WEBVTT - Advance Placement: WILL AMAZON'S STOCK RECOVER?

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<v Speaker 1>So let's get into this.

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<v Speaker 2>I want to start with probably the biggest thing that

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<v Speaker 2>happened last week is Amazon. So Amazon, it was down

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<v Speaker 2>twenty percent after hours, but then it rebounded. I think

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<v Speaker 2>it finished the day down like seven percent something like that,

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<v Speaker 2>but missed it's uh, it's expected guidance. The guidance was

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<v Speaker 2>lower than they were expected. Still profitable, still made a

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<v Speaker 2>ton of money, but just missed Wall Street's expectations, and

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<v Speaker 2>it dropped to a fifty two week low. Like I said,

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<v Speaker 2>rebounded a little bit from that. But yeah, it's interesting, man,

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<v Speaker 2>it really, you know, had a really tough day and

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<v Speaker 2>it's been having a tough year.

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<v Speaker 1>It's been having a tough couple of years. Actually. Well,

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<v Speaker 1>so now the stock market, Oh are we.

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<v Speaker 3>Going to get the dialogue and debate that we get sports? Well,

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<v Speaker 3>what's the show is going to be the one? What's

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<v Speaker 3>the base show?

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<v Speaker 1>Is?

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<v Speaker 2>So the stock stock market is up for the month

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<v Speaker 2>of October.

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<v Speaker 1>Yeah, that was up eleven percent.

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<v Speaker 2>The Nasdaq is up even the other day when when

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<v Speaker 2>Amazon crashed, NASDAK was up. That's when people was up.

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<v Speaker 2>That was up. But so Amazon was your pick of

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<v Speaker 2>the year, Yes, it was. So I'll let you start

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<v Speaker 2>off this conversation is do you want to reverse that?

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<v Speaker 2>I'm not there down Everest? So which which way are

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<v Speaker 2>we going? Which way we're going?

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<v Speaker 3>Yes?

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<v Speaker 1>Sension or the sension is key?

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<v Speaker 4>Yeah, I mean based on everything that I had read

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<v Speaker 4>in my in my information, you know, I stuck by

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<v Speaker 4>that pick.

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<v Speaker 1>Has it gone the way I predicted? No? No? Do

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<v Speaker 1>I still believe in the company. Absolutely.

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<v Speaker 4>So the report, the earnings report was interesting, right, because

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<v Speaker 4>there was some like if you looked inside of it,

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<v Speaker 4>there were some good spots, but the bad spots were

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<v Speaker 4>so bad that it got overlooked. So I'm gonna break

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<v Speaker 4>it down by the numbers, and so a good spot

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<v Speaker 4>the revenue group about fifteen percent. Anytime you have a

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<v Speaker 4>business and it grows, that's great. The advertising, right, which

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<v Speaker 4>is we said was going to pass Google at some point,

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<v Speaker 4>was up by twenty five percent. The big pitfall was

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<v Speaker 4>the operating income that fell by forty nine percent. Right,

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<v Speaker 4>So those who don't know what operating income is, can

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<v Speaker 4>you really quickly explain to them on I mean, I

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<v Speaker 4>think the best way to say it is the money

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<v Speaker 4>that they are taking in and how they're going to

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<v Speaker 4>use it now and specifically for tech companies and inflationary environments,

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<v Speaker 4>this does not bolde well, right, And so as inflation

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<v Speaker 4>goes the cost to do things to operate your business

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<v Speaker 4>obviously goes up. And so when you see interest rate rise,

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<v Speaker 4>you see right, since January, if you look at the NASTEC,

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<v Speaker 4>the tech stocks have taken descension. We're gonna stick with

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<v Speaker 4>that work. Most of them died riding down ever or

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<v Speaker 4>walking down evers, right, most counts die on a decession,

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<v Speaker 4>So that that that was huge, all right. The arnth

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<v Speaker 4>per share dropped right by an estimated forty five percent.

