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Oracle Slides by Most Since January on Mounting AI Spending · Bloomberg Intelligence

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Speaker 2: Oracle taking it on the chin today. You know, they
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Speaker 2: put us a big revenue numbers. I thought, I mean
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Speaker 2: thirty percent here, sixty percent here, but not enough for
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Speaker 2: the street. And same time with Jack up your capex,
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Speaker 2: and I think the street gets a little bit nervous
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Speaker 2: about that. So this dock is trading down pretty big.
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Speaker 2: Second with anarag Rana, he covers all the technology spased
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Speaker 2: in your technis for Bloomberg Intelligence. So on our why
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Speaker 2: do you think Oracle's selling offs so much today?
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Speaker 3: So there are a few things to keep in mind.
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Speaker 3: You know, the number one thing is cloud infrastructure growth.
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Speaker 3: Consensus was sixty nine percent, decame at sixty six. I
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Speaker 3: know it's a very big number. However, in the cloud world,
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Speaker 3: missing by even one percentage point is not good. So
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Speaker 3: that's first thing. But you know, there's a very logical
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Speaker 3: reason about it. Everybody can see the backlock, so it's
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Speaker 3: not as if they don't have a business there, but
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Speaker 3: converting that backlog into sales is an issue. Everybody knows
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Speaker 3: that there is a capacity constraints out there, whether it's
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Speaker 3: data center, whether it's networking, et cetera. Power is a
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Speaker 3: very big issue, for example. So that's one area of it.
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Speaker 3: But although I would say the management did not harp
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Speaker 3: on it as much as we would wanted them to be,
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Speaker 3: that to explain why the growth can improve going forward.
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Speaker 3: So that's one factor. But I think the biggest question
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Speaker 3: is something that we had discussed earlier. Also is everybody
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Speaker 3: is questioning that out of their big backlock, which is
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Speaker 3: over five hundred billion right now, three hundred plus billion
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Speaker 3: of that comes from open ai. Now open ai currently
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Speaker 3: or the order book is from open Ai. By the
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Speaker 3: end of this year, open ai will have a revenue
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Speaker 3: round it off about twenty billion. So everybody is saying that, okay,
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Speaker 3: well tell me, if you have revenue of twenty billion,
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Speaker 3: how are you going to spend three hundred billion just
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Speaker 3: with Oracle. So there's a big question mark. But then
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Speaker 3: your question is, well, why didn't this happened when they
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Speaker 3: first announced it? Well, their bottle was at the top
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Speaker 3: at that point, and right now Google's Gemini has caught up,
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Speaker 3: so people don't know what will Openaize future look like
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Speaker 3: two years from now, three years from now, and so forth.
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Speaker 3: So there are multiple factors that are going into this equation.
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Speaker 3: And not to mention something, you just remarked that capex
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Speaker 3: is going to go up by fifteen billion, So thirty
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Speaker 3: five billion going to fifty billion. So it's a big, big,
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Speaker 3: you know, change across four or five different vectors that
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Speaker 3: are having an impact on the stock.
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Speaker 4: So the cloud strategy of Oracle continues to evolve. What
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Speaker 4: is the next major inflection point for you when you
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Speaker 4: see these cloud companies really move towards more AI driven efforts.
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Speaker 3: So the big thing is that five hundred billion a
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Speaker 3: backlock needs to bleed into revenue. For that, they need
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Speaker 3: to open new data center. But even to open new
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Speaker 3: data center, they need more cash. So the big catalyst
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Speaker 3: for them is they need go out. Most likely they
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Speaker 3: need to create a special purpose vehicle where they can
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Speaker 3: raise funds with the help of private equity investors, private
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Speaker 3: credit and basically you know, keep that off Oracles balance
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Speaker 3: sheet and that will help pacify the fears that they
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Speaker 3: actually have the way, a way to finance this big
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Speaker 3: order book that they have.
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Speaker 2: All right, look, well you mentioned open Ai. Can you
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Speaker 2: refresh my memory? Because I have no idea where do
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Speaker 2: they get their money that they like? Where are they
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Speaker 2: getting the money? I don't do all this stuff.
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Speaker 3: So the single biggest is the consumer app right now,
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Speaker 3: That's where most of the money is coming in because
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Speaker 3: you know, if you want the best model, you're going
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Speaker 3: to pay twenty dollars a month. I mean, you can
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Speaker 3: get the free version of it. But that's one area.
