WEBVTT - E-Commerce & Supply Chains with Kornit Digital CEO 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.400 at Bloomberg dot com slash podcast. Well. One of the 0:00:21.400 --> 0:00:23.239 things we try to do here in Bloomberg Radio, particularly 0:00:23.320 --> 0:00:27.200 during this pandemic, is to talk to CEOs from different 0:00:27.240 --> 0:00:29.440 parts of the economy, different parts of the world to 0:00:29.440 --> 0:00:34.240 see how their businesses have been impacted by COVID UH 0:00:34.240 --> 0:00:36.720 and how they're adapting. Today, we're going to chat with 0:00:36.840 --> 0:00:39.520 Ronan Samuel. He's the CEO of corn It Digital, based 0:00:39.520 --> 0:00:43.600 in Israel. Corner Digital manufacturers digital inkjet printers. The printers 0:00:43.600 --> 0:00:46.840 are used by the textile industry to print directly on 0:00:47.040 --> 0:00:49.159 to cloth thrown and thanks so much for joining us 0:00:49.200 --> 0:00:53.000 here again. You know, years, like I'm sure many other 0:00:53.040 --> 0:00:56.280 businesses around the world have been really impacted by COVID. 0:00:56.320 --> 0:00:58.960 I'd love to get a sense of how it impacted 0:00:59.000 --> 0:01:01.520 your company and and kind of how your positions here 0:01:01.600 --> 0:01:06.800 as the world begins to reopen. First of all, pleasure 0:01:06.840 --> 0:01:09.960 to be to be with all of you. UM. So UM, 0:01:10.000 --> 0:01:11.520 you know we have we are playing in the UH. 0:01:11.680 --> 0:01:13.880 In the textile industry and the technical industry is the 0:01:14.319 --> 0:01:17.480 second most polluted industry in the world after the oil industry. 0:01:18.080 --> 0:01:21.680 It's actually there's a huge consumption of water UM. And 0:01:21.760 --> 0:01:25.959 there's about thirty percent of four that are being produced 0:01:26.040 --> 0:01:29.400 never been sold, which creates twenty one million tons of 0:01:29.480 --> 0:01:32.080 text and are being on the way and about twenty 0:01:32.120 --> 0:01:38.080 eight trillion little water that being consumed. UH. This is huge, UM, 0:01:38.160 --> 0:01:41.520 and the textile industry has to move into most sustainable 0:01:41.560 --> 0:01:46.080 way of production. Now. The COVID erupted there like March 0:01:46.440 --> 0:01:49.040 last year, UM, and it was kind of a shock 0:01:49.120 --> 0:01:53.800 for the industry because the retail UM really stopped UM 0:01:54.000 --> 0:01:58.440 and the consumer went and ordering online UM and through 0:01:58.480 --> 0:02:01.280 the e commerce and the ecommerce today is representing like 0:02:01.360 --> 0:02:05.400 thirty percent of that being solved for the e commerce UH. 0:02:05.400 --> 0:02:08.480 And the focus that in twenty twenty four will be 0:02:08.520 --> 0:02:13.440 about six older girl being sold in e commerce, which 0:02:13.560 --> 0:02:17.960 really fueling the need for own demand manufacturing. Yeah, and 0:02:18.200 --> 0:02:21.359 I mean it's not just e commerce, right Runnan. We 0:02:21.440 --> 0:02:25.800 expect to get what we order tomorrow. You know, Amazon 0:02:25.919 --> 0:02:30.480 has spoiled consumers into wanting something within twenty four hours. 0:02:30.480 --> 0:02:34.880 So if I order UM UH tank top T shirt, 0:02:35.400 --> 0:02:37.520 it can't really be made in Taiwan because it has 0:02:37.600 --> 0:02:40.320 to be here right away. Does that mean we're gonna 0:02:40.400 --> 0:02:46.720 see UM supply chains spread out over the globe? Yeah, 0:02:46.760 --> 0:02:49.520 so you're absolutely right. So the e commerce has to 0:02:49.600 --> 0:02:53.760 adopt the supply chain to meet the consumer needs. And 0:02:53.800 --> 0:02:57.400 what the consumer needs is immediate gratification. They would like 0:02:57.440 --> 0:02:59.480 to have the same experience as going to a retail 0:02:59.480 --> 0:03:01.079 shop and get think the products. They would like to 0:03:01.120 --> 0:03:03.840 get their products within twenty four hours. But they also 0:03:03.880 --> 0:03:07.520 would like to choose to choose a variety of products. 