Support for Prof G comes from Better Help. Social media has made it really easy to appear into other people's lives, but when you start comparing yourself, that's a trap. Therapy can help you zero on what you want instead of what others have, so you can start living your best life. Better Help Online Therapy offers a safe place to figure out what's really important to you. It's entirely online and flexible enough to fit into any schedule. You can fill out a brief questionnaire to get matched with a licensed therapist fast. Stop comparing and start focusing with Better Help.
To betterhelp.com slash prof g today to get 10% off your first month, that's BetterHelp at glp.com slash prof g. Support for this show comes from Mercury. There's an art to making the complex feel simple. Everything should be in sync so that even the smallest part serves a bigger purpose. Simplicity can transform your business operations.
That's why Mercury powers your financial workflows from the bank account. So ambitious companies have the precision, control, and focus they need to perform at their best. Apply in minutes at mercury.com Today's number $10. That's the value of the Uber Eats gift card that CrowdStrike offered customers as an apology for its worldwide.
Outage Ed, I just can't take much anymore. I'm divorcing my wife. First it was some guy to drunk party. Then it was her ex boyfriend for boss, my best friend, even an Uber driver. I just can't stop sucking other men's cocks. Ed. That was bad even for me. Here we are Ed. ProbG. Our producer just went off camera. She's calling her lawyer.
Hello. Hey, do you know it's Claire again. What's going on, Ed? I'm doing very well. By the way, I saw a nice headline in the news this week, which is that you're donating $12 million to UCLA and UC Berkeley. That was an interesting segue from me giving random oral sex to men. Yes, I am. I'm trying to portray you in a better light. We definitely changed altitudes pretty quickly there. Do you want to stay on sucking decks? Do you want to remain there for a little bit longer?
Let's try and pivot out of that. Even I'm feeling a bit cringed out right now. Even I'm feeling a bit cringed out. Back to me in my virtue signaling, what would you like to know Ed? You know, you know me. I don't like to talk much about myself. What's on your mind? I mean, you just talk about it. I shared it on Twitter, which you're not on. So you didn't see this. But I just sort of gave you a little shout out for putting your money where your mouth is.
That's nice. I'm actually feeling good. And people just loved it. I mean, it's gone. I wouldn't say viral, but semi viral. I think people are just very impressed with that donation. So maybe explain what it's for, what you're doing. I just like when you. Yeah, follow through with your ideas. And that's what you've done here. Okay. Well, first off, thanks for asking.
So it's a lot of things. It's a combination of a lot of things. One, it's an overdue nod to the generosity of California taxpayers that gave me a shot. The reason I'm here with you today is the generosity of California taxpayers and the visions of the Regency University of California.
I'm not being humble. I'm a town remarkably talented person, but without the certification contacts and job opportunities that I got from the University of California. I just wouldn't be here. And the thing about UC back in the 80s. Was it was not only affordable. It was accessible. Yeah, 76% emissions rate $1,200 per year.
And I feel that people who are successful and have gathered some wealth have an obligation, especially UC grads to try and return it to that level of affordability and accessibility. In addition, I saw an opportunity. And that is. We have this incredible infrastructure across the UC campuses. We don't take advantage of the facilities at night or during the summer.
And also our product doesn't evolve. Not everyone should be shoved through a traditional four year liberal arts degree. And because five people are leaving the trades every two that are going in over the next 10 years, we've seen a dramatic escalation in the salaries and compensation of plumbers, electricians, cybersecurity professionals, specialty nursing, specialty construction.
So I approached the chanceers at UCL and Berkeley and said, if I funded a program that was more vocational in nature, they gave maybe young adults and adults a chance to take courses, very specialized courses over the course of a year.
They gave them access to this incredible upswell and compensation and job opportunities in the mainstream economy. Would you be interested? And they were interested and they were very generous with me, even though they hate using the term vocational. So we talk about non traditional students. Why do you hate the term does it just sound not elite enough or something?
Yeah, I think they see themselves as is wanting to hire education as a by giving a kid a chance to explore different disciplines such that it rounds out the kind of the brain is a muscle whether history or philosophy. And that maybe our junior colleges or other trade schools are really for that that erodes kind of the mission and somewhat of the elite status of higher ed. So they are very they have been that was the hardest part about this gift was.
Getting them to somehow move to the notion that we need to offer an opportunity here over one or two years that would help kids have the skills that foot to the mainstream economy right now and my vision is I want it to be free and I want I don't want their to be an admissions process.
