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Robinhood Unveils Credit Card, Carnival Earnings · Bloomberg Intelligence

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Speaker 2: All right, Good Wednesday morning from Bloomberg INTERACTI Broker Studio
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Speaker 2: in New York City to our worldwide audience. We've got
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Speaker 2: Bailly the Lipsholtz sitting in for Alex Steele. We're broadcasting
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Speaker 2: Bloomberg Podcast and that's where you find. It's big news
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Speaker 2: today for a good head of friends of Robin Hood.
0:45
Speaker 2: Markets stocks up three point six percent today. The company
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Speaker 2: unveiling a credit card. I need more credit cards.
0:52
Speaker 3: Look at the stock here. Obviously I'm a Wall Street guy.
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Speaker 3: All I care about is the stock.
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Speaker 2: Stock's a fifty six percent year to date wow, trailing
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Speaker 2: twelve months up one hundred and thirty two since it's
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Speaker 2: got a seventeen and a half billion dollar market cap
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Speaker 2: so big news coming out of our friends of Robinhood.
1:05
Speaker 2: Lat Ten of joins us. He's a chief executive officer.
1:07
Speaker 2: He's a co founder Robinhood. He joined us here in
1:10
Speaker 2: a Bloomberg interactive broker studio. I'm not on the robin
1:14
Speaker 2: Hood platform because I'm a gentleman.
1:15
Speaker 3: I need the.
1:15
Speaker 2: Swiss bank secrecy laws protecting me. But my twenty eight
1:20
Speaker 2: year old twins, who are the future of this thing,
1:22
Speaker 2: they are on Robinhoo. They're very happy. They were psyched
1:24
Speaker 2: that I was talking to Vlad. Talk to us about
1:26
Speaker 2: your news today. You're not just a commission free platform,
1:30
Speaker 2: which is in and of itself amazing, but you're now
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Speaker 2: getting to the credit card business.
1:34
Speaker 4: Yeah.
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Speaker 5: We were really excited to announce this. We've been working
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Speaker 5: on it for quite a while and we didn't just
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Speaker 5: want to launch another me too credit card. We really
1:43
Speaker 5: wanted to come in and do something special and really
1:48
Speaker 5: lead the industry. So it's really the best cash back
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Speaker 5: rewards that we found in any credit card on the market,
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Speaker 5: the best digital experience, and really the best design. We
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Speaker 5: have a solid gold card that's basically a hunk of metal.
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Speaker 5: It's extremely iconic, very simple, like very well designed. We're
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Speaker 5: really proud of the product. Now the hard work comes
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Speaker 5: of rolling it out. But even since the announcement, in
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Speaker 5: the first few hours after the announcement, which was last night,
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Speaker 5: we had hundreds of thousands of people signing up for
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Speaker 5: the credit card, so it's it's looking very good so far.
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Speaker 6: How does the credit card fit into the business, because
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Speaker 6: I know early last year you guys announced a retirement products,
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Speaker 6: so it feels like you're trying to expand away from
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Speaker 6: the core trading platform.
2:35
Speaker 4: Yeah.
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Speaker 5: So as a business, holistically, we're focused on three things.
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Speaker 5: The first is being the number one platform for active traders.
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Speaker 5: Right now, we're number two, but we have a path
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Speaker 5: to being number one in some number of years, and
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Speaker 5: that's really through user experience improvements, product innovations like twenty
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Speaker 5: four hour market, adding new asset classes like Futures, new
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Speaker 5: platform launches like our web Pro platform which we've announced.
3:01
Speaker 5: But we don't want to just be an active trader platform.
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Speaker 5: We also want to grow wallet share with our customers
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Speaker 5: and help them build wealth. That's where Robinhood Gold comes in.
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Speaker 5: That's where our innovations and the retirement program with three
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Speaker 5: percent match come in. And of course, now the credit
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Speaker 5: card is sort of another pillar of us growing wallet
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Speaker 5: share with customers and helping them do all of their
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Speaker 5: financial activities in one place via Robinhood.
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Speaker 2: So are you competing with this card with the bank
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Speaker 2: issued visa master cards?
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Speaker 3: Is that the market you're now going into.
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Speaker 5: I think that we're trying to do something really interesting
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Speaker 5: with this card. So if you think about premium credit cards,
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Speaker 5: the best ones out there, accept less than half of
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Speaker 5: the people that apply.
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Speaker 3: Is that right? Half of that? Is that Chase Sephi
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Speaker 3: or is that an Platinum or whatever.
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Speaker 5: Those classes of credit card. It's really like the typical
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Speaker 5: sort of like super prime premium rewards cards, and they
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Speaker 5: have high annual fees. So what we want to to
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Speaker 5: do is, in the same way that Robinhood democratized stock
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Speaker 5: trading and made it accessible to a wider group of people,
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Speaker 5: we want to open up the private client experience. I
4:11
Speaker 5: don't know if you've been to a Chase branch, but
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Speaker 5: you can see there's two doors, one for the private
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Speaker 5: clients and one for everyone else. And the whole idea
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Speaker 5: behind Robinhood Gold is giving that private client experience for
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Speaker 5: as little as five dollars a month, opening it to everyone,
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Speaker 5: and it starts with the premium credit card. Of course,
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Speaker 5: the retirement benefits where you get a three percent match,
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Speaker 5: the first and biggest in the industry the five percent
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Speaker 5: apy on our cash which is just an institutional grade,
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Speaker 5: high yield offering that you have to have, you know,
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Speaker 5: millions of dollars to match at other brokers. So yeah,
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Speaker 5: we're putting all this together and we're seeing Robinhood Gold
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Speaker 5: customers actually depositing the lion's share of their money into
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Speaker 5: Robinhood and really growing with us. And I think we
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Speaker 5: have an opportunity to offer them services for all their
5:03
Speaker 5: financial needs in BIB the perks.
5:04
Speaker 6: Are pretty sweet, as you mentioned, three percent cash back
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Speaker 6: on all purchases. Do you make money off of this?
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Speaker 5: Are?
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Speaker 6: How is this going to be kind of another peg
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Speaker 6: for the profitability and the growth of the company.
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Speaker 5: Yeah, two things there. One is we do obviously any
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Speaker 5: business line we enter, we intend to be profitable over
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Speaker 5: the long run on a standalone basis, so not just
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Speaker 5: a creative but we anticipate this being a profitable business
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Speaker 5: line just within the card portfolio. And that's through not
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Speaker 5: just the interchange transaction revenue, but also the lending business
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Speaker 5: through the card. We anticipate this would actually be a
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Speaker 5: very attractive card for people building credit over time, and
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Speaker 5: not just folks that pay off their balance in full.
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Speaker 5: And then the other side of it is we see
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Speaker 5: that when customers adopt Robinhood Gold, their rate of deposit
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Speaker 5: growth and account balance growth is much higher than non
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Speaker 5: Gold customers. They also adopt our products at a much
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Speaker 5: higher rate, and so even though they're getting so much
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Speaker 5: more value with all these industry leading rates and value props,
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Speaker 5: the revenue that accrues to the business from the gold
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Speaker 5: relationship is also multiples higher than non gold customers. And
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Speaker 5: we think the credit card, since it's so core to
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Speaker 5: people's financial needs. Typically all of their the line's share
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Speaker 5: of their spending goes through credit, and if you're using
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Speaker 5: a credit card, much easier to grab the paycheck deposit.