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Speaker 3: They have over nine hundred million users right now, but
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Speaker 3: only a small portion of them are paying customers. So
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Speaker 3: that's one. Second is if you as a company, let's
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Speaker 3: say you're you know, let's call a hypothetical bank, and
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Speaker 3: you're creating a chat pot which needs intelligence or a
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Speaker 3: large language model, You're going to use APIs from open Ai,
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Speaker 3: and that gets embedded intelligence into whatever system that you're creating,
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Speaker 3: your chatboard that becomes smarter. They get paid from that.
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Speaker 3: So those are the two I think big elements or
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Speaker 3: the big sources of revenue for them. And there is
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Speaker 3: a huge you could say, looking ahead, all the enterprises
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Speaker 3: around the world will have some intelligence into their core applications,
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Speaker 3: and they're going to use model from somebody, whether it's Google,
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Speaker 3: whether it's Anthropic, whether it's open AI.
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Speaker 4: How are you thinking of the leadership in this company?
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Speaker 4: How will the company's direction be affected down the line.
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Speaker 3: I think they really need to talk a little bit
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Speaker 3: about their expansion plans. I think this concept of you know,
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Speaker 3: he went out and talked about I'm going to spend
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Speaker 3: a trillion dollars in data centers. Then he went to
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Speaker 3: the government and say, well, is there a backstop to
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Speaker 3: this needs a little bit more clear on its expansion strategy,
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Speaker 3: because if he goes out and say, you know what,
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Speaker 3: I don't, I'm not spending a trillion dollars maybe one
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Speaker 3: hundred two hundred million or so. I think they needs
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Speaker 3: to tone down that rhetoric a little bit. But I
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Speaker 3: mean otherwise or he has to show a lot of
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Speaker 3: revenue growth over the next one years to one year
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Speaker 3: to pacify this particular uncertainty that has cropped up.
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Speaker 2: Right now and around thirty seconds left, this is Oracle
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Speaker 2: News kind of highlight the risk of some of these
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Speaker 2: circular deals.
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Speaker 3: See, I think it's not so much the circular deal
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Speaker 3: when it comes to the entire space. But there is
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Speaker 3: a question mark between what Opening is doing along with
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Speaker 3: Oracle and an Nvidia. So it's this three people for
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Speaker 3: this particular aspect of it that people are questioning whether
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Speaker 3: this is going to lead any issues. Whether it's Microsoft
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Speaker 3: and AWS and Google. I'm not concerned about those three.
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Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 2: Isabelle sitting in for Scarlet Fu and Paul Sweeney Life
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Speaker 2: here on our Bloomberg Interactive Brokers Studio streaming live on YouTube.
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Speaker 5: We're still waiting to see what's going to happen.
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Speaker 2: With Warner Brothers Discovery. We're talking about a ninety billion
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Speaker 2: dollar enterprise value m and a trade going to hit
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Speaker 2: the tape. But we've got two suitors out there, and
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Speaker 2: I'm not sure what the sello wants to do.
6:18
Speaker 6: Here.
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Speaker 2: Ethan Roung and Nathan joints that she's a US media
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Speaker 2: analyst for Bloomberg Intelligence. I guess the only new thing
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Speaker 2: I saw was President Donald Trump kind of weighing in here,
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Speaker 2: and he says, hey, whoever buys this thing, you got
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Speaker 2: to sell CNN or something like that.
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Speaker 5: What do you make of that?
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Speaker 2: I mean, CNN is like not even really relevant to
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Speaker 2: the entire company, is it not?
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Speaker 6: Really? But I think obviously Donald Trump has a huge
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Speaker 6: history with CNN, has despised the network always, so you know,
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Speaker 6: naturally he's kind of laying down this condition. But what
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Speaker 6: we think is it obviously complicates the deal a little
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Speaker 6: bit for Netflix. Remember Netflix is only buying the streaming
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Speaker 6: and studio portion of Warner Brothers Discovery, So obviously if
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Speaker 6: they are going to go with Netflix, you know, the
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Speaker 6: WBD team will have to find some way of offloading CNN,
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Speaker 6: which I'm not so sure how it's going to do that.
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Speaker 6: It obviously complicates the process with Paramount. That's not going
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Speaker 6: to be a problem because Paramount is buying the whole
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Speaker 6: company that includes the studio, the streaming platform, as well
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Speaker 6: as the TV network's business.
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Speaker 4: Talk to us why this deal is so polarizing. To
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Speaker 4: Paul's point, the President made a comment. Actress Jane Fonda
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Speaker 4: spoke out against a Netflix deal. Y. Both policymakers from
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Speaker 4: both aisles are also making comments. We will discuss that
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Speaker 4: comment later. I'm also interested, But Giza, why is it
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Speaker 4: so divisive?