I want it to be if you're smart not I'm sorry you're a good person who wants to be a part of our economy wants to be in the middle class wants to or hire wants to pay taxes but isn't cut out like two thirds of Americans for traditional for your liberal arts degree that you have opportunities.
And you know free and accessible those are my two call signs here but this is I'm super excited about it both UCLA and Berkeley were really supportive of the idea and also for me it it's not even philanthropy it's it's consumption it makes me feel really fucking awesome I feel like a ball or doing it. And then get accomplished another goal which is that many of the comments I saw on Twitter were I didn't know Scott had 12 million dollars.
I have 12 million and one it's all gone now so I said so much as you have I said more than 12 million.
I'm super excited I'm happy to be you know I don't know that it's like you get to appoint in your life and what I want to do is I love the difference between an opinion and a principle or a value and the difference between an opinion of which I vomit out to everybody on this and other podcasts is that okay are you really passionate about struggling young men I think I am well as an opinion or as a value I'm really passionate about higher at and making it more affordable and accessible.
And the way you show it's a value is that you sacrifice for it and so I'm sort of overdue closing the gap between everything I say and everything I do I need to you know I definitely talk the talk I need to walk the walk more and this is this is an attempt to do that. And with that let's share opinions on the news let's start with a week's review of market vitals.
The SMP 500 had its worst day since 2022 the dollar was flat Bitcoin declined and the yield on tenure treasuries fell shifting to the headlines Google reported second quarter earnings beating analysts expectations on the top and bottom lines operating profit crossed $1 billion for the first time ever. However the stock still fell 5% due to concerns over heavy AI spending and slowing YouTube ad sales Louis Vuitton and your owner LVMH reported only a 1% increase in sales for the second quarter.
That is its lowest growth rate since 2009 excluding the pandemic sales for fashion and leather goods also only rose 1% nearly half of what analysts expected the stock fell more than 4% following that news. And finally Spotify hit 246 million premium subscribers in the second quarter that's up 12% from a year earlier those subscriber numbers help deliver a record profit of just under $300 million.
Spotify stock rose as much as 16% Scott your thoughts starting with Google earnings have been thinking a lot about about and I wonder if they're still sort of semi stuck in the innovators to lemon that is the company's LLM Gemini gets about an eighth of the traffic of chat GPT when when you think about the captive audience they have between Android and search.
And the fact that a lot of the IP for AI was actually developed at alphabet are they really have they really turn the fire hose of their you know 3 billion captive consumer base to Gemini or do they want to have their cake and eat it too and that is the majority of the AI efforts I have seen from alphabet have been in the context of a Google search and it has that kind of summary at the top.
But I haven't I don't feel like I've had them much marketing or that much incentive to use Gemini and I wonder if it's there still sort of protecting or not going full force they don't they're not they haven't in other words they haven't burn the boats so to speak and the busy sending out 23 billion dollars to whiz and buying back shares and issuing dividends here their cap backs got hit hard this quarter and would struck me immediately thought of apple that so smart not getting into this arms race they're just going to make sure they own access.
To the billion wealth is consumers and then they're going to charge someone like alpha better open AI ridiculous amount of money to be the AI of iOS but their cap backs was hit 13 billion up 91% from a year earlier. Their total cap backs this year could be around 50 billion which would be 84% higher than when the company has averaged annually over the past five years I got to think most of that was on AI which was mentioned get this 89 times on the earnings call YouTube.
You know at revenue still climb 13% so I think it's pretty pretty striking the thing I have to remember here is that alphabet and this is our big tech stock pick of 2024 so I've been tracking it Microsoft year to date is up 16% for all of the excitement about that stock Amazon's up 21% but alphabet is up 25% so they're doing really well and it just strikes me when the analyst the analyst zero in on the negatives here.
But the company is still doing really well what are your thoughts I completely agree with you I think people are so obsessed with this idea that they're behind on on AI which is probably true when you compare it to Microsoft. But as with anything you have to look at the big picture here and the big picture for Google is extremely compelling search revenues up 14% people thought that chat gbt and AI would be eating into that revenue it hasn't hurt at all in fact.
So it's just chugging along just fine better than fine cloud revenue up 29% I think that was expected and as you mentioned the YouTube revenue people people didn't like the 13% jump in YouTube revenue it's coming off an insanely high base and I think they're just comparing it to the previous quarters where they were getting 20 plus percent growth which is already insane I just want to point this start out YouTube ads just adds alone.