6:34
Speaker 4: You need to carry his cash around.
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Speaker 6: Now, this is the guy who walks around with hundreds
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Speaker 6: of dollars in his pocket.
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Speaker 2: I don't know why I asked myself to say, when
6:41
Speaker 2: you walk into a bar, the jersey short good cash
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Speaker 2: on the bar there.
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Speaker 5: Well, I mean, I'll show you what I've got in
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Speaker 5: my pocket.
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Speaker 2: Oh, he brought the card, very cool fourteen car So
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Speaker 2: this all right, folks, on we're shoving you this card.
6:53
Speaker 2: It is it weighs something you got some hef to. Well,
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Speaker 2: this is the card here, folks, it is.
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Speaker 5: It's basically a gold bull. It's like it's not gold plated,
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Speaker 5: it's a this is solid.
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Speaker 6: Your numbers though I can't make it right now.
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Speaker 5: That's the great thing about it because this is a
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Speaker 5: digital first card, and we outlined all of the awesome
7:13
Speaker 5: digital features like virtual cards, like family focused suite of features. Yeah,
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Speaker 5: you don't actually need the number on it. You can
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Speaker 5: open up the app, look at the number, the expiration
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Speaker 5: dates on there. The design of the card is minimal,
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Speaker 5: only the robin Hood brand, the chip and on the
7:32
Speaker 5: back you have your name and that's pretty much interesting.
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Speaker 5: So if it gets stolen or lost, you don't really
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Speaker 5: have to worry about their actual number being used.
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Speaker 4: Yeah, yeah, all right.
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Speaker 2: So who is the typical robin Hood customer these days?
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Speaker 3: Client? These days?
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Speaker 5: A typical Robinhood customer, I would say, is someone in
7:51
Speaker 5: their thirties. They tend to be an early adopter of technology.
7:56
Speaker 5: They have you know, more half of our customers make
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Speaker 5: over one hundred thousand dollars in annual income, so it's
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Speaker 5: not sort of like the paycheck to paycheck customer as
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Speaker 5: maybe some people think, and we also have much larger
8:15
Speaker 5: customers with big accounts. We recently have been introducing matches.
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Speaker 5: In fact, last night we rolled out another initiative, one
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Speaker 5: percent unlimited deposit match into Robinhood for all dollars deposited
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Speaker 5: for our Gold members. So basically, most financial firms charge
8:34
Speaker 5: you a percentage to keep your money there as a
8:36
Speaker 5: management fee. We're paying you a percentage to move your
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Speaker 5: money with us. And these types of offers have really
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Speaker 5: attracted people with much bigger accounts. We've had customers with
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Speaker 5: tens of millions of dollars moving those accounts to Robinhood
8:49
Speaker 5: and they've been very happy with the experience. So we
8:52
Speaker 5: have been adding capabilities to serve customers across the entire market,
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Speaker 5: not just sort of in that middle tier, but also
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Speaker 5: people with more money and people with less who are
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Speaker 5: just getting started. We also would like to serve them
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Speaker 5: and have been focusing on that demographic since day one.
9:11
Speaker 6: And VLAT When I talk to skeptics, they point out
9:13
Speaker 6: that you guys are heavily reliant on options trading, crypto volumes,
9:17
Speaker 6: and that driving the business. Paul mentioned their huge run
9:21
Speaker 6: up over the last twelve months, it's still down forty
9:22
Speaker 6: eight percent from the IPO price. What is the kind
9:26
Speaker 6: of mission in the next coming months and years for
9:28
Speaker 6: the company to.
9:29
Speaker 3: Get back to that IPO price and trade higher.
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Speaker 5: Well, I think we've been doing really well focusing on
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Speaker 5: the inputs of the business. I can't really control the
9:38
Speaker 5: stock price directly, but if we're growing revenues, if we're
9:42
Speaker 5: diversifying revenues, if we're launching innovative new products for our customers,
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Speaker 5: I think we can kind of grow through market headwinds
9:51
Speaker 5: and high interest rate environment and be sort of like
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Speaker 5: a company that thrives in all conditions. And you mentioned
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Speaker 5: the revenues and you know, options trading and all these things.
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Speaker 5: But what's happened in the past couple of years is
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Speaker 5: the revenue profile of the business has diversified as we've
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Speaker 5: rolled out all these products. As of the last earnings
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Speaker 5: report several earnings calls, more than half of the revenue
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Speaker 5: is actually net interest margin, not even transaction base. So
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Speaker 5: as we add more of these products, like the five
10:20
Speaker 5: percent yield on your cash, the profile of the business
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Speaker 5: has also changed.
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Speaker 3: All right, flat, thank you so much for joining us.
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Speaker 2: Really appreciate you coming into our Bloomberg and director broker
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Speaker 2: studio of lad Tenev. He's the chief executive officer, co
10:32
Speaker 2: founder of Robin Hood. The news Today, Robinhood unveils a
10:36
Speaker 2: credit card and folks, it hasn't hef This is a
10:38
Speaker 2: unique credit card. It's been a further push beyond the
10:41
Speaker 2: trading business there in the stock performing very well there.
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Speaker 3: We appreciate that.
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11:05
Speaker 2: One of the issues here is we think about the
11:06
Speaker 2: ripple effects of what happened in Baltimore yesterday, is who's
11:10
Speaker 2: going to pay for this stuff? And that kind of
11:12
Speaker 2: goes to the insurance discussion, and so we have a
11:15
Speaker 2: just insurance discussion. We turned to our expert, Matthew Palozola.
11:18
Speaker 2: He's a senior analys insurance annalys for Bloomberg Intelligence he
11:21
Speaker 2: joins his life in our Bloomberg Interactive Brooker Studio. So, Matthew,
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Speaker 2: it's not every day that we have an event like
11:27
Speaker 2: we saw yesterday in Baltimore. From your perspective, from the
11:31
Speaker 2: insurance perspective, how do you think it's going to play out?
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Speaker 7: So we know a couple of things. Is obviously still
11:37
Speaker 7: very early, but we've seen some stuff in the trade press,
11:40
Speaker 7: and there's a little more information than there actually normally
11:43
Speaker 7: is on some of these disasters. The bridge itself, I've
11:47
Speaker 7: seen reports that it's valued at about one point two
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Speaker 7: billion dollars. I have no idea how much it's going
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Speaker 7: to actually cost to rebuild it. The ship the Dolly
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Speaker 7: that crashed, actually is carrying, in my view, unusually large
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Speaker 7: amount of insurance and reinsurance, which is a good thing
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Speaker 7: in this case. There's about three point one billion dollars
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Speaker 7: worth of insurance and reinsurance tied to that vessel. Now
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Speaker 7: that's also separate from insurance that's on the bridge and
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Speaker 7: kind of other things. The problem is it's going to
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Speaker 7: take a long time to play out, so the reinsurance
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Speaker 7: that's on there will probably end up paying the bulk
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Speaker 7: of the.
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Speaker 6: Claims and how does this compare to say a hurricane
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Speaker 6: or another form of kind of natural disaster thing that
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Speaker 6: happens where you have insurance and reinsures kind of all.