0:03:07.520 --> 0:03:11.200 A self expression is very important. Nobody wants to wear 0:03:11.240 --> 0:03:14.840 the same tissuts that anyone else next to him wearing UM, 0:03:15.000 --> 0:03:18.359 So they want to add a variety of products uh 0:03:18.440 --> 0:03:21.320 and and to go to the e commerce and having 0:03:21.360 --> 0:03:25.079 a variety of products and keeping the inventory offer a 0:03:25.360 --> 0:03:29.240 large sp use of products is almost impossible. So you 0:03:29.320 --> 0:03:33.120 have to change the supply chain into on demand manufacturing 0:03:33.360 --> 0:03:36.160 and you move you have to move the manufacturing from 0:03:36.280 --> 0:03:40.000 offshore to on shore or near shore next to the 0:03:40.040 --> 0:03:43.040 consumer and next to the main cities, like what Amazon 0:03:43.160 --> 0:03:47.120 is doing leveraging our technology or many other companies. So 0:03:47.520 --> 0:03:52.640 core Net is enabling on the main sustainable manufacturing, on 0:03:52.880 --> 0:03:56.960 shore manufacturing, and really changing the entire supply chain of 0:03:57.000 --> 0:04:00.720 the textile market. Ron Interest real quickly seconds give us 0:04:00.760 --> 0:04:04.240 a sense of how the industry can reduce its footprint 0:04:04.280 --> 0:04:07.720 in terms of the ecological harm it does. Yeah. So 0:04:07.800 --> 0:04:11.320 if you if you produce on demand, UH, and you 0:04:11.440 --> 0:04:15.160 produced to an order, So actually everything you produce being 0:04:15.200 --> 0:04:19.880 consumed today, thirty percent of the product are being produced, 0:04:19.960 --> 0:04:23.480 never being consumed, and you're throwing it away. This creates 0:04:23.520 --> 0:04:29.359 a huge amount of waste of materials, of water, um 0:04:29.520 --> 0:04:33.159 and a huge amount of pollution. So just by changing 0:04:33.200 --> 0:04:36.080 the supply chain to on show, on demand, this is 0:04:36.279 --> 0:04:40.000 a huge benefit for the globe and we are very 0:04:40.040 --> 0:04:44.240 happy to take a major part and a leadership in that. Ronan, 0:04:44.279 --> 0:04:46.159 thank you so much for joining us. We really appreciate 0:04:46.320 --> 0:04:49.680 you getting on from Israel and sharing the story of 0:04:49.760 --> 0:04:52.120 your company. Ronan Samuel, he's the CEO of corn It 0:04:52.240 --> 0:04:56.880 Digital again a big player in the global textiles industry. UH. 0:04:57.120 --> 0:05:00.440 Navigating this pandemic, navigating the reopening and trying to do 0:05:00.480 --> 0:05:03.760 it in a more sustainable way given some of the 0:05:03.839 --> 0:05:07.839 challenges that that industry deals with as in terms of 0:05:08.080 --> 0:05:15.000 the sustainability issues. Let's bring in Laura Davison, Bloomberg Tax reporter. Lara, 0:05:15.000 --> 0:05:16.279 thanks so much for joining us, And what do we 0:05:16.279 --> 0:05:19.279 know about this plan here? So, yeah, this is basically 0:05:19.320 --> 0:05:22.520 Biden reverting to a different part of his American Jobs Plan. 0:05:22.680 --> 0:05:26.520 This is a a minimum tax on financial profits for 0:05:26.520 --> 0:05:31.400 for financial accounting purposes. This would basically affect companies like Amazon, 0:05:32.080 --> 0:05:34.240 like Netflix that has been able in the past to 0:05:34.440 --> 0:05:37.000 use legal tax breaks for research and development, for stock 0:05:37.040 --> 0:05:39.599 options to cut down their tax bills too, you know, 0:05:39.760 --> 0:05:42.680 zero percent or very low rate. So what what the 0:05:42.680 --> 0:05:45.000 Biden plan would say here and say, Okay, you know, 0:05:45.080 --> 0:05:46.960 even if you do have all these credits andtroductions, you 0:05:47.000 --> 0:05:50.120 have to pay at least fifteen percent on your on 0:05:50.160 --> 0:05:53.200 your financial statement profits. Um. This is basically a negotiating 0:05:53.400 --> 0:05:55.720 tactic that the Biden U is bringing up here, as 0:05:55.800 --> 0:05:58.440 as the Washington Post reported, um and saying Okay, we're 0:05:58.440 --> 0:06:00.080 not going to raise the tax rate, but we're going 0:06:00.120 --> 0:06:02.320 to make sure that at least