They are now bringing in on an annualized basis 35 billion dollars per year which is higher than netflix's total revenue last year and it doesn't even include all the paid subscriptions they get from YouTube premium and YouTube TV so I just think it's remarkable what YouTube has done we haven't saying this for a while I continue to believe that YouTube is the most underrated media asset in the world and I think if you just.
Stuck all those things up there's so much reason to be optimistic about Google market agrees with you and it was the thing I said about alphabet for a long time as it has the greatest concentration of IQ since NASA. And the team of the best players wins and alphabet consistently finds the tracks and retains some of the best players it's it's an incredible company I think it's you have to admire the their management and what they built there.
As we want to LVM H thoughts on these earnings that were a disappointment LVM H is sort of the quote unquote bell weather for luxury and what's ailing them is kind of with ailing every luxury firm and that is that Asia or specifically China is no longer the gift that keeps on giving.
And if you are overexposed to China it was champagne cocaine from like 2000 to 2018 and as they lot went through the roof and you know north face it took north face I think 20 years or 30 years to get to a billion and sales it took him 18 months in China.
I mean the shit was just selling before it even got offloaded from from ships right and last year about one in six purchases globally of luxury happened in China but the Chinese economy is showing signs of weakness high net worth families and China reduce their annual spending by 11% last year.
And I want to talk about just an incredible shift in fortunes Chinese stocks of lost 6 trillion over the past three years that's twice the GDP of the United Kingdom the S&P over the last five years is double that's up 100% India 65 to pan 25 year 24 China is down 30% so I don't know what it was China was 10 trillion and we were 25 trillion we went to 50 and they went to seven I mean LVM H gets about a third of its revenues from China so if that's down.
15% that means of our revenues are going to be down 5% I wonder if it's a buying opportunity at such a well run company they have such incredible brands.
But this is just simply put their biggest customer it doesn't doesn't have as much money as they used to I will also it's very interesting I think this is another nice example of these ripple effects that we often talk about in the markets where you know what started out as basically a real estate crisis in China that began with ever ground has morphed into a larger issue in China it has reverberated throughout the world and it's now.
Warming its way onto the income statement of a French luxury fashion house which is LVM H and so it's a very interesting dynamic going on here having said all that I think your point that it could be a buy is a good one because this company is not in crisis I mean the stock is down this year.
Down 10% year to date coming off some crazy highs where you saw or no becoming the wealthiest man in the world so yeah I don't think this is an organizational issue with LVM H this is a regional issue it's a problem with China so but let's just look at let's look at the stock of the last five years the stocks up 66% I mean it's just yeah and then the one that just absolutely
promises me is there as has a market cap of 213 billion euros which is about 240 billion unbelievable so I think luxury is going to continue I think it's ridiculous this notion the young people are in his fascinated by luxury is my generation and their ability to command margins once they get to sort of that iconic status and they also
want to wrap up here they have an incredible mode because the majority of luxury brands have heritage you just can't spin up heritage you can have a brand like supreme that becomes aspirational for a while but these brands you know panor I was initially crafted for Italian submariner's I mean this should is just Louis Vuitton tracked into Paris on barefoot and said OK it makes no sense that these
are carrying suitcases that are rounded at the top and have led the tracks moisture and mold so we came up luxury is really rooted innovation I think it was was a lorry all or was it I forget who initially it was a German chemist who went to the fields of the south of France and found a way to crush these flowers and turn them into a fragrance I mean this shit it really is rooted it was it was innovation before there was
innovation as we saw it in terms of technology wasn't fact luxury anyway so it's my my rant on luxury co-couch now the fine luxury is the following luxury is a necessity that begins when necessity ends that was sort of the perfect encapsulation and a great explanation of why yes we will always worship luxury no matter what we say we'll find a way to find necessities when necessity ends yes she also said the opposite of luxury is not poverty its vulgarity which I
love and she also said I love that Nazi dick she said that to and she said that to OK is that fair is that fair it's pretty easy to tell no longer working for a company that catered to luxury brands by the way she knows an amazing company with amazing people sorry about that yeah that's why you're getting sent clothes from Nike and not Louis Vuitton
I have used Chanel moisturize I use Chanel blue it's what I bought actually when my son was headed back to boarding school I I was still a little bit of a shopping ritual for him and I'm like this shit is gangster you got to put a little this on and it's I use Chanel blue moisturize or anyway it sells lovely masculine yet feminine at the same time fascinating I'm glad everyone's getting to hear this let's move on to Spotify who had a great quarter monthly