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Speaker 7: Yeah, anything, it's it's a more complex event, right, So
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Speaker 7: on the back end, stuff we probably will never see.
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Speaker 7: They'll probably be a lot more back and forth. In
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Speaker 7: terms of the cost of the event, I'm assuming very
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Speaker 7: early back of the envelope, it's probably a mid single
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Speaker 7: digit billions, probably like a four billion or probably even less, honestly,
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Speaker 7: which is like a small hurricane, and we have hurricanes
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Speaker 7: that are twenty thirty fifty billion dollars. So in terms
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Speaker 7: of the impact of the entire industry is probably very manageable.
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Speaker 3: Who ensures this stuff? I mean, these ships go all
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Speaker 3: over the world. They're monsterships.
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Speaker 2: I have no idea how they get in and out
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Speaker 2: of ports now that you think about it, they're so
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Speaker 2: huge these days, and I got to traverse you know,
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Speaker 2: dangerous waters, congested waters. Who ensures this stuff?
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Speaker 4: So it's pretty interesting.
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Speaker 7: The way it works is it's it's kind of a
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Speaker 7: mutual claims paying group that specifically this ship, right, So
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Speaker 7: a bunch of this is kind of the way insurance started. Honestly,
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Speaker 7: is a bunch of people running the ships get together
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Speaker 7: and they pull their resources, and that's where they get
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Speaker 7: the insurance from. That's really only the very low layer
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Speaker 7: of the insurance. So that's one hundred million of the
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Speaker 7: three point one billion of insurance, right.
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Speaker 4: So then the rest of it goes to this.
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Speaker 7: Global reinsurance market. Above the one hundred there's kind of
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Speaker 7: another bit of ship reinsurance, and then above that it's
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Speaker 7: the global reinsurance market. So I think companies like Swiss
14:04
Speaker 7: re Munich ree, some of the Bermuda reinsurance companies, I
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Speaker 7: don't know if they have specific exposure.
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Speaker 3: So do we know who's the name's backing this?
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Speaker 4: Who's we don't. We know that acce Xcel.
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Speaker 7: Was the lead on some of the reinsurance, we don't
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Speaker 7: know by how much, and that was just reported by
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Speaker 7: the group at the time when they renewed the policy.
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Speaker 6: If I'm a shipper and now my path is delayed
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Speaker 6: and I have to rethink how I'm operating, is there
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Speaker 6: anyone that I'm covered by insurance or reinsurance? Like, how
14:30
Speaker 6: does insurance play into some of the delays that are
14:33
Speaker 6: likely going to happen as they eventually clear, there'll.
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Speaker 7: Certainly be some knock on effects, right, so it would
14:39
Speaker 7: be a business interruption claim. So it's kind of I think,
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Speaker 7: pretty classic, meaning there's something in your way, you can't
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Speaker 7: do your business, you'll have some sort of business insrupting
14:51
Speaker 7: clim it's probably on the primary insurance market. If you
14:54
Speaker 7: recall in twenty twenty one the Suez Canal got blocked
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Speaker 7: by that ship. There was talk about like ten billion
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Speaker 7: dollars worth of commerce a day going through there or
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Speaker 7: something like that, and that was that was six days.
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Speaker 7: Even when that happened, it wasn't a huge amount of
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Speaker 7: business eruption claims for the industry, but that that would
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Speaker 7: be where it falls.
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Speaker 2: All right, So are rates going to go up here
15:17
Speaker 2: or is this just a one off black Swan kind
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Speaker 2: of event it which kind of seems like it.
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Speaker 7: So reinsurance press have been going up anyway, right, So,
15:25
Speaker 7: and the reinsurance market doesn't exactly move in lockstep anymore.
15:31
Speaker 7: It's kind of individual market. So I think you will
15:33
Speaker 7: certainly see maritime reinsurance rates going up. So in case
15:37
Speaker 7: you're shipping anything overseas, qual you might have to pay
15:39
Speaker 7: a little more. But I think that's almost a given.
15:42
Speaker 7: After an event like this that specifically to maritime reinsurance.
15:46
Speaker 6: And looking at reinsurres, we've been sitting on the equities desk.
15:49
Speaker 6: We're trying to game out which stocks are going to
15:51
Speaker 6: move in which direction and who benefits and who loses?
15:53
Speaker 4: How does that play out? Like?
15:55
Speaker 6: Is this in real time we find out that X
15:57
Speaker 6: firm has to disclose that they're the main reinsurer on
16:00
Speaker 6: this or how how did those kind of dynamics?
16:03
Speaker 4: Usually the way works.
16:03
Speaker 7: So what will happen is and I don't expect we'll
16:06
Speaker 7: see much of this for the names I cover.
16:08
Speaker 4: But what will happen is as we go into earnings.
16:11
Speaker 7: If you are one of the companies with a big
16:12
Speaker 7: exposure to this and it's gonna be material on your results,
16:16
Speaker 7: they will usually pre announce that ahead of earnings, just
16:19
Speaker 7: so that they don't, you know, dramatically miss the number
16:21
Speaker 7: on that day. So that will be the way it
16:24
Speaker 7: would play out in the market. But I don't think
16:26
Speaker 7: you're gonna hear a ton from at least in Bermuda
16:28
Speaker 7: companies that I cover.
16:29
Speaker 3: Gotcha, where are we? I don't know?
16:31
Speaker 2: Trailing twelve months on your you're the disaster guy. So
16:35
Speaker 2: there's a hurricane or some terrible fire with our friends
16:39
Speaker 2: in California or something like that, we turned to you.
16:41
Speaker 3: We haven't talked to you a lot recently.
16:43
Speaker 4: Yeah, we've We've been alright.
16:45
Speaker 7: So even last year, what happened was the Swiss regis
16:49
Speaker 7: put out there annual catastrophe loss for the industry, right,
16:53
Speaker 7: and it was one hundred billion dollars for the third
16:55
Speaker 7: year in a row. And when I started in this
16:58
Speaker 7: industry many years ago, if you told me it would
17:00
Speaker 7: be one hundred billion dollars last year, we'd be shocked, right,
17:02
Speaker 7: it would have blown off the off the chair. And
17:04
Speaker 7: now it's been three years in a row that's happened.
17:07
Speaker 7: The interesting thing about last year was a lot of
17:09
Speaker 7: it was caused by severe convective storms, not huge catastrophes,
17:14
Speaker 7: not huge hurricanes, So it was kind of these smaller
17:17
Speaker 7: events that built up. So that's probably why you're not
17:20
Speaker 7: hearing these kind of headline things. But the losses, you know,
17:23
Speaker 7: are still there. That said, the market's still very well capitalized,
17:27
Speaker 7: and it really wasn't. It was still a pretty good
17:29
Speaker 7: year for the insurers. But that's kind of what's happening.
17:34
Speaker 7: And now if you get a big event on top
17:36
Speaker 7: of those accumulation of smaller events, than it could be
17:38
Speaker 7: pretty all.
17:39
Speaker 2: Right, Bailey's in the market for beachfront mansion done in
17:41
Speaker 2: the palm beachery.
