Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all partnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one and twenty countries. You can
Speaker 1: download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. We are still trying to
Speaker 1: make sense of Bill Wong and what prosecutors charge at
Speaker 1: the hedge fund investor did plowing cash into a desperate
Speaker 1: buying spree to prop up his artificially inflated stocks. As
Speaker 1: our Matt Levine rights, let's get to it. Because Bloomberg
Speaker 1: opinion columnist Matt Levine covers finance. He was an editor
Speaker 1: of deal Breaker, Investment baker at Goldman and m and
Speaker 1: a lawyer at Wachtel Lipton and a clerk for the
Speaker 1: US Court of Appeals for the Third Circuit. And he
Speaker 1: joins us now via zoom in New York City. And
Speaker 1: I gotta say, Matt, we actually kind of want to
Speaker 1: talk Twitter and Elon with you as well as this,
Speaker 1: But let's start with Bill Juan because you have such
Speaker 1: a great detailed column about what this guy actually did.
Speaker 1: I mean, what strikes you as like just trying to understand,
Speaker 1: you know, his thinking and all of this. I just
Speaker 1: really don't understand his thinking. Um. Yeah, as you said,
Speaker 1: he bought he had he had a lot of money.
Speaker 1: He was a former headphone manager. He borrowed a lot
Speaker 1: more money from his banks, and he spent all of
Speaker 1: it on buying about ten stocks. And he bought so
Speaker 1: much of them that their stock that their prices went
Speaker 1: up and up and up, and like it doubled in
Speaker 1: some cases over the course of months. And uh. And
Speaker 1: then he just you know, he had profits because he
Speaker 1: had bought stocks that were going up, and he took
Speaker 1: those profits and he rolled them into borrowing more money
Speaker 1: and buying more of the same stocks. And so eventually
Speaker 1: something went slightly wrong. You know, one of these companies
Speaker 1: issued more stock in the stock went down. He got
Speaker 1: margin calls from his banks because he borrowed all this money,
Speaker 1: he didn't have any money left over, and so the
Speaker 1: bank's liquidated all of his stocks that went back down,
Speaker 1: and his fund was left with basically nothing, and some
Speaker 1: of the banks lost a lot of money. Um, this
Speaker 1: doesn't make any sense, you know, it's not a good trade.
Speaker 1: Like if you do this, if you buy billions of
Speaker 1: dollars of stock and the stock goes up and you
Speaker 1: then take money out and spend it on buying a
Speaker 1: yacht and sailing away, that makes sense. If you just
Speaker 1: do it, and you keep plowing the money into the stocks,
Speaker 1: including like on the last day when you're getting the
Speaker 1: margin calls, he's spending even more money buying even more
Speaker 1: of these stocks, all your money advantages at the end,
Speaker 1: and then you just start left with kind of nothing
Speaker 1: and and being arrested. But the thing is, as you write,
Speaker 1: he's a really smart guy. He's really he's been in
Speaker 1: the industry for years. Uh, what could I mean? Is
Speaker 1: there any other end game that could have happened here?
Speaker 1: Was this this bound to happen given given the way
Speaker 1: he traded, you know one possibilities he did take some
Speaker 1: profits out right, I mean, if you if you read
Speaker 1: the indictment, it seems like to the very last minute,
Speaker 1: Our Kagos was plying plowing all of its money into
Speaker 1: uh into buying more of these stocks. Arkego is the
Speaker 1: entity that he ran, it's his family office. But could
Speaker 1: he have taken money out of Our Kagos at some
Speaker 1: point and like buried in the backyard. That's possible. Another
Speaker 1: possibility that someone suggested to me is that, you know,
Speaker 1: a lot of the stocks that he was buying were
Speaker 1: heavily shorted stocks, and it's possible that he was trying
Speaker 1: to do a short squeeze where eventually the short sellers
Speaker 1: would have no choice but to buy back the stocks,
Speaker 1: and they buy them back from him, and even higher prices,
Speaker 1: and he'd make you know, tens of billions of dollars um.
Speaker 1: It seems like a very strange trade to do in
Speaker 1: this size and for that long. But you know, it's
Speaker 1: one thing he could have been thinking. If you could
Speaker 1: sit down with him, fly on the wall or something,
Speaker 1: or in a conversation, well, what would be the question
Speaker 1: you would ask him, because, as you said, smart guy
Speaker 1: knows how the market works, And yeah, I would ask
Speaker 1: him what he thought his end game was. The other
Speaker 1: the other possibility, by the way, and this one sort
Speaker 1: of sounds absurd but is in some ways very straightforward.
Speaker 1: The other possibility is that he just thought these stocks
Speaker 1: were really good stocks and he thought they'd go up,
Speaker 1: and so he bought as he could have them. Um,
Speaker 1: the indictment, if you read like with the SEC and
Speaker 1: the Justice Department say, they say that he had stopped
Speaker 1: talking to his investment analysts and he just spent all
Speaker 1: day with the traders to buy more and more stock,
Speaker 1: and he didn't really care about what his research analysts
Speaker 1: said about these companies. But like you know, when possibility
Speaker 1: is he thought these were just really good stocks and
Speaker 1: he wanted to buy as much as he could have them.
Speaker 1: So does that tell you in the government's eyes, he
Speaker 1: didn't necessarily think they were really good stocks because he
Speaker 1: wasn't doing that. The government thinks he didn't think that.
