them and we know that, you know, that's
26:46 a bit depressed here.
26:47 Thoughts on Apple, like is there a scenario where Apple, and this brings me back to, you
26:52 remember early 2019, I think it was like the second trading day of the year in January
26:56 where Apple had their first negative pre-announcement, I think over a decade.
27:01 And it was specifically on China.
27:02 You probably came on fast money that day.
27:04 - Pandemic China related?
27:05 - Yeah, well no, this was pre-pandemic.
27:07 This was just China slow down, you know what I mean?
27:12 How is it, is this company so much better managed than they were, let's say three years
27:16 ago that they've been operating in a very difficult environment where are the products
27:21 just that good with the demands always there?
27:23 I was never a big believer in these super cycles, the next 5G phone or this and that
27:28 or whatever, but like the relative strength is something that it'd be stupid to ignore.
27:33 - And I think one of the ironies about their strength and what's happened with the stock
27:37 is that the piece that has been historically criticized, which is the hardware hit and
27:42 miss boom and bust type of a cycle mentality with investors after some of the pain that
27:47 happened in the smartphone hardware world years ago.
27:51 Some of that, I think all those issues are starting to become more clear that that's
27:56 a strength of the company.
27:57 No other company, I mean, it's a tagline for the company, hardware, software and services.
28:03 The only other company that I think does it to that extent is Tesla and different topic,
28:08 but it's pretty rare for companies to do all three and do them with excellence.
28:13 And I think that's a piece and what does all that mean?
28:16 I'm not just recycling some of their marketing language.
28:19 What it means is that they make products that people like and that work really well and
28:24 that obviously our lives are becoming more dependent on this.
28:26 This is a similar thesis to 10 years ago.
28:29 It still plays out today.
28:30 It still resonates true.
28:32 You get other aspects.
28:33 I mean, today they announced that they're raising their price.
28:37 If you look on their services, it's about an average of about a 16% price increase.
28:42 That's gonna probably add about 2.5% to overall earnings.
28:47 So to put that into perspective is this price increase can add almost 2 billion and that
28:54 includes a 20% churn onto their bottom line.
28:57 There are not very many companies that can flip a switch and all of a sudden 2 billion
29:01 in earnings shows up over four quarters and investors love that.
29:05 And then you also have some of the optionality about other things they can get into longer
29:09 term.
29:10 - Well, I'll tell you one thing.
29:11 I bought the first Apple Watch probably seven or eight years ago.
29:14 I had it for two weeks.
29:15 It really bugged the crap out of me.
29:16 I remember you and I have a conversation in the green room of CNBC's Fast Money.
29:21 This was years ago and you had one on your wrist and you were singing the praises for
29:24 a whole host of different reasons.
29:26 And then every year, a new one come out and increment a little better, but it's still
29:29 the same form factor.
29:30 It still looked the same.
29:31 But look at this bad boy, this new Ultra for $800.
29:35 This thing is dope.
29:36 It's the first one that I've had.
29:38 I'm not lying to you.
29:39 It's since the first.
29:40 - I got watch envy here, Dan.
29:42 - Well, I saw it.
29:43 You know what's funny?
29:45 I know you know Rick Heitzman.
29:46 He had a first mark event at the NYSC a few weeks ago and I saw a guy sitting next to
29:51 me was wearing one.
29:52 I'm like, "What the hell is that?"
29:53 And then Rick had one and the next day I got to get one of those.
29:57 So yeah, you probably have a little-
29:58 - It's a statement.
29:59 Yeah, it's not about the people who are climbing mountains.
30:02 It's definitely a statement and I think they've got something.
30:06 Watch is, it's gonna rebound.
30:08 It's been struggling in the last couple of quarters, but I think it's gonna rebound nicely.
30:11 - Well, the service thing's interesting too, because we know that they've been decelerating,
30:14 obviously, yeah, that huge growth, you know what I mean?
