WEBVTT - Fed Decision, Tech Earnings and Musk Versus Dimon 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.479 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.600 Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:20.560 --> 0:00:23.239 All right, everybody, a bunch of earnings crossing, as we said, 0:00:23.239 --> 0:00:27.240 metages crossing, and we are seeing that stock certainly rally 0:00:27.320 --> 0:00:30.600 in the aftermarket. It's up about six and a half percent. 0:00:31.680 --> 0:00:33.760 And again it must have to do with the outlook 0:00:33.760 --> 0:00:35.760 because it says third quarter revenue, so we're talking about 0:00:35.800 --> 0:00:38.200 top line thirty two to thirty four point five billion. 0:00:38.240 --> 0:00:41.680 The estimate on the street was thirty one point eighteen billion. 0:00:41.800 --> 0:00:43.680 What is interesting is the comment from Remain at the 0:00:43.760 --> 0:00:49.840 end there that the cost increasing for reality Labs, which 0:00:49.880 --> 0:00:52.640 is the metaverse of meta, and that is what the 0:00:52.680 --> 0:00:54.960 company's been spending so much money on at least last year, 0:00:55.360 --> 0:00:57.800 what scared away so many investors. That's not scaring away 0:00:57.800 --> 0:00:58.480 investors today. 0:00:58.600 --> 0:01:01.960 No, it's interesting, right, reality labs is meta, it's the 0:01:02.040 --> 0:01:05.040 VR headsets, right, and exactly they're saying, says Sez twenty 0:01:05.040 --> 0:01:09.399 twenty four. Reality Labs operating losses to increase meaningfully, all right, 0:01:09.440 --> 0:01:11.800 So let's get to it. Certainly keeping an eye on 0:01:11.840 --> 0:01:14.080 all of these numbers as well as John Erlichman, he's 0:01:14.120 --> 0:01:17.039 co anger at Bloomberg Markets on BTV, joining us on 0:01:17.080 --> 0:01:20.440 the phone from Toronto. John, good to have you here. 0:01:20.880 --> 0:01:25.440 We are seeing Meta pop in the after hours. What's 0:01:25.520 --> 0:01:29.200 the number one or two headline that has caught your 0:01:29.200 --> 0:01:31.559 attention that you've. 0:01:31.440 --> 0:01:35.240 Got, Basically, Carol, a couple of solid quarters from Meta 0:01:35.319 --> 0:01:39.480 after a really sloppy twenty twenty two is interesting. I 0:01:39.600 --> 0:01:43.199 was thinking back to around this time last year when 0:01:43.440 --> 0:01:47.880 the company talked about rolling out a new automated ad platform, 0:01:48.160 --> 0:01:51.520 and ironically there was a lot of focus on artificial 0:01:51.560 --> 0:01:54.680 intelligence at the time, you know, last year, given the 0:01:54.680 --> 0:01:56.960 pressure the company was feeling, they were already starting to 0:01:56.960 --> 0:01:59.240 build a narrative around cost cutting, and you were just 0:01:59.320 --> 0:02:02.720 talking about all those cost cutting initiatives and the restructuring 0:02:02.800 --> 0:02:06.200 charges associated with them. So, yes, Wall Street likes the 0:02:06.240 --> 0:02:09.120 financial discipline on the bottom line. Yes, Wall Street, in 0:02:09.160 --> 0:02:13.080 reaction to these numbers, likes better than expected performance on 0:02:13.160 --> 0:02:16.240 the top line. But this is a company that has 0:02:16.280 --> 0:02:19.280 invested so much in AI and acquired so much AI 0:02:19.440 --> 0:02:22.799 technology over the last decade. You have to wonder if 0:02:22.800 --> 0:02:25.079 they could redo it, if they'd leave the metaaname out. 0:02:26.600 --> 0:02:29.840 Yeah, I leveraged John. I was just going to ask 0:02:29.880 --> 0:02:31.760 you about that, because you what you kept saying over 0:02:31.760 --> 0:02:33.400 and over again, and look what they said in the 0:02:33.400 --> 0:02:37.320 statement today. It's it's sort of like in Mark Zuckerberg's 0:02:37.320 --> 0:02:40.320 first comment in the press release, it's like the metaverse 0:02:40.560 --> 0:02:44.720 is an afterthought. It's the last