active uses up 14% revenue up 20% profits up 45% record profits for the company your thoughts on Spotify if you think about what Spotify is accomplished it's singular they've taken an entire medium and distilled it to a single icon on your phone that is searchable and very user friendly no one's done that in TV no one's done that in books I think it's a great value I think they do a fantastic job in some I think it's a great company and they were also pretty bold they went all in and
gave the artists and labels just proportion amount of the revenues they basically lost money they were more like a collective or cooperative just taking money distributing it to the record labels and the artists but once they got scale and once they kind of not consolidate the industry that at a large enough share where they could start they had the pricing
power to improve or increase prices and their subscribers didn't go down and basically essentially what they have figured out is that they have more pricing power than they thought and despite increasing prices they have increased their revenues so revenue from premium users increased 21% and premium subscribers accounted for 95% of Spotify's gross profit over the last 12 months the thing that doesn't work or the thing I saw in this earnings call or in these numbers
is I think both Netflix and Spotify I think the advertising does not work for them and I remember I remember being like in 2000 like the early 2000s I think it was on a date or whatever I had some people over and I was trying to oppress these people and I was in my my loft I know I know it's horrifying to think of me as single and I remember I had music on and I think
I'm going really well and all of a sudden it dawned on me like some really bad ad for like pet stock commerce and became a lot like oh my God no one's ever going to have sex with the ad supported Pandora guy and I literally thought having ad supported Pandora was just going to ruin no matter how many
mannerized I had or how do I was trying when the pets dot com ad comes on on Pandora radio it's over everyone's like well it's getting late it's getting late but what I saw in the Netflix earnings call and in this one is that it's just the ad supported ecosystem is having a really difficult time I think it gets in the way storytelling
and I think this earnings shows just that basically it's subscribers that are what 95% of spotifies gross profit one other thing I found really interesting was how the CEO this guy Daniel and I announced these earnings and that is before the official earnings call he posted on Twitter and on Instagram what was essentially like a tech talk video it was like a two minute selfie video where he just spoke directly out the camera and run through all of the
headline numbers in the earnings report I think he started doing this around Q4 of last year this is kind of his cons strategy I'd like to get your take I will just say I think it's such a good idea because in a weird way the way most people consume earnings news it isn't actually from the company earnings calls it's from media companies it's from like CNBC or the Wall Street Journal or even you might get it from
listening to this podcast you're rarely hearing from the CEO but this strategy is such an obvious one just post directly to social media that sort of fixes it you know it's a small detail it's a small innovation but I would predict that this is going to become the norm I think you're going to see lots more CEOs posting on social media these selfie videos about the earnings in the next few months I think that's really interesting I didn't know that you can see them bypassing kind of the
analyst industrial complex with the CNBC industrial complex and doing a video kind of timed well choreographed tweets and then maybe doing like Instagram live to do their analyst calls right to say all right I'm going live to answer your questions there's some choreography around SEC and you know when you release non public material information that they got to be careful of but I think you're right I think that that might be because what you want is you want to get more people
just as you want to garner more consumers the consumer brand wants to get new consumers into the franchise get new customers the company wants to get new investors and they also would never goes out of style as they all want to be known for having an innovative product that's differentiated and that they're you know good what they do in their
component but what they really want more than anything is they want some that innovative pixie dust port all over them so communicating your earnings via video that's posted to YouTube and then spliced up for TikTok or what have you and then doing some of this live stuff on some of these platforms that just sort of screams of innovation yeah I can't understand how p-off or p-r-teams I should say at these public companies haven't gotten on this it's
weird to think this but I would bet within five years 10 years max a key component of your boards deciding whether it makes someone CEO is how strong as they're following basically is the CEO your job is to attract retain the best talent and set a vision for the company but as much or more than anything now it's your ability to tell a story or craft a narrative the results and access to cheaper capitals such that you can invest at a greater rate
then your competitors and pull away from them anyways I 100% with you and I would bet your the next generation of CEOs are ones that come armed with pretty decent following on social media we'll be right back off to the break with a look at Tesla support for property markets comes from fund rise venture capital is widely seen as one of the most lucrative asset classes in the world go look at the
S&P 500 nearly every major tech company on that list was once funded by venture capital firms producing billions of dollars in profits in the process the hard truth however is that the biggest venture funds are almost entirely funded by institutional investors like endowments and sovereign wealth funds so unless you knew a guy who knew a guy you and 99.9% of individual investors
