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Advance Placement: WILL AMAZON'S STOCK RECOVER? · Earn Your Leisure

• 0:00
  Speaker 1: So let's get into this.
• 0:01
  Speaker 2: I want to start with probably the biggest thing that
• 0:04
  Speaker 2: happened last week is Amazon. So Amazon, it was down
• 0:12
  Speaker 2: twenty percent after hours, but then it rebounded. I think
• 0:15
  Speaker 2: it finished the day down like seven percent something like that,
• 0:19
  Speaker 2: but missed it's uh, it's expected guidance. The guidance was
• 0:25
  Speaker 2: lower than they were expected. Still profitable, still made a
• 0:30
  Speaker 2: ton of money, but just missed Wall Street's expectations, and
• 0:34
  Speaker 2: it dropped to a fifty two week low. Like I said,
• 0:36
  Speaker 2: rebounded a little bit from that. But yeah, it's interesting, man,
• 0:40
  Speaker 2: it really, you know, had a really tough day and
• 0:44
  Speaker 2: it's been having a tough year.
• 0:48
  Speaker 1: It's been having a tough couple of years. Actually. Well,
• 0:51
  Speaker 1: so now the stock market, Oh are we.
• 0:55
  Speaker 3: Going to get the dialogue and debate that we get sports? Well,
• 1:01
  Speaker 3: what's the show is going to be the one? What's
• 1:03
  Speaker 3: the base show?
• 1:04
  Speaker 1: Is?
• 1:05
  Speaker 2: So the stock stock market is up for the month
• 1:08
  Speaker 2: of October.
• 1:09
  Speaker 1: Yeah, that was up eleven percent.
• 1:11
  Speaker 2: The Nasdaq is up even the other day when when
• 1:15
  Speaker 2: Amazon crashed, NASDAK was up. That's when people was up.
• 1:18
  Speaker 2: That was up. But so Amazon was your pick of
• 1:22
  Speaker 2: the year, Yes, it was. So I'll let you start
• 1:24
  Speaker 2: off this conversation is do you want to reverse that?
• 1:31
  Speaker 2: I'm not there down Everest? So which which way are
• 1:37
  Speaker 2: we going? Which way we're going?
• 1:39
  Speaker 3: Yes?
• 1:40
  Speaker 1: Sension or the sension is key?
• 1:43
  Speaker 4: Yeah, I mean based on everything that I had read
• 1:46
  Speaker 4: in my in my information, you know, I stuck by
• 1:48
  Speaker 4: that pick.
• 1:49
  Speaker 1: Has it gone the way I predicted? No? No? Do
• 1:52
  Speaker 1: I still believe in the company. Absolutely.
• 1:55
  Speaker 4: So the report, the earnings report was interesting, right, because
• 2:00
  Speaker 4: there was some like if you looked inside of it,
• 2:02
  Speaker 4: there were some good spots, but the bad spots were
• 2:05
  Speaker 4: so bad that it got overlooked. So I'm gonna break
• 2:08
  Speaker 4: it down by the numbers, and so a good spot
• 2:10
  Speaker 4: the revenue group about fifteen percent. Anytime you have a
• 2:12
  Speaker 4: business and it grows, that's great. The advertising, right, which
• 2:17
  Speaker 4: is we said was going to pass Google at some point,
• 2:19
  Speaker 4: was up by twenty five percent. The big pitfall was
• 2:23
  Speaker 4: the operating income that fell by forty nine percent. Right,
• 2:27
  Speaker 4: So those who don't know what operating income is, can
• 2:30
  Speaker 4: you really quickly explain to them on I mean, I
• 2:32
  Speaker 4: think the best way to say it is the money
• 2:34
  Speaker 4: that they are taking in and how they're going to
• 2:37
  Speaker 4: use it now and specifically for tech companies and inflationary environments,
• 2:43
  Speaker 4: this does not bolde well, right, And so as inflation
• 2:46
  Speaker 4: goes the cost to do things to operate your business
• 2:49
  Speaker 4: obviously goes up. And so when you see interest rate rise,
• 2:52
  Speaker 4: you see right, since January, if you look at the NASTEC,
• 2:56
  Speaker 4: the tech stocks have taken descension. We're gonna stick with
• 3:01
  Speaker 4: that work. Most of them died riding down ever or
• 3:06
  Speaker 4: walking down evers, right, most counts die on a decession,
• 3:12
  Speaker 4: So that that that was huge, all right. The arnth
• 3:15
  Speaker 4: per share dropped right by an estimated forty five percent.