a minimum amount of 0:06:02.400 --> 0:06:05.800 tax would be paid. It's very interesting. I wonder how 0:06:06.120 --> 0:06:09.760 corporate America will react to this. I mean, on the 0:06:09.760 --> 0:06:12.520 one hand, um, surely they don't want to see rates 0:06:12.640 --> 0:06:15.279 rise at twenty eight percent. But let's face it, Laura, 0:06:15.360 --> 0:06:19.520 even if rates rise to nominally, a lot of companies 0:06:19.560 --> 0:06:22.280 are still gonna pay nothing, right. Yeah. And the important 0:06:22.279 --> 0:06:23.720 thing to remember here too is this is part of 0:06:23.720 --> 0:06:27.520 the negotiations happening with the publicans. Um. You know, Biden 0:06:27.640 --> 0:06:30.000 and several center Republicans are working on trying to come 0:06:30.080 --> 0:06:32.760 up with some sort of bipartisan infrastructure deal, and this 0:06:32.880 --> 0:06:34.400 is one of the ways he's trying to kind of 0:06:34.520 --> 0:06:37.200 find ways to to pay for that plan. Democrats can 0:06:37.240 --> 0:06:38.960 still even if they do a bipartisan deal, or if 0:06:38.960 --> 0:06:41.240 they don't do something with Republicans can still go and 0:06:41.279 --> 0:06:43.719 are likely to do a separate tax deal later in 0:06:43.720 --> 0:06:45.360 the year that would raise the corporate rate. So this 0:06:45.400 --> 0:06:48.159 doesn't really take the rate off the table, It just 0:06:48.200 --> 0:06:50.440 puts it in a different bill than it might have 0:06:50.520 --> 0:06:52.880 been otherwise. Um. So that's one thing that's important to 0:06:52.880 --> 0:06:55.600 remember as well. As you know, even if the rate, 0:06:55.640 --> 0:06:57.960 the headline rate is percent, there are still lots of 0:06:58.000 --> 0:07:00.839 other deductions, credits, other tax breaks in the tax cod 0:07:00.880 --> 0:07:03.240 I mean that many companies pay far, far less because 0:07:03.279 --> 0:07:06.160 whatever the headline tax rate is. Yeah, Laura, what is 0:07:06.400 --> 0:07:09.960 there a sense about any kind of support for a 0:07:10.040 --> 0:07:13.440 tax floor, whether it's fift or something else. Is there 0:07:13.760 --> 0:07:16.800 bipartisan support for that? This is something that that Republicans 0:07:16.840 --> 0:07:20.880 have pushed back on Democrats. Um like the idea, uh, largely, 0:07:20.920 --> 0:07:23.680 but there's been some It's it's not universally seen as 0:07:23.760 --> 0:07:25.720 as a good idea. It's a little bit harder to implement. 0:07:26.040 --> 0:07:28.560 It's also, um, you know, a lot of economists say 0:07:28.560 --> 0:07:30.400 this is sort of a kind of roundabout way to 0:07:30.400 --> 0:07:32.720 go about this. If Congress doesn't want companies taking all 0:07:32.760 --> 0:07:35.119 these tax credits, introductions, getting rid of the tax credits 0:07:35.120 --> 0:07:38.080 and inductions, don't put some sort of minimum tax after 0:07:38.120 --> 0:07:40.120 giving people tax breaks and then taking them away, it's 0:07:40.160 --> 0:07:43.080 sort of a economically inefficient way to go about it. 0:07:43.320 --> 0:07:46.360 I mean, we've already seen Congress telling the banks they 0:07:46.360 --> 0:07:49.280 don't want them lending to two oil businesses that are 0:07:49.320 --> 0:07:52.960 perfectly legal operating in the United States. Um. I think 0:07:53.080 --> 0:07:56.040 we're not gonna understand how Congress works, but to me, 0:07:56.200 --> 0:08:00.160 it seems like Laura Um companies would prefer to have 0:08:00.320 --> 0:08:06.160 a percent top rate to a fifteen percent minimum, you know, 0:08:06.240 --> 0:08:07.800 And then it probably depends a little bit on the 0:08:07.800 --> 0:08:10.080 profile of your of your company. If you're someone like 0:08:10.080 --> 0:08:12.480 a tech company that has a ton of you know, 0:08:12.680 --> 0:08:15.040 research and development costs and things that can really cut 0:08:15.080 --> 0:08:18.360 down your UM your tax bill, having a minimum tax 0:08:18.400 --> 0:08:20.200 it's certainly not helpful. And having a little bit of 0:08:20.200 --> 0:08:22.520 a higher tax um, you know, isn't