Bill Hwang's Rise and Vicious Fall

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. We are still trying to make sense of Bill Wong and what prosecutors charge at the hedge fund investor did plowing cash into a desperate buying spree to prop up his artificially inflated stocks. As our Matt Levine rights, let's get to it. Because Bloomberg

opinion columnist Matt Levine covers finance. He was an editor of deal Breaker, Investment baker at Goldman and m and a lawyer at Wachtel Lipton and a clerk for the US Court of Appeals for the Third Circuit. And he joins us now via zoom in New York City. And I gotta say, Matt, we actually kind of want to talk Twitter and Elon with you as well as this, But let's start with Bill Juan because you have such a great detailed column about what this guy actually did.

I mean, what strikes you as like just trying to understand, you know, his thinking and all of this. I just really don't understand his thinking. Um. Yeah, as you said, he bought he had he had a lot of money. He was a former headphone manager. He borrowed a lot more money from his banks, and he spent all of it on buying about ten stocks. And he bought so much of them that their stock that their prices went up and up and up, and like it doubled in

some cases over the course of months. And uh. And then he just you know, he had profits because he had bought stocks that were going up, and he took those profits and he rolled them into borrowing more money and buying more of the same stocks. And so eventually something went slightly wrong. You know, one of these companies

issued more stock in the stock went down. He got margin calls from his banks because he borrowed all this money, he didn't have any money left over, and so the bank's liquidated all of his stocks that went back down, and his fund was left with basically nothing, and some of the banks lost a lot of money. Um, this doesn't make any sense, you know, it's not a good trade.

Like if you do this, if you buy billions of dollars of stock and the stock goes up and you then take money out and spend it on buying a yacht and sailing away, that makes sense. If you just do it, and you keep plowing the money into the stocks, including like on the last day when you're getting the margin calls, he's spending even more money buying even more of these stocks, all your money advantages at the end, and then you just start left with kind of nothing

and and being arrested. But the thing is, as you write, he's a really smart guy. He's really he's been in the industry for years. Uh, what could I mean? Is there any other end game that could have happened here? Was this this bound to happen given given the way he traded, you know one possibilities he did take some profits out right, I mean, if you if you read the indictment, it seems like to the very last minute, Our Kagos was plying plowing all of its money into

uh into buying more of these stocks. Arkego is the entity that he ran, it's his family office. But could he have taken money out of Our Kagos at some

point and like buried in the backyard. That's possible. Another possibility that someone suggested to me is that, you know, a lot of the stocks that he was buying were heavily shorted stocks, and it's possible that he was trying to do a short squeeze where eventually the short sellers would have no choice but to buy back the stocks, and they buy them back from him, and even higher prices, and he'd make you know, tens of billions of dollars um. It seems like a very strange trade to do in

this size and for that long. But you know, it's one thing he could have been thinking. If you could sit down with him, fly on the wall or something, or in a conversation, well, what would be the question you would ask him, because, as you said, smart guy knows how the market works, And yeah, I would ask him what he thought his end game was. The other the other possibility, by the way, and this one sort of sounds absurd but is in some ways very straightforward.

The other possibility is that he just thought these stocks were really good stocks and he thought they'd go up, and so he bought as he could have them. Um, the indictment, if you read like with the SEC and the Justice Department say, they say that he had stopped talking to his investment analysts and he just spent all day with the traders to buy more and more stock, and he didn't really care about what his research analysts

said about these companies. But like you know, when possibility is he thought these were just really good stocks and he wanted to buy as much as he could have them. So does that tell you in the government's eyes, he didn't necessarily think they were really good stocks because he wasn't doing that. The government thinks he didn't think that. I mean, like it's a weird thing because like he's charged with stock with market manipulation, and it's very unclear

what that is. Right, Like, if you buy stocks and the stocks go up, someone could say that you manipulated the stocks. But also just anytime anyone buy stocks, they're likely to go up. Right, Buying pressure is what makes stock to go up, and so the different stock, I kind of hope it goes up. Well, you certainly you hope it goes up. But if you buy a lot of the stock, you're buying activity itself will push up

the stock. What doesn't make it a crime, But yeah, exactly our June Grosso are legal analysts and who hosted Bloomberg Glass. She said, I don't understand exactly what he did wrong. He was buying shares like you understand the lying and stuff right to regulators not so good. But the different The question of whether it's market manipulation is