thing that gets to 0:02:44.760 --> 0:02:47.359 mention the launch of Quest three this fall. Before that, 0:02:47.720 --> 0:02:50.560 he says he's got the most exciting roadmap that I've 0:02:50.560 --> 0:02:52.400 seen in a while with Lamaitu. That's kind of like 0:02:52.440 --> 0:02:56.080 the chat GPT competitor threads. We all know what that is, 0:02:56.200 --> 0:02:59.400 reels new AI products in the pipeline, and then he 0:02:59.480 --> 0:03:01.959 gets to the launch of Quest three. Should they have 0:03:02.040 --> 0:03:02.880 not changed the name? 0:03:05.120 --> 0:03:08.280 Well, look, I think that Mark Zuckerberg still wants that 0:03:08.400 --> 0:03:12.000 meta plan to work, undoubtedly, but I think that there's 0:03:12.200 --> 0:03:14.720 a real good reason for them to be leveraging AI 0:03:14.760 --> 0:03:17.919 because everybody is and it's interesting, like we've got these 0:03:18.040 --> 0:03:22.440 standout stocks from twenty twenty three and heading into Microsoft's results, 0:03:23.000 --> 0:03:26.639 the AI hype was tested, and I think we were 0:03:27.760 --> 0:03:30.040 schooled on the fact that they're still working a lot 0:03:30.040 --> 0:03:32.880 of that AI into the Microsoft suite of products right now. 0:03:33.360 --> 0:03:36.440 So there's a bullish view that Microsoft will work some 0:03:36.480 --> 0:03:38.800 of that technology in, but maybe they're not quite there. 0:03:39.480 --> 0:03:42.640 Meta is there. Meta has been working all of this 0:03:42.880 --> 0:03:47.600 into their ad platforms for a long time, and the 0:03:47.680 --> 0:03:52.440 rollout of a specific platform, which is known as Advantage, 0:03:52.880 --> 0:03:56.000 was really seen as a potential boostered revenue. And so 0:03:56.080 --> 0:03:58.360 I think that there were a lot of people who 0:03:58.360 --> 0:04:01.680 felt that after a solid first quarter, that shouldn't be 0:04:01.720 --> 0:04:04.720 a surprise if they could do this. You mentioned Tim Reels, 0:04:05.040 --> 0:04:07.600 and I do think that there's a lot of advertisers 0:04:07.600 --> 0:04:10.600 out there, you know, whether we're talking as much about 0:04:10.720 --> 0:04:14.880 Reels as we're talking about, say a new product by Threads, 0:04:14.920 --> 0:04:18.279 or certainly what's happening over at TikTok. The bottom line 0:04:18.320 --> 0:04:21.760 is the fact that they constantly talk about this suite 0:04:22.279 --> 0:04:25.600 of apps, their family of apps. They can still give 0:04:25.640 --> 0:04:30.800 a very strong proposition to advertisers on leveraging what they've got. 0:04:31.360 --> 0:04:34.599 To be fair, if they did not give a better 0:04:34.720 --> 0:04:40.279 than forecasted or estimate for third quarter revenue, this would 0:04:40.279 --> 0:04:44.000 be a different story. And we saw those expenses, investors 0:04:44.040 --> 0:04:47.320 would be so happy. But because their outlook is upbeat 0:04:47.360 --> 0:04:50.280 and they're raising their forecast, this is why we're seeing 0:04:50.279 --> 0:04:53.520 some enthusiasm. So it's basically, Okay, you guys are spending, 0:04:53.600 --> 0:04:56.080 we get that, but you're also look at the top line. 0:04:56.120 --> 0:04:58.080 You're doing well. You're doing better than we thought. 0:04:59.320 --> 0:05:02.839 I think a pretty good learning lesson Carol last year 0:05:03.040 --> 0:05:06.279 and how it feels when you don't deliver. And we 0:05:06.360 --> 0:05:10.440 know there's there's a certain amount of math behind sing 0:05:10.600 --> 0:05:13.440 or whatever, but you remember when they lost two hundred 0:05:13.440 --> 0:05:16.000 and fifty billion dollars in market value just as a 0:05:16.040 --> 0:05:19.000 snap of the fingers. So I think they learned their lesson, 0:05:19.200 --> 0:05:22.680 and a lot of this comes down to communication. And 0:05:22.400 --> 0:05:25.479 you're still seeing a company that wants to spend and 0:05:25.600 --> 0:05:29.719 retool for the future. You know, Mark Zuckerberg seems obsessed 0:05:29.720 --> 0:05:32.880 with what Elon Musk is doing too, whether Threads works 0:05:32.920 --> 0:05:36.320 out or not. He's always trying to compete and stay 0:05:36.320 --> 0:05:39.599 irrelevant and all that jazz and focus on the future. 