• 3:19
  Speaker 4: So those those two things, when you're talking about operating
• 3:21
  Speaker 4: costs and the earnings per share drop in there you
• 3:24
  Speaker 4: can see why a company like Amazon, which I still
• 3:26
  Speaker 4: think is a top three, if not top two companies
• 3:29
  Speaker 4: in the world, had such a negative quarter. Operating cash
• 3:33
  Speaker 4: flow also declined by twenty five percent. So like now
• 3:36
  Speaker 4: we're talking about three major factors of things that are like,
• 3:39
  Speaker 4: all right, this is a rough quarter. But even Basos
• 3:42
  Speaker 4: when they asked him about it, he was like, look,
• 3:44
  Speaker 4: we're gonna have to really tighten the belt because the
• 3:47
  Speaker 4: climate is about to get a real tricky. So those
• 3:50
  Speaker 4: are three factors you add on to one other thing
• 3:53
  Speaker 4: that was almost positive.
• 3:55
  Speaker 1: And kind of got overlooked.
• 3:56
  Speaker 4: But the fourth quarter revenue is expected to grow by
• 3:59
  Speaker 4: two to eight percent. Fourth Quarta, obviously we know, is
• 4:03
  Speaker 4: how they shop and how they season. More people are
• 4:05
  Speaker 4: in e commerce. The only thing is that what they're
• 4:07
  Speaker 4: seeing is that more people are going back into the stores.
• 4:10
  Speaker 4: We thought that obviously from the COVID time that people
• 4:13
  Speaker 4: were shopping online and it was a positive. But people
• 4:17
  Speaker 4: are back outside right e commerce numbers are not looking
• 4:21
  Speaker 4: the same as they did when you know, it was
• 4:22
  Speaker 4: a lockdown. So all those things taken into account. I
• 4:27
  Speaker 4: understand it. Do I still believe in it absolutely. Is
• 4:30
  Speaker 4: it going to be the stock of the year. Absolutely not.
• 4:33
  Speaker 4: It's still one of my top two or three companies.
• 4:35
  Speaker 1: Though.
• 4:39
  Speaker 3: The big thing I want people to realize is that
• 4:42
  Speaker 3: even in a company when it's going down.
• 4:46
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• 6:36
  Speaker 3: To wait for a great price to get in. Everyone
• 6:39
  Speaker 3: on a stock club, please put in chat Woll was
• 6:41
  Speaker 3: a number our coff Amazon. You can still make money
• 6:44
  Speaker 3: on a heavy drop like that. So the fundamentals of
• 6:47
  Speaker 3: the company haven't changed that much. Their global market share
• 6:52
  Speaker 3: dominance has not changed that much. When you have interest
• 6:58
  Speaker 3: rates of course going up and we're now going through
• 7:01
  Speaker 3: I think this ultimately will be a bigger recession when
• 7:05
  Speaker 3: it's all said and done in two thousand and seven,
• 7:07
  Speaker 3: two thousand and eight. But Amazon is primed, no pun
• 7:10
  Speaker 3: intended to do really well. Once things start to settle out,
• 7:19
  Speaker 3: they could be a hell of a lot lower. Being
• 7:21
  Speaker 3: in that tech space. They haven't fallen into the seventies
• 7:24
  Speaker 3: or the sixties. Ninety nine was like a good spot
• 7:26
  Speaker 3: that we liked, got in. It's like currently like a
• 7:29
  Speaker 3: one oh four if you're holding it for the long term,
• 7:32
  Speaker 3: you will be good also for a quick homework assignment. Internationally,
• 7:37
  Speaker 3: if you're going to order online from someone who are
• 7:40
  Speaker 3: the four biggest competitors of Amazon. Now ask yourself, who's
• 7:46
  Speaker 3: going to get the goods to you there faster than Amazon?
• 7:50
  Speaker 1: No one.
• 7:50
  Speaker 3: They'll fix the operating income. Any money they're losing right now,
• 7:55
  Speaker 3: they'll fix. Going into next year, you're going to be
• 7:58
  Speaker 3: really upset if you don't hold a stock twenty twenty five,
• 8:00
  Speaker 3: twenty six. Yeah, and if you look at the climate
• 8:04
  Speaker 3: of the world, like every country is trying to create
• 8:06
  Speaker 3: a business that replicates Amazon, right and I won't give
• 8:10
  Speaker 3: them the names because you gave them a homework assignment.
