S2E25 – Stock Review with Ryan Sterling – META AX TSLA

 Transcription

[00:00:03.430] – Intro

Payback Time is a podcast about building businesses’ wealth and financial freedom. We try to uncover the challenges our guests faced, the mistakes they made, and the steps they took to achieve their goals. The overall objective is to provide you with a roadmap that leads to your own success. Sean Tepper is your host. Are you ready? It’s payback Time.

[00:00:33.090] – Sean

In this episode, Ryan Sterling returns and we review Meta, American Express and Tesla. Let’s go, Ryan. Welcome back to the show.

[00:00:42.070] – Ryan

Thanks for having me. Last time was a lot of fun.

[00:00:44.520] – Sean

Absolutely. Well, we got three new stocks we’re going to review today, but first things first, we’re talking offline a little bit about the market and this bear market that has been dredging on. And just our thoughts, high level. So I’ll let you kind of take it and then I’ll make some comments on my own.

[00:01:00.290] – Ryan

Yeah. Bear markets are an unfortunate part of investing. I tell people all the time that bear markets are the price of admission to compound at 8%, potentially even more over the long term. So long term, nothing has shaken my confidence and with respect to investing in stocks, but it’s been challenging. It’s interesting if you go back over the last five years, we’ve actually experienced three bear markets in the last five years. And I’m calling there was a decline in late 2018. From September to December 2018, the market was down 19.8%. So let’s just lump that into a bear market. So the end of 2018, March of 2020, and then now. Yeah, but if you would have invested five years ago, and if you would have just put your money in a lockbox, you didn’t look at your statements and you opened it today, your return would have been right around 50%. So you talk about 50% return over five years while going through three bear markets.

[00:02:00.090] – Sean

That’s pretty good.

[00:02:00.920] – Ryan

Yeah. So it just shows you that the worst thing you can do in these times of stress and anxiety is to sell into the stress and anxiety. If anything, if you have dry powder, put more in. If you’re able to contribute on a monthly basis, then look, acquire more shares at lower prices. But I will say that we were just talking offline a minute ago, the difficulty with this time, it’s not the magnitude necessarily just in the duration of it all. I think what I’m getting from clients and I’m hearing from people is they’re just tired and that we’re seven months into this. When is this going to end? And I wish I had an answer. I will say that market bottoms are not formed when all of a sudden the news turns good again. Markets bottom when news becomes less bad. Yes. By the time things are good, the market has long moved off bottom. So we just need to wait for that period where things become less bad. If you go back to the financial crisis, the bottom of the financial crisis was March 9, 2009. What happened on March 9, 2009? Well, the only notable piece of news I recall was city reported earnings that were really bad, but they just weren’t as bad as expected.

[00:03:11.070] – Ryan

But we were still going to lay offs. We were in a recession. There was still a major concern that our banks capitalized enough. There was concern over the autos. Things did not feel good. On March 9, 2009, I actually found a headline recently. I know people are listening to this, but I’ll just show you here. I’m going to pull this up on the screen. I found a headline from March 9, 2009 in the Wall Street Journal, and the headline said, Dow $5,000. There’s a case for it. March 19, 2009. And the first sentence, just how low can stocks go? This was the very bottom of the financial crisis. This was the absolute best time to invest over the last 15 years. But the headlines on that day were, gosh market could go down another 20% from here.

[00:04:06.940]

Right?

[00:04:09.630] – Ryan

Yeah. And it was just talking about all the stress and anxiety. So that’s why I say, I talked to people right now and they’re just throwing out all of the bad news they can think of right now. And look, I’m not denying it. There’s a lot of really scary news out there, but we don’t need the news to be good for the market bottoms to form. We just need something to be a little less bad.

[00:04:30.300] – Sean

Yes, I agree. And just to summarize some points that I’ve recently seen, and this relates to a video I did recently, maybe in the last month or so, it was from Forbes reported than the last 19 bear markets. Average drop is about 38%. Average duration was about nine months. So they’re saying that we could start to see things really start to turn around in September, October. Jim Cramer, I don’t always take everything he says by gospel, right? Or as gospel, but I do enjoy listening to CNBC just to hear their thoughts on stocks and whatnot. Same thing with Motley fool. Don’t always agree with them, but Kramer is like, our rally is about to start. Get ready. Yeah, I thought that was interesting. So I think things could turn here. I’ve been buying as much as I can and telling the Tykr audience base, now is the time. Like, whether it goes down a little bit more, who cares? Like, you’ve been buying, keep buying.