0:05:39.960 --> 0:05:42.480 But I think for today, they had a lot of 0:05:42.920 --> 0:05:46.760 easy levers that they could pull, and the fact that 0:05:46.800 --> 0:05:49.000 the ad environment has changed. We just saw that with 0:05:49.120 --> 0:05:52.839 Google right the AD market typically dips early and between 0:05:52.880 --> 0:05:54.800 Alphabet and Meta, and now we have this view that 0:05:54.839 --> 0:05:58.000 the AD recovery is showing some signs of life. 0:05:58.240 --> 0:06:01.120 So the question is in this for you know, a 0:06:01.200 --> 0:06:04.599 question for for managers everywhere, but also for all the 0:06:04.600 --> 0:06:07.400 people who were in my LinkedIn feed over the last 0:06:07.440 --> 0:06:10.080 few months saying that you know they, after X number 0:06:10.080 --> 0:06:12.520 of years at Meta, I no longer have a job. 0:06:13.200 --> 0:06:15.720 I'm now open to work the tens of thousands of 0:06:15.720 --> 0:06:19.000 people that the company laid off. To what extent can 0:06:19.000 --> 0:06:23.600 we attribute this success to decreasing those costs? 0:06:24.760 --> 0:06:24.920 Oh? 0:06:25.240 --> 0:06:25.960 One hundred percent? 0:06:26.000 --> 0:06:26.200 Tim? 0:06:26.279 --> 0:06:29.800 I mean, the reality is that this is a company 0:06:29.839 --> 0:06:33.760 that grew because it had the opportunity to grow. And 0:06:33.839 --> 0:06:36.800 I think the reason I the reason I brought up 0:06:36.839 --> 0:06:40.080 the same quarter a year ago and the company talking 0:06:40.120 --> 0:06:44.800 about introducing updated versions of their AD tools, well because 0:06:44.800 --> 0:06:48.000 it's even their messaging then alluded to the fact that 0:06:48.040 --> 0:06:51.480 AI would allow them to do more with less. So 0:06:51.920 --> 0:06:55.440 I think it's a pretty sobering time still at the company, 0:06:55.600 --> 0:06:58.240 given how many people, and you know, when you lose 0:06:58.279 --> 0:07:01.840 your colleagues, that's not fun. And at the same time, 0:07:02.040 --> 0:07:04.920 we're sitting here on a day where maybe, you know, 0:07:04.960 --> 0:07:07.600 the headline is that maybe we don't see the recessionary 0:07:07.680 --> 0:07:13.400 environment that anybody thought tech overspent, tech over hired. And 0:07:13.440 --> 0:07:16.560 I think the fact that AI is as advanced as 0:07:16.600 --> 0:07:19.640 it is allows these companies to do more with less, 0:07:19.680 --> 0:07:22.240 So one hundred percent, it plays a key role there. 0:07:22.680 --> 0:07:25.360 As for the stock market reaction, you know, this is 0:07:25.400 --> 0:07:28.280 an interesting one because the second best performer in the 0:07:28.360 --> 0:07:30.800 S and P this year, right behind Nvidia. I mean 0:07:30.840 --> 0:07:33.000 literally this is like one hundred and forty five percent 0:07:33.080 --> 0:07:36.960 coming into the earnings report. But this is still a 0:07:37.000 --> 0:07:39.360 stock that has a long way to go to get 0:07:39.360 --> 0:07:40.600 back to its all time high. 0:07:40.800 --> 0:07:42.920 So rat still down about twenty two percent from that 0:07:42.960 --> 0:07:45.920 September twenty twenty one high, and we talk about it. 0:07:45.960 --> 0:07:48.160 We wrote about it, you know on the Bloomberg two 0:07:48.240 --> 0:07:50.320 John As you know that with a pe of about 0:07:50.320 --> 0:07:54.840 twenty six, I mean, it's valuation, as our writers reported, 0:07:55.080 --> 0:07:57.120 might be at saving grace because if you look at 0:07:57.120 --> 0:07:59.200 some of the other big megacap tech names, they have 0:07:59.240 --> 0:08:02.600 run up so much, but their valuation has gotten really heady, 0:08:03.080 --> 0:08:06.280 and so you're even you know, so maybe that's their 0:08:06.280 --> 0:08:10.480 saving grace that they weren't so overvalue. 