17:42
Speaker 3: Can you get insurance on that stuff sitting on the water?
17:44
Speaker 7: It depends on the state, but probably not. You might
17:47
Speaker 7: have to move into yours. But yeah, no, I mean,
17:50
Speaker 7: it's it's all the insurers are pulling back from all
17:53
Speaker 7: of the coastal states.
17:56
Speaker 4: It's partly climate change.
17:58
Speaker 7: I know, we know, kind of like a point to
18:00
Speaker 7: that immediately, but that's not it's not the biggest thing.
18:03
Speaker 7: The other thing is that property valves have gone up,
18:05
Speaker 7: inflation has pushed the repair costs up, and yes, the
18:09
Speaker 7: frequency and severity of storms is worse. So it's kind
18:12
Speaker 7: of all those things mixed together. It's just at a
18:14
Speaker 7: conference where someone said a home insurance ceo who I
18:16
Speaker 7: won't name, and said they just wouldn't even touch New
18:19
Speaker 7: Jersey specifically.
18:20
Speaker 2: Right, all right, Well, I'm five blocks for us, fine
18:23
Speaker 2: blocks in from the ocean, so I feel and they're
18:25
Speaker 2: long blocks of the big block, so I feel very
18:27
Speaker 2: safe there. But again, you know, Superstorm Sandy came through
18:30
Speaker 2: and still to this day you get onto men and
18:34
Speaker 2: menal loaking in New Jersey. There are still lots like
18:36
Speaker 2: a ten million dollar home got washed away. They haven't rebuilt.
18:39
Speaker 2: It's still sitting there empty. So those folks got crushed.
18:43
Speaker 3: So it's a thing.
18:43
Speaker 2: Matthew Palozola, thanks so much for joining us senior analys
18:46
Speaker 2: covering the insurance business for Bloomberg Intelligence. Joining us here
18:49
Speaker 2: in our Bloomberg Interactive Brokers studio're trying to game out
18:52
Speaker 2: kind of what some of the insurance implications will be
18:54
Speaker 2: from this bridge collapse in Baltimore.
19:00
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
19:04
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19:07
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19:10
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19:15
Speaker 3: Cardinal Cruise Lines reported some numbers.
19:18
Speaker 2: They raised their four year outlook amid record setting booking pace,
19:23
Speaker 2: but they also said that the collaps Baltimore Bridge might
19:25
Speaker 2: have a ten million dollars negative impact on their cash flow.
19:28
Speaker 3: And earnings for the year.
19:32
Speaker 2: Let's break it down with Jody Lourie. She covers all
19:34
Speaker 2: the consumer stuff for Bloomberg Intelligence.
19:36
Speaker 3: She's a credit analyst over there.
19:38
Speaker 2: So, Jody, what'd you make of the Carnival numbers. It
19:42
Speaker 2: seems like people are cruising like crazy here, So I.
19:46
Speaker 8: Would say a few things about that, Paul.
19:48
Speaker 9: First of all, I would say that when you look
19:50
Speaker 9: at Carnival, it's really a cash flow story. It really
19:53
Speaker 9: is a credit story more than anything else, and the
19:56
Speaker 9: bookings are sort of confirming that.
19:59
Speaker 8: Now.
19:59
Speaker 9: The booking level, if you include short and long term,
20:01
Speaker 9: it's actually not at the peak, which was second quarter
20:04
Speaker 9: of last year, but it's right near the peak, and
20:07
Speaker 9: based on what management is saying, it sounds like second
20:10
Speaker 9: quarter of this year might top second quarter of last year.
20:14
Speaker 8: That said, I.
20:15
Speaker 9: Think more importantly, the company is starting to attack some
20:18
Speaker 9: of its debt load, particularly in some of its secured areas,
20:23
Speaker 9: which will help to sort of free up the balance
20:25
Speaker 9: sheet a little bit, provide some flexibility, make it so
20:29
Speaker 9: that the company has an ability to sort of make
20:31
Speaker 9: its way back to high grade ratings as it's been
20:34
Speaker 9: targeting for twenty twenty six.
20:36
Speaker 6: H Jody, you call that out just using the FA
20:38
Speaker 6: function on the terminal Carnival cruise almost thirty two billion
20:42
Speaker 6: dollars in debt compared to a market cap of twenty
20:44
Speaker 6: one billion dollars. How does that stack up to the
20:48
Speaker 6: likes of Royal, Caribbean or Norwegian and some of those
20:51
Speaker 6: other piers in the cruise liner space.
20:54
Speaker 9: So yeah, Carnival was able to bring down their debt
20:58
Speaker 9: load to about thirty billion over the past year, and
21:02
Speaker 9: it's likely that'll probably end this year around that level
21:06
Speaker 9: based on what they're taking in in terms of ships.
21:08
Speaker 9: That said, it is significantly higher than Royal, it is
21:11
Speaker 9: significantly higher than Norwegian, but on a leverage perspective, it's
21:16
Speaker 9: sort of middle of the pack at the moment as
21:18
Speaker 9: compared to Royal and Norwegian. Royal is a little bit
21:22
Speaker 9: a few quarters ahead of Carnival in terms of its
21:25
Speaker 9: deleveraging strategy. Management at Royal actually bumped up their narrative
21:29
Speaker 9: around getting to investment grade level metrics to do it
21:32
Speaker 9: earlier than twenty twenty five, and Carnival stuck to that
21:36
Speaker 9: twenty twenty six number, which I think is descriptive of
21:39
Speaker 9: being a little bit more conservative, particularly with the backdrop
21:43
Speaker 9: of everything happening globally, not just the Baltimore Bridge situation,
21:47
Speaker 9: but also at the Red Sea and everywhere else that's
21:50
Speaker 9: affecting Carnival more broadly because of its more global nature.
21:55
Speaker 2: I'm looking at again, the FA function is barely called out.
21:58
Speaker 2: I still see you know, three four billion dollars in
22:00
Speaker 2: in capex every year. Are they buying ships or what
22:03
Speaker 2: are they spending that kind of money on?
22:05
Speaker 9: Yeah, the three four billion dollars of capex is primarily ship.
22:10
Speaker 9: There is a portion of it that is in terms
22:13
Speaker 9: of maintenance capex. Right, your ships get old, you have
22:15
Speaker 9: to update them every few years. You have all these
22:18
Speaker 9: sort of different requirements related to it. They also have
22:21
Speaker 9: that celebration key that they're rolling out on, which is
22:23
Speaker 9: on the Grand Bahama, and that's to rival their peers,
22:26
Speaker 9: which have been investing really heavily also into island presence. Right,
22:32
Speaker 9: the Caribbean island presence is a money maker for all
22:35
Speaker 9: of them.
22:35
Speaker 8: It's this captive audience.
22:36
Speaker 9: They bring the people who are on their ships to
22:39
Speaker 9: these islands and to these sections of islands like you know,
22:42
Speaker 9: not the whole Grand Bahama, but that carved out sections
22:45
Speaker 9: specifically for Carnival and you know, wine and dying them
22:48
Speaker 9: get them to spend extra money that onboard spend is
22:51
Speaker 9: really where you see that.