Speaker 1: I mean, like it's a weird thing because like he's
Speaker 1: charged with stock with market manipulation, and it's very unclear
Speaker 1: what that is. Right, Like, if you buy stocks and
Speaker 1: the stocks go up, someone could say that you manipulated
Speaker 1: the stocks. But also just anytime anyone buy stocks, they're
Speaker 1: likely to go up. Right, Buying pressure is what makes
Speaker 1: stock to go up, and so the different stock, I
Speaker 1: kind of hope it goes up. Well, you certainly you
Speaker 1: hope it goes up. But if you buy a lot
Speaker 1: of the stock, you're buying activity itself will push up
Speaker 1: the stock. What doesn't make it a crime, But yeah,
Speaker 1: exactly our June Grosso are legal analysts and who hosted
Speaker 1: Bloomberg Glass. She said, I don't understand exactly what he
Speaker 1: did wrong. He was buying shares like you understand the
Speaker 1: lying and stuff right to regulators not so good. But
Speaker 1: the different The question of whether it's market manipulation is
Speaker 1: just one of intent. Like if he was sitting there thinking,
Speaker 1: I'm going to buy these stocks to make them go up,
Speaker 1: then that is I think the government would would would
Speaker 1: successfully argue market manipulation. If he was buying the stocks
Speaker 1: because he thought they were good stocks, even though they
Speaker 1: then did go up, Um, then it's not market manipulation.
Speaker 1: And often in these cases you see like chatlogs where
Speaker 1: people are just typing to their buddies all day. I'm
Speaker 1: manipulating the market. Hope I don't go to jail, and
Speaker 1: you don't have that here, And maybe they will, right,
Speaker 1: maybe they will find evidence of his intent. But as
Speaker 1: of right now, and they have cooperators and they've you know, invested,
Speaker 1: and they've gotten some of the transcripts of his messages,
Speaker 1: it doesn't seem like there's anything like that where he's
Speaker 1: saying that he's doing something wrong. Hey, just got forty seconds,
Speaker 1: real quickly. We did get a headline earlier that Musk's
Speaker 1: Twitter share purchases under an FTC probe, according to those
Speaker 1: in the know. What are you real quick thoughts on Twitter?
Speaker 1: Elon Musk? Um? I don't know. I mean, I think
Speaker 1: that every every big merger goes through some sort of
Speaker 1: antitrust review, but I would be surprised if there is
Speaker 1: a big issue here. But I don't know. Um. Do
Speaker 1: you think he's going to ultimately finish the deal? I do.
Speaker 1: I don't think it's a dred percent probable, but I
Speaker 1: think people are underestimating how locked up the deal is
Speaker 1: and how likely he is to get the financing. I
Speaker 1: don't think it's by any means certain, but I think
Speaker 1: he is much more likely than not going to complete
Speaker 1: the deal. Well, we love reading your columns. We learned
Speaker 1: so much the way Tim said. Tim came into the
Speaker 1: studios like the way Matt lays out what Bill Wong
Speaker 1: did just really made such made sense to me. Matt,
Speaker 1: so definitely appreciate you taking the time to join us.
Speaker 1: Matt Levine, columnists for Bloomberg Opinion, joining us via zoom
Speaker 1: from New York. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: I gotta say, Tim, it's not easy being a company today.
Speaker 1: Employees and consumers and customers, and Vester's kind of wanting
Speaker 1: you to take a stand on important issues sometimes. Yeah,
Speaker 1: and then there's the whole you know, maybe quote unquote
Speaker 1: problem of high level executives using Twitter. Yeah, it doesn't
Speaker 1: always work out. Well, Well, that's sort of uh. We're
Speaker 1: talking about this because if you recall, it's a story
Speaker 1: that centers around a Levi's executive. You might have heard
Speaker 1: of her over the last few months, who's no longer
Speaker 1: ad Levi's. Well, our own Claire said, columnist at Bloomberg
Speaker 1: Business Week who joins us now on the phone from Brooklyn,
Speaker 1: is the author of that story, Levi's finding itself thrust
Speaker 1: into the culture wars by a rogue executive joining us
Speaker 1: now is Claire along with Joel Webber, editor at Bloomberg
Speaker 1: Business Week. He joined us on the access line from Brooklyn. Joel.
Speaker 1: I think for a lot of people, they might not
Speaker 1: know the name Jennifer Say or did not know it
Speaker 1: until just a few weeks ago. Uh, despite the fact
Speaker 1: that she's been a high level executive at Levi's for
Speaker 1: quite a bit of time. Yeah, Jennifer Say rose through
Speaker 1: the ranks at Levi's for for years actually, and eventually
Speaker 1: became a brand president and was in charge of Levi's
Speaker 1: uh marketing. She was the chief marketing officer, so that
Speaker 1: it which basically set her up to to be potentially
Speaker 1: the next CEO at the company. And she was very
Speaker 1: very good at her job. And where the rest of
Speaker 1: the world. Um, maybe you've heard of Levi's and um,
Speaker 1: uh there's just since that's you know, basically an old
Speaker 1: school Americana brand that she helped turn around. Frankly. Um,
Speaker 1: but if you hadn't heard of Jennifer Say, you may have.
Speaker 1: When all of a sudden in February, um, a spat
Speaker 1: between her and the company, uh became the reason that
Speaker 1: she left, and that made us very interested in her
Speaker 1: and Claire said, us immediately started going on a bigger
Speaker 1: story and what what Um, what she found I think
Speaker 1: is pretty remarkable, and it's really this complete tale of
Speaker 1: Jennifer's sort of transformation inside Levi's. And it also gets
Speaker 1: to the bigger story that I think we're all really
Speaker 1: interested in right now in corporate America, which is this
Speaker 1: tension between um companies their images, the tension that social
Speaker 1: media creates. And you just think of Coke Disney. Now
Speaker 1: this we'll talk more about Levi's here. This is a
Speaker 1: challenge for all kinds of American companies all of a sudden.