0:08:09.920 --> 0:08:13.520 Perhaps, I think so already you're going to be seeing 0:08:13.560 --> 0:08:17.280 these headlines about this being, you know, a return to 0:08:17.320 --> 0:08:21.520 profitability for the company, and I think that they're definitely 0:08:21.520 --> 0:08:23.640 going to leverage some sort of but I still think 0:08:23.640 --> 0:08:26.000 there's plenty of issues that this company has to deal with, 0:08:26.720 --> 0:08:29.000 you know, I think, you know, let's let's just talk 0:08:29.000 --> 0:08:31.320 about the landscape of social media. You know, it's hard 0:08:31.360 --> 0:08:34.360 to gauge how TikTok is doing every day, but they're 0:08:34.400 --> 0:08:38.240 definitely giving Facebook's or met I should say, properties are 0:08:38.320 --> 0:08:41.520 run for their money, so they're always having to navigate that. 0:08:42.040 --> 0:08:44.080 We haven't heard in the updates on the Elon Musk 0:08:44.120 --> 0:08:50.280 Mark Zuckerberg cage match, but we've definitely seen We've definitely 0:08:50.320 --> 0:08:54.040 seen threads launched. It'll be interesting to see if they 0:08:54.160 --> 0:08:58.000 have any more data on how that is doing so far. 0:08:58.679 --> 0:09:01.000 And that is a bit of a for the company 0:09:01.440 --> 0:09:05.760 to take. You've got Elon Musk now creating an everything 0:09:05.880 --> 0:09:09.520 app at a time when some people have said Zuckerberg 0:09:09.559 --> 0:09:12.960 could continue doing the exact same thing because they own 0:09:13.040 --> 0:09:17.040 WhatsApp and this family of apps, and Facebook itself has 0:09:17.280 --> 0:09:20.000 tried to be a bigger player in payments in the 0:09:20.040 --> 0:09:23.040 past as well. So there's a lot on the go 0:09:23.400 --> 0:09:26.280 and I don't think there's any shortage of competition or 0:09:26.440 --> 0:09:30.400 easy answers going forward. But this has always been that 0:09:30.559 --> 0:09:33.960 company that has set up so much advertising revenue and 0:09:34.040 --> 0:09:35.920 pulling some levers again to show their muscle. 0:09:36.120 --> 0:09:37.800 Well, the stock, which was up more than seven percent 0:09:37.840 --> 0:09:40.240 the after market's still up about four percent here, but 0:09:40.320 --> 0:09:43.800 definitely tempering some of the gains back, but we'll continue 0:09:43.800 --> 0:09:46.800 to monitor it. Chapote also out with their numbers. Second 0:09:46.840 --> 0:09:50.000 quarter revenue very slight miss com sales were slightness as well. 0:09:50.040 --> 0:09:53.679 Second quarter just at EPs was a beat, and we're 0:09:53.720 --> 0:09:57.040 seeing that stock under some pressure in the aftermarket, down 0:09:57.040 --> 0:10:00.920 about almost six to seven percent. Research while up about 0:10:00.920 --> 0:10:05.240 two and a half percent in the aftermarket following it's earnings, 0:10:05.280 --> 0:10:09.320 and it came out yeah with its results. All right, 0:10:09.360 --> 0:10:12.360 John Oakman, thank you so much. You're listening and watching Bloomberg. 0:10:12.920 --> 0:10:16.520 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:16.520 --> 0:10:19.880 live weekday afternoons from three to six Eastern Listen on 0:10:19.960 --> 0:10:23.960 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:10:24.280 --> 0:10:26.560 or watch us live on YouTube. 0:10:27.520 --> 0:10:27.840 Meadows. 0:10:27.920 --> 0:10:30.199 You know, just atworthosings as well. Then he's breaking down 0:10:30.200 --> 0:10:33.080 all those results after the close. Stock still up about 0:10:33.160 --> 0:10:36.000 almost five percent the after market, but it's off its 0:10:36.320 --> 0:10:38.840 pop that we saw of about maybe six seven percent 0:10:39.240 --> 0:10:41.720 just after it reported. You had Microsoft and an alphabet 0:10:41.720 --> 0:10:44.880 and snap last night texas instrument. So let's go over that. 0:10:45.360 --> 0:10:48.199 What we've gotten so far from tech megacaps and earnings 0:10:48.679 --> 0:10:50.920 this week and in this earning season. Back with us 0:10:50.960 --> 0:10:54.440 is James Chochmak, partner in technology analyst at Clockwise Capital. 