• 8:12
  Speaker 3: But go look in China, right, Well, we know that company,
• 8:15
  Speaker 3: but go look in South America. There's another company there
• 8:18
  Speaker 3: that is duplicated the business model of Amazon. And so
• 8:22
  Speaker 3: they'll figure it out. I believe in them. Well, let
• 8:25
  Speaker 3: me ask you this ian.
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  Speaker 2: You you said a few times that your theory of
• 8:29
  Speaker 2: two tech two index, if inflation gets something to over
• 8:34
  Speaker 2: eleven percent, then that right, eleven percent? Yes, then that
• 8:38
  Speaker 2: that is gonna hurt your your theory. So why is
• 8:41
  Speaker 2: high inflation bad for technology?
• 8:44
  Speaker 3: Especially when quantitative easing goes away all the easy wins,
• 8:47
  Speaker 3: like for all my hoopers, like when we play on
• 8:50
  Speaker 3: like a nine foot rim, we all look like Lebron
• 8:54
  Speaker 3: ten feet dramatically different. So that difference between happens your
• 8:58
  Speaker 3: interest rates and being able to borrow money. Like imagine
• 9:02
  Speaker 3: if if I said, hey, come to invest fast euro
• 9:06
  Speaker 3: We'll give every entrepreneur one hundred thousand dollars and you
• 9:09
  Speaker 3: never have to pay us back. The upside for the
• 9:12
  Speaker 3: entrepreneur is probably a ninety five percent win rate. If
• 9:16
  Speaker 3: we give one hundred thousand pounds away and say hey,
• 9:18
  Speaker 3: you got to pay us twenty five percent back, now
• 9:21
  Speaker 3: maybe only thirty percent of the businesses will actually be
• 9:24
  Speaker 3: profitable as a result, So that arbitrage is one of
• 9:28
  Speaker 3: the biggest reasons Now Apple inside of that two tech
• 9:31
  Speaker 3: two index model has worked well. That's why always say
• 9:35
  Speaker 3: pair with the top two. But if you're going through
• 9:37
  Speaker 3: tech and you're looking at something that's fifteenth or twentieth,
• 9:41
  Speaker 3: that's not going to do really well because what the
• 9:43
  Speaker 3: technology industry really has done has gotten venture capital, which
• 9:49
  Speaker 3: has funded all of the ideas, and we have a
• 9:51
  Speaker 3: funded innovation. We've really funded the ideas that can get funded.
• 9:56
  Speaker 3: That's why we have a whole bunch of social media apps.
• 9:58
  Speaker 3: We could talk about it later. Now Jack from squares
• 10:01
  Speaker 3: looking to make another social media app, which I think
• 10:04
  Speaker 3: is a mistake. But you're really playing an interest rate
• 10:07
  Speaker 3: arbitrage game. So if I'm getting loan money at three percent,
• 10:11
  Speaker 3: when I can find a way ultimately to sell advertising
• 10:15
  Speaker 3: or a subscription to my user base at nine percent,
• 10:18
  Speaker 3: I'm playing an arbitrage game and getting the profit in between.
• 10:22
  Speaker 3: If interest rate is high and then no one's loaning
• 10:24
  Speaker 3: the money out, it's really hard to win that game.
• 10:27
  Speaker 3: So we are in a space, but we need more innovation,
• 10:31
  Speaker 3: and ironically enough tech has not done a great job
• 10:36
  Speaker 3: at making a bunch of innovation. How we thought Like
• 10:38
  Speaker 3: when we were kids, I thought we would have flying
• 10:40
  Speaker 3: cars by now, Yeah, Jetson's for sure, we're not there.
• 10:44
  Speaker 3: Like RAYJ is the only one still making scootie bikes
• 10:47
  Speaker 3: shot up in the city.
• 10:48
  Speaker 1: Shout out to ray J.
• 10:50
  Speaker 3: So we need more innovation, and I think now we're
• 10:52
  Speaker 3: just going to clear the way for people to be
• 10:55
  Speaker 3: able to get out all the bad companies and create
• 10:58
  Speaker 3: companies that will actually have a real ima.
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