just one of intent. Like if he was sitting there thinking, I'm going to buy these stocks to make them go up, then that is I think the government would would would successfully argue market manipulation. If he was buying the stocks because he thought they were good stocks, even though they then did go up, Um, then it's not market manipulation. And often in these cases you see like chatlogs where people are just typing to their buddies all day. I'm

manipulating the market. Hope I don't go to jail, and you don't have that here, And maybe they will, right, maybe they will find evidence of his intent. But as of right now, and they have cooperators and they've you know, invested, and they've gotten some of the transcripts of his messages, it doesn't seem like there's anything like that where he's saying that he's doing something wrong. Hey, just got forty seconds,

real quickly. We did get a headline earlier that Musk's Twitter share purchases under an FTC probe, according to those in the know. What are you real quick thoughts on Twitter? Elon Musk? Um? I don't know. I mean, I think that every every big merger goes through some sort of antitrust review, but I would be surprised if there is a big issue here. But I don't know. Um. Do you think he's going to ultimately finish the deal? I do.

I don't think it's a dred percent probable, but I think people are underestimating how locked up the deal is and how likely he is to get the financing. I don't think it's by any means certain, but I think he is much more likely than not going to complete the deal. Well, we love reading your columns. We learned so much the way Tim said. Tim came into the studios like the way Matt lays out what Bill Wong

did just really made such made sense to me. Matt, so definitely appreciate you taking the time to join us. Matt Levine, columnists for Bloomberg Opinion, joining us via zoom from New York. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. I gotta say, Tim, it's not easy being a company today. Employees and consumers and customers, and Vester's kind of wanting

you to take a stand on important issues sometimes. Yeah, and then there's the whole you know, maybe quote unquote problem of high level executives using Twitter. Yeah, it doesn't always work out. Well, Well, that's sort of uh. We're talking about this because if you recall, it's a story that centers around a Levi's executive. You might have heard of her over the last few months, who's no longer

ad Levi's. Well, our own Claire said, columnist at Bloomberg Business Week who joins us now on the phone from Brooklyn, is the author of that story, Levi's finding itself thrust into the culture wars by a rogue executive joining us now is Claire along with Joel Webber, editor at Bloomberg Business Week. He joined us on the access line from Brooklyn. Joel. I think for a lot of people, they might not know the name Jennifer Say or did not know it

until just a few weeks ago. Uh, despite the fact that she's been a high level executive at Levi's for quite a bit of time. Yeah, Jennifer Say rose through the ranks at Levi's for for years actually, and eventually became a brand president and was in charge of Levi's uh marketing. She was the chief marketing officer, so that it which basically set her up to to be potentially the next CEO at the company. And she was very very good at her job. And where the rest of

the world. Um, maybe you've heard of Levi's and um, uh there's just since that's you know, basically an old school Americana brand that she helped turn around. Frankly. Um, but if you hadn't heard of Jennifer Say, you may have.

When all of a sudden in February, um, a spat between her and the company, uh became the reason that she left, and that made us very interested in her and Claire said, us immediately started going on a bigger story and what what Um, what she found I think is pretty remarkable, and it's really this complete tale of

Jennifer's sort of transformation inside Levi's. And it also gets to the bigger story that I think we're all really interested in right now in corporate America, which is this tension between um companies their images, the tension that social media creates. And you just think of Coke Disney. Now this we'll talk more about Levi's here. This is a challenge for all kinds of American companies all of a sudden. So Claire, tell us about Jennifer and what you learned.

Obviously this was all over the headlines, but you dug deeper, what would you find out? Um? Well, you know, like you said, Jennifer was the head um of Levi's marketing, so all the advertising, marketing, branding Levi's, that's what she was in charge of the company for years. Was also incredibly progressive, um, you know, back way back until the nineteen thirties. You know it more recently in the past decade or so, they've come out in favook gun control, um,

you know, marriage equality, transgender rights, etcetera, etcetera. UM. And she was also part of executive team that's sort of shaped that narrative and talked about, you know, when it was appropriate for Levi's to say something and in what way. UM. But then during the pandemic, you know, we've all found the pandemic really hard, and she was stuck at home with four kids, and so she started tweeting her views on covid UM. But they were, I would say, rather contrarians, UM.