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<v Speaker 4>So those those two things, when you're talking about operating

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<v Speaker 4>costs and the earnings per share drop in there you

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<v Speaker 4>can see why a company like Amazon, which I still

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<v Speaker 4>think is a top three, if not top two companies

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<v Speaker 4>in the world, had such a negative quarter. Operating cash

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<v Speaker 4>flow also declined by twenty five percent. So like now

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<v Speaker 4>we're talking about three major factors of things that are like,

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<v Speaker 4>all right, this is a rough quarter. But even Basos

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<v Speaker 4>when they asked him about it, he was like, look,

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<v Speaker 4>we're gonna have to really tighten the belt because the

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<v Speaker 4>climate is about to get a real tricky. So those

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<v Speaker 4>are three factors you add on to one other thing

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<v Speaker 4>that was almost positive.

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<v Speaker 1>And kind of got overlooked.

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<v Speaker 4>But the fourth quarter revenue is expected to grow by

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<v Speaker 4>two to eight percent. Fourth Quarta, obviously we know, is

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<v Speaker 4>how they shop and how they season. More people are

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<v Speaker 4>in e commerce. The only thing is that what they're

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<v Speaker 4>seeing is that more people are going back into the stores.

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<v Speaker 4>We thought that obviously from the COVID time that people

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<v Speaker 4>were shopping online and it was a positive. But people

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<v Speaker 4>are back outside right e commerce numbers are not looking

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<v Speaker 4>the same as they did when you know, it was

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<v Speaker 4>a lockdown. So all those things taken into account. I

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<v Speaker 4>understand it. Do I still believe in it absolutely. Is

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<v Speaker 4>it going to be the stock of the year. Absolutely not.

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<v Speaker 4>It's still one of my top two or three companies.

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<v Speaker 1>Though.

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<v Speaker 3>The big thing I want people to realize is that

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<v Speaker 3>even in a company when it's going down.

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<v Speaker 1>Ernest, what's up?

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<v Speaker 5>You ever walk into a small business and everything just

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<v Speaker 5>works like the checkout is fast, or seats are digital,

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<v Speaker 5>tipping is a breeze and you're out the door before

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<v Speaker 5>the line even builds.

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<v Speaker 1>Odds are they're using.

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<v Speaker 1>What matters most Ready.

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<v Speaker 5>Let's Square handle the back end so you can keep

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<v Speaker 5>pushing your vision forward. This episode is brought to you

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<v Speaker 5>by P and C Bank. A lot of people think

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<v Speaker 5>podcasts about work boring, and sure they definitely can be,

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<v Speaker 5>P and C Bank National Association Member FDIC.

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<v Speaker 3>To wait for a great price to get in. Everyone

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<v Speaker 3>on a stock club, please put in chat Woll was

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<v Speaker 3>a number our coff Amazon. You can still make money

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<v Speaker 3>on a heavy drop like that. So the fundamentals of

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<v Speaker 3>the company haven't changed that much. Their global market share

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<v Speaker 3>dominance has not changed that much. When you have interest

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<v Speaker 3>rates of course going up and we're now going through

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<v Speaker 3>I think this ultimately will be a bigger recession when

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<v Speaker 3>it's all said and done in two thousand and seven,

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<v Speaker 3>two thousand and eight. But Amazon is primed, no pun

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<v Speaker 3>intended to do really well. Once things start to settle out,

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<v Speaker 3>they could be a hell of a lot lower. Being

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<v Speaker 3>in that tech space. They haven't fallen into the seventies

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<v Speaker 3>or the sixties. Ninety nine was like a good spot

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<v Speaker 3>that we liked, got in. It's like currently like a

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<v Speaker 3>one oh four if you're holding it for the long term,

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<v Speaker 3>you will be good also for a quick homework assignment. Internationally,

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<v Speaker 3>if you're going to order online from someone who are

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<v Speaker 3>the four biggest competitors of Amazon. Now ask yourself, who's

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<v Speaker 3>going to get the goods to you there faster than Amazon?

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<v Speaker 1>No one.

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<v Speaker 3>They'll fix the operating income. Any money they're losing right now,

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<v Speaker 3>they'll fix. Going into next year, you're going to be

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<v Speaker 3>really upset if you don't hold a stock twenty twenty five,

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<v Speaker 3>twenty six. Yeah, and if you look at the climate

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<v Speaker 3>of the world, like every country is trying to create

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<v Speaker 3>a business that replicates Amazon, right and I won't give

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<v Speaker 3>them the names because you gave them a homework assignment.