It wouldn't be 0:08:22.560 --> 0:08:24.600 as big of a deal if you have fewer of 0:08:24.640 --> 0:08:27.000 those credits and productions. If you're already paying you know, 0:08:27.040 --> 0:08:29.800 somewhere above fift it doesn't affect you as much. But 0:08:30.120 --> 0:08:32.600 this is something that you can imagine Corporate America is 0:08:32.600 --> 0:08:35.280 is galvanizing behind right now. And uh, you know, the 0:08:35.400 --> 0:08:37.760 US Chamber of Commerce and Business Roundtable they're figuring out, 0:08:37.760 --> 0:08:39.560 you know, running the numbers and how will this affect 0:08:39.840 --> 0:08:44.760 you know, large companies in the country. Matt, this is 0:08:44.880 --> 0:08:48.360 my fifth fourth week coming back to the office full 0:08:48.400 --> 0:08:51.800 time to Bloomberg's HQ at seven thirty one Lexington Avenue. 0:08:51.800 --> 0:08:53.800 How do you like it? I love it, love being back, 0:08:54.000 --> 0:08:57.280 um and uh, you know, and what I'm noticing Matt is. 0:08:57.360 --> 0:09:00.199 You know, every week it's getting a little bit more 0:09:00.440 --> 0:09:04.200 people here in our headquarters. But I just wonder what's 0:09:04.200 --> 0:09:06.440 gonna what's happening with other businesses, you see, I don't 0:09:06.480 --> 0:09:09.120 really see a consensus on hey, let's get everybody back 0:09:09.280 --> 0:09:12.200 or let's be all remote or hybrid. Is just a 0:09:12.320 --> 0:09:16.480 lot of feeling out, I think along from corporate America, 0:09:16.800 --> 0:09:18.800 and that raises a lot of questions. But one of 0:09:18.800 --> 0:09:21.520 the questions is what does that mean for commercial real estate, 0:09:21.600 --> 0:09:24.240 not just in New York but around the country. Kevin Thorpe, 0:09:24.400 --> 0:09:26.600 he's the chief economist and head of global research for 0:09:26.760 --> 0:09:29.439 Cushman and Wakefield. They know where thing or two about 0:09:29.440 --> 0:09:32.080 commercial real estate. Kevin, thanks so much for joining us here. 0:09:32.480 --> 0:09:35.160 So again, you know, it's my fourth week back in 0:09:35.320 --> 0:09:38.360 Manhattan working, doing the commute, doing all that kind of thing. 0:09:39.000 --> 0:09:43.000 Um what is your sense as to how commercial real 0:09:43.120 --> 0:09:47.920 estate and vacancies and corporate America will come back to work? Yeah, well, 0:09:47.960 --> 0:09:49.800 thanks for having a good do with you. Glad to 0:09:49.840 --> 0:09:52.520 hear you're back at the office. Um, So I have 0:09:52.520 --> 0:09:55.080 a prediction for you, and here it is when when 0:09:55.080 --> 0:09:59.600 most people will be back, going to be Tuesday, September seven, 0:10:00.720 --> 0:10:04.679 I am, and so there's the day after labor Day. 0:10:05.240 --> 0:10:07.240 It's it's when we expect most of me back and 0:10:07.240 --> 0:10:09.719 I left an extra seven minutes for people to get 0:10:09.760 --> 0:10:13.240 their coffee. Um, I think really, look, I think virtually 0:10:13.240 --> 0:10:17.120 every survey conducted does suggest that employers and employees are 0:10:17.200 --> 0:10:21.520 anxious to get back to the office, obviously with more flexibility, 0:10:21.520 --> 0:10:24.520 but they want to go back, right. We're social creatures. 0:10:24.559 --> 0:10:27.120 We know that we can make one close one equal 0:10:27.200 --> 0:10:30.680 three in the office, and we know that that happy 0:10:30.720 --> 0:10:34.760 hours by yourself after work is not really a very 0:10:34.760 --> 0:10:37.080 happy hour. So, uh, you know, I think it's gonna 0:10:37.080 --> 0:10:39.320 be case by case, but um, for sure, I think 0:10:39.360 --> 0:10:41.800 the August September time frame is when most are penciling it. 0:10:41.960 --> 0:10:44.400 I don't know. I mean, I say so. I love 0:10:44.520 --> 0:10:47.240 being in the office. I've never worked a day from home, 0:10:47.320 --> 0:10:50.280 and to me it sounds nightmarish. But I also lived 0:10:50.320 --> 0:10:54.640 two blocks from my studio here were I in you know, Bronxville, 0:10:54.880 --> 0:10:58.400 making an hour commute each way or worse, New Jersey. 