Speaker 1: So Claire, tell us about Jennifer and what you learned.
Speaker 1: Obviously this was all over the headlines, but you dug deeper,
Speaker 1: what would you find out? Um? Well, you know, like
Speaker 1: you said, Jennifer was the head um of Levi's marketing,
Speaker 1: so all the advertising, marketing, branding Levi's, that's what she
Speaker 1: was in charge of the company for years. Was also
Speaker 1: incredibly progressive, um, you know, back way back until the
Speaker 1: nineteen thirties. You know it more recently in the past
Speaker 1: decade or so, they've come out in favook gun control, um,
Speaker 1: you know, marriage equality, transgender rights, etcetera, etcetera. UM. And
Speaker 1: she was also part of executive team that's sort of
Speaker 1: shaped that narrative and talked about, you know, when it
Speaker 1: was appropriate for Levi's to say something and in what way. UM.
Speaker 1: But then during the pandemic, you know, we've all found
Speaker 1: the pandemic really hard, and she was stuck at home
Speaker 1: with four kids, and so she started tweeting her views
Speaker 1: on covid UM. But they were, I would say, rather contrarians, UM.
Speaker 1: I would say, as early as April, she was calling
Speaker 1: for the country to open back up. Her pet topic
Speaker 1: was UM school reopenings, which you know, now kids are
Speaker 1: back in the classroom now. But in when no one
Speaker 1: really understood the virus it was, it was much more controversial.
Speaker 1: And you know, within Levi's employees started to become really
Speaker 1: upset and and saying internally to hr to legal, UM,
Speaker 1: the CEO himself, you know, why do we have an
Speaker 1: executive who's saying all this keepoff on Twitter? Some of
Speaker 1: it is in direct contradiction to company policy. UM. And
Speaker 1: it was like a two year long internal struggle of
Speaker 1: Levis trying to handle the diplomatically internally. UM. Ultimately, I
Speaker 1: told her she couldn't hold her position as brand president
Speaker 1: and she'd never be CEO, And so she quit in
Speaker 1: a very dramatic fashion and said that she had been silenced.
Speaker 1: So what's interesting clear too? I mean, as you note
Speaker 1: in your reporting, I mean Levi's is known for being
Speaker 1: a pretty progressive company for years and taking positions on
Speaker 1: controversial issues. Yeah, and that was sort of Um, Jennifer says.
Speaker 1: Argument is is, you know, if I speaks out on
Speaker 1: so many things, why was it not okay for me
Speaker 1: to speak out about covid um? But I think you
Speaker 1: know that issue is really you know, one executive going
Speaker 1: one way and all these employees to sort of rank
Speaker 1: and file employees saying we do not agree with this,
Speaker 1: we don't like this. You know, they had town hall meetings,
Speaker 1: she went on Laura Ingram's show on Fox News. People
Speaker 1: didn't like that, um, and they were saying, you know
Speaker 1: why is why is the Levice executive talking to Laura
Speaker 1: Ingram when Lama Ingram has explicitly said things that this
Speaker 1: company stands in contradiction to. You know, she can I
Speaker 1: just jump in? Didn't she know she was going to
Speaker 1: get into no friends? But she seems like a pretty
Speaker 1: smart lady and understands branding and marketing. Didn't she understand
Speaker 1: despite understanding it was a progressive company, know that by
Speaker 1: going on Fox you send pretty much a clear message,
Speaker 1: and you do because of the company you work for
Speaker 1: that it's going to come back at the company. Well,
Speaker 1: when I talked to her, she said, Um, she didn't
Speaker 1: know really anything about Laura Ingram. She never watched Fox nude,
Speaker 1: and but she was the person who oversaw Levi's advertising budget,
Speaker 1: and and and just was in charge of marketing and
Speaker 1: had her finger on the also the culture that it
Speaker 1: seemed you know, it required a leap of faith for
Speaker 1: me to take her at face value and think that
Speaker 1: that was really the case. But that was her claim,
Speaker 1: is like she didn't she didn't really know, She didn't
Speaker 1: realize why this is such a big deal. And and
Speaker 1: also she said, you know, just because she's Laura Ingram
Speaker 1: has said all these other things, why can't I talk
Speaker 1: to her about what I care about, which is pool reopening? Um?