0:10:54.920 --> 0:10:57.520 He is on Zoom in Miami. James, So good to 0:10:57.520 --> 0:11:00.680 have you back with Tim and me. So Meta, let's 0:11:00.760 --> 0:11:03.680 kick it off with Meta. It's up about five percent 0:11:03.679 --> 0:11:07.040 in the aftermarket. Does it make sense the trade? And 0:11:07.080 --> 0:11:08.679 what do you like about the results? Are not? 0:11:08.840 --> 0:11:08.920 Like? 0:11:10.760 --> 0:11:12.720 No, I think the results were great. I think the 0:11:12.760 --> 0:11:15.920 aftermarket reaction speaks for itself. I think at the tale 0:11:15.960 --> 0:11:18.640 of two cities when you look at Meta on the 0:11:18.640 --> 0:11:21.840 one side and Snapchat on the other, I think that 0:11:21.880 --> 0:11:24.160 we're going to see is that these big, big ad 0:11:24.200 --> 0:11:28.120 platforms continue to accrue more and more value and more 0:11:28.160 --> 0:11:31.760 and more of the online digital ad market as they 0:11:31.800 --> 0:11:35.000 implement their AI capabilities and invest. 0:11:35.000 --> 0:11:35.720 On that front. 0:11:35.760 --> 0:11:37.920 So I think it's going to be increasingly hard for 0:11:37.960 --> 0:11:41.199 the niche players unless they have some type of completely 0:11:41.240 --> 0:11:43.040 differentiated value proposition. 0:11:43.280 --> 0:11:45.280 Are they actually tracked the maximum value? 0:11:45.520 --> 0:11:47.800 But James, James, good to talk to you, by the way, 0:11:47.800 --> 0:11:48.480 it's been a while. 0:11:48.640 --> 0:11:51.160 Sure, yeah, are they actually. 0:11:50.800 --> 0:11:54.040 Implementing this AI technology yet? Because if you look at 0:11:54.040 --> 0:11:56.880 some of the notes today in the wake of Microsoft earnings, 0:11:57.320 --> 0:11:59.280 this is Microsoft and we can talk about meta too. 0:11:59.880 --> 0:12:01.600 Was it was, you know, they were like, show us, 0:12:01.640 --> 0:12:03.600 you know, show us where the AI capability is. 0:12:03.920 --> 0:12:04.840 It's going to take. 0:12:04.720 --> 0:12:08.720 Time, let's be fair, right, Yeah, I mean, look, I 0:12:08.720 --> 0:12:11.000 think it's going to be a constant state of iteration 0:12:11.280 --> 0:12:13.280 in getting the right ad in front of the right 0:12:13.360 --> 0:12:15.760 user at the right time. And that's been the mission 0:12:15.800 --> 0:12:18.720 of digital ads since day one, as dollars moved from 0:12:18.760 --> 0:12:22.240 analog to Digital's the that's the golden value proposition that 0:12:22.280 --> 0:12:24.480 they're selling. They're just going to be able to get 0:12:24.480 --> 0:12:26.600 better at it. But also on the flip side, as 0:12:26.600 --> 0:12:29.760 you think about the generative AI aspects of it in 0:12:29.800 --> 0:12:31.920 the production of ads, you know, there's a lot of 0:12:31.920 --> 0:12:35.240 money spent being toward the middlemen in the creation of 0:12:35.280 --> 0:12:37.480 these ads and think about being able to create a 0:12:37.559 --> 0:12:41.240 thousand ads and in several seconds, you know, tailored toward 0:12:41.400 --> 0:12:43.760 every type of constituency that you. 0:12:43.640 --> 0:12:44.200 Can think of. 0:12:44.280 --> 0:12:46.520 And where are you going to deploy that excess capital 0:12:46.559 --> 0:12:48.280 that you would have spent on that front. 0:12:48.320 --> 0:12:50.480 You're likely going to deploy it toward the. 0:12:50.400 --> 0:12:54.600 Advertising themselves, so they in essence, you know, it's not 0:12:54.679 --> 0:12:58.520 just a metas specific. I think as the industry adopts 0:12:58.520 --> 0:13:00.960 these tools and capability, I think that you will see 0:13:00.960 --> 0:13:04.479 more and more dollars shift towards these platforms. 