0:10:58.520 --> 0:11:01.160 Having to deal with Penn Station. New Jersey is awesome, 0:11:01.200 --> 0:11:04.920 but you know I wouldn't want Penn Station is nasty. Um. 0:11:05.760 --> 0:11:07.880 I feel like they're probably a lot of people who 0:11:07.960 --> 0:11:12.360 still would be happy working from Summit rather than um 0:11:12.360 --> 0:11:16.040 coming into the big Apple, and you're likely going to 0:11:16.080 --> 0:11:19.160 see a little pushback there, Kevin. Yeah, I think it'll 0:11:19.160 --> 0:11:21.720 be a mix, right. I think we learned from this 0:11:21.800 --> 0:11:25.800 sort of first forced work from home experiment that it 0:11:25.880 --> 0:11:28.480 actually worked pretty well. I mean, people are a good 0:11:28.520 --> 0:11:32.240 portion of the workforce was largely productive, um and so 0:11:32.280 --> 0:11:35.319 that that's very real. Stating on compute time is very real, 0:11:36.040 --> 0:11:39.240 but that doesn't replace some people be able to kind 0:11:39.280 --> 0:11:41.720 of work remotely for a long period of time. And 0:11:41.720 --> 0:11:46.040 it hasn't gone remote, right, So it doesn't replace the 0:11:46.160 --> 0:11:49.360 valleys that office brains. When it comes to collaboration, worker 0:11:49.440 --> 0:11:53.280 productivity factors, now, it's still over factors, and these are 0:11:53.320 --> 0:11:56.800 these are the same reasons that office buildings were created 0:11:56.800 --> 0:11:59.360 in the first place, right, And so there's an economic 0:11:59.400 --> 0:12:01.840 inseet of not to mention, you want to in general 0:12:01.920 --> 0:12:04.720 be closer to your clients, right and a lot of 0:12:04.720 --> 0:12:08.200 the major clients are slow located in the city centers. 0:12:08.200 --> 0:12:10.400 So um, so yeah, I think there is going to 0:12:10.440 --> 0:12:13.760 be Those are a strong incentive, but it'll be Kevin, 0:12:13.760 --> 0:12:16.960 give us a sense of how the state, how the 0:12:17.000 --> 0:12:18.720 city of New York is right now, because in terms 0:12:18.800 --> 0:12:22.560 of vacancies and what the trends have been, what do 0:12:22.559 --> 0:12:24.520 you need to do to get people back into office. 0:12:24.559 --> 0:12:27.160 We've heard reports that people are you know, companies are 0:12:27.160 --> 0:12:30.120 subleasing or trying to sublease some of their space. What 0:12:30.160 --> 0:12:33.360 are you seeing in New York City? Yeah, so great, 0:12:33.400 --> 0:12:37.040 great question. So New York, New York got hard, very hard. 0:12:37.080 --> 0:12:40.520 But I mean virtually every big city San Francisco, La. 0:12:41.320 --> 0:12:43.640 But New York in particular got hit very hard by 0:12:43.679 --> 0:12:47.800 the pandemic. The fundamentals got got rocked. And right now 0:12:48.760 --> 0:12:54.800 office vacancy in Manhattan is you know, overfitting, pushing certain spots, 0:12:55.240 --> 0:12:57.760 and so it's a real challenge. It's absolutely a very 0:12:57.800 --> 0:13:02.360 strong you know, uh tenant that there uh strong leverage 0:13:02.400 --> 0:13:04.640 right now in the Manhattan market. One thing else say 0:13:04.640 --> 0:13:09.040 about New York is there in economics there's something called 0:13:09.080 --> 0:13:13.280 perfect substitutes. Right, So there's you know, Coca cola versus pepsi. 0:13:13.320 --> 0:13:15.079 If you don't like coke, you can go to pepsi. 0:13:15.360 --> 0:13:18.240 That kind of thing. There really isn't a perfect substitute 0:13:18.280 --> 0:13:21.720 for a New York right A year of pandemic doesn't 0:13:21.800 --> 0:13:24.440 change everything that New York has to offer in terms 0:13:24.440 --> 0:13:28.080 of infrastructure and restaurants and art and labor talent. So 0:13:28.320 --> 0:13:31.160 I'm confident New York is gonna bounce back and there 0:13:31.160 --> 0:13:33.760 will be a return to the office, certainly in New York, 0:13:34.559 --> 0:13:37.120 and it has. It's bounced back from every single recession 0:13:37.120 --> 0:13:39.760 as far as data goes back, So I just think 0:13:39.800 --> 0:13:42.920 it's gonna