not get to participate in the pre IPO growth of any of those blue chip companies and it's happening again AI is making waves everywhere right now except your portfolio some of the biggest names in AI are locked behind private markets the fund rise innovation fund is changing that it's a more than 125 million dollar fund it holds some of the most exciting pre IPO tech companies in the world
and it's designed for individual investors to get in early on the AI revolution go to fund rise comm slash markets to learn more carefully consider the investment material for investing including objectives risk charges and expenses this and other information can be found in the innovation funds perspectives at fund rise comm slash innovation this is a paid advertisement
support for the show comes from mercury mercury knows your financial operations are complex founders and finance names have to pull together different tools reconcile transactions from different sources and struggle to get accurate answers with mercury you can simplify your operations with banking and software the power your critical financial workflows all within the one thing every business needs a bank account
that with new bill pay and accounting capabilities you can pay bills faster stay in control of company spend and speed up reconciliation apply in minutes at mercury dot com and join over 200,000 ambitious startups that trust mercury to provide the precision control and focus they need to transform their financial workflows so they can perform at their best
mercury the art of simplified finances mercury is a financial technology company not a bank banking services provided by choice financial group and evolve bank and trust members FDIC support for this podcast comes from huntress keeping your data safe is important however for a small business owner then protecting the information of yourself your company and your workers is vital in comes huntress
is where fully managed cybersecurity meets human expertise they offer revolutionary approach to manage security that isn't all about tech it's about real people for writing real defense when threats arise or issues occur their team of season cyber experts is ready 24 hours a day 365 days a year for support visit huntress dot com slash prop g to start a free trial or learn more
we're back with profty markets Tesla's second quarter profits fell 45% year of year declining for the second quarter in a row the company also posted its lowest quarterly profit margin in five years and its second consecutive sales decline
Tesla did not offer a fresh sales target for the year but it did warn that its vehicle volume growth rate would be quote notably lower than twenty twenty three the stock fell 12% after the earnings call Scott reaction to Tesla's earnings I think the analogy here is this market feels very similar in some ways and not
the market is just a little bit more than a few years to the streaming market and that is Tesla basically had the market to themselves similar to Netflix through the odds in the 2000s and that is if you're going to buy an EV you were really going to buy a Tesla was kind of like Tesla in the seven door no one was going to buy a Pontiac leaf for whatever the heck was called right
in the stock market just reacted so possibly to Tesla and gave them sass like tech like multiples that everyone in the auto industry said okay we gotta get into this and the announced you know Mary bar announced that half the cars sold from GM were going to be electric within a certain time the you know fiscal all these startups kind of spun up and there was essentially what happened in the EV race is what happened in streaming that is it became over invested
in the manifestation of that over investment is that a year ago an EV an electric powered vehicle was eighty five hundred dollars more expensive than its internal combustion equivalent as of today it's only fifteen hundred dollars more expensive and in some instances it's less expensive so the F one fifty lightning that is now ten thousand dollars the electric version is ten thousand dollars less than its internal combustion
brother and I will say brother that's a pretty much a fucking car that shit has real balls that should have balls bottom line is this is classic economics over investment because of the market giving it above market multiples that over investment results in a price war and then I think you combine that with Tesla's products feel a little bit dusty right now they don't feel that I mean I by the way I drove in a Matt black cyber truck
no way yeah friend of mine is this total master the universe baller hedge fund guy anybody me out to his house went out there last weekend and his house manager pick me up in a Matt black cyber truck no what I am literally the doucheous douche and douche fill right now how did it feel on the inside because I kind of agree that I think Tesla's feel very cheap on the inside did it feel
cool no I felt modern and very techy but on the way back we drove in his Range Rover and I thought that was just much nicer I think the car quite frankly I think the cyber truck is fucking ridiculous I think it looks like something Homer Simpson would have designed after watching Battlestar Galactica for forty eight hours straight I think it's just so stupid looking and weird looking and the inside was very
very good and I think it felt like you're on a set of a movie about the future but you would never fucking actually own this car right and you know people were coming up and stopping and talking to us because they were so interested it looked like you know the bat mobile but I don't I think the thing is a giant thought although I guess the sale have you
heard anything about the sales of this thing I don't think they've broken out there's the sales for the cyber truck yet but I think the consensus is that it's all underwhelming and that sort of struggling to keep up the other thing that strikes me about Tesla is that if you think about pure meme stocks like the meme is to meme stocks a meme stock is a stock whose in my opinion is stock is totally disassociated from the underlying fundamentals of the company