Speaker 1: And employees were not having that excuse UM, clear, I'm interested. Um,
Speaker 1: because so many companies find themselves thrust into the culture wars. Now,
Speaker 1: what what if any were the takeaways at Levi's after
Speaker 1: this is all, you know, they get sucked into this,
Speaker 1: this fight that they maybe didn't necessarily want to have,
Speaker 1: like what are they what are the takeaways? And what
Speaker 1: our companies to do? And just got about Well, it's
Speaker 1: funny because when I talked to Levi's about this, they
Speaker 1: were like, you know, this is a kind of a
Speaker 1: unique situation. Most of the time, UM, companies cultures thrown
Speaker 1: into the culture wards or because the company did something
Speaker 1: and people get upset, and this is one person internally
Speaker 1: in the company. UM, And so it was sort of
Speaker 1: a lose lose situation. If they'd ignored their employees, maybe
Speaker 1: their employees to speak out UM and said they listened
Speaker 1: to them, and then the executive spoke out. UM. I
Speaker 1: think what the takeaway is is this is incredibly hard
Speaker 1: and one day you might find yourself based with the
Speaker 1: public scandal. Well, just talk to Bob Chapeck right now,
Speaker 1: I'm sure, yes, some thoughts on that. UM, A really
Speaker 1: great story, Thank you so much. Business Week columnists Claire
Speaker 1: set up joining us on the phone from Brooklyn of
Speaker 1: Chris Joe Webber, editor of Bloomberg business Week, on the
Speaker 1: Access line in Brooklyn. Be sure to check out the
Speaker 1: new issue of Bloomberg Business Week. It is on newsstands,
Speaker 1: online at Bloomberg dot com, business Week dot com, and
Speaker 1: of course, on the Bloomberg terminal. Yeah. One part of
Speaker 1: the story that Claire really gets into, and this is
Speaker 1: Levi's long history of being early when it comes to
Speaker 1: progressive causes, being the first company to offer same benefits
Speaker 1: to you know, same sex partners sans for women for
Speaker 1: women in the nineteen twenties, I think nineteen forties. Yeah. Yeah,
Speaker 1: it's a great read. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. Here's a Mattel. They shot up yesterday, their
Speaker 1: biggest gaining about eighteen months, ending with about an eleven
Speaker 1: percent gain. Their up again today two percent, following their
Speaker 1: latest earnings report, first quarter earnings last night that top
Speaker 1: to estimates thanks to Barbie and Hot Wheel sales that
Speaker 1: defy the usual seasonal slow down. We are delighted to
Speaker 1: have back with us, Mattel chairman and CEO, Enan cries
Speaker 1: via zoom in California. You're not so nice to have
Speaker 1: you How are you great, Carol. Thank you for having me. Well,
Speaker 1: it's wonderful to have you here. We are going to
Speaker 1: talk about the quarter, but you know where I'm going
Speaker 1: to go. Um. We all kind of sat up a
Speaker 1: little straighter when that headline crossed, uh that there could
Speaker 1: be a possible buy out private equity interested. What can
Speaker 1: you tell us about that? Well, as you expect, we
Speaker 1: don't comment on speculation and we're focused on executing our strategy.
Speaker 1: What I can say is this was the highest first
Speaker 1: quarter we have on record, both revenue and profitability. Our
Speaker 1: momentum continued across the business with double digit growth in Barbie,
Speaker 1: hot Woods and Fisher Price. We have started the second
Speaker 1: quarter with strong consumer demand. The Follier outlook is also strong,
Speaker 1: and we expect to grow market here. So all in all,
Speaker 1: an excellent start of the year and we're firmly in
Speaker 1: growth mode. And I think we highlighted yesterday. I mean,
Speaker 1: you guys have been on a tear. If I look
Speaker 1: at you know, the share price in terms of the
Speaker 1: moves that you guys have been doing specifically. Um, some
Speaker 1: would say, and I'm going to push a little bit
Speaker 1: that you are setting it up for a sale. Are
Speaker 1: you talking with people? Are there conversations going on? But
Speaker 1: I can't comment on the speculation. But we've been consistently
Speaker 1: growing the company, UH, and this has happened over the
Speaker 1: last four years. You followed the story, so you know
Speaker 1: that we took our said ida from a six million
Speaker 1: dollars in two thousand and seventeen to over a billion
Speaker 1: and guided fo yet another growth this year with higher
Speaker 1: goals three. So this is not a one quarter situation.
Speaker 1: This has been consistent delivery and execution on a on
Speaker 1: a clear strategy and a clear roadmap with tracking weale
Speaker 1: and we are in a great position to continue to
Speaker 1: grow the company. And I will point out that from
Speaker 1: the end of the stock is up almost so investors
Speaker 1: have certainly noticed that performance in those changes. On one
Speaker 1: element that you've had to UH deal with just not
Speaker 1: just over the last year, but over the last few quarters,
Speaker 1: to our inflationary pressures on the supply chain. We've spoken
Speaker 1: to you in the company in past quarters about moves
Speaker 1: that you've made to try to make sure that your
Speaker 1: supply chain remains intact. What you've been able to do
Speaker 1: ahead of time, but it doesn't mean you've been immune
Speaker 1: to higher prices. Talk to us about the pricing power
Speaker 1: that you've had and how much you've had to raise
Speaker 1: prices and how consumers are being affected by that. Yeah.
Speaker 1: We you know, given the anticipated inflation, implementing pricing action
Speaker 1: UM is one of the things we consider at times
Speaker 1: of of of inflationary pressures. Uh. We're not the only ones,
Speaker 1: and it's not unique to the toy industry. UH. And
Speaker 1: this is something that we've done, like in the second
Speaker 1: half of last year, and we expect to do that
Speaker 1: again uh in the second half of this year. It's
Speaker 1: important to say that when raising prices, we always keep
Speaker 1: the consumer in mind, and we're being very thoughtful and
Speaker 1: very strategic and remain strategically committed to maintaining the right
Speaker 1: balance between quality and value for our consumers. Well, you
Speaker 1: know what's really great is I mean, you guys have
Speaker 1: some old iconic brands. We've talked about it with you before,
Speaker 1: whether it's Barbie, whether it's Hot Wheels. I mean, it's
Speaker 1: just one brand after another. But then you have folded
Speaker 1: into the mix and embrace of all that is new
Speaker 1: through a lot aiances and partnerships. What is it that
Speaker 1: really drives growth for you? Guys, what is it that
Speaker 1: you say? Okay, this is top of mind, you know.
Speaker 1: In terms of the performance for the company overall, well,
Speaker 1: we've been growing on the toy side of the company
Speaker 1: very strongly. We expect further growth this year. We expect
Speaker 1: growth in the second quarter and growth for the full year.