I would say, as early as April, she was calling for the country to open back up. Her pet topic was UM school reopenings, which you know, now kids are back in the classroom now. But in when no one really understood the virus it was, it was much more controversial. And you know, within Levi's employees started to become really upset and and saying internally to hr to legal, UM, the CEO himself, you know, why do we have an executive who's saying all this keepoff on Twitter? Some of

it is in direct contradiction to company policy. UM. And it was like a two year long internal struggle of Levis trying to handle the diplomatically internally. UM. Ultimately, I told her she couldn't hold her position as brand president and she'd never be CEO, And so she quit in a very dramatic fashion and said that she had been silenced.

So what's interesting clear too? I mean, as you note in your reporting, I mean Levi's is known for being a pretty progressive company for years and taking positions on controversial issues. Yeah, and that was sort of Um, Jennifer says. Argument is is, you know, if I speaks out on so many things, why was it not okay for me

to speak out about covid um? But I think you know that issue is really you know, one executive going one way and all these employees to sort of rank and file employees saying we do not agree with this, we don't like this. You know, they had town hall meetings, she went on Laura Ingram's show on Fox News. People didn't like that, um, and they were saying, you know why is why is the Levice executive talking to Laura Ingram when Lama Ingram has explicitly said things that this

company stands in contradiction to. You know, she can I just jump in? Didn't she know she was going to get into no friends? But she seems like a pretty smart lady and understands branding and marketing. Didn't she understand despite understanding it was a progressive company, know that by going on Fox you send pretty much a clear message, and you do because of the company you work for that it's going to come back at the company. Well, when I talked to her, she said, Um, she didn't

know really anything about Laura Ingram. She never watched Fox nude, and but she was the person who oversaw Levi's advertising budget, and and and just was in charge of marketing and had her finger on the also the culture that it seemed you know, it required a leap of faith for me to take her at face value and think that that was really the case. But that was her claim, is like she didn't she didn't really know, She didn't

realize why this is such a big deal. And and also she said, you know, just because she's Laura Ingram has said all these other things, why can't I talk to her about what I care about, which is pool reopening? Um? And employees were not having that excuse UM, clear, I'm interested. Um,

because so many companies find themselves thrust into the culture wars. Now, what what if any were the takeaways at Levi's after this is all, you know, they get sucked into this, this fight that they maybe didn't necessarily want to have, like what are they what are the takeaways? And what our companies to do? And just got about Well, it's funny because when I talked to Levi's about this, they were like, you know, this is a kind of a

unique situation. Most of the time, UM, companies cultures thrown into the culture wards or because the company did something and people get upset, and this is one person internally in the company. UM, And so it was sort of a lose lose situation. If they'd ignored their employees, maybe their employees to speak out UM and said they listened to them, and then the executive spoke out. UM. I think what the takeaway is is this is incredibly hard and one day you might find yourself based with the

public scandal. Well, just talk to Bob Chapeck right now, I'm sure, yes, some thoughts on that. UM, A really great story, Thank you so much. Business Week columnists Claire set up joining us on the phone from Brooklyn of Chris Joe Webber, editor of Bloomberg business Week, on the Access line in Brooklyn. Be sure to check out the new issue of Bloomberg Business Week. It is on newsstands, online at Bloomberg dot com, business Week dot com, and

of course, on the Bloomberg terminal. Yeah. One part of the story that Claire really gets into, and this is Levi's long history of being early when it comes to progressive causes, being the first company to offer same benefits to you know, same sex partners sans for women for women in the nineteen twenties, I think nineteen forties. Yeah. Yeah, it's a great read. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on

Bloomberg Radio. Here's a Mattel. They shot up yesterday, their biggest gaining about eighteen months, ending with about an eleven percent gain. Their up again today two percent, following their latest earnings report, first quarter earnings last night that top to estimates thanks to Barbie and Hot Wheel sales that defy the usual seasonal slow down. We are delighted to have back with us, Mattel chairman and CEO, Enan cries via zoom in California. You're not so nice to have

you How are you great, Carol. Thank you for having me. Well, it's wonderful to have you here. We are going to talk about the quarter, but you know where I'm going to go. Um. We all kind of sat up a little straighter when that headline crossed, uh that there could be a possible buy out private equity interested. What can you tell us about that? Well, as you expect, we don't comment on speculation and we're focused on executing our strategy. What I can say is this was the highest first

