Plus, our analysts debate the merits of Arby’s Vodka and share two stocks on their radar: Sea Limited .
We’ve got a conversation with best selling author Ben Mezrich and as always, we’ve got a couple of stocks on our radar.
You still see the price-earnings ratio on the S&P 500 is still less than right around 20 so it’s not unrealistic and it’s still a place to put your money into and hopefully have a return of maybe mid to high single-digits over the next few years, probably you’re not going to see the 12-15 percent per year we’ve seen over the last few years.
You start looking for some of those ideas where the market may be a little bit out-of-favor in the near term, but that could represent some long-term opportunity.
Andy Cross: It’s interesting, Chris, you think about Jason mentioned different parts of the market and the concern a lot within increasing inflation, which leads to eventually increase in interest rates as the Fed at some point will start to increase interest rates are going to do their tapering probably quicker than what I think they originally had thought.
This will happen in the next 18-24 months with a number of big decisions still to be made, including who’s going to run that consumer products business, what it will be called, and how the transaction will affect current J&J shareholders.
What are they going to call these companies or what are they going to call this new company? Who’s going to be running the show? It does sound in regard to the transaction that’s going to be done in a tax-efficient way for shareholders and they were very quick to state that the dividend policy will remain intact as well.
The maker of electric vehicles, none of which can be found on actual roads at the moment, priced its stock at $78, ended the week with the stock closing in on $130 a share with a market cap bigger than every automaker, not named Tesla.
As you mentioned, has yet to sell a car and focuses on really the pickup, that’s their big push with their R1T all-electric pickup that comes with a 400 miles of range and on a single charge, also a whole all host of other things you can add into it like tents and flashlights and all kinds of fun things.
Certainly, Amazon has been talking about committing with them and looking to be able to buy 100,000 electric delivery vans from Rivian over the next nine or 10 years.
Daily active users for the online game platform were also up and shares of Roblox rose more than 30 percent this week.
Overall, when I look at Roblox, I own stock myself, they continue to make these investments which hurts the profitability although there’s also some nice growth this year on the gross profits.
Chris Hill: Shares of The Trade Desk up more than 40 percent this week after third quarter profits and revenue came in higher than expected.
I think one of the most powerful quotes in the call was when CEO Jeff Green said, “As we predicted, the most recent iOS changes have had no material impact on our business, and we expect that to remain the case.” If you’re an advertising supported business and you can say that, that’s really big because it’s clearly been an issue for a lot of other businesses out there.
Shares of Upstart Holdings fell more than 25 percent despite the fact that 3rd quarter revenue for the AI-lending platform was higher than analysts were expecting.
Andy Cross: Well, it isn’t as nice Chris, and their guidance for the year for the fourth quarter at 255 million to 265 million in revenue was ahead of estimates but it’s a growth of 200 percent.
Chris Hill: Paypal’s revenue in the 3rd quarter was lower than expected, and guidance for Q4 was not exactly what Wall Street was hoping for.
But I think most of that is due to headwinds from weaning themselves off of that eBay relationship there, we’ve been talking about that for the past year, knew that this was something that was going to be playing out for 2021.
Jason Moser: Listen, I understand the market reacts the way it does when you pull back on guidance like that.
It’s a tale wonderfully captured in Ben Mezrich’s new book, The Antisocial Network, the GameStop Squeeze, and the Ragtag Group of Amateur Traders that Brought Wall Street to Its Knees.
Ben Mezrich: For the GameStop story, I know we were all familiar with the main characters, which was Roaring Kitty, which was the Melvin Capital people.
The idea was it wasn’t just people trying to make a few bucks out of short squeeze, it was people who were very angry about Wall Street and about being treated poorly going all the way back to 2008, but Occupy Wall Street with the banking crisis of that time.
Maria Gallagher: I think it’s really interesting too.
It was really people trapped at home sitting on their couches and they had a little bit of money because of the stimulus checks, and no one had anything to do.
Maria Gallagher: Something else that I thought was really interesting that you highlight too, is that interconnectedness, not only of the people on WallStreetBets, but within the structure of the back-end.
Although it looks like it happens instantly, like you buy some GameStop and it appears in your account, what’s really happening is a two-day process where you put up a certain amount of money to buy GameStop, Robinhood takes your trades and then essentially sells them to Citadel, Citadel makes the trade happen.
Robinhood makes money on the trade, but doesn’t have to charge you anything, and Citadel make tons of money because they are running all the trades and they can see what’s going to happen, they can make money off of the trades and they make money by placing the trades, they get a little bit in between.
Maria Gallagher: I feel like that interconnection is so fascinating because you feel like you have Melvin Capital and you highlighted a lot in the book that people saying, specifically, we’re going to take this hedge fund down.
You have hedge funds and they are the enemy to the retail trader in some way, and then you have the retail trader, which previous to this moment in time was very weak, it was lots of disparate people who are all doing their own things.
They are now employing people who are going to scour the Reddit boards and try and figure out which direction things are going, and they’re definitely not going to announce short positions anymore, and they’re going to be as quiet as they can about things like that.
Where do you think that that disconnect between the fundamentals of a business and the fundamental value of the stock market and then this idea that, well, we care about GME and if we’re all going to do it, we’re all going to raise it up.
I think it’s very hard to say that people are going to act rationally when you’re talking about millions and millions of 22-year-olds, each with 1,000 dollars in the bank and each one wanting to make 10 times.
Do you think that that’s a good thing because you’re getting people more interested in, we might say bad investing? Or do you think it’s actually ending up doing more harm because people are not thinking, let me try and get 10 percent because I can build up a nest egg for the rest of my life.
Suddenly, it’s not just people in seats and ties on Wall Street playing, it’s everyone can join in on this game, but it is a game and it is gambling to some extent.
The reality is someone with very little money and no real nest egg or anything like that is risking a whole lot more than some Wall Street trader.
As there are always people on the program who may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against.
But I understand we are in a day and age where brands, particularly these quick-service brands, need to branch out and capitalize on their brand to whatever extent that they can.
The fries are good, don’t get me wrong, but it just, it feels like the jamocha shake vodka combo makes more sense than the fries.
When you look at the e-commerce market overall, Rick and I look at the growth picture growing north of 100 percent, continuing to grow very, very attractive in those markets, it’s going to do about nine billion in sales, about 15 times multiple.
Andy Cross: I don’t think so Rick, this is like that Amazon, MercadoLibre, Activision Blizzard all kind of merged together.
I think the big news they are acquiring visual effects company, Weta Digital, best known, I think for a lot of the stuff that you’ve seen in movies in the Lord of the Rings franchise.