Speaker 1: We expect our power brands to continue to grow this year,
Speaker 1: Barbie Hot Walls and Fisher Price, as well as American Girl,
Speaker 1: and we expect to see strong growth in the challenging categories.
Speaker 1: This is where we're not a global leader, but we're
Speaker 1: seeing tremendous momentum and growth in categories like action figures
Speaker 1: and building sets. So we are in a great position
Speaker 1: to grow in the toy side of the company. And
Speaker 1: in addition to that, we're also seeing great momentum on
Speaker 1: the I P strategy. This is film, television content in general,
Speaker 1: consumer products, digital experiences. And this week alone, we had
Speaker 1: two very exciting news to share. One is that we
Speaker 1: partnered with j. J Abrahms to produce the Hot Wheels
Speaker 1: movie that we are developing with Warner Brothers. JJ is
Speaker 1: one of the most prolific respected producers of this generation
Speaker 1: filmmakers in general is also a director, and we're very
Speaker 1: excited to have him partnered with us on Hot Wheels.
Speaker 1: And in addition, we also announced or Warner Brothers announced
Speaker 1: at CinemaCon the release date of The Barbie Movie, which
Speaker 1: will be July one, three, And this film is shaping
Speaker 1: up really well to be an iconic cultural event. We
Speaker 1: could not be more excited with the creative, execution and
Speaker 1: vision of Greta Gelwig, who is also one of the
Speaker 1: most respected and prolific creative filmmakers of this generation. And
Speaker 1: an all star cast with Margot Robbie, Ryan Gosling, Will Farrell, Simulo,
Speaker 1: America Fera and many other you know, very strong talent
Speaker 1: and exciting cast. So expect something very special, uh from
Speaker 1: the Barbie Movie as well as Hot Wheels, and as
Speaker 1: well as other twelve films that we have in development.
Speaker 1: You know, I want to go back to something that
Speaker 1: you said about challenger categories areas where you're not actually
Speaker 1: the top of the category. Um, do you think you
Speaker 1: can become the leader of the pack in those categories
Speaker 1: in action figures, for example? What will it take? We
Speaker 1: we're seeing tremendous growth and momentum in the first quarter.
Speaker 1: We grew by fort in the core and this is
Speaker 1: on top of six six percent in the same quarter
Speaker 1: last year, so we're lapping a very strong year with
Speaker 1: forty percent in in the first quarter. Within that action
Speaker 1: figures actually grew by seventy so uh, huge momentum driven
Speaker 1: by our own properties such as Muscles of the Universe,
Speaker 1: as well as third party franchises that we manage on
Speaker 1: the toy sides such as Jurassic World, Minions and light
Speaker 1: Year three, big theatrical releases that are coming up in
Speaker 1: the second quarter and will further amplify growth in this
Speaker 1: category in addition to what we do already. So this
Speaker 1: is an area where we see an opportunity to position
Speaker 1: Mattel as a partner of choice for the major entertainment
Speaker 1: companies and owners of big important franchises to leverage our platform,
Speaker 1: our capabilities on the design side, supply and supply chain
Speaker 1: and commercial execution and really grow these franchises and manage
Speaker 1: them as evergreen properties that are not just dependent on
Speaker 1: the movie launch. But this is where we can bring
Speaker 1: out capabilities and manage franchises as evergreen I p and
Speaker 1: continue to create value for our partners well. And you know,
Speaker 1: I think about what you said about I pace rategy
Speaker 1: film TV. You guys are already do with the Barbie movie.
Speaker 1: You're gonna do it, as you said, with Hot Wheels,
Speaker 1: and I do think about, UM, what's the best way
Speaker 1: for you to leverage all of that? Is it by
Speaker 1: doing it as a standalone and just partnering and you know,
Speaker 1: creating alliances with media and entertainment companies, or is there
Speaker 1: some kind of you know, going back to our first question,
Speaker 1: some kind of more significant link up with a specific
Speaker 1: media house Disney for the matter, Uh, you know, that
Speaker 1: would make sense and and really create some incredible leverage.
Speaker 1: Our approach has been capitalized in that we don't take
Speaker 1: capital risk in investing in movies um, and that capitale
Speaker 1: approach applies also to our manufacturing strategy. What we do
Speaker 1: do on the content side is with partner with the
Speaker 1: best the best in their respective fields. So we're partnered
Speaker 1: with the best distributor as a major studio and the
Speaker 1: best creative talent per genre, per project. And that gives
Speaker 1: us the ability to do that at scale and develop
Speaker 1: multiple projects at the same time and not be limited
Speaker 1: to uh, one or two movie movies coming out every
Speaker 1: one or two or three years, so we can do
Speaker 1: it at scale, work with the best people the genre,
Speaker 1: per opportunity across across the industry, and have multiple shots
Speaker 1: on goal with incredible brands and incredible incredible franchises and
Speaker 1: still find the right economic balance in terms of risk
Speaker 1: and reward for matail. Where our currency, our contribution is
Speaker 1: the I P the franchises that we know, our expertise
Speaker 1: and know how of those of those franchises, and making
Speaker 1: sure that we collaborate and and and bring our understanding
Speaker 1: and the nuance knowledge of these franchises to the table
Speaker 1: and create something very excited for exciting for consumers all
Speaker 1: over the world. All right, you know, and I'm a
Speaker 1: little persistent, as you might know, having we talked a
Speaker 1: few times. So go, So you are firing at all cylinders.
Speaker 1: Mattel is firing at all cylinders. And you guys have
Speaker 1: had what three consecutive years of dynamic certainly equity growth.