[00:05:28.560] – Ryan

That’s right. I cannot agree with that more. I will say that this bear market has really been in two stages. Stage number one is the multiple contraction, and multiples have come down because interest rates have gone up. Right now, multiples, in terms of the price forward earnings are right around 1617 right now, which is kind of right around the average multiple. One could even argue they come down a little too much. The second part of it is what happens to earnings. And I think right now the market is pricing in that we do have a recession. And with that on earnings recession, I think that looking at a 14 of 1617 and just kind of pulling back earning expectations just a little bit to come back. Or in a mild recession, I think this part of the market is roughly speaking, fairly valued, maybe a little bit undervalued. So I guess what I’m saying is I don’t necessarily and this is what I’m telling the clients, I don’t necessarily think we’re getting back to where we were back in December of last year. I don’t think we’re getting there necessarily in the next six to twelve months.

[00:06:33.540] – Ryan

So I don’t think this is necessarily going to be a V shape. That said, I think what this is doing is this is setting up a ten year period that I think is going to be very favorable for stock values.

[00:06:44.310] – Sean

Right. I 100% agree with you. There’s a foundational element happening right now, and this is something that Kevin O’Leary, Mr. Wonderful and Shark Tank to touch on is one big difference from the 2008 recession is the consumer has not rolled over this time. They’re still going on vacation, they’re still buying toys, they’re spending money. Whereas that recession was so scary, people kind of hauled to their vacations or buying a new car or making a home improvement. Today people are, this train has not stopped, we’re driving right through and we’re still spending money.

[00:07:19.890] – Ryan

That’s right. I could not agree more.

[00:07:23.610] – Sean

Well, no, that’s really good to hear your thoughts on the market. You from an advisory perspective, you have clients that you’re managing their money. There’s a lot of emotions there and kind of keeping them calm that, hey, it’s going to be okay, we’ve been here before, we’re going to get through this, and now is the time to just keep buying.

[00:07:40.320] – Ryan

That’s right. Again, I think you look back ten years from now, you’ll be very happy that you bought today. Does that mean we can’t go down another 10% from here? No, we absolutely could. But again, if you have money and you’re thinking about do I buy now, do I buy a month from now? Too much? Who knows? But I got ten years from now. It’s not going to make a material difference. Just stay with the plan or put more money in and just make sure that you have the right time horizon.

[00:08:04.360] – Sean

Right? Exactly. Well, let’s transition here to our stocks. First on the list, we have meta platforms, aka Facebook. So what I’ll do is I’ll kick us off just with a high level financials looking at Tykr, then I’ll hand it off to you and we’ll just go from there. So right away meta platforms are I’m probably going to call it Facebook because I’ve been calling it Facebook the last 18 years since it’s been around. Really well rated in Tykr it’s on sale score of 72 out of 100, which is really good financials. And then margin of safety is 79%. This means share price is at 163, fair value is at 489. So a ton of side potential. So strong business from a financial standpoint, but what are your thoughts?

[00:08:50.050] – Ryan

Yeah, so what I look for in companies and when I get really excited about a company, it’s when it has a combination of does it have a strong cash flow model that’s currently in place, number one. And then number two, is there potential for some serious upside growth and there really aren’t many companies that fit both of those criteria. Last time we talked about Google, I think Google fits that criteria. Google is a cash flow machine and you get a free call option on all of their innovation. I think Facebook or Meta is the exact same thing. Facebook Meta is a cash flow machine right now I can tell you as a small business owner, you have to advertise on Facebook to grow your business. That you have to. But Facebook is a huge partner for us in growing the business. They’ve cracked the code. Granted they’re facing some headwinds with respect to Apple and privacy, but nonetheless, I still think their ad business is such a strong business. In addition, they have the WhatsApp, which is again, if you do a lot of international travel, WhatsApp is what everybody uses overseas. So that’s a strong business.