22:52
Speaker 6: Margin you mentioned wining and dining. I just want to
22:55
Speaker 6: look at some of the other areas that you cover,
22:58
Speaker 6: talking about wind resorts, MGM and HILT all the funds,
23:01
Speaker 6: all the fund stuff. Yeah, you have the best job.
23:02
Speaker 6: I hope you take advantage of it. But like when
23:05
Speaker 6: you look at the underlying business dynamics of some of
23:08
Speaker 6: the other areas that you cover. What are we seeing
23:10
Speaker 6: in terms of hotel demand and hotel sales and what
23:13
Speaker 6: that means from a credit perspective.
23:16
Speaker 9: So hotel demands, hotel sales, it's it is a bit
23:20
Speaker 9: mixed regionally, but I think overall we're pretty optimistic about
23:23
Speaker 9: this year, and that's a function of the fact that
23:25
Speaker 9: business and conference is really picking up this year as
23:28
Speaker 9: compared to the past few years. You know, we're at
23:31
Speaker 9: that point where that post pandemic narrative has sort of
23:34
Speaker 9: played out and we're getting to more normalized.
23:36
Speaker 8: That said, there are areas.
23:38
Speaker 9: Of expansion and growth. We're also seeing that all inclusive
23:41
Speaker 9: area be a much more attractive area for a lot
23:45
Speaker 9: of these companies, and I think we are seeing some
23:47
Speaker 9: rivalry across the board when it comes to hotels casinos,
23:51
Speaker 9: cruise lines as these destination opportunities. We're talking Las Vegas
23:55
Speaker 9: obviously not the regional casinos that's a little bit different,
23:58
Speaker 9: but Las Vegas, Macaw, you know, the cruise lines and
24:02
Speaker 9: the hotels. There's a lot of sort of this destination
24:04
Speaker 9: narrative that's going on to get people to spend that
24:07
Speaker 9: extra money and to sort of go on vacation, live
24:09
Speaker 9: life to the fullest. Now, we do have these partnerships
24:13
Speaker 9: that are happening between Marriott and an MGM, but then
24:18
Speaker 9: also we have an MGM and Carnival relationship. So there
24:21
Speaker 9: is this fluidity that's happening within my industry that makes
24:24
Speaker 9: it sort of interesting.
24:25
Speaker 2: And you get a great view on the consumer Jody
24:29
Speaker 2: with you know the coverage you have again hotels and
24:32
Speaker 2: casinos and cruise lines. Where are people kind of spending
24:35
Speaker 2: their dollar And it seems like they're still spending on
24:38
Speaker 2: that whole experiential thing, the experiences. What are the companies
24:42
Speaker 2: you cover, what are they saying is to the how
24:44
Speaker 2: that's likely to play out?
24:47
Speaker 9: Because so consumers are definitely spending still on experiences. We're
24:51
Speaker 9: still very much seeing it now if you compare twenty
24:54
Speaker 9: twenty three twenty twenty two. It's a different sort of
24:57
Speaker 9: narrative than twenty twenty three to two thousand two before,
25:00
Speaker 9: because the base is much greater. Right, if you looked
25:04
Speaker 9: at the base going back to twenty twenty one, you're
25:07
Speaker 9: dealing with nothing, building on nothing. It's very significant. That said,
25:11
Speaker 9: there still is that narrative of growth and that consumer
25:14
Speaker 9: spending on experiences where we sort of wonder is what's
25:19
Speaker 9: going to happen heading into the second half. That's sort
25:22
Speaker 9: of the puzzle piece that isn't quite filled.
25:24
Speaker 8: Out for us yet.
25:25
Speaker 9: Where first half into the summer season is very strong,
25:30
Speaker 9: we're also seeing that for cruise lines, they're saying that
25:32
Speaker 9: going into the twenty twenty five they're seeing strength, and
25:35
Speaker 9: that's a function of the fact that people book their
25:37
Speaker 9: cruises so far in advance. You don't get that benefit
25:40
Speaker 9: in the hotel space, you don't get that benefit as
25:42
Speaker 9: much in the vacation arena elsewhere. People don't book vacations
25:48
Speaker 9: apart from cruises so far in advance. So I think
25:52
Speaker 9: as we head into second half, we'll sort of get
25:54
Speaker 9: a feel for how comfortable the consumer is in terms
25:56
Speaker 9: of spending.
25:58
Speaker 6: And Jody, I just want to ask about FED if
26:01
Speaker 6: we do have higher for longer and if a rate
26:04
Speaker 6: cut keeps dragging on, how does that impact the kind
26:07
Speaker 6: of areas of your coverage differently, whether it's sector by
26:10
Speaker 6: sector or a company by company, it's.
26:14
Speaker 8: A combination of factors.
26:17
Speaker 9: So when you're talking the cruise lines, a lot of
26:19
Speaker 9: the narrative is around repaying and refinancing debt. That refinancing
26:23
Speaker 9: portion won't be as attractive if we are higher for longer.
26:28
Speaker 9: The other component, though, is on the consumer side. So
26:30
Speaker 9: you have the high end consumers that might benefit or
26:33
Speaker 9: not from high interest rates or a elevated stock market
26:38
Speaker 9: price of sorts, But then you have the lower end
26:40
Speaker 9: consumer that might feel a little bit more of the pressure.
26:43
Speaker 9: I think the more important piece is that inflation factor,
26:47
Speaker 9: where you say, okay, from the inflation standpoint, how much
26:50
Speaker 9: is the consumer feeling it, how are they feeling it
26:52
Speaker 9: directly in their wallet, and how much are they willing
26:54
Speaker 9: to borrow in order to continue that's spending, and so
26:59
Speaker 9: I don't really know how that's going to play out.
27:01
Speaker 9: That's you know, there are other people within the firm
27:03
Speaker 9: that are really very smart and can talk more to that.
27:06
Speaker 8: That said that is something we.
27:08
Speaker 9: Are monitoring from the standpoint of how much the consumer
27:11
Speaker 9: is stretching, because that narrative around consumer is having extra
27:14
Speaker 9: cash on the sidelines to pump into vacations isn't so
27:17
Speaker 9: much there, but the thought process around spending on vacations
27:21
Speaker 9: and that mentality around spending on vacations still exists.
27:25
Speaker 3: All right, Jodi, thanks so much for joining us. Really
27:26
Speaker 3: appreciate it. Jody Lourie.
27:27
Speaker 2: She covers all the consumer companies, all the fun companies.
27:30
Speaker 2: She does it from the credit perspective. Talking about Carnival,
27:33
Speaker 2: Cruz reported some numbers today took their guidance up a
27:35
Speaker 2: little bit, citing even though some concerns a little bit
27:38
Speaker 2: near term short term small hit from Baltimore.
27:41
Speaker 3: Have you cruised before?
27:43
Speaker 2: Not a cruise, So you're not cruising for the honeymoon honeymoon?
27:46
Speaker 6: No, we are flying to Portugal and then flying and
27:49
Speaker 6: driving running a car leash mateo cruiser.
27:52
Speaker 3: No, I haven't.
27:52
Speaker 8: I'm kind of scared. I don't know. Titanic like comes
27:55
Speaker 8: in my head and I'm like, I can't do it.
27:58
Speaker 3: My thing is I don't like people. So that's kind
27:59
Speaker 3: of a that's kind of a it could be a problem.