Speaker 1: Uh And like I said, investors are noticing. So some
Speaker 1: would say that is a reason the top perhaps or
Speaker 1: at a prime moment to sell the company. Others would
Speaker 1: say it's you know, you are talking about more avenues
Speaker 1: for growth. What would it take to do a deal
Speaker 1: that makes sense. Obviously shareholders of the board have to agree.
Speaker 1: But you know, is it just about price or is
Speaker 1: it about strategy. Well, we're here to create shareholder value.
Speaker 1: We've been very consistent about executing our strategy and always
Speaker 1: have our shareholders interests as a north star. We have
Speaker 1: been doing it consistently. We see a lot of runway
Speaker 1: for the company to continue to grow and to create
Speaker 1: more shareholder value. That's our job, that's our focus, that's
Speaker 1: what we've been doing, and this is what we are
Speaker 1: looking to do going forward. You know, give us a
Speaker 1: time frame for the strategy here. I mean, when you
Speaker 1: think going forward, what does that mean to you? How
Speaker 1: many years? How many quarters? What the The original strategy
Speaker 1: that we set out was to was to grow the
Speaker 1: toy business and in the mid to long term execute
Speaker 1: on our IP strategy. Now further down the road, we're
Speaker 1: now looking to continue to grow our IP toy business
Speaker 1: I P driven toy business and expand our entertainment offering.
Speaker 1: We have put the building blocks in place for the
Speaker 1: second side, the second part of the strategy, and you're
Speaker 1: now starting to see the fruit of that work. With
Speaker 1: a release state for the Barbie Movie as a first
Speaker 1: and more to follow. More to come we will release
Speaker 1: on the television side, on the prosodic side, we will
Speaker 1: have third in series and specials on air, nine of
Speaker 1: which are new and for our returning This is a
Speaker 1: full slate. This is a real offering that will continue
Speaker 1: to grow and evolve. So, you know, help us, help
Speaker 1: our investor audience understand how much Barbie sales will increase
Speaker 1: when the movie comes out, how much Hot Hot Wheels
Speaker 1: sales will increase when the movie comes out. Now we
Speaker 1: haven't we haven't outlined that specifically by brand, and it's
Speaker 1: not something that we typically break down by that at
Speaker 1: that level, but we all understand that content strategy, an
Speaker 1: IP strategy, increasing the touchpoints and the engagement of consumers
Speaker 1: with our brands at multiple levels is a good thing.
Speaker 1: Our approach on the content side, on all of our
Speaker 1: experiences outside of the toy aisle, was to to create
Speaker 1: quality experiences, quality content that will engage consumers. So when
Speaker 1: we develop a movie, the approach is not how are
Speaker 1: we going to sell more toys on the back of
Speaker 1: this movie. Their approaches how are we going to make
Speaker 1: the best movie that people want to watch? We know
Speaker 1: you can do it. Well, good things will happen. We
Speaker 1: know you have to run thirty seconds left here the
Speaker 1: Barbie movie. Have you been on set seen some of
Speaker 1: the filming. I have been on set, and I can
Speaker 1: only say it's extremely exciting. The quality, the visuals, the
Speaker 1: execution is stunning, and I come back super excited and
Speaker 1: I know it's going to be very special. All right, Well,
Speaker 1: we're looking forward to it and always appreciate when you
Speaker 1: find time for us. Eenon cries he's chairman, chief executive
Speaker 1: officer of Mattel. That Barbie Movie in theater is July
Speaker 1: twenty three, and I really appreciate it getting some time
Speaker 1: with us. So much going on that stock though on
Speaker 1: that company has really been on a tear. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes.
Speaker 1: Tim Stinovic on Bloomberg Radio. You guys know right you've
Speaker 1: been listening to us watching on YouTube. We have been
Speaker 1: all over so many big tech earnings. Netflix of course,
Speaker 1: We've heard from Meta, we heard from Pinterest, we heard
Speaker 1: from Google, we heard from Alphabet of course, whom am
Speaker 1: leaving out. I don't know, there's like this is the
Speaker 1: biggest week. This is our quarterly you know, super Bowl, Yeah, exactly,
Speaker 1: the tech super Bowl. Hey, James chalkmak, I bet I
Speaker 1: don't even know if he's been getting sleep. Partner and
Speaker 1: technology analyst at the asset management from Clockwise Capital. He
Speaker 1: is back with us. They just like hang out. You know,
Speaker 1: it's not like Wall Street. Okay, you live in Margaritaville.
Speaker 1: Is that what's going on? Good afternoon, guys? How are
Speaker 1: you sorry? That's very serious, So talk to us about
Speaker 1: what we've gotten so far? Um, Netflix, can we go
Speaker 1: back to Netflix? I'm curious your takeaway on all of
Speaker 1: that and what it means going forward. Sure. I think
Speaker 1: two kind of big takeaways from Netflix. Is that one,
Speaker 1: you have this uh subscription uh saturation uh in the market. Clearly,
Speaker 1: you know, we've been a rising tideslifts all boat situations
Speaker 1: for quite some time as it relates to services and
Speaker 1: cord cutting and um and UH and video offerings from
Speaker 1: from different players. But as competition has increased and uh
Speaker 1: um and attention time uh spence has remained finite. UM,
Speaker 1: you know you're you are reaching a point of saturation. UM.