take it longer. We we've read that there 0:13:42.960 --> 0:13:47.120 are some industries that are still kind of the bright 0:13:47.200 --> 0:13:51.360 spots of commercial real estate, life sciences, for for example, um, 0:13:51.520 --> 0:13:56.239 they need to work in the offices, in the labs. Um, 0:13:56.280 --> 0:13:59.080 you know, they have to be there. Where do you 0:13:59.120 --> 0:14:02.439 see the most trouble and where do you see the 0:14:02.800 --> 0:14:07.520 least Yeah, So, just broadly speaking in commercial real estate, 0:14:07.600 --> 0:14:10.400 and there's certain certain property types that are actually have 0:14:10.559 --> 0:14:13.439 recovered swiftly, doing extremely well. You probably have covered this, 0:14:13.760 --> 0:14:18.160 you know, throughout your time on the program. Industrial logistics 0:14:18.200 --> 0:14:23.280 absolutely booming, warehouse based, the e commerce effect, data centers, 0:14:23.280 --> 0:14:26.720 as you mentioned, life sciences, as you mentioned. I actually 0:14:26.720 --> 0:14:28.560 think we're now at the point where we're going to 0:14:28.640 --> 0:14:31.800 see these other property type that have struggled throughout the 0:14:31.840 --> 0:14:35.320 pandemic property types that really rely on bringing people together, 0:14:35.400 --> 0:14:38.280 like office, like retail. I think we're now seeing the 0:14:38.320 --> 0:14:40.680 green shoots and those those sectors are likely they joined 0:14:40.680 --> 0:14:43.160 the party here. I think will bailing soon. All right, Kevin, 0:14:43.160 --> 0:14:45.080 thanks so much for joining us. We appreciate getting that 0:14:45.200 --> 0:14:49.280 update on commercial real estate. Kevin Thorpe, chief economists and 0:14:49.400 --> 0:14:53.960 head of Global Research for Cushman and Wakefield. The economy 0:14:54.240 --> 0:14:56.560 is opening up? Will people come back to their offices? 0:14:56.680 --> 0:15:02.840 This is Bloomberg Bloomberg Opinion informed perspectives, an expert, data 0:15:02.920 --> 0:15:07.960 driven commentary on breaking news. All Right, A m C 0:15:08.400 --> 0:15:12.000 has been a wild ride, to say the least, and 0:15:12.080 --> 0:15:15.080 if you owned it, um, you've gotten super rich. Over 0:15:15.120 --> 0:15:18.280 the last couple of days, it was up well, it 0:15:18.400 --> 0:15:21.480 was doubled yesterday, and it doubled the week before that. 0:15:21.640 --> 0:15:25.640 It's up two thousand, eight hundred and fifty percent since 0:15:25.680 --> 0:15:29.440 the beginning of this year alone. It's off twenty two today. 0:15:29.520 --> 0:15:32.440 Maybe people are taking profits, maybe they're getting ready for 0:15:33.200 --> 0:15:36.160 new shares um. In any case, we bring in Chris 0:15:36.200 --> 0:15:39.880 Bryant from Bloomberg Opinion to tell us what exactly is happening. Chris, 0:15:40.120 --> 0:15:44.280 had they just struck upon um an incredibly great business 0:15:44.320 --> 0:15:48.240 strategy that nobody foresaw coming, and so share holders are 0:15:48.280 --> 0:15:51.840 rushing to get in on this. Well not, I mean, 0:15:51.840 --> 0:15:54.680 it continues to be an upolute, extraordinary story. The latest, 0:15:54.680 --> 0:15:56.680 of course, we had this morning was that they are 0:15:57.120 --> 0:16:00.920 announcing the intention to issue yet more stock, so up 0:16:00.960 --> 0:16:04.960 to eleven million shares, and of course you know that 0:16:05.000 --> 0:16:09.120 will inevitably further dilute shareholders a little bit. Of course, 0:16:09.200 --> 0:16:11.560 they've done that previously and the stock has risen, so 0:16:11.680 --> 0:16:13.960 you know, I'm not going to try and you know, 0:16:14.040 --> 0:16:16.320 second guests the movements in the market today, but I 0:16:16.360 --> 0:16:19.800 will say this. You know they didn't issue prospectus to 0:16:19.840 --> 0:16:23.680 a company that announcement. We said the following. Under the circumstances, 0:16:23.760 --> 0:16:26.560 given the volatility I'm just referred to, we cause you 0:16:26.640 --> 0:16:29.200 against investing in our class A common stock unless you 