0:13:04.520 --> 0:13:09.320 What I find always kind of wild is the reach 0:13:09.920 --> 0:13:13.160 of META as a company overrole. And I'm looking at 0:13:13.160 --> 0:13:16.760 Facebook users topping three billion. I mean, that's real numbers, 0:13:16.800 --> 0:13:19.360 whether you like it or not, and it's up three 0:13:19.400 --> 0:13:24.760 percent like that is worth something, correct, Yeah. 0:13:24.600 --> 0:13:25.920 It is, But at the end of the day, you 0:13:25.960 --> 0:13:28.120 still have to place a value on it. We actually, 0:13:28.240 --> 0:13:31.080 you know, we trimmed our position around three hundred. We 0:13:31.120 --> 0:13:33.640 were up about one hundred percent on it heading into 0:13:33.640 --> 0:13:36.360 the print because some of the buyside expectations have gotten 0:13:36.880 --> 0:13:39.679 you know, out of control, you know, looking for ten 0:13:39.720 --> 0:13:42.400 percent higher numbers than where the street currently is, and 0:13:42.480 --> 0:13:45.200 you saw those disappointments on the buyside, getting the head 0:13:45.240 --> 0:13:50.040 of themselves on Netflix, on Microsoft as well as on Tesla. 0:13:50.520 --> 0:13:53.760 So you know, handicapping for that, we did take some 0:13:53.800 --> 0:13:56.959 money off the table. Well then this is a go ahead. 0:13:57.040 --> 0:13:59.160 Yeah, Well you go ahead, James, and then I'll follow up. 0:14:00.040 --> 0:14:01.559 Well, I was just going to say, you know, also 0:14:01.640 --> 0:14:04.800 investors are really rethinking how they're valuing these companies, you know, 0:14:04.840 --> 0:14:08.319 as the investments on the AI front require a lot 0:14:08.360 --> 0:14:11.240 of capital expenditures, so a lot of the valuation that 0:14:11.280 --> 0:14:15.080 the methodologies have increasingly shipped from an earning spasis to 0:14:15.120 --> 0:14:16.760 a free cash floard basis. 0:14:16.640 --> 0:14:19.880 And that's kind of changing the valuation calculus as well. 0:14:21.040 --> 0:14:26.040 What about TikTok? You look at time spent on these apps, Yeah, 0:14:26.240 --> 0:14:28.280 and you look at where the eyeballs are, how much 0:14:28.280 --> 0:14:31.640 time they're spending using these what's the TikTok factor here 0:14:31.680 --> 0:14:32.840 for meta platforms. 0:14:34.120 --> 0:14:36.320 I think it's a factor for all of them because 0:14:36.360 --> 0:14:39.680 time is finite. Every minute I spend on this service 0:14:39.760 --> 0:14:41.960 is a minute not spent on another. I mean we're 0:14:42.000 --> 0:14:44.280 cognizant of it when it comes to meta, when it 0:14:44.280 --> 0:14:47.480 comes to Alphabet, when it comes to Spotify and any 0:14:47.520 --> 0:14:52.880 type of media consumption Netflix exactly an Yeah, I mean, 0:14:52.920 --> 0:14:56.760 if you've got to be cognizant of it, and you know, 0:14:57.120 --> 0:14:58.960 we're only here at once in this world. 0:14:58.720 --> 0:15:02.280 For only a certain number of minutes, and whoever can capture. 0:15:02.160 --> 0:15:03.680 That existential very quickly. 0:15:03.800 --> 0:15:05.800 It's funny that you say that because Tim and I 0:15:05.840 --> 0:15:08.400 recently had a conversation this whole idea. You're right, like, 0:15:08.440 --> 0:15:09.920 you have a limited time on this. 0:15:10.880 --> 0:15:13.120 You know what's funny though, that I really want to 0:15:13.160 --> 0:15:15.280 be spending the limited time I have on this earth 0:15:15.360 --> 0:15:17.840 glued to my phone exactly right. 0:15:18.240 --> 0:15:20.600 I mean, it's really I do think there's a major 0:15:20.680 --> 0:15:24.000 rethink going on, and we all just have so much time. 0:15:24.040 --> 0:15:26.000 And you know, I went back to reading, and I'm like, 0:15:26.040 --> 0:15:28.480 I forgot how much I love books. You talk to 0:15:28.520 --> 0:15:31.880 me about reading and going back like real books, like 0:15:31.960 --> 0:15:35.200 real books. Snap. Did we talk about Snap? 0:15:35.240 --> 0:15:37.040 We didn't talk about Snap with James yet. 0:15:37.360 --> 0:15:39.440 Are we just writing this one off? It just seems 0:15:39.440 --> 0:15:41.800 like quarter after quarter it's a little difficult. 