Speaker 1: So some investors are essentially trying to decipher you know
Speaker 1: who's gonna end up, you know, maintaining the most sustainable
Speaker 1: growth UM. In this next chapter, Netflix obviously has a
Speaker 1: big question mark on it, but I'd say if you
Speaker 1: zoom out just a little bit, the overarching team for
Speaker 1: Netflix and tech more broadly is this concept the mean reversion.
Speaker 1: And what we mean by that is that, you know,
Speaker 1: you had these growth curves across technology that have been
Speaker 1: largely predictable prior to COVID, and what happened was COVID
Speaker 1: pulled forward a tremendous amount of demand for these companies,
Speaker 1: so you saw growth accelerate well beyond what investors have
Speaker 1: expected um for the companies over the next five to
Speaker 1: ten year cycles. And then what happened today um over
Speaker 1: the last quarter and dis quarter and likely into next
Speaker 1: is that the growth rates have been decelerating tremendously, because
Speaker 1: you're laughing these huge growth numbers from last year. So really,
Speaker 1: when we think about, you know, the risk consucciated with
Speaker 1: the market and the draw downs that we've seen now,
Speaker 1: we think it's less amount you know, the Fed inflation
Speaker 1: rate hikes and so forth, and more about investors having
Speaker 1: a tremendous amount of difficulty ascertaining exactly where these growth
Speaker 1: rates will land for these companies on a normalized basis.
Speaker 1: You know, our masters are thinking, are these new lower
Speaker 1: growth rates the new normal or will they revert back
Speaker 1: to the way things were? I mean some of these
Speaker 1: you can make the case go ahead, Yeah, James. Some
Speaker 1: of these companies have just been are just beat up.
Speaker 1: I mean Netflix down from its highs back in November.
Speaker 1: You have companies like until today Meta she had of
Speaker 1: its value just this year, Roku down since July of
Speaker 1: last year, PayPal just getting absolutely crushed. Are are these
Speaker 1: stocks oversold or are they buying opportunities here? Yeah? I
Speaker 1: mean I think through that mean reversion springwork, you can
Speaker 1: kind of come up with high degrees of confidence on
Speaker 1: which ones are going to be the winners and losers.
Speaker 1: And look at company like Microsoft, right, this is a
Speaker 1: company where the world completely moved in Microsoft's favor because
Speaker 1: of COVID, which means that the growth rate is actually
Speaker 1: the sustainable growth rate is higher than we had expected
Speaker 1: prior to COVID. So that's one that's been of fitting.
Speaker 1: The world moved somewhat against the Google favor um as
Speaker 1: competition increased and attention expans moved into other areas UM
Speaker 1: and that one is likely lower than expect. That Facebook
Speaker 1: even more so lower than what we previously expected, which
Speaker 1: is why the stock is down tremendously. Uh and Netflix
Speaker 1: is also tremendously lower, which is why the stock is
Speaker 1: is also down. But I think you can decipher Amazon
Speaker 1: is a huge, huge comeback. I mean it's it's it's
Speaker 1: our number one position and it's probably the number one
Speaker 1: most undervalued company in the market right now, the company
Speaker 1: that provides the most value for your subscription UM than
Speaker 1: any other service in the in the market combined. James
Speaker 1: chock Mark is with US partner technology analyst at the
Speaker 1: asset management from Clockwise Capital UM. You said just before
Speaker 1: we went to the break, Amazon's your number one position,
Speaker 1: number one most undervalued company. Explore that a little bit
Speaker 1: further with us. I mean, sure, think about what you
Speaker 1: get with your prime subscription for a hundred forty dollars
Speaker 1: a year, you get you get six businesses in one.
Speaker 1: When you buy a stock share of Amazon, you get
Speaker 1: retail logistics, video music, grocery, and the cloud, and you're
Speaker 1: getting it at three time sales. And when we're talking
Speaker 1: about the mean reversal. This is a company that grew
Speaker 1: nine percent last year I mean last quarter, but used
Speaker 1: to grow about revenue every quarter like clockwork. I think
Speaker 1: by the time they report third quarter guidance in three
Speaker 1: months time, you're gonna see the growth rate double back
Speaker 1: up and um and this shares either this quarter or
Speaker 1: uh you know, beginning next are just gonna rock it off.
Speaker 1: Where we are straining at three time sales compared to
Speaker 1: Chipotle at six times sales, You're you're getting Amazon or
Speaker 1: half the multiple as a burrito where you can see that.
Speaker 1: Where are you going to see that growth? Are you
Speaker 1: in in Amazon? Are you going to see it in
Speaker 1: a WS you can see? I think a retail thing
Speaker 1: is going to be a huge, huge Advertising is going
Speaker 1: to be a huge driver. Um, you know, I think
Speaker 1: that's part of the reason you're seeing the pains that
Speaker 1: Facebook and to some extent YouTube you know intelligence team
Speaker 1: wrote the same thing, Um, James, they're kind of on
Speaker 1: the same thinking of you that there's a lot more marketplaces,
Speaker 1: including Amazon that's eating away at some of the advertising
Speaker 1: budget that has been enjoyed by you know, a few
Speaker 1: for a long time, but no more completely agree. I
Speaker 1: mean I think it's gonna be and and it's so
Speaker 1: Nathan uh relative to its other businesses. I mean, it's
Speaker 1: going to be growing in thirty or four percent range
Speaker 1: likely for the foreseeable future. Obviously you have the membership
Speaker 1: UH component to it, and the cloud as as reinforced
Speaker 1: by Microsoft and Google's results will be growing at very
Speaker 1: very healthy rates as well, and retail growth rates will
Speaker 1: normalize back through pre COVID level. So this one, to
Speaker 1: me is the biggest no brainer UH of the bunch
Speaker 1: when it comes to big tech. What should we be
Speaker 1: looking for with the Amazon earnings in just a few
Speaker 1: minutes when they cross UM. The main thing I think, UH,
Speaker 1: is that you're going to see better discretion on the
Speaker 1: on the expense side, UM. So I think that's going
Speaker 1: to be an area of surprise and then and obviously
Speaker 1: UM a steeper profitability and growth curve as a result
Speaker 1: of that. And but most importantly the fact that the
Speaker 1: growth rate is moving back up for that number that
Speaker 1: we used to have prior to COVID and once that
Speaker 1: happens with within UM because they will fully be laughing
Speaker 1: things in the second quarter. So I think we're just
Speaker 1: you know, days UM away from seeing um those kind
Speaker 1: of numbers from them. If they don't see that kind
Speaker 1: of positivity, is that a bit of a disappointment to
Speaker 1: you then? Um? I mean in our minds it has
Speaker 1: always been when they report two q UM and provide
Speaker 1: that third quarter guidance in in in three months time. UM.