it's like the ketamine of the market if you will and the ultimate meme stock is hands down Donald Trump media it's got a six billion dollar market cap even after declining 30% in the last last week and it on like seven million revenues and 300 million the company makes no
fucking sense it's basically people have decided it's a proxy for your support of or your belief or the probability that Trump is elected president and it trades on kind of sentiment and emotion has nothing to do with the underlying business halfway between a stock that trades on its underlying fundamentals like an alpha better 99% of stocks and Trump which is a Trump media which is a total meme stock I think in near meme stocks would be like AMC and game stop
there's shitty businesses and they trade a much greater multiples and they should because people think there's a chance they'll go crazy again because of roaring kid or whatever I think perfectly in the middle of that continuum is Tesla because to be fair it's an amazing company they've inspired the EV race they have they do have great products their energy unit is making money the idea of a robot tax is compelling will come back to that
but Tesla trades at 99 times forward earnings this is in contrast to Ferrari an amazing brand that a lot of people want it kind of singular in terms of prestige and self expressive benefit that trades at 50 times forward trades at seven times and GM get this said trades at five times forward earnings so great company but should it trade a double the multiple of Ferrari and 20 times the multiple of general motor so this is sort of a
good term I would use is it as relates to meme stocks that Tesla is a hybrid to press it's a great company but it can't really justify the multiple it's at and then well I'll end up with and this will come back to our prediction is that just as Donald J Trump media became an index or
whether or not Trump got reelected I think these guys is techno libertarian weirdos really fucked up by coming out so forcefully in favor of Trump because what they've done is is they've tied themselves and their businesses to the re election of Donald Trump and as the likelihood of a vice president
a Kamala Harris becomes more likely and it's become much more likely just in the last five days I think people are going to go well who is this going to be a big deal and I think one it'll put pressure on Bitcoin prices because they'll say okay maybe Bitcoin isn't going to be totally
deregulated and become the ultimate stable coin or whatever whatever the right term would be good for Bitcoin but also I think people are going to soon learn or soon figure out if it's a Harris administration they may not be inclined to put tariffs on B.
They may not be as inclined to give subsidies that would include Tesla or give subsidies that might exclude some of the Tesla models I just I think people are going to start connecting the dots that when you go all maga musk there's some risk there and I think that risk will start to show up in some pressure on the stock as a little bit of a meme stock tracking Trump's election or lack there up to the White House.
I mentioned the robot taxi which we should definitely talk about it was supposed to come out or the the robot taxi model was supposed to be unveiled in August and then on this earnings call Elon delayed it to October and that's I think a big reason why the stock fell he's been saying that full self driving is coming next year for literally a decade so you know he's delayed the unveiling again supposedly it's coming out in October now one sort of tangential point I
like to get a reaction to in terms of this when will this robot taxi ever arrive discussion I was speaking with an AI founder recently and he actually started his career as an engineer at an autonomous vehicle company and that episode will be coming out in first time and he made a really interesting point which is that we tend to think of self driving calls as its own sort of separate very specific technology but in reality as he pointed out
self driving calls is just AI and his point is that you know right now is the big AI moment twenty twenty four is the year of AI and so logically speaking you think that if we're in the AI moment we're about to witness the self driving moment to I think it's a strong case for why the test the robot taxi might actually it actually will
arrive this year despite all of Elon's bullshit and I'm wondering if if you agree I have no idea I just know that it's the thing that's supposed to be around the corner and you look around the corner it's not there and you also have way more you also have a lot of competitors in this space in order to really take this through in order to capture incremental margin that that results in this type of increase in earnings you would have to have
Tesla's that were more AI enabled or had more automated driving technology than any other car is Tesla that far ahead of the other self driving technology such that they could capture that innovation just for Tesla's I don't there's two things here when does this happen and also what would Tesla's ability be to capture the economics of that innovation versus any other company just before we wrap up on this we spend all this time
ragging on Tesla let's try to think a bit more positively say you were on the board of Tesla and let's be clear that the business is struggling revenue rose but it only rose 2% and profits fell 45% it's dealing with a lot of issues you know it's it's it's market share in the EV space in America is down to 50% 4 years ago that number was 80% so we're not being biased by saying that Tesla's Tesla as a business is struggling what would you be focusing on if you
are trying to improve this business and you're on the board okay so if we're going to imagine we're on the board I'm going to imagine that I'm dating Tom Brady and he runs his hands through my share like thick hair I mean if we're really going to imagine let's if we're really going to lose Nate let's go full let's