[00:10:08.630] – Ryan

And I think the Meta verse, I’m not really a tech guy. So on the one hand I don’t see myself wanting to live in what people are defining the metaverse to be right now. That said, I guess what I’m making a bet on is that I think the metadata is going to be something I think it’s going to be something that all of us are engaged with in some way, shape or form. I don’t think that means we’re going to wake up in the morning, we’re going to plug into the metabolic and we’re going to live in this alternate reality for the duration of our day. But I do think it’s going to help and add value to our lives in a number of different ways that we’re maybe not even thinking about right now. So far as I compare to I remember when I was a lot younger, but again, I’ve never been really a tech guy. But I think back to the mid 90s when people are first talking about the Internet and all the way the internet was going to change the world and what life is going to look like in 2022.

[00:10:59.150] – Ryan

A lot of it was wrong, but obviously the internet has been transformational in terms of the way that we do business, the way that we interact. It’s a crucial part of our daily lives. I think the metaverse is going to be very similar to that. I think it’s just really hard to tell what that’s going to look like in 20 years. So Facebook fits that criteria of a cash flow machine today, which by the way, is trading at a price to earnings multiple of around twelve to 13. So you get Facebook at basically the same multiple as a utility company. Then you have this game changing technology that they are really at the forefront of and I think going to be the leaders of pioneers of facebook again is one of those companies where I think you buy it, I think it’s reasonably priced right now, and I think you hold it for the next ten to 20 years.

[00:11:47.130] – Sean

I do agree with some of your comments there. I just want to point out because I just did a review this week, a written review, I’m going to do a video review a little more in detail and I agree with you. The cash flow machine. I love SAS. You know me, I’m a tech guy. I love B to C SAS and B to B. But there’s two business models that I consider superior. You’ve got transaction fee models like PayPal and Square. You come in between people on that transaction and make it super low friction. You can run that all day. It’s like you just run the meter, let it go. Advertising models like Google, YouTube, and of course Facebook, another great model, you just let that meter run and those fees can crank. So excellent business model, the best of the best, the most scalable in my opinion. Now you mentioned Apple. Two threats there just have to call out. One is they released this new iOS feature called Attracting Transparency. I was doing some homework on this and I just finally came with the times and migrated from Android to Apple, by the way, to an iPhone 13.

[00:12:55.370] – Sean

But anyway, this at technology, what it does is it brings up a pop up that allows users to not share their information with Facebook or any kind of advertising. And based on some research here, 62% of users opt out of that. They don’t want their information stored. The issue is this could cost Facebook this year about $10 billion. And to give you some numbers here, they generated 117,000,000,000 in revenue in 2021. That means they could be about eight to 9% hit on revenue. I think they’ll be okay for the long term, but short term, it’s like that’s quite a hit.

[00:13:40.040] – Ryan

Yeah, there’s no doubt that’s the biggest headwind in my opinion. Yes. But again, I think again, looking at Facebook and looking at not just where they are today, but the fact that they are forward looking and the fact that they’re putting that in place right now again, to me is a company that I think we can hold on for the next ten to 20 years. I think it’s going to be volatile. I think it’s going to be challenging. I think they’re going to face headwinds. But it’s been dangerous to bet against Mark Zuckerberg.

[00:14:07.950] – Sean

Yes, true. Very true. And it’s going to be interesting to see where the Metaverse goes because I’ve heard talks of like now you can bring people into meetings. They’ll feel like they’re actually present, although they’re on the opposite side of the world. Instead of Zoom is very 2D, it’s going to go to more of a 3D experience. Also, social interaction could be its own thing, but it’ll be very interesting. So I’m curious to see I know you’re right with the small business part. So many businesses can target so well to the right consumer they’re looking for. Facebook is world class at that, and that’s not going away. So that’s something to that’s, right.

[00:14:51.520] – Ryan

I also think when you think about the Metaverse or augmented reality or virtual reality, I think it’s going to be like, I was thinking about this, the Facebook Oculus. The hardware is going to get more sophisticated as the years go on, and it’s going to become smaller. It’s going to be probably more like sunglasses. Exactly. Now, one thing that’s going to be interesting, I was thinking about is I like to travel. For example, I think about, am I going to be able to pre experience traveling? So if I want to go to Greece, for example, and say, gosh, this hotel looks really cool, but I wonder what it’s like to be there. Like, let’s put on the Oculus. Let’s kind of put ourselves there. Let’s kind of pre experience this in this virtual world and say, yeah, I want to be there in person. I could see myself doing that, and I could see myself wanting the Oculus or something like that. I could also see sporting events. Is the way we watch a basketball game going to change? Are we going to be able to basically sit courtside virtually using something like the Oculus?