0:16:29.200 --> 0:16:31.520 are prepared to incur the risk of losing all or 0:16:31.680 --> 0:16:35.480 a substantial portion of your investment. So that's UM. That's 0:16:35.480 --> 0:16:39.040 straight from a mc UM. So clearly anybody who invested 0:16:39.360 --> 0:16:44.000 at these value rations are you know, taking a big risk. Uh, 0:16:44.000 --> 0:16:46.160 and they're well aware of it. I should hope with 0:16:46.240 --> 0:16:48.360 the market cap now, I mean that's a risk for 0:16:48.400 --> 0:16:51.360 anyone buying making an equity investment, right, They just don't 0:16:51.400 --> 0:16:55.600 usually put it that clearly in the prospectives um for sure. 0:16:55.640 --> 0:16:57.960 I mean, of course, you buying stock always entails risk. 0:16:58.040 --> 0:17:00.640 But what they're saying here is because of the massive 0:17:00.720 --> 0:17:03.480 volatility that we have had in our stock, which is 0:17:03.560 --> 0:17:06.840 unrelated to the performance of our business, that obviously that 0:17:07.040 --> 0:17:11.040 entails extra That's the key class. So, Chris, you know, 0:17:11.280 --> 0:17:15.240 another aspect of this whole, you know, the deal with 0:17:15.440 --> 0:17:18.439 AMC has been the role of the CEO, Adam Aaron. 0:17:18.600 --> 0:17:24.639 He has really embraced these retail reddit investors um and 0:17:24.760 --> 0:17:27.359 kind of egging them on a little bit. It feels 0:17:27.400 --> 0:17:30.000 to me, what what do you make of it? Yeah, 0:17:30.040 --> 0:17:31.960 I mean I read a Columnartier in the week where 0:17:31.960 --> 0:17:34.280 I said that he was playing with fire, and I 0:17:34.280 --> 0:17:37.240 think I stand behind that. I mean, ultimately, he's performed 0:17:37.240 --> 0:17:39.960 an amazing service for his company and his shells in 0:17:39.960 --> 0:17:41.840 the sense that you know, this company has been able 0:17:41.880 --> 0:17:44.120 to raise a lot of capital to the company that 0:17:44.880 --> 0:17:47.359 was on the verge of bankruptcy several times over the 0:17:47.400 --> 0:17:50.000 past year or so. That's now off the table for 0:17:50.040 --> 0:17:53.359 at least the next year. Or two because they've raised 0:17:53.359 --> 0:17:55.240 so much money now, but they're simply not in danger 0:17:55.280 --> 0:17:59.000 of running out of it anymore. Nevertheless, of course, by 0:17:59.119 --> 0:18:01.760 you know, appealing to two retail investors, and he's done 0:18:01.760 --> 0:18:03.720 an incredible job of that in terms of, you know, 0:18:03.760 --> 0:18:06.840 giving YouTube interviews, in terms of you know, retweeting memes 0:18:06.840 --> 0:18:09.320 and all these fun things that make him you know, 0:18:09.359 --> 0:18:11.720 a friend to the to the retail investor, and the 0:18:11.800 --> 0:18:13.800 latest of course yesterday saying you know, you can have 0:18:13.840 --> 0:18:16.680 free popcorn. Um. All of this, of course, you know, 0:18:17.000 --> 0:18:20.200 ultimately encouraged retail investors to buy the stock at ever 0:18:20.359 --> 0:18:23.080 higher prices. And my concern, of course is that some 0:18:23.119 --> 0:18:26.720 of these investors are relatively inexperienced, and the danger is 0:18:26.760 --> 0:18:29.040 of course that they get a nasty surprise down the track, 0:18:29.600 --> 0:18:31.800 although they're prepared. I mean, if you read through Wall 0:18:31.800 --> 0:18:36.119 Street bets, um, those apes know that they're probably gonna 0:18:36.119 --> 0:18:41.000 lose their nut eventually. Um, Aaron Adams, I'm looking at 0:18:41.000 --> 0:18:43.600 the HDS function on the Bloomberg, which is Great Holdings 0:18:43.640 --> 0:18:47.720 and obviously a huge portion of this stock is now 0:18:47.720 --> 0:18:51.280 owned by retail, but he owned as of the last 0:18:51.320 --> 0:18:55.200 reporting period seven orty eight thousand seven forty seven shares. 