28:02
Speaker 3: That's a problem for me.
28:04
Speaker 2: So I mean it'd be stuck on board with like
28:06
Speaker 2: three thousand people onto this ship.
28:08
Speaker 4: Liesa says Titanic.
28:10
Speaker 6: I use the pandemic as like exhibit number six hundred
28:13
Speaker 6: for me to not do it, And you're just like,
28:14
Speaker 6: I don't really want to interact with it.
28:16
Speaker 3: I just don't like people. Yes, I don't need to
28:17
Speaker 3: see it.
28:19
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
28:23
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
28:26
Speaker 1: Auto with the Bloomberg Business. You can also listen live
28:30
Speaker 1: on Amazon Alexa from our flagship New York station Just
28:33
Speaker 1: Say Alexa, playing Bloomberg eleven thirty.
28:37
Speaker 2: Speaking of a global investment bank, Let's get the Alison Williams,
28:40
Speaker 2: she covers the global investment banks for Bloomberg Intelligence. She
28:42
Speaker 2: joins us from Princet, New Jersey via zoom Allison, I
28:46
Speaker 2: guess the most recent story out is UBS. They're selling
28:49
Speaker 2: an eight billion dollars in loans to Apollo. I guess
28:52
Speaker 2: these are some loans they picked up on the acquired
28:54
Speaker 2: Swiss What's going on with her friends in Switzerland?
28:57
Speaker 10: Yeah, so this is really just wrapping up feel that
29:01
Speaker 10: Credit SUITEE had put in place some time ago.
29:03
Speaker 8: So even before UBS.
29:05
Speaker 10: Had had purchased Credit Suite, they were winding down the
29:09
Speaker 10: investment banks. They had this business, the securitized products group
29:12
Speaker 10: that they were you know, getting rid of, and so
29:17
Speaker 10: they upon consummation of the deal, some of those assets
29:20
Speaker 10: had been sold off, but the rest have been put
29:22
Speaker 10: in sort of a non core unit. So I think
29:24
Speaker 10: this is really just kind of closing the loop on
29:26
Speaker 10: that and it just shows progress that they're continuing to
29:29
Speaker 10: wind down the business some of the more I don't
29:33
Speaker 10: want to say unprofitable, but sort of some of the
29:36
Speaker 10: more voluable assets, balancing intensive, the types of things that
29:41
Speaker 10: UBS really does not want to be involved with.
29:43
Speaker 6: Now's in UBS booking and net gain of three hundred
29:45
Speaker 6: million in the first quarter related to the deal or
29:48
Speaker 6: the matter.
29:48
Speaker 3: Is this just a big.
29:49
Speaker 6: Win for them given kind of how they're shedding the assets.
29:53
Speaker 10: Yeah, I mean, I think if you if you look
29:55
Speaker 10: at some of the numbers that they gave, I mean,
29:57
Speaker 10: and it's there's obviously sort of the way that they
30:00
Speaker 10: accounted for the transactions when they did the deal. I think,
30:05
Speaker 10: you know, the important thing is probably not the direct
30:08
Speaker 10: impact but just shutting those assets so that they can
30:12
Speaker 10: you know, kind of return to the core business.
30:14
Speaker 3: They have a.
30:15
Speaker 10: Huge road ahead. I mean, this is you know, eight
30:17
Speaker 10: billion in assets. It's about ten percent of the non
30:20
Speaker 10: core book that they want to get rid of, and
30:24
Speaker 10: they're sort of on a long path of integrating the
30:27
Speaker 10: two banks. They've got big restructuring chargers ahead. I think
30:30
Speaker 10: what we're focusing on really in the first quarter is,
30:33
Speaker 10: you know, can we start to see some results from
30:36
Speaker 10: this investment bank you know that part of what they wanted.
30:39
Speaker 10: You know, obviously the wealth assets are huge for them,
30:41
Speaker 10: the Swiss assets are huge for them, but another thing
30:45
Speaker 10: they wanted was the investment bankers and credit Suiteze really
30:48
Speaker 10: did have expertise in the tech area, as you know, Paul.
30:53
Speaker 10: They have you know, a great reputation and done really
30:57
Speaker 10: well on tech IPOs. And what we've seen in the
31:01
Speaker 10: first couple of months of the quarter is UBS really
31:03
Speaker 10: moving up the league tables for tech IPOs, showing that
31:07
Speaker 10: they might be getting some of that benefit.
31:09
Speaker 2: I'm looking at the stock here of thank you. I'm
31:12
Speaker 2: looking at stock here, Allison of UBS. It's not kind
31:14
Speaker 2: of flat year to date, but it's up sixty five
31:16
Speaker 2: percent on a trailing twelve month basis. So what's the
31:19
Speaker 2: when you talk to introditional investors out there, what's the
31:22
Speaker 2: call here on UBS?
31:25
Speaker 10: I think, you know, it depends probably a little bit
31:28
Speaker 10: on your time frame. It's going to be a long
31:30
Speaker 10: slog and so I think, you know, the broader look
31:33
Speaker 10: at the company, and as you know, we don't we
31:36
Speaker 10: don't make recommend recommendations on stocks. But I think you know,
31:39
Speaker 10: when I talk about this company from a fundamental standpoint
31:42
Speaker 10: and how investors might be looking at it, it's going
31:45
Speaker 10: to be a very long time for them to you know,
31:48
Speaker 10: sort of get this deal done the execution. As I said,
31:54
Speaker 10: you know, we're looking at mid single digit returns in
31:57
Speaker 10: the year ahead, so there's sort of a long path
32:00
Speaker 10: to go to the fifteen percent return on common equity
32:04
Speaker 10: that you know that they're kind of targeting in a
32:07
Speaker 10: long run, and a lot of work to do. So
32:09
Speaker 10: it depends on you know, sort of the investors' patients.
32:14
Speaker 10: Also somewhat of a show me story. I think that
32:17
Speaker 10: the big gains last year really reflect that they did
32:23
Speaker 10: this deal. It was a very financially attractive just given
32:28
Speaker 10: the structure of the deal, and especially what happened with
32:32
Speaker 10: the at ones and you know the fact that they
32:36
Speaker 10: were able to stabilize the wealth flows and stabilize that franchise.
32:41
Speaker 10: So I think a lot of the initial concerns were
32:43
Speaker 10: will they be able to you know, preserve some of
32:45
Speaker 10: that value or will their competitors pick it off? And
32:48
Speaker 10: I think they did show that they've stabilized it. So
32:52
Speaker 10: we have the foundation and now just need to start
32:55
Speaker 10: doing some of the heavy lifting.
32:56
Speaker 6: And Allison Paul's looking to put some money to work.
32:58
Speaker 6: He's got his eye on global banks and asset managers,
33:01
Speaker 6: which is exactly what you cover. What stocks do you
33:05
Speaker 6: like right now? And where does ubs fit into it?