quarter we have on record, both revenue and profitability. Our momentum continued across the business with double digit growth in Barbie, hot Woods and Fisher Price. We have started the second quarter with strong consumer demand. The Follier outlook is also strong, and we expect to grow market here. So all in all, an excellent start of the year and we're firmly in growth mode. And I think we highlighted yesterday. I mean,

you guys have been on a tear. If I look at you know, the share price in terms of the moves that you guys have been doing specifically. Um, some would say, and I'm going to push a little bit that you are setting it up for a sale. Are you talking with people? Are there conversations going on? But I can't comment on the speculation. But we've been consistently growing the company, UH, and this has happened over the

last four years. You followed the story, so you know that we took our said ida from a six million dollars in two thousand and seventeen to over a billion and guided fo yet another growth this year with higher goals three. So this is not a one quarter situation. This has been consistent delivery and execution on a on a clear strategy and a clear roadmap with tracking weale and we are in a great position to continue to

grow the company. And I will point out that from the end of the stock is up almost so investors have certainly noticed that performance in those changes. On one element that you've had to UH deal with just not just over the last year, but over the last few quarters, to our inflationary pressures on the supply chain. We've spoken to you in the company in past quarters about moves that you've made to try to make sure that your

supply chain remains intact. What you've been able to do ahead of time, but it doesn't mean you've been immune to higher prices. Talk to us about the pricing power that you've had and how much you've had to raise prices and how consumers are being affected by that. Yeah. We you know, given the anticipated inflation, implementing pricing action UM is one of the things we consider at times of of of inflationary pressures. Uh. We're not the only ones,

and it's not unique to the toy industry. UH. And this is something that we've done, like in the second half of last year, and we expect to do that again uh in the second half of this year. It's important to say that when raising prices, we always keep the consumer in mind, and we're being very thoughtful and very strategic and remain strategically committed to maintaining the right balance between quality and value for our consumers. Well, you know what's really great is I mean, you guys have

some old iconic brands. We've talked about it with you before, whether it's Barbie, whether it's Hot Wheels. I mean, it's just one brand after another. But then you have folded into the mix and embrace of all that is new through a lot aiances and partnerships. What is it that really drives growth for you? Guys, what is it that you say? Okay, this is top of mind, you know. In terms of the performance for the company overall, well, we've been growing on the toy side of the company

very strongly. We expect further growth this year. We expect growth in the second quarter and growth for the full year. We expect our power brands to continue to grow this year, Barbie Hot Walls and Fisher Price, as well as American Girl, and we expect to see strong growth in the challenging categories. This is where we're not a global leader, but we're seeing tremendous momentum and growth in categories like action figures and building sets. So we are in a great position

to grow in the toy side of the company. And in addition to that, we're also seeing great momentum on the I P strategy. This is film, television content in general, consumer products, digital experiences. And this week alone, we had two very exciting news to share. One is that we partnered with j. J Abrahms to produce the Hot Wheels

movie that we are developing with Warner Brothers. JJ is one of the most prolific respected producers of this generation filmmakers in general is also a director, and we're very excited to have him partnered with us on Hot Wheels. And in addition, we also announced or Warner Brothers announced at CinemaCon the release date of The Barbie Movie, which will be July one, three, And this film is shaping

up really well to be an iconic cultural event. We could not be more excited with the creative, execution and vision of Greta Gelwig, who is also one of the most respected and prolific creative filmmakers of this generation. And an all star cast with Margot Robbie, Ryan Gosling, Will Farrell, Simulo, America Fera and many other you know, very strong talent

and exciting cast. So expect something very special, uh from the Barbie Movie as well as Hot Wheels, and as well as other twelve films that we have in development. You know, I want to go back to something that you said about challenger categories areas where you're not actually the top of the category. Um, do you think you can become the leader of the pack in those categories in action figures, for example? What will it take? We we're seeing tremendous growth and momentum in the first quarter.