0:18:55.280 --> 0:18:58.280 Most recent change, he domped half a million. I wonder 0:18:58.400 --> 0:19:01.960 what his ownership stake looks like now. Those those shares 0:19:02.000 --> 0:19:05.480 interesting that he's sold were actually given to his sons, 0:19:05.920 --> 0:19:09.080 so that clearly they have done very nicely out of 0:19:09.160 --> 0:19:11.320 that if they still hold this dog. Actually know, did 0:19:11.520 --> 0:19:15.800 my column very interesting? A mc um had an executive 0:19:16.160 --> 0:19:19.640 pay plan which was linked to the share price targets. 0:19:19.640 --> 0:19:22.480 Those price targets were lowered last year because it was 0:19:22.520 --> 0:19:24.760 thought that they wouldn't be able to achieve them, and 0:19:24.800 --> 0:19:27.720 of course when the shares first took off in January 0:19:28.000 --> 0:19:30.600 and then those targets were very quickly met thanks to Reddit. 0:19:30.720 --> 0:19:34.159 So you know, Adam Aaron is you know, scratching the 0:19:34.200 --> 0:19:38.400 backs of retail investors and you know, and that's been returned. 0:19:38.520 --> 0:19:40.440 He of course is doing very well this He still 0:19:40.480 --> 0:19:44.440 holds a substantial number of uh you know, shares already 0:19:44.480 --> 0:19:46.320 and of course we will get further ones as a 0:19:46.520 --> 0:19:49.640 result of his executive compensation, so you know, no doubt 0:19:49.680 --> 0:19:52.119 at all he'll do well. Its shareholders do well. And 0:19:52.160 --> 0:19:54.360 that's what he said time and again, I work for you. 0:19:55.119 --> 0:19:56.960 Now that's the case, and he's done a good job 0:19:57.000 --> 0:19:59.600 by raising money. The problem is now, is it can 0:19:59.640 --> 0:20:02.200 they made saying that the price at these elevated levels, 0:20:02.200 --> 0:20:04.000 that of course will be very difficult. I would. It's 0:20:04.000 --> 0:20:07.520 a refreshing view though, right Chris. I mean you've researched 0:20:07.560 --> 0:20:12.000 and written about CEO pay executive pay recently. I know, 0:20:12.200 --> 0:20:15.600 and this is one share This is one CEO who 0:20:15.600 --> 0:20:18.879 knows that he works for the owners. Yeah, that's true, 0:20:18.920 --> 0:20:21.440 and um, you know, of course it's very difficult when 0:20:21.520 --> 0:20:25.200 you've got a very diverse retail investor basis they do 0:20:25.320 --> 0:20:29.119 now to speak directly to to those shareholders. There aren't 0:20:29.119 --> 0:20:31.640 just you know twenty r so key institutional investors. He's 0:20:31.640 --> 0:20:33.040 got to go and see now he has to speak 0:20:33.080 --> 0:20:35.119 to them all. And I think it was quite smart 0:20:35.160 --> 0:20:38.119 actually yesterday by saying, you know, everybody mocked it, you know, 0:20:38.200 --> 0:20:41.480 free popcorn. But if if it encourages written investors to 0:20:41.520 --> 0:20:44.040 engage more with the company by stigning up to their portal, 0:20:44.440 --> 0:20:46.879 hopefully then they'll be able to get them to vote 0:20:47.040 --> 0:20:50.879 in favor of you know, further expeditions if that is 0:20:50.920 --> 0:20:53.040 required as expected. I think at some point they're going 0:20:53.080 --> 0:20:56.920 to publish a new proxy statement which will detail any 0:20:56.960 --> 0:21:01.440 possible further authorization for share issurans. But you know, for now, 0:21:01.440 --> 0:21:03.360 they've got enough money in the door. I was even 0:21:03.359 --> 0:21:05.800 talking about doing acquisitions or so forth yesterday. I think 0:21:05.800 --> 0:21:08.400 the priority really should be paying down debt. They've got 0:21:08.400 --> 0:21:10.520 a lot of debt still, and I've got a lot 0:21:10.560 --> 0:21:13.480 of rent that they owe to landlords. So this money 0:21:13.640 --> 0:21:16.879 can be good to good use. So, Chris, you know 0:21:17.160 --> 0:21:19.239 Adam Aaron here, the CEO, he's kind of playing up 0:21:19.240 --> 0:21:22.320 to his new shareholders, kind of reminds me of another 0:21:22.840 --> 0:21:24.800 you know, uh ceo is a kind of a promoter, 0:21:25.000 --> 0:21:27.639 and that's Elon Musk. I think about Elon Musk and 0:21:27.640 --> 0:21:29.760 how he, you know, really promotes on social media and 0:21:29.800 --> 0:21:32.840 other tesla as well as other assets like dog coin. 0:21:33.480 --> 0:21:36.240