0:15:42.320 --> 0:15:43.320 Yes, you. 0:15:44.840 --> 0:15:46.880 Becoming Snap for years? James? What's what's going on? 0:15:46.960 --> 0:15:47.160 Yeah? 0:15:47.200 --> 0:15:50.800 I know, Well the thing that I mean, he sold 0:15:50.840 --> 0:15:53.280 me on a different value proposition than what it ended 0:15:53.360 --> 0:15:56.960 up being, which is why I was initially constructed on it. 0:15:57.040 --> 0:15:59.720 But the problem with Snap is, you know, they don't 0:16:00.240 --> 0:16:02.160 they don't really know what they are. You know, this 0:16:02.280 --> 0:16:04.640 is a in order to succeed, you either have to 0:16:04.640 --> 0:16:07.440 be everything to everyone and then to be that you 0:16:07.480 --> 0:16:09.960 have to massive scale like a metal, like a YouTube, 0:16:10.360 --> 0:16:13.360 or you have to be incredibly niche and maximize the 0:16:13.400 --> 0:16:17.720 average value per user by a tremendous amount of engagement 0:16:17.760 --> 0:16:18.800 on a per user level. 0:16:18.880 --> 0:16:20.680 Unfortunately, they're trying to. 0:16:20.640 --> 0:16:22.960 Be a Meta without the scale of Meta, and that's 0:16:23.000 --> 0:16:25.520 a losing proposition and I just don't see it. 0:16:26.000 --> 0:16:26.200 You know. 0:16:26.280 --> 0:16:29.000 It contrasts that with a pinterest, you know, which is 0:16:29.960 --> 0:16:33.840 a different value proposition, one that requires necessary necessity, takes 0:16:33.960 --> 0:16:37.320 a different level of engagement, a different and aspirational level 0:16:37.360 --> 0:16:41.360 of engagement. You know, those are two both niche services, 0:16:41.360 --> 0:16:43.280 but one is better than the other. 0:16:43.560 --> 0:16:45.880 So I'm looking at just a bunch of earnings in 0:16:45.880 --> 0:16:47.920 the aftermarket. I mean, we just talked about Meta in 0:16:47.920 --> 0:16:49.440 a big way and some of the other big tech 0:16:49.440 --> 0:16:51.640 this week, but you got topotely down about eight percent, 0:16:52.640 --> 0:16:56.400 the company saying inflation hit some popular menu items. You know, 0:16:56.440 --> 0:16:58.840 we've gone through Bank earnings, we've gone through, We've gotten 0:16:58.840 --> 0:17:00.840 some chip names. I mean, what are you thinking about 0:17:00.880 --> 0:17:02.040 this earning season so far? 0:17:03.120 --> 0:17:03.880 It's a good question. 0:17:03.920 --> 0:17:07.320 I mean, we're we're actually broadening out our portfolio. Obviously, 0:17:07.400 --> 0:17:11.679 you know, we're tech first. You know, we're called Clockwise 0:17:11.680 --> 0:17:15.560 Capital because we believe the purpose of technology is to 0:17:15.600 --> 0:17:19.520 save time i e. Productivity, and you know that that's 0:17:19.520 --> 0:17:21.560 what we booked to invest in big secular themes. 0:17:21.560 --> 0:17:23.720 However, you know, we've had a tremendous run. 0:17:23.880 --> 0:17:27.119 A vast majority of the growth that we've seen or 0:17:27.160 --> 0:17:29.399 the appreciation of the market has been a factor of 0:17:29.440 --> 0:17:33.480 the multiple expansion versus earnings expansion. So actually we've added 0:17:33.520 --> 0:17:36.480 a lot of names that are you know, not traditionally tech, 0:17:36.880 --> 0:17:39.400 you know, into our wheelhouse we have We've added Coke, 0:17:39.480 --> 0:17:41.320 we have added Spirit, Arrow Systems. 0:17:42.480 --> 0:17:46.040 We're in JP Morgan Standard and Poors. 0:17:46.200 --> 0:17:48.120 You know, a lot of names that you wouldn't really 0:17:48.119 --> 0:17:49.800 think because we think that there's going to be a 0:17:49.880 --> 0:17:54.199 rotation here from growth to value, as if things settled 0:17:54.240 --> 0:17:56.600 down on the growth side, but obviously still full steam 0:17:56.640 --> 0:17:59.520 ahead on the big names like Amazon and Navidio. 