We grew by fort in the core and this is on top of six six percent in the same quarter last year, so we're lapping a very strong year with

forty percent in in the first quarter. Within that action figures actually grew by seventy so uh, huge momentum driven by our own properties such as Muscles of the Universe, as well as third party franchises that we manage on the toy sides such as Jurassic World, Minions and light Year three, big theatrical releases that are coming up in the second quarter and will further amplify growth in this

category in addition to what we do already. So this is an area where we see an opportunity to position Mattel as a partner of choice for the major entertainment companies and owners of big important franchises to leverage our platform, our capabilities on the design side, supply and supply chain and commercial execution and really grow these franchises and manage them as evergreen properties that are not just dependent on

the movie launch. But this is where we can bring out capabilities and manage franchises as evergreen I p and continue to create value for our partners well. And you know, I think about what you said about I pace rategy film TV. You guys are already do with the Barbie movie. You're gonna do it, as you said, with Hot Wheels, and I do think about, UM, what's the best way

for you to leverage all of that? Is it by doing it as a standalone and just partnering and you know, creating alliances with media and entertainment companies, or is there some kind of you know, going back to our first question, some kind of more significant link up with a specific media house Disney for the matter, Uh, you know, that would make sense and and really create some incredible leverage.

Our approach has been capitalized in that we don't take capital risk in investing in movies um, and that capitale approach applies also to our manufacturing strategy. What we do do on the content side is with partner with the best the best in their respective fields. So we're partnered with the best distributor as a major studio and the

best creative talent per genre, per project. And that gives us the ability to do that at scale and develop multiple projects at the same time and not be limited to uh, one or two movie movies coming out every one or two or three years, so we can do it at scale, work with the best people the genre, per opportunity across across the industry, and have multiple shots on goal with incredible brands and incredible incredible franchises and still find the right economic balance in terms of risk

and reward for matail. Where our currency, our contribution is the I P the franchises that we know, our expertise and know how of those of those franchises, and making sure that we collaborate and and and bring our understanding and the nuance knowledge of these franchises to the table and create something very excited for exciting for consumers all over the world. All right, you know, and I'm a little persistent, as you might know, having we talked a

few times. So go, So you are firing at all cylinders. Mattel is firing at all cylinders. And you guys have had what three consecutive years of dynamic certainly equity growth. Uh And like I said, investors are noticing. So some would say that is a reason the top perhaps or at a prime moment to sell the company. Others would say it's you know, you are talking about more avenues for growth. What would it take to do a deal that makes sense. Obviously shareholders of the board have to agree.

But you know, is it just about price or is it about strategy. Well, we're here to create shareholder value. We've been very consistent about executing our strategy and always have our shareholders interests as a north star. We have been doing it consistently. We see a lot of runway for the company to continue to grow and to create more shareholder value. That's our job, that's our focus, that's what we've been doing, and this is what we are looking to do going forward. You know, give us a

time frame for the strategy here. I mean, when you think going forward, what does that mean to you? How many years? How many quarters? What the The original strategy that we set out was to was to grow the toy business and in the mid to long term execute on our IP strategy. Now further down the road, we're now looking to continue to grow our IP toy business I P driven toy business and expand our entertainment offering.

We have put the building blocks in place for the second side, the second part of the strategy, and you're now starting to see the fruit of that work. With a release state for the Barbie Movie as a first and more to follow. More to come we will release on the television side, on the prosodic side, we will have third in series and specials on air, nine of which are new and for our returning This is a full slate. This is a real offering that will continue

to grow and evolve. So, you know, help us, help our investor audience understand how much Barbie sales will increase when the movie comes out, how much Hot Hot Wheels

sales will increase when the movie comes out. Now we haven't we haven't outlined that specifically by brand, and it's not something that we typically break down by that at that level, but we all understand that content strategy, an IP strategy, increasing the touchpoints and the engagement of consumers with our brands at multiple levels is a good thing. Our approach on the content side, on all of our experiences outside of the toy aisle, was to to create

quality experiences, quality content that will engage consumers. So when we develop a movie, the approach is not how are we going to sell more toys on the back of this movie. Their approaches how are we going to make the best movie that people want to watch? We know you can do it. Well, good things will happen. We know you have to run thirty seconds left here the Barbie movie. Have you been on set seen some of the filming. I have been on set, and I can

only say it's extremely exciting. The quality, the visuals, the execution is stunning, and I come back super excited and I know it's going to be very special. All right, Well, we're looking forward to it and always appreciate when you find time for us. Eenon cries he's chairman, chief executive officer of Mattel. That Barbie Movie in theater is July twenty three, and I really appreciate it getting some time with us. So much going on that stock though on

that company has really been on a tear. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. You guys know right you've been listening to us watching on YouTube. We have been all over so many big tech earnings. Netflix of course, We've heard from Meta, we heard from Pinterest, we heard from Google, we heard from Alphabet of course, whom am leaving out. I don't know, there's like this is the