30:16 Like when they really started to kind of kick in a few years ago, but it'll be interesting
30:19 to see that-
30:20 - It'll pop back up on this news.
30:22 - Yeah, no, and I know that that's been part of the bullish thesis for you is just kind
30:26 of that mixed shift and as it becomes a greater percentage of their revenues, even as the
30:31 rate of iOS, right?
30:33 Like their installed base, it's just, it's not what it was five years ago.
30:39 That's where those services really start to kick in and help the margin there.
30:42 So again, I'm with you.
30:43 All right, real quickly, 'cause I know we gotta get out of here.
30:46 Amazon's the last one.
30:47 This one, to me, it's just so curious because after the huge ramp, right, and during the
30:52 pandemic, the stock then went sideways for the second half of 2020, where a lot of mega
30:57 cap tech was still going berserk.
30:59 It didn't do anything last year, went sideways still, and then had this precipitous drop
31:03 this year.
31:04 At one point, it was down from a high from last summer, 2021, at 188, and it traded just
31:10 above 100.
31:11 It had a huge rally this summer when the NASDAQ rallied 20%.
31:15 It rallied like 40-some percent here.
31:18 Thoughts on this one because this is the one of the mega caps that I think I would love
31:23 to kind of own in and around this kind of $100 level if it were to get back there.
31:27 I know it's well above that, but that's where it was just a couple weeks ago.
31:30 Thoughts on Amazon into the print and maybe kind of looking past the print?
31:34 So into the print, this, for me, it's a wild card.
31:37 Feel good about Google.
31:38 Feel good about Apple.
31:39 Feel surprisingly good about MetaStock.
31:43 But I just don't know how this one's going to play out just because of all the cross
31:47 currents related to costs and what's going to happen with consumer demand, what their
31:51 commentary is going to be in December.
31:54 So it's hard to kind of judge that.
31:56 But I would come back to there's just some what we call an undeniable truth, which is
32:01 no one's going to compete with Amazon.
32:03 And when you kind of zoom out and look at this longer, I mean, the logistics piece of
32:07 it, who would have ever imagined five years ago we're focusing on logistics as one of
32:11 their competitive advantage.
32:13 It's a huge advantage.
32:14 And they overbuilt more recently.
32:17 They're going to tighten that up, but still no one's coming even close.
32:21 And so I think that when you just fast forward 6, 12, 24 months from now, I think that this
32:28 company is going to be in a great position.
32:30 And just because they really don't have any competition, I don't consider other e-commerce
32:36 companies really competition for Amazon.
32:38 All right.
32:39 So one last question to you before we get out of here.
32:41 I think we played this game last quarter into the Q2 results.
32:44 If there was one of these stocks that we just mentioned, the five that are reporting this
32:48 week, that is down, let's say 10 plus percent on a disappointment that you want to buy,
32:54 and then one that's, let's say, up 5, 7 percent or so that's up on a great quarter and guidance
33:00 that you want to buy up.
33:01 Okay.
33:02 So one that you want to buy down, that you want to look past whatever headwind is near
33:05 term and one that you want to buy that's up.
33:10 So I would, if Apple is down 10 percent, I would be all over it.
33:13 I think that that would be, yeah, that would be a gift.
33:15 I don't think we're going to get it, but that would be a gift.
33:18 And then the second one was one that's, it gaps up.
33:21 You want to buy more of it?
33:23 Yes.
33:24 Be meta.
33:25 Okay.
33:26 All right.
33:27 Fair enough.
33:28 All right.
33:29 Gene Munster, you're the man from Loop Ventures.
33:30 We really appreciate these conversations.
33:31 We all get smarter listening to you.
33:32 All right, man.
33:33 Well, let's have you back and we'll just do a little bit of a recap at some point when
33:36 the dust settles.
33:37 Thanks a lot, Gene Munster.
33:38 Thank you.
33:43 Thanks again to our presenting sponsor, Current, and our supporters, Masterworks and Taboola,
33:48 for bringing you this episode of OK Computer.
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