[00:15:52.020] – Ryan

I just see there’s so many different things that could evolve from this that we’re not thinking about necessarily right now that I could see very much being a part of our future.

[00:16:01.390] – Sean

Sure. Now that’s a great point. I didn’t think of that. The travel one, you got my attention there. I would use that functionality as well. That’s pretty slick. Another thing, these aren’t red flags, but just something to pay attention to as an investor. The other item is Sheryl Sandberg is leaving, and she was a key driver for the advertising model. She came from Google. Zuckerberg brought her over from Google. She helped implement that, and that’s 97% of the revenue of the business. So who’s going to kind of help Mark navigate this metadata world? Who’s going to be the executive to really take the lead? Because I don’t think he can do it alone. I think he’s done great, but he needs somebody else there. And Cheryl? She’s much older. She’s been through leadership, horror stories, and knows how to lead a culture. And she’s done a good job of that. So who’s going to help him? That’s the big question I have. We don’t have an answer.

[00:17:01.550] – Ryan

Yeah, I think part of it, though, too, is that they were paired together when Bark was a very awkward 23 year old and he’s a less awkward 38 year old or whatever he is. But no, and I think it’s interesting thing with some of the Facebook transitions or Meta transitions over time. I remember when they bought Instagram and people said they are absolutely out of their mind crazy. They paid $3 billion for Instagram and people said they paid way too much. What are they doing? I remember at the time, they said, this is shifting to mobile, and they’re were 100% spot on without the WhatsApp? Same exact thing it was, what are they doing? And it’s something that is a huge part of their business and I think something they’re going to be able to monetize in a greater degree going forward. To your point, though, I think what Mark is really good at is building things that people use. I think where Cheryl was good then is monetizing that use, and I think then who’s going to be the next Cheryl to kind of help monetize some of these other platforms? I agree with you.

[00:18:08.440] – Ryan

She was an enormous part about in terms of making Facebook what it is today. There’s no question it’s a huge loss. That said, there are other people that I think can slide in and can help monetize some of these other areas. But I think the big thing is you first need to get the users and you need to get people actively on these platforms. And I think Mark Zuckerberg has proven an ability to do that. And I know where the puck is going.

[00:18:32.560] – Sean

Yeah, good call out.

[00:18:33.900] – Speaker 4

Let’s take a quick commercial break.

[00:18:36.390] – Sean

Hey, this is Sean. I just want to say thanks a.

[00:18:38.510] – Speaker 4

Lot for checking out this podcast. I know there’s a lot of other.

[00:18:40.870] – Sean

Podcasts you could be listening to, so thanks for checking out this one. Could you do me a quick favor?

[00:18:45.980] – Speaker 4

If you haven’t done so already, could.

[00:18:47.360] – Sean

You leave us a five star rating on either Spotify, Apple, Podcasts, Google, or any other platform you use to listen to podcasts? What this will do is help us rank higher in the podcast search engines, you could say. So that would be much appreciated. Also, if there are any questions you want me to ask the guests for a specific topic you want me to address, please go to our Tykr Facebook group. You can leave a comment there and.

[00:19:15.140] – Speaker 4

I’d love to hear what you have to say. All right, back to the show.

[00:19:19.180] – Sean

I do have to make a call out here on some of the recent acquisitions. I got a whole list here, some really cool stuff. Especially the last five or six acquisitions have been straight up VR related platforms. There’s downpour interactive Video and Game Company. Then you’ve got Unit Two games, another VR game. Big box, VR. More VR games. This is cool. It’s called AI Reverie, a synthetic data company. Synthetic data is like fake data used for what if scenarios. I did some homework on synthetic that I really haven’t heard this term before, but what it’s going to do is allow them to quickly analyze. If metaverse goes directly to the left, what would happen? Or this direction, or this direction. It would kind of give you those simulations to get ahead of the curve. I think that’s really smart. And then there’s another acquisition called within, which is a VR fitness app. I think getting involved in the fitness industry. So knowing that the last six acquisitions or VR focus shows you this focus on the metaverse.

[00:20:24.030] – Ryan

That’s right. And again, I think the applications, there are so many I just gave a couple of examples. I think there are going to be so many applications that are going to allow us preexperience what reality is going to be. It’s not going to replace reality because it could, but it doesn’t have to replace reality. But it can help make your reality. It can help make your choices in reality more informed.