biggest week. This is our quarterly you know, super Bowl, Yeah, exactly, the tech super Bowl. Hey, James chalkmak, I bet I don't even know if he's been getting sleep. Partner and technology analyst at the asset management from Clockwise Capital. He is back with us. They just like hang out. You know, it's not like Wall Street. Okay, you live in Margaritaville. Is that what's going on? Good afternoon, guys? How are you sorry? That's very serious, So talk to us about

what we've gotten so far? Um, Netflix, can we go back to Netflix? I'm curious your takeaway on all of that and what it means going forward. Sure. I think two kind of big takeaways from Netflix. Is that one, you have this uh subscription uh saturation uh in the market. Clearly, you know, we've been a rising tideslifts all boat situations for quite some time as it relates to services and cord cutting and um and UH and video offerings from

from different players. But as competition has increased and uh um and attention time uh spence has remained finite. UM, you know you're you are reaching a point of saturation. UM. So some investors are essentially trying to decipher you know who's gonna end up, you know, maintaining the most sustainable

growth UM. In this next chapter, Netflix obviously has a big question mark on it, but I'd say if you zoom out just a little bit, the overarching team for Netflix and tech more broadly is this concept the mean reversion.

And what we mean by that is that, you know, you had these growth curves across technology that have been largely predictable prior to COVID, and what happened was COVID pulled forward a tremendous amount of demand for these companies, so you saw growth accelerate well beyond what investors have expected um for the companies over the next five to

ten year cycles. And then what happened today um over the last quarter and dis quarter and likely into next is that the growth rates have been decelerating tremendously, because

you're laughing these huge growth numbers from last year. So really, when we think about, you know, the risk consucciated with the market and the draw downs that we've seen now, we think it's less amount you know, the Fed inflation rate hikes and so forth, and more about investors having a tremendous amount of difficulty ascertaining exactly where these growth rates will land for these companies on a normalized basis.

You know, our masters are thinking, are these new lower growth rates the new normal or will they revert back to the way things were? I mean some of these you can make the case go ahead, Yeah, James. Some of these companies have just been are just beat up. I mean Netflix down from its highs back in November. You have companies like until today Meta she had of its value just this year, Roku down since July of last year, PayPal just getting absolutely crushed. Are are these

stocks oversold or are they buying opportunities here? Yeah? I mean I think through that mean reversion springwork, you can kind of come up with high degrees of confidence on which ones are going to be the winners and losers. And look at company like Microsoft, right, this is a company where the world completely moved in Microsoft's favor because of COVID, which means that the growth rate is actually the sustainable growth rate is higher than we had expected

prior to COVID. So that's one that's been of fitting. The world moved somewhat against the Google favor um as competition increased and attention expans moved into other areas UM and that one is likely lower than expect. That Facebook even more so lower than what we previously expected, which is why the stock is down tremendously. Uh and Netflix is also tremendously lower, which is why the stock is is also down. But I think you can decipher Amazon

is a huge, huge comeback. I mean it's it's it's our number one position and it's probably the number one most undervalued company in the market right now, the company that provides the most value for your subscription UM than any other service in the in the market combined. James chock Mark is with US partner technology analyst at the asset management from Clockwise Capital UM. You said just before we went to the break, Amazon's your number one position,

number one most undervalued company. Explore that a little bit further with us. I mean, sure, think about what you get with your prime subscription for a hundred forty dollars a year, you get you get six businesses in one. When you buy a stock share of Amazon, you get retail logistics, video music, grocery, and the cloud, and you're getting it at three time sales. And when we're talking about the mean reversal. This is a company that grew nine percent last year I mean last quarter, but used

to grow about revenue every quarter like clockwork. I think by the time they report third quarter guidance in three months time, you're gonna see the growth rate double back up and um and this shares either this quarter or uh you know, beginning next are just gonna rock it off. Where we are straining at three time sales compared to Chipotle at six times sales, You're you're getting Amazon or half the multiple as a burrito where you can see that. Where are you going to see that growth? Are you

in in Amazon? Are you going to see it in a WS you can see? I think a retail thing is going to be a huge, huge Advertising is going

to be a huge driver. Um, you know, I think that's part of the reason you're seeing the pains that Facebook and to some extent YouTube you know intelligence team wrote the same thing, Um, James, they're kind of on the same thinking of you that there's a lot more marketplaces, including Amazon that's eating away at some of the advertising budget that has been enjoyed by you know, a few for a long time, but no more completely agree. I mean I think it's gonna be and and it's so