0:17:59.720 --> 0:18:01.280 I love what you said, and I think this is 0:18:01.320 --> 0:18:04.600 like something worth repeating that the appreciation of the market 0:18:04.640 --> 0:18:07.920 was because of multiple expansion, not earnings expansion. Like when 0:18:07.920 --> 0:18:10.120 we talk about the importance of fundamentals. This is why 0:18:10.160 --> 0:18:12.160 earnings matter, right when we go through the earning season 0:18:12.640 --> 0:18:14.840 to see whether or not, especially some of these names 0:18:14.880 --> 0:18:17.080 that have run up so dramatically, whether or not they, 0:18:17.320 --> 0:18:19.680 you know, are worth the valuation that we see in 0:18:19.760 --> 0:18:20.320 the marketplace. 0:18:20.359 --> 0:18:21.760 So James, just in the last minute. 0:18:21.720 --> 0:18:23.800 The biggest Yeah, go ahead, I'm just gonna say on 0:18:23.800 --> 0:18:27.000 that point, the biggest disconnect in the market between earnings 0:18:27.040 --> 0:18:30.560 and multiple expansion is Nividia. Nividia has lagged from an 0:18:30.600 --> 0:18:34.760 earning standpoint, from a multiple standpoint, while their earnings have searched. 0:18:35.040 --> 0:18:37.440 So I mean, that's why we're putting our money there. 0:18:37.640 --> 0:18:41.360 Interesting, Okay, last minute. Next week, we've got Apple and Amazon. 0:18:42.520 --> 0:18:44.280 Give us some expectations there. 0:18:46.359 --> 0:18:48.960 Apple is one that I can't believe we didn't add 0:18:48.960 --> 0:18:51.040 it to the portfolio. It's one that we just didn't 0:18:51.040 --> 0:18:54.000 see that much upside to it, and it's worked. But 0:18:54.240 --> 0:18:57.520 I think that Apple Apple is going to be just fine. 0:18:58.000 --> 0:18:58.679 I think that the. 0:18:59.280 --> 0:19:02.159 Expectations around phones and. 0:19:04.480 --> 0:19:08.840 Desktop and everything as modest services continues to grow. Obviously, 0:19:08.960 --> 0:19:12.359 China is the question mark so and that was one 0:19:12.359 --> 0:19:14.880 of the reasons why we didn't invest in the concentration there. 0:19:14.920 --> 0:19:19.200 But I think the shares should continue to do well, 0:19:19.440 --> 0:19:23.040 and as relates to Amazon, that's one that we continue 0:19:23.080 --> 0:19:23.880 to like a lot. 0:19:23.960 --> 0:19:26.480 I think that you're going to see the bottoming out 0:19:26.520 --> 0:19:29.520 of AWS, potentially coming out slightly ahead of the ten 0:19:29.560 --> 0:19:33.359 percent growth that the streets expecting, and then possible reacceleration 0:19:33.760 --> 0:19:35.640 as you look into third quarter. And I think that 0:19:35.680 --> 0:19:39.080 in and of itself should be enough to send shares. 0:19:38.760 --> 0:19:40.960 Hire looking forward to get to one fifty nine of 0:19:40.960 --> 0:19:41.240 the year. 0:19:41.480 --> 0:19:44.040 Always love getting time with you. James B. Will James Chock, 0:19:44.119 --> 0:19:47.320 mac partner and technology analyst at Clockwise Capital. Really a 0:19:47.400 --> 0:19:49.440 nice overview of the tech and some of the big 0:19:49.480 --> 0:19:51.919 names that we've gotten, but also the broader perspective when 0:19:51.960 --> 0:19:54.280 it comes to earnings and what we've seen in terms 0:19:54.280 --> 0:19:56.800 of the market reaction. He of course, was joining us 0:19:56.800 --> 0:19:57.680 on zoo from Miami. 0:19:59.359 --> 0:20:02.960 You're listening to the Bloomberg Business Week podcast. Catch us 0:20:03.000 --> 0:20:07.000 live weekday afternoons from three to six Eastern on Bloomberg Radio, 0:20:07.200 --> 0:20:10.480 the Bloomberg Business app and YouTube. You can also listen 0:20:10.560 --> 0:20:13.680 live on Amazon Alexa from our flagship New York station, 0:20:14.119 --> 0:20:16.919