[00:20:45.370] – Sean

Right. So to summarize, we talk in a buy, sell, or hold. Sounds like we know the answer from your perspective.

[00:20:53.990] – Ryan

I am a buy and hold for the next ten to 20 years.

[00:20:57.070] – Sean

All right. I would say I’m a buy, but with some caution. Just think about what Apple is doing with the privacy. That’s something to keep in mind. And then who’s going to be that leader to help with the monetization of metaverse. So by with caution, now we’re going to move on to next dock is American Express. So I’ll start here within Tykr. This is a watch. We got a score of 61 out of 100, so looking pretty good. The issue is margin of safety is zero. That’s why we’re a watch. So I’m just jumping down to their financials. Their net income has been kind of all over, kind of like a saw tooth all over the place here. I have to admit, we all know credit card companies and American Express being one of the big ones, but I haven’t gone into depth in this business. I’m really excited to hear what you have to say.

[00:21:48.400] – Ryan

Yeah, so my excitement around American Express is what we’ve seen so far this year in 2022. And the companies that have been punished the most are companies where there is maybe a concept or maybe they’ve been able to acquire users by spending an enormous amount of money, which works really well. And it just rates were basically zero. And again, you could just spend your way to growth. A lot of those companies that went public in the last couple of years without proven cash flow and profit models, those are the companies that are down 60, 70, 80, 90%, and a lot of those companies are in the fintech space. So I’m a big fan of innovation. That said, you can’t a lot of companies were kind of dubbed like the new way of doing things. But they were able to basically offer their services at a below market price because they had all of this cash that they could earn from their venture capital funding that is now gone and they’re not able to do that anymore. So I think American Express is kind of like the revenge of the old established franchise that knows how to do this.

[00:22:59.770] – Ryan

So again, a lot of these fin tech companies have really kind of fallen on tough times the last couple of months. And I suspect that will continue. And I think American Express is a company that has a long track record, a long history, but at the same time is really innovative. They know how to underwrite, they know how to attract a customer base and retain a customer base. So I think and they’re coming at a really good price. So at a P multiple, kind of like Facebook in the twelve or 13 range. And also the fact that their financials conceivably should do well in rising interest rate environment because it increases their net interest margin. I think these are all tailwinds for American Express. Again, you have fintech that very well might go out of business. American Express is going to absorb some of that business. You have the net interest margin increasing because interest rates are going up. That’s a positive long term for a company like American Express. I still think they’re desirable brand right people, whether you’re individual small business, I can tell you my kind of typical client is someone in their thirty s and forty s who is a high earner.

[00:24:05.340] – Ryan

I can tell you they all want American Express credit cards. They all want the platinum card. And the reason being you get amazing rewards as a Platinum Card holder. And I think there’s also a little bit of prestige that comes with it as well. So I think they’ve done a really good job knowing their customer base, marketing to their customer base, and then they have a customer base that is very loyal and that’s not going to change any time soon. So American Express is again kind of a classic example of established company. They know how to play this game. That said, they’re not opposed to innovation. They’re not opposed to kind of going into different areas and they’re continuing to grab young consumers.

[00:24:45.090] – Sean

So I do agree with you there on that perception of the card. There’s this brand and people are looking for that higher quality card. It’s not a Visa. It’s not a Mastercard. It’s an American Express. It’s that and that brand is growing. You are right. I will say this. I was an investor in Visa the last few years and I decided to cut my losses with Visa at the end of 2021. I returned that year about 3% on Visa, whereas the market was about 26%. Took my gains and then went into Google. So I’m looking here in American Express 2021 returns, it looked like about 30%. So a lot better than Visa. That’s interesting.

[00:25:36.140] – Ryan

Yes, I know. It had a good 2021. It’s at a nice run over the last five years. This year it’s down 17% or so, which is less than the market. And again, I think part of that is established business global franchise. They’re reasonably priced, but also, again, keep in mind on that interest margin, when interest rates go up, they’re able to earn a better spread on lending out money.

[00:26:01.060] – Sean

Yes, I like that about not only beentech like, I invest in PayPal and Square, but your credit card companies are absolutely right. You’ve got that higher interest rate, and you’ve got a huge population of people just paying a little bit. That’s a transaction fee model I talked about earlier. Highly scalable, highly lucrative.

[00:26:20.680] – Ryan

When they acquire a customer, it’s a customer for life.