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<v Speaker 3>But go look in China, right, Well, we know that company,

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<v Speaker 3>but go look in South America. There's another company there

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<v Speaker 3>that is duplicated the business model of Amazon. And so

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<v Speaker 3>they'll figure it out. I believe in them. Well, let

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<v Speaker 3>me ask you this ian.

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<v Speaker 2>You you said a few times that your theory of

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<v Speaker 2>two tech two index, if inflation gets something to over

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<v Speaker 2>eleven percent, then that right, eleven percent? Yes, then that

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<v Speaker 2>that is gonna hurt your your theory. So why is

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<v Speaker 2>high inflation bad for technology?

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<v Speaker 3>Especially when quantitative easing goes away all the easy wins,

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<v Speaker 3>like for all my hoopers, like when we play on

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<v Speaker 3>like a nine foot rim, we all look like Lebron

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<v Speaker 3>ten feet dramatically different. So that difference between happens your

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<v Speaker 3>interest rates and being able to borrow money. Like imagine

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<v Speaker 3>if if I said, hey, come to invest fast euro

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<v Speaker 3>We'll give every entrepreneur one hundred thousand dollars and you

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<v Speaker 3>never have to pay us back. The upside for the

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<v Speaker 3>entrepreneur is probably a ninety five percent win rate. If

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<v Speaker 3>we give one hundred thousand pounds away and say hey,

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<v Speaker 3>you got to pay us twenty five percent back, now

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<v Speaker 3>maybe only thirty percent of the businesses will actually be

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<v Speaker 3>profitable as a result, So that arbitrage is one of

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<v Speaker 3>the biggest reasons Now Apple inside of that two tech

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<v Speaker 3>two index model has worked well. That's why always say

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<v Speaker 3>pair with the top two. But if you're going through

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<v Speaker 3>tech and you're looking at something that's fifteenth or twentieth,

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<v Speaker 3>that's not going to do really well because what the

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<v Speaker 3>technology industry really has done has gotten venture capital, which

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<v Speaker 3>has funded all of the ideas, and we have a

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<v Speaker 3>funded innovation. We've really funded the ideas that can get funded.

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<v Speaker 3>That's why we have a whole bunch of social media apps.

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<v Speaker 3>We could talk about it later. Now Jack from squares

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<v Speaker 3>looking to make another social media app, which I think

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<v Speaker 3>is a mistake. But you're really playing an interest rate

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<v Speaker 3>arbitrage game. So if I'm getting loan money at three percent,

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<v Speaker 3>when I can find a way ultimately to sell advertising

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<v Speaker 3>or a subscription to my user base at nine percent,

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<v Speaker 3>I'm playing an arbitrage game and getting the profit in between.

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<v Speaker 3>If interest rate is high and then no one's loaning

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<v Speaker 3>the money out, it's really hard to win that game.

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<v Speaker 3>So we are in a space, but we need more innovation,

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<v Speaker 3>and ironically enough tech has not done a great job

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<v Speaker 3>at making a bunch of innovation. How we thought Like

0:10:38.280 --> 0:10:40.480
<v Speaker 3>when we were kids, I thought we would have flying

0:10:40.520 --> 0:10:44.480
<v Speaker 3>cars by now, Yeah, Jetson's for sure, we're not there.

0:10:44.840 --> 0:10:47.520
<v Speaker 3>Like RAYJ is the only one still making scootie bikes

0:10:47.679 --> 0:10:48.640
<v Speaker 3>shot up in the city.

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<v Speaker 1>Shout out to ray J.

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<v Speaker 3>So we need more innovation, and I think now we're

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<v Speaker 3>just going to clear the way for people to be

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<v Speaker 3>able to get out all the bad companies and create

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<v Speaker 3>companies that will actually have a real ima.

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<v Speaker 2>My graduates from my school being force back drop Drop

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<v Speaker 2>Mike drot bag.

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