33:08
Speaker 10: Okay, Well, as I said, I can't, we don't recommend stocks,
33:12
Speaker 10: so but I will talk about, you know, the fundamentals,
33:15
Speaker 10: and I would say that, you know, one of the
33:19
Speaker 10: big things that investors are looking for this year is
33:21
Speaker 10: a pickup and fees. We think that we will get
33:24
Speaker 10: good growth and fees, but you know, we're nowhere near
33:27
Speaker 10: the twenty twin levels, so that story could end up
33:31
Speaker 10: being a little bit disappointing. But trading, on the other
33:34
Speaker 10: hand holding up really well. The asset values are great
33:39
Speaker 10: for asset managers, right, especially from a mixed perspective. We
33:42
Speaker 10: have equities at record highs. That definitely helps the few
33:46
Speaker 10: prospects because more assets just mathematically turn into more fees
33:51
Speaker 10: and the potential for more flows. The flows are always tricky.
33:56
Speaker 10: They've also been good for the hedge funds. Hedge funds
33:59
Speaker 10: and asset managers doing well. That means Goldman's doing well
34:01
Speaker 10: in their prime brokerage business. They do have more of
34:03
Speaker 10: a bent to those types of customers. But we think
34:06
Speaker 10: trading looks good across the banks. Bank of America is
34:10
Speaker 10: also someone that we're watching, Gating share Bank of America
34:14
Speaker 10: and Wells Fargo, who's a smaller one, but you know,
34:17
Speaker 10: the share games are really more meaningful about for them
34:19
Speaker 10: because because they're smaller, So from a fundamental standpoint, those
34:25
Speaker 10: skew to trading. Like Goldman, Sachs looking like a strong corner.
34:29
Speaker 10: All right, Alison, thank you so much for joining us.
34:31
Speaker 2: Als Williams senior analy She covers all the big banks
34:34
Speaker 2: investment banks globally for Bloomberg Intelligence. She's based down in Princeton,
34:38
Speaker 2: joining us via zoom. I guess my one of my
34:40
Speaker 2: questions is again having worked for one of the firms
34:45
Speaker 2: that now makes up UBS, that being Pain Weber, I
34:48
Speaker 2: still don't know what UBS is kind of globally ambitions
34:51
Speaker 2: are do they do they intend to compete against the
34:53
Speaker 2: jpm Morgans and the Morgan Sailings of the world, or
34:56
Speaker 2: are they, you know, they're a little bit more focused
34:58
Speaker 2: maybe on just a handful of markets, a handful of
35:01
Speaker 2: business lines and not going to kind of compete across
35:03
Speaker 2: the board. I'm not really sure now that they've acquired
35:05
Speaker 2: credits with you know, kind of what's happening there. But
35:08
Speaker 2: I think typically the street rewards, at least for this
35:11
Speaker 2: investment banks kind of just focus, yeah, you know, like
35:13
Speaker 2: Morgan Stanley focusing on the wealth management business, which has been.
35:17
Speaker 3: So good for them.
35:20
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
35:24
Speaker 1: weekdays at ten am Eastern on applecar Play and androyd
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35:34
Speaker 1: Say Alexa playing Bloomberg eleven thirty.
35:38
Speaker 2: One of the most read stories on the Bloomberg Terminal
35:41
Speaker 2: is regarding former President Donald Trump. He is richer than ever,
35:45
Speaker 2: yet still strapped for cash. To former President's fortune on
35:48
Speaker 2: paper has vaulted to seven point two billion dollars thanks
35:51
Speaker 2: to his newly public media company. In the ticker there's
35:54
Speaker 2: d j T for his initials, but legal strains threatened
35:59
Speaker 2: his finances to more than we welcome. Eric Larson, he
36:02
Speaker 2: covers all of this stuff for Bloomberg News. He joins
36:04
Speaker 2: us here in our Bloomberg Interactive Brokers studio. So, Eric,
36:07
Speaker 2: I'm looking at DJT stocks up another eleven percent. It's
36:10
Speaker 2: had a heck of a run year up to two
36:13
Speaker 2: hundred and seventy percent year to date, three hundred and
36:15
Speaker 2: seventy percent over the past year. A heck of a
36:17
Speaker 2: good run for the former president. So there's net worth,
36:21
Speaker 2: how about cash? Talk to us about those two dynamics.
36:24
Speaker 11: Right, So it was actually Bailey's story I was reading
36:26
Speaker 11: earlier about DJT is very fascinating.
36:29
Speaker 4: He's obviously more than you know, doubled his wealth.
36:31
Speaker 11: But Trump testified in a deposition last year in one
36:34
Speaker 11: of his civil lawsuits that he had more than four
36:36
Speaker 11: hundred million dollars in cash. Just last week he said
36:40
Speaker 11: on truth Social that he had almost five hundred million
36:43
Speaker 11: dollars in cash. We're not exactly sure. We can't really
36:48
Speaker 11: exactly verify that, but he had been saying in that
36:51
Speaker 11: court case that he was low on cash, he didn't
36:53
Speaker 11: have enough to post this big bond. So that's kind
36:56
Speaker 11: of our relationship with Trump's cash right now, is his
36:58
Speaker 11: comments in regards to that huge bonds that he that
37:02
Speaker 11: he has to pay for his appeal in that case.
37:04
Speaker 6: And so your story calls out seven point two billion
37:06
Speaker 6: dollars in wealth on paper? How much is that is
37:09
Speaker 6: in Trump media? How much of that is real estate
37:12
Speaker 6: and other ventures?
37:13
Speaker 11: Right, so it seems like the bulk of it is
37:15
Speaker 11: actually on paper. As you mentioned from the from the
37:18
Speaker 11: Trump media, his real estate has always usually been the
37:23
Speaker 11: bulk of his wealth, about like two point seven billion
37:26
Speaker 11: or so. I don't have the story right in front
37:28
Speaker 11: of me, but clearly that's what Bloomberg Billionaire's Index put
37:32
Speaker 11: his wealth at three point one billion before these these verdicts.
37:35
Speaker 11: So the vast majority of that was real estate, and
37:39
Speaker 11: of course there's licensing deals around the world and things
37:42
Speaker 11: like that. So now that with Trump media, you know
37:45
Speaker 11: his wealth is largely from this from the shares, which
37:49
Speaker 11: is fascinating to me, but of course his real estate
37:52
Speaker 11: continues to be you know, his crown jewels of his portfolio.
37:55
Speaker 4: Yeah.
37:56
Speaker 3: So I'm looking at dj T Trump Media.
37:59
Speaker 2: It's got a you know, eight billion dollars eight point
38:01
Speaker 2: seven billion dollar market cap, and I pull up FA
38:04
Speaker 2: the financial analysis section to see the financials for this company,
38:08
Speaker 2: and I don't really have any.
38:10
Speaker 6: H What's part of that is because it's a SPAC deal,
38:14
Speaker 6: so our our filings kind of are backloaded. That's why
38:17
Speaker 6: I will like caution with SPACs.
38:18
Speaker 3: So what do we know about the financials of this company?
38:21
Speaker 6: They revenue three point four million in the first nine
38:24
Speaker 6: months of last year and they lost I think air
38:25
Speaker 6: correct me if I'm wrong about thirty million dollars, right, right, right,
38:29
Speaker 6: So we're valuing.
38:29
Speaker 2: That company at eight point eight billion dollars, correct, right,
38:33
Speaker 2: and get my equity animals.