[00:26:22.810] – Sean

Yeah, right. I’m just curious to see what Mastercard has an 89, a little higher score and then a margin of zero as well. I’m going to Visa here. It’s been Tykr to see what we’re looking at. 72 still a little higher as well. Against American Express is 61. Margin of safety is zero as well. Very interesting. All three of these credit card companies have a margin of safety is zero. But we could see things turn around in the next few quarters because of those transaction fees, those higher interest.

[00:26:57.000] – Ryan

Yeah. And I think you do have a higher end customer base with American Express, so I’m not as concerned about defaults.

[00:27:06.810] – Sean

Exactly right.

[00:27:08.170] – Ryan

I think the last thing about it, too, and this is kind of, I think a long term trend that we’re going to see is entrepreneurship. I think this is a trend that was born out of the financial crisis, and I think it’s only going to continue with technology. It’s easier than ever to start a business today and scale a business. And American Express is so good about being an advocate to small businesses and extending credit to small businesses, extending credit cards to small businesses. When I first started teaching you well, american Express was very eager to lend to us and to give us a business credit card. And it’s something we will forever be loyal to them. And again, I think that trend is only going to continue again. For me, again, it’s the personal experience. I’m an American Express customer for life. Sure.

[00:27:58.590] – Sean

Well, this is really good to know. And I didn’t know that about their position with small business owners. I know depending on your business model, there’s a lot of banks out there that will just tell you, like, go down the road, we can’t help you. Really good to know about American Express. So yeah. With this stock, before. We get to the third and final stock, what are your thoughts? Buy, sell or hold American Express. I think it’s a buy for a buy. I would agree with you. I’m going to go buy as well. I think all credit card companies are the big three. I look at American Express, Visa, Mastercard, all by long term. I didn’t get rid of my Visa because I think it was going to return negative returns. I just knew the businesses that I liked more that would generate higher returns. That’s why I went from Visa to Google.

[00:28:43.670] – Ryan

Yeah. I also think, again, it’s interesting to see some of these areas that have been disruptive over the last couple of years where a lot of those disruptive companies are now facing really challenging times. And I think you’re getting a return back to some established franchises. So that’s one thing I’m really excited about right now. Companies that have established franchises but also are still focused on long term growth and acquisition.

[00:29:09.960] – Sean

Right? Yeah, absolutely. It’ll be really interesting to see who American Express partners with, like, what kind of fintech that kind of diversify the revenue streams. That can be really exciting because now you did make a great point. There are some beat down businesses. Businesses. And we know a lot of crypto companies that are filing bankruptcy.

[00:29:29.340] – Ryan

Yes, that’s right.

[00:29:30.140] – Sean

So, you know, they’re looking out there like, who, can we get a deal on them if we buy them?

[00:29:34.960] – Ryan

That’s right. Absolutely.

[00:29:38.550] – Sean

Good. All right, well, moving on to the third and final stock, here Tesla. So looking at Tykr, looking really strong here. 89 out of 100. Really strong financials years ago, before Tykr was a software platform and it was in Excel, I was thinking, oh, my gosh, this is another main stock. This is going to be a low score. I put in the numbers, and I was doing it. I was looking at these numbers increase year over year over year, and I was like, oh, this is a different company than I thought I was. And they still been strong. 89 out of 100. Margin of safety of 74%, which means share price today of 711. Fair value of 1800. Wow, looking strong. I’ll let you take it from here.

[00:30:26.120] – Ryan

Look, I’m with you. I really dislike this stock for the longest time, and I was wrong for the longest time, and it was really frustrating. And I’ve come around to it for a couple of reasons. Number one, I think first and foremost, I think this is also just Elon Musk. He’s crazy, he’s also a genius. He’s erratic, he’s an innovator, you name it across the board. It’s one of those things where it’s like, I just kind of want to hitch my horse to that wagon.

[00:31:00.390]

Yes.

[00:31:02.250] – Ryan

Or if it hits the wagon to the horse, one of the two. This is an investment being aligned with Elon Musk and just believing in where the company is now. So, number one, it’s a great product. I think it’s a product that does have a loyal customer base and I think it’s also still very much an aspirational purchase for people. I know. I live in New York City. I don’t have a car. If I needed to get a car, I would absolutely look at a Tesla above anything else. And I’m not necessarily an ESG person. It’s really not like an ESG decision. It’s more of like just a really cool car. I also think it’s reasonably priced too. So it’s one of those things in the luxury category. Right. So again, I think it’s a really good product. I think it’s also that this is more of a I just want to be aligned with Elon Musk. And I think that kind of, again, looking at ten to 20 years, I can’t necessarily tell you exactly where they’re going to be or where I think they’re going to be ten to 20 years from now.