go full psilocybin and with a kicker of like it nine shots of something okay I'm on the board of Tesla that's a good one where would I be focused I think I mean this sounds boring but I think I would their energy stuff is pretty cool totally by the way that business doubled yeah doing pretty well
there I mean it sounds really based I guess I don't have anything creative here I'd be focused on freshening the model lineup and then I would probably I would probably for the robot taxi stuff I would probably acquire lift and have a built in base and user base of
people are comfortable with ride hailing digital call it palatine yeah there you go that's right that was my favorite for a while they're definitely being acquired says brought you will be right back off to the break with a look at a tobacco company is recent success support for this show comes from mercury financial operations are needlessly complex with mercury you can simplify them with banking software that power your critical financial workflows all within the one thing every
business needs a bank account and with new bill pay and accounting integrations you can pay bills faster stay in control of company spend and speed of reconciliation apply in minutes at mercury dot com mercury the art of simplified finances Ryan Reynolds here for I guess my hundreds mid commercial no no no no no no no no no you know honestly when I started this I thought only have to do like four of these it's unlimited premium wireless for $15 a month how are
there still people paying two or three times that much I'm sorry I shouldn't be victim blaming here give it a try at mcmobile dot com slash save whatever you're ready $45 up from payment equivalent to $15 per month new customers on the first three month plan only taxes and fees extra speed slower about 40 gigabyte the details well landing in account this big totally changed my landscaping business it's going to mean hiring more guys and
more equipment and he trucks for the new guys to drive the new equipment in I don't know if I'm ready you can do this and Ford ProFin simple can help our experts are ready to make growing pains less painful for your business with flexible financing solutions that meet the needs of your business today when you need them get started at Ford pro dot com slash financing we're back with profty markets shares of Philip Morris international hit their highest level in more than two years after a
red hot product propelled the tobacco company to a better than expected earnings report that product is is in is a nix team pouch that you absorb through your gums and they're so popular that there's been a nationwide shortage of them this summer Philip Morris which acquired in in 2022 said sales of the pouches rose 50% year over all sales in its smoke free category rose 24% and total revenue for the company rose 10% Scott what do you
make of this new zin trend that Philip Morris has managed to capture and there's benefiting this company really interesting I think all the sin guys are trying to figure out a way to go sort of near sin and that is my understanding of zin is that I want to be clear this shit is not good for you don't pick it up if if you if you haven't if you don't have an addiction to nicotine but it's a much less damaging means of delivering nicotine
then chewing tobacco and just full disclosure I have some background here I invested in a company being pulled out of the crepsy called enjoy was it just an electronic nicotine delivery system better known as vaping and I think I did it in 2000 and 15 or 16 long time ago and one of the reasons I invested was my mother died of a smoking related illness and I had two friends who quit smoking using enjoy and just as combustibles
are going away every year they're down like five or eight percent one in three people who buy a pack of cigarettes get this says this is our last pack they're ever going to buy one in three it's the largest source of preventable death in the United States and it's going away people are getting a memo here long story short we pulled this company out of bankruptcy I think we bought it for six to 70 million put a bunch of money into it
it was basically a regulatory play I think we invested another hundred million in it to try and get FDA approval and show that we're good players or not jewel we don't have a youth problem anyways seven one seven
seven nine years later we got acquired for 2.8 billion by Philip Morris by sorry was it fit because there's Altria which used to be Philip Morris and then there's Philip Morris International which is the international segment that was spun out of Altria several years ago so that's just one little
wrinkle in this story do you know if it was Altria or Philip Morris International that acquired it it was Altria okay so you're right it's technically a different group because there's different dynamics and I guess they figured they could get more money yeah and that totally separate companies now but at one point it was they were the same yeah my favorite though as I changed the name to Altria thinking to people like the more they would
forget about all the death disease and disability that they turn around you don't think it works I don't like name changes when you're trying to escape from something I don't I don't know I don't think I made
any sense anyways but the thing that really struck me I think I told you this I went to summit at sea with all these you know young enough and coming vertical farming you know it's like I call it learning man it was Ted Talks during the day and then at night everyone did their drugs with a DJ and
pretended they were interesting and thoughtful people because they'd gone to a talk during the day I'm like AI and fashion that'll be riveting anyway so but the thing that struck me was it was on this virgin cruise ship and I went up in order to make her some ginger the barn is like oh my god finally someone's drinking and I said what do you mean I think none of these kids drank they're all doing drugs and I noticed that everybody