38:35
Speaker 6: I'm trying to do my evaluation here, Paul. It's a
38:37
Speaker 6: two thousand. Last night, it was a twenty two hundred
38:41
Speaker 6: price to sales multia to sales reference in videos.
38:44
Speaker 3: About thirty eight so understood.
38:46
Speaker 4: And what was Facebook?
38:47
Speaker 11: I believe I saw when it went public was something
38:49
Speaker 11: maybe like twelve times minutes revenue.
38:51
Speaker 2: So this is so are we characterizing in this company
38:54
Speaker 2: at this stage as a kind of a mean stock.
38:58
Speaker 11: I mean, we could call it a startup, but it
39:02
Speaker 11: certainly has been put in that category. I think when
39:05
Speaker 11: when one meme stock moves one way and a lot
39:08
Speaker 11: of them tend to I think that's sort of been
39:10
Speaker 11: true with this.
39:11
Speaker 2: Okay, So what do we know about the liquidity of
39:15
Speaker 2: the former president Trump? Again, he's been given a little
39:17
Speaker 2: bit of a reprieve here to come up with this
39:19
Speaker 2: one hundred and seventy five million dollar bond. But again
39:22
Speaker 2: there still is that judgment out there for the larger amount.
39:26
Speaker 2: But the I guess the expectation is he'll satisfy that
39:29
Speaker 2: bond either with cash or.
39:31
Speaker 11: He has said that he will satisfy that with cash.
39:34
Speaker 11: Keep in mind that earlier or just in January, he
39:38
Speaker 11: lost a big defamation trial with the writer Egene Carroll,
39:41
Speaker 11: who had accused him of sexually assaulting her in the
39:44
Speaker 11: nineties and then defaming her by denying it. And that
39:48
Speaker 11: was an eighty three point three million dollar verdict. He
39:50
Speaker 11: did post a bond in that case of over ninety
39:53
Speaker 11: one million dollars in order to put it on hold
39:55
Speaker 11: while he appealed, so that took up almost one hundred
39:57
Speaker 11: million right there. Then we're running one seventy five from
40:00
Speaker 11: this next upcoming bond. And he has said he still
40:03
Speaker 11: also wants to be able to spend some of his
40:05
Speaker 11: money on his campaign, so that I mean, even based
40:08
Speaker 11: on what he's saying he has, that's using up a
40:11
Speaker 11: lot of it.
40:12
Speaker 6: And Eric, when we look at the inability, from my understanding,
40:15
Speaker 6: to borrow against his Trump media stake, can he take
40:18
Speaker 6: out loans against some of his other real estate, Like
40:21
Speaker 6: how if he doesn't want to use the cash on hand,
40:23
Speaker 6: how can he kind of churn up some money.
40:26
Speaker 4: I mean, that certainly is an option.
40:28
Speaker 11: I think some wonder if he hasn't already done that
40:30
Speaker 11: though with some of his properties, we know that he's
40:34
Speaker 11: refinanced some of them, but he has claimed that he
40:37
Speaker 11: has very low debt on his properties, so it certainly
40:40
Speaker 11: one of them he should be able to borrow against
40:42
Speaker 11: if he really had to. But it's also possible that
40:45
Speaker 11: he could get the board of TMGT to change the
40:49
Speaker 11: rules on that lock up period potentially and which would
40:52
Speaker 11: allow him to sell some shares theoretically before that six
40:56
Speaker 11: month period.
40:58
Speaker 4: Although that might be a bad look with some of
41:00
Speaker 4: the other buyers.
41:01
Speaker 3: And interesting, i'man looking at the mg MT function, the management.
41:05
Speaker 2: Function for the Trump Media and Technology Group again the tickers.
41:10
Speaker 6: D j T.
41:11
Speaker 2: I don't see former President Trump on the board or
41:14
Speaker 2: listed as an executive, but I do see his son
41:17
Speaker 2: is on the board, Donald Trump Junior.
41:20
Speaker 3: So but do we know of anything of his.
41:23
Speaker 2: Interaction or interaction with this company or is he simply
41:27
Speaker 2: the shareholder.
41:28
Speaker 4: Well, he's certainly the face of it.
41:30
Speaker 11: I don't know exactly how much in the day to
41:32
Speaker 11: day he's involved in it, other than of course being
41:35
Speaker 11: the star user of its main or only products, truth Social.
41:40
Speaker 11: So you know, as you point out it pointed out
41:43
Speaker 11: in your story, Bailey, at a lot of these purchases,
41:46
Speaker 11: you know, this stock is largely seen as a bet
41:48
Speaker 11: on his political futures as well. So in a way,
41:53
Speaker 11: these meme stocks are betting against you know, they're betting
41:57
Speaker 11: against Wall Street, or in this case, betting against people
41:59
Speaker 11: who are Trump detractors who don't think he can win.
42:02
Speaker 2: Okay, Well, certainly having a good run here, that's that's
42:05
Speaker 2: for sure.
42:06
Speaker 3: There's certainly some buyers out there.
42:07
Speaker 2: We're seeing good volume again, to stock up over double
42:09
Speaker 2: digits here about twelve percent on some pretty decent volume.
42:13
Speaker 2: Eric Larsan, thanks so much for joining us. Eric is
42:15
Speaker 2: a Bloomberg legal reporter. On this story that it's a
42:19
Speaker 2: great headline. Trump is richer than ever yet still strapped
42:23
Speaker 2: for cash. We'll see how that plays out going forward.
42:25
Speaker 2: And the question I have alias just as a you know,
42:28
Speaker 2: someone who used to follow the social media companies like Facebook,
42:31
Speaker 2: like Snapchat, want, you know, I have to take a
42:34
Speaker 2: look and see kind of where the users are, where
42:35
Speaker 2: the revenue is, and see, you know, kind of what
42:37
Speaker 2: the opportunities are for this company.
42:40
Speaker 6: And that's been the big thing when I talk to
42:41
Speaker 6: investors who are not in the stock but are you know,
42:45
Speaker 6: on the street, and their big question is how can
42:48
Speaker 6: you actually monetize the business? If he wins the presidency,
42:51
Speaker 6: does that then draw people to true social and advertisers.
42:54
Speaker 3: In turn, or do they go out and acquire companies.
42:57
Speaker 6: That's the big kind of question is how do you
42:59
Speaker 6: fundamentally value what really is an app that has been
43:04
Speaker 6: around for a little over a year at this point.
43:06
Speaker 2: Right and you know, just seeing the business model for
43:08
Speaker 2: these social media companies, it's very simple It's no different
43:10
Speaker 2: than the magazine business back in the day. The newspaper
43:13
Speaker 2: business back in the day is you have mass an audience.
43:16
Speaker 2: The bigger the audience and the more engage the audience,
43:18
Speaker 2: the more.
43:18
Speaker 3: Valuable that is to advertisers.
43:20
Speaker 2: You mess on audience and you sell advertising against that audience,
43:23
Speaker 2: as simple as that. Maybe a little bit of an
43:25
Speaker 2: e commerce in there if you're fortunate, but really it's
43:27
Speaker 2: an advertising game.
43:29
Speaker 3: So the question for the folks.
43:30
Speaker 2: At Trump Media Technology goog will be whether they can
43:33
Speaker 2: what kind of audience they can amss over timing.
43:36
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