[00:32:02.710] – Ryan

I’m willing to go out on a limb and say that 20 years from now, I wouldn’t be surprised if their largest revenue stream is something we’re not talking about today.

[00:32:12.610] – Sean

Great call out. Yes. It could be something really boring. Like really boring tech, I think, of what they’re doing with solar panels. That’s right, yeah, something like that.

[00:32:21.680] – Ryan

So could they be the most important energy company 20 years from now?

[00:32:24.760] – Sean

Yeah, right, it could be.

[00:32:26.850] – Ryan

So it’s kind of one of those. Amazon was a book retailer and that’s what they were for a very long time. And they put other book retailers out of business. The Barnes and Noble, I guess Barnes and Nobles still around, but they’re a fraction of what they were the Borders Books of the world. But obviously they’re still massive in terms of terms of being a bookseller. But there’s so much more, obviously, than being a book seller today. So again, Amazon over the last number of years is building up AWS very much in the background. And now look, I think Amazon just AWS alone. I mean, you can support the valuation based on just that part of the business. So I look at Tesla and I’m like, okay, it’s a car company right now, and it produces an amazing, beautiful car. But what is it going to be ten to 20 years from now? I think it’s going to be something different, but that much more scalable and that much more powerful.

[00:33:21.550] – Sean

Those are the questions that can shift people’s thought process from, hey, I’m on the sideline here, to oh, good point, that Amazon comparison. That’s a really good point. I will speak up here and say that there are a lot of investors have come to me and be like, hey, I’ve got Tesla. What would you do? Would you sell it? If it came to all time highs? And my thoughts, my answer has usually been around. You’re probably going to make money off the cars alone the Next Five To Ten Years. My issue is I’ve done a lot of homework on Volkswagen, which is really capitalizing the European markets. Really a big competitor to Tesla especially. I think it’s the ID. Four competes with the Tesla model three. They’re almost the same price point. And that has taken the market. Now they kind of shift from quarter to quarter on who’s selling the best. But then I also think about in the US. You’ve got Ford. Ford f 150. Marcus Brownlee, who’s got a YouTube channel. Big tech guy. He talked about it’s pretty much like a Drivable iPhone. A lot of tech packed into that vehicle is incredible.

[00:34:24.710] – Sean

Then you’ve got a GM product. In my opinion, it’s not the best, but my gosh, they’ve got some market share. So those threats, from a moat perspective, create an issue for Tesla for the long term. But You’re Right. From an energy standpoint. What else other than cars can they do?

[00:34:42.810] – Ryan

That’s the question. And again, I don’t know the answer to that today, so I don’t have any special insight into it. I guess it’s more of a being aligned with somebody who I think is taking 510 steps ahead of everybody else.

[00:34:59.470] – Sean

That’s it? Finding. We always look at the forums and that management part. There’s a lot of people that skip that part and they don’t care. In many cases, they don’t even know who the CEO is. And it’s like, okay, so most people know who Elon is, but do you know how he’s thinking? What if you sat down with an hour form? What kind of questions could you ask? Where are things going in the next five to 1020 years?

[00:35:25.150] – Ryan

Yes. Then you also think about just with their manufacturing capability, he might be able to figure out a scale that’s faster and better than anybody else. To the point where else is going to become cheaper and cheaper? And then I think there’s also the question of what are some of these enterprise contracts that they’re going to get? Is this something where Uber basically instead of dialing up a driver, you’re going to dial up a driverless? Tesla 20 Years, Right?

[00:35:52.570] – Sean

I was watching a video clip. Leo capital is big into preserving the environment. He’s involved with a few projects, and there’s a video of him talking to Elon and asking, what would you do? Or What’s Available Today? He says we have the capabilities to operate this world without fossil fuels. And it was something along those lines. I’m kind of paraphrasing here, but he was so confident in his delivery that Leo was like, really? He was almost pushed back. Like, you. Seriously? Yeah. Watching his delivery was almost like, are you working on something like this? Or should you be working like this? It’s like you’ve got the map already laid out and you just need to executes now.