the drug of choice was mushroom chocolates and then everyone buys one drink and just nurses at all night and that alcohol is really wax out I'll turn this question back to you you're young and now for a young person what is going on with the trend of substance abuse both tobacco and alcohol and drugs and I won't ask you to say what you do but what do your friends do at yeah that's exactly right everyone stop drinking I mean here's statistics no no alcoholic beer sales increased 20% last year
and then two probably more importantly Gen Z drinks 20% less alcohol per capita the millennials did at their age and I'd love to see the difference between the millennials and the boomers probably like 100% less but the thing that you know what we should be talking about with this story is this new obsession with Zinn and yeah it's a nicotine pouch it's it's similar to chewing tobacco but without the tobacco
supposedly it doesn't cause cancer but like the vapes we just don't have enough data to say it causes or doesn't cause it but it's extremely popular everywhere Zinn sales were up 80% earlier this year it's now around 50%
an expected 580 million cans will be sold this year and as I mentioned there is a Zinn shortage in the US so now Philip Morris is spending 600 million dollars on a manufacturing facility in Colorado just to keep up with Dimon final anecdotal evidence I will offer most of my friends use Zinn
really yes none none of the women all the men especially the tech bros and especially the bankers this is sort of a phenomenon in the world of nicotine so it's massively popular I think the question is do you want to get in on it as an investment I mean for that Morrison's and Arsenal's trading at 20 times earnings which is pretty high it's double altrias P ratio at the moment I think the market is correctly recognizing that Zinn is an absolute rocket in the nicotine industry
but you know I will throw this back to you one do you like this as an investment two do you have any ethical concerns about investing in a company that sure offers tobacco alternatives but also sells tobacco I think it's easy to be a purest and like sure other people after you're already rich
I think people have an obligation to develop economic security for themselves like I used to own Facebook stock and I got so much shit for it because I'm constantly saying you know Mark and Cheryl have done more damage to the world their teens anyone like but you own the stock
so I sold the stock but I don't have a problem with owning since stocks I don't my attitude is you know if you really have a moral if you really are against it then find what you want but my observation is that the companies that are quote unquote ruining the world generally have the nicest people
under the best run companies so I did work for fossil fuel companies and my first company profit the people at Chevron the people at Exxon so nice such a well run company I've worked with people at gaming companies you know casino guys incredibly professional incredibly well run
walk into Altria do work at Altria and you're going to see some of the most talented discipline managers they massively invest in their human capital I think it's got some of the happiest employees in the world based on service they invested tremendous amount of money and training
they have great employee profit sharing these are just really well run companies and they're typically in terms of evaluation somewhat depressed relative to peers because there's a large segment of the population they want to invest in them so long term just I'm not going to make a moral argument for against them I mean you know I'm a capitalist and you know have added it's your capital do what you want but I would invest I would invest in it
I'm an investor in a my investor in a fossil fuel company I'm an investor actually in a small possible fuel company in Switzerland but let me first I think it's a personal choice but I don't I don't look down on people who invest in this stuff I think economic security is is really the thing you should be pursuing and I think we should be voting for people that it put in place regulations that think about the well-being of people a second look at the week ahead
we'll hear the Fed's interest rate decision for July and we'll also see earning from Microsoft, Metzer, Apple and Amazon big earnings week do you have any predictions Scott?
Tesla is about to become a bit of a meme sock that is an updraft or a downward draft based on vice president Harris' likelihood or where she is in the polls and I think these guys a couple weeks ago this big list of tech pros again seemed like literally the lamest club in San Jose thought that they were smart to go all in on Trump and that it would pay off for them they didn't do the math on what's going to happen if all of a sudden
a Harris presidency becomes more and more likely that I do think it's going to actually impact the companies that are involved in and Musk has turned Tesla Red Pill and it appears as if he's gone all in on Trump he said he was giving $45 million dollars a month now he's backtracked on that he all gives that it was made up I don't think there's any way that we'll know well okay it was the Wall Street Journal reporting it so who do you trust more the Wall Street Journal or Elon Musk?
yeah anyways this is about to become another not as much as Donald Trump media but it's about to become a tracking stock and it become inversely correlated to Harris' poll numbers this episode was produced by Claire Miller and engineered by Benjamin Spencer
our associate producer is Alison Weiss or executive producers of Jason Stammer's and Catherine Dillon Mia Silvario is our research lead and Drew Burrows is our technical director thank you for listening to Prof. Markets from the Vox Media Podcast Network join us on Thursday for our conversation with Dan Ives only on Prof. Markets live time you have me in time we are as the world's and the world's