Nathan uh relative to its other businesses. I mean, it's going to be growing in thirty or four percent range likely for the foreseeable future. Obviously you have the membership UH component to it, and the cloud as as reinforced by Microsoft and Google's results will be growing at very very healthy rates as well, and retail growth rates will normalize back through pre COVID level. So this one, to me is the biggest no brainer UH of the bunch

when it comes to big tech. What should we be looking for with the Amazon earnings in just a few minutes when they cross UM. The main thing I think, UH, is that you're going to see better discretion on the on the expense side, UM. So I think that's going to be an area of surprise and then and obviously UM a steeper profitability and growth curve as a result

of that. And but most importantly the fact that the growth rate is moving back up for that number that we used to have prior to COVID and once that happens with within UM because they will fully be laughing things in the second quarter. So I think we're just you know, days UM away from seeing um those kind of numbers from them. If they don't see that kind of positivity, is that a bit of a disappointment to you then? Um? I mean in our minds it has always been when they report two q UM and provide

that third quarter guidance in in in three months time. UM. So I can't say with great certainty that it's this quarter, but I certainly think that the trends will be in that in that direction this quarter, and at the very least they'll discuss it that it's in that trend. On the urine, it's called how important is advertising to Amazon? It's and I'd say this, you know in quotes. It's a relatively new business to the company. I think it's important.

I think it just shows that it's a proofpoint that people go to Amazon first. Um. I mean, it's a right. They're not necessarily googling the product. They're going to Amazon, and they're using the search there to do it. Yeah, and and and and the proof is in the pudding. So if the dollars are moving in that direction, it clearly means that behavior consumer behaviors in that direction and

it's not going anywhere. But the one thing I just wanted to add before we go, is that you know, the number one in that mistake investors make as they tend to underestimate the sustainable sustainability of the growth for these cloud first companies, and it's been done throughout times. The number one example, I always think of this Walmart. You know, Walmart from grew thirty six percent year on

average for thirty years. I mean, how many people would have sunk in nineteen sixty nine that the Walmart is a company that can average over growth a year for thirty years, I mean virtually impossible, but it saved people a lot of times because they had the supersource. I think the cloud first companies of today snowflakes of the world, the crowd Strikes, Twilios, airbnd S, Octa, Amazon, and these are companies that can have much much more sustainable growth

rates than people expect. So I think we are in one of the biggest buying opportunities of at least my investing career is um uh right at this juncture, and I would say much more so even during the depths of COVID. So right now it's tough out there, but if you can pick the right horses there's a ton ton of money to be made, and I the analogy is you're buying Walmart in n so. So all right, so someone's got new money that they want to commit. They're a little freaked out by some of the volatility.

So what are five names that you would say this is where you should commit new money. You might need to be patient, it might be a little bit of a crazy ride, but this is where you should go because it is the Walmart. Like you just said of past Um, I'm in Amazon number one. I'm in Uh. I definitely do Snowflake. I would definitely want to play a security type names Cimber security is going to be critical. Uh that would be a company like like crowd Strike. UM I like um let's see uh I still I

still do like UM. I like Tesla here after the pullback here, I think this is one that I mean, Tesla is changing the world. I mean, and and the the advantage that they have in production, I mean, they are mild ahead and it's gonna take years and years for others to catch up on on the cost effectiveness inefficiency that they can gain over time at Testloo. That's one definitely, And then in Nividea the video because they're

involved in everything that's involved in the future. All right, really quickly twenty second So Tesla, even with a bye of Twitter, you think it's okay. Yes, I think it's okay. I mean it's it's noise. It's noise right now. It's

a lot of noise, you know. And the thing is, honestly, I mean they say that Mosk doesn't care about monetization, but if you do the things that he says he's gonna do at Twitter, Um, I really think that the monetization predential it's far bigger for Twitter than it's ever been. So I think, yes, what a treat for us to be able to do a double dive with you. So thank you so much. James chock Mak, He's partner and technology analysts at the asset management from Clockwise Capital, joining

us once again on the phone in Miami. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global News