[00:36:38.660] – Ryan

That’s Right. That’s why again I say the way I think tesla 20 years from now could be an energy company.

[00:36:45.220] – Sean

Yes. Interesting. Okay. That thought alone has piqued my interest here. Give you context. Going back to Visa, I knew my plan because I tried to kind of rebalance my portfolio a little bit at the end of every year, who are the weak performers and did I make returns? And if so, I may sell it and reallocate to another stock. And I knew I wanted to do that with Visa. So I was looking at Google, Adobe, and Tesla, and ultimately with Google because they have more revenue streams. And the scalability, it just goes back to I love that trend, that advertising model. They have so many revenue streams under that model. No brainer. Adobe’s got B to C and B to C to B. And BTC SAS really like that? But Tesla, the thing that scared me away was the car industry, the competitors. But you’re right, with the potential to become an energy company, that’s when it’s like, oh, now you really have my attention.

[00:37:45.670] – Ryan

That’s a bad thing, straight up.

[00:37:49.630] – Sean

So I’m still pleased with my decision on Google. As of the recording of this podcast, it is 714. On 715, they’re going to issue their 20 to one stock splits. The retail investors going to start flooding that even more, especially when those market rallies. So good for Apple investors.

[00:38:09.190] – Ryan

Last time I mentioned, we covered Google, Apple, and Microsoft, and Google was my favorite stock in that camp. And of all the six that we reviewed, google is still my number one event.

[00:38:22.150] – Sean

Interesting.

[00:38:23.080] – Ryan

Yes.

[00:38:24.730] – Sean

You know what, I kind of waffle between Google and Microsoft. I really love Microsoft. But you’re right, Google is still the strongest. But on that note, of the three today, which is your favorite?

[00:38:34.970] – Ryan

Got it.

[00:38:35.580] – Sean

Really?

[00:38:36.300] – Ryan

Yeah.

[00:38:36.940] – Sean

Okay.

[00:38:38.350] – Ryan

Yeah. I personally think it’s even with some of these headwinds and some of these risks, again, I look over a ten plus year period, and I think if you put all these in a lockbox ten years from now, I think that is going to be the biggest. I have the best return for the ten year period.

[00:38:57.290] – Sean

Yes. All right. In my case, I’m going with Tesla. I still like Tesla better than american express and Meta. I respect what both those companies are doing and what they can do from a share price turnaround. But Tesla, I think automobiles, they really have a lock on the next five to ten years, and we’ll see what happens after that.

[00:39:18.320] – Ryan

Yeah. And I think all three yeah, right.

[00:39:21.690] – Sean

Listeners out there, these are three really strong companies. Well, cool. We got a few minutes here. I know some people may not know where to reach you, but if they’re interested, where can they reach out?

[00:39:35.020] – Ryan

Yeah, I would say that on LinkedIn. I’m at Ryan Sterling instagram. I’m the Ryan Sterling. I don’t really post on Instagram, even though, again, that is is my favorite company. I’m not really a big user of it besides advertising ads. Or you can just email me at ryan@futureyouwel.com. My website is futureul.com.

[00:39:54.570] – Sean

Awesome. Well, this is, I think, the third time we’ve had you on, and this is great. We really get to dive into some good companies. We’ll get you back on in a month or two, talk about a few more and go from there.

[00:40:06.420] – Ryan

Yeah, we’ll build out a ten to 20 stock portfolio.

[00:40:10.110] – Sean

Absolutely.

[00:40:11.170] – Ryan

Yeah.

[00:40:12.050] – Sean

All right, Ryan, thanks a lot.

[00:40:13.460] – Ryan

Yeah, thanks a lot. I really enjoyed it.

[00:40:21.170] – Speaker 4

Hi, I just want to say thanks for checking out this podcast. I know your time is valuable, and there’s a lot of other podcasts out there you could be listening to. So thanks for taking the time to listen to my guest story. If you did enjoy this podcast episode, could you head over to itunes and leave a five star review? That would be much appreciated. Thank you. And last but not least on this podcast, some episodes we do talk about stocks. And please keep in mind, this podcast is for entertainment purposes only. So if you did hear any buy or sell recommendations, please don’t make those decisions based solely on what you hear. All right, big slot.

[00:40:57.300] – Sean

See you.