Speaker 1: So I can't say with great certainty that it's this quarter,
Speaker 1: but I certainly think that the trends will be in
Speaker 1: that in that direction this quarter, and at the very
Speaker 1: least they'll discuss it that it's in that trend. On
Speaker 1: the urine, it's called how important is advertising to Amazon?
Speaker 1: It's and I'd say this, you know in quotes. It's
Speaker 1: a relatively new business to the company. I think it's important.
Speaker 1: I think it just shows that it's a proofpoint that
Speaker 1: people go to Amazon first. Um. I mean, it's a right.
Speaker 1: They're not necessarily googling the product. They're going to Amazon,
Speaker 1: and they're using the search there to do it. Yeah,
Speaker 1: and and and and the proof is in the pudding.
Speaker 1: So if the dollars are moving in that direction, it
Speaker 1: clearly means that behavior consumer behaviors in that direction and
Speaker 1: it's not going anywhere. But the one thing I just
Speaker 1: wanted to add before we go, is that you know,
Speaker 1: the number one in that mistake investors make as they
Speaker 1: tend to underestimate the sustainable sustainability of the growth for
Speaker 1: these cloud first companies, and it's been done throughout times.
Speaker 1: The number one example, I always think of this Walmart.
Speaker 1: You know, Walmart from grew thirty six percent year on
Speaker 1: average for thirty years. I mean, how many people would
Speaker 1: have sunk in nineteen sixty nine that the Walmart is
Speaker 1: a company that can average over growth a year for
Speaker 1: thirty years, I mean virtually impossible, but it saved people
Speaker 1: a lot of times because they had the supersource. I
Speaker 1: think the cloud first companies of today snowflakes of the world,
Speaker 1: the crowd Strikes, Twilios, airbnd S, Octa, Amazon, and these
Speaker 1: are companies that can have much much more sustainable growth
Speaker 1: rates than people expect. So I think we are in
Speaker 1: one of the biggest buying opportunities of at least my
Speaker 1: investing career is um uh right at this juncture, and
Speaker 1: I would say much more so even during the depths
Speaker 1: of COVID. So right now it's tough out there, but
Speaker 1: if you can pick the right horses there's a ton
Speaker 1: ton of money to be made, and I the analogy
Speaker 1: is you're buying Walmart in n so. So all right,
Speaker 1: so someone's got new money that they want to commit.
Speaker 1: They're a little freaked out by some of the volatility.
Speaker 1: So what are five names that you would say this
Speaker 1: is where you should commit new money. You might need
Speaker 1: to be patient, it might be a little bit of
Speaker 1: a crazy ride, but this is where you should go
Speaker 1: because it is the Walmart. Like you just said of
Speaker 1: past Um, I'm in Amazon number one. I'm in Uh.
Speaker 1: I definitely do Snowflake. I would definitely want to play
Speaker 1: a security type names Cimber security is going to be critical.
Speaker 1: Uh that would be a company like like crowd Strike.
Speaker 1: UM I like um let's see uh I still I
Speaker 1: still do like UM. I like Tesla here after the
Speaker 1: pullback here, I think this is one that I mean,
Speaker 1: Tesla is changing the world. I mean, and and the
Speaker 1: the advantage that they have in production, I mean, they
Speaker 1: are mild ahead and it's gonna take years and years
Speaker 1: for others to catch up on on the cost effectiveness
Speaker 1: inefficiency that they can gain over time at Testloo. That's
Speaker 1: one definitely, And then in Nividea the video because they're
Speaker 1: involved in everything that's involved in the future. All right,
Speaker 1: really quickly twenty second So Tesla, even with a bye
Speaker 1: of Twitter, you think it's okay. Yes, I think it's okay.
Speaker 1: I mean it's it's noise. It's noise right now. It's
Speaker 1: a lot of noise, you know. And the thing is, honestly,
Speaker 1: I mean they say that Mosk doesn't care about monetization,
Speaker 1: but if you do the things that he says he's
Speaker 1: gonna do at Twitter, Um, I really think that the
Speaker 1: monetization predential it's far bigger for Twitter than it's ever been.
Speaker 1: So I think, yes, what a treat for us to
Speaker 1: be able to do a double dive with you. So
Speaker 1: thank you so much. James chock Mak, He's partner and
Speaker 1: technology analysts at the asset management from Clockwise Capital, joining
Speaker 1: us once again on the phone in Miami. Thanks for
Speaker 1: listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
Speaker 1: our radio show at two pm Eastern on Bloomberg Radio
Speaker 1: or watch us on YouTube search Bloomberg Global News