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Speaker 6: It is divisive because this really will change or reshape
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Speaker 6: the whole media landscape. Isabelle, So, I think majority of
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Speaker 6: the content community, you know, writers, actors, talent, they're really
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Speaker 6: worried that if Netflix gets a hold of Warner Brothers
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Speaker 6: Discovery Studio, it kind of totally changes things, right, It
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Speaker 6: could potentially disrupt the theatrical model as we know it.
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Speaker 6: You know, all of the legacy media revenue streams are
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Speaker 6: at risk. It could potentially reduce output. Licensing from one
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Speaker 6: of the studios could be completely folded into Netflix's operation.
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Speaker 6: So there are obviously a lot of very many different risks,
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Speaker 6: very tangible risks that you know, could materialize in case
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Speaker 6: Netflix goes after or they're already after, in case they
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Speaker 6: win the Warner Brothers Studio asset. Now with paramount, I
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Speaker 6: think people generally see that more of a status quore,
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Speaker 6: just a continuation there. You know, they've obviously committed to
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Speaker 6: keeping the studio. We know David Ellison loves movies. He's
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Speaker 6: made a huge commitment to increase theatrical output. So I
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Speaker 6: don't think people necessarily view that deal as that much
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Speaker 6: more disruptive than the Netflix deal. The other political you
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Speaker 6: know issue there is obviously with CNN again, that's definitely
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Speaker 6: very polarizing considering you know, it's it's always kind of
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Speaker 6: been a little bit of an anti Trump kind of platform. Again,
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Speaker 6: everybody has a view on this deal from many different angles.
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Speaker 6: I would say it's about.
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Speaker 2: Hey, Keith, I've been reading some of the research from
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Speaker 2: your colleague Stephen Flynn is a credit analyst for Bloomberg
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Speaker 2: Intelligence looking at the media companies from the credit perspective.
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Speaker 2: Man if Paramount Wincessing, they're going to have a lot
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Speaker 2: of debt on their balance sheet, like a lot is
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Speaker 2: the equity folks, are they concerned about that?
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Speaker 6: So the way that Paramount has really framed this whole argument,
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Speaker 6: Paul is they're talking about a lot of synergies. Okay,
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Speaker 6: so they're talking about sixteen billion dollars in EBITDA. So
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Speaker 6: remember next year, paramounts Guida and standalone is going to
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Speaker 6: generate about three to three and a half billion dollars
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Speaker 6: in IBADA. If they do succeed in getting oneer Brothers Discovery,
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Speaker 6: they are promising about sixteen billion dollars in EBITDA, so
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Speaker 6: we're we're talking almost, you know, taking this fivefold, which
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Speaker 6: is why this DAL is so transformative. So yes, they
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Speaker 6: might have about eighty to ninety billion dollars in debt,
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Speaker 6: but their whole argument is that we can support it
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Speaker 6: just kind of given the amount of EBITDAD that we're
10:13
Speaker 6: going to be generating free cash flow generator conversion from
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Speaker 6: ibadah is going to also be robust, So that's their
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Speaker 6: whole argument. Of course, I'm not so sure the street
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Speaker 6: is necessarily convinced because those synergy targets could be pretty aggressive.
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Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
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10:47
Speaker 7: One of the stock story's been following today's Eli Lilly
10:50
Speaker 7: some Morgan news on some of their obesity work there.
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Speaker 7: The stocks up three point four percent today of thirty
10:56
Speaker 7: three percent year to date.
10:57
Speaker 8: I forgot.
10:57
Speaker 2: This thing's got a monster market caply nine hundred and
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Speaker 2: seventy billion dollar market kept, so just extraordinary. There a
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Speaker 2: big winner.
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Speaker 5: Madison Muller, she is Bloomberg News reporter.
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Speaker 2: She's been following this space, Madison joints us here in
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Speaker 2: our studio, Madison, what's going on with Lily? Here? They
11:13
Speaker 2: got some more good news today.
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Speaker 9: More good news for Lily. That's sort of been the
11:16
Speaker 9: theme of the last year. I mean, Lily has really
11:18
Speaker 9: surpassed its rival Novo Nordisk in terms of developing these
11:22
Speaker 9: next generation weight loss drugs that can be potentially easier
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Speaker 9: to take, easier to manufacture, elicit more weight loss than
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Speaker 9: Wigovi and Zepbound, which are the shots that are currently
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Speaker 9: on the market. And so Lily has a shot or
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Speaker 9: a pill potentially coming next year. And then this shot
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Speaker 9: read a true Tide, which is a triple agonist. It
11:39
Speaker 9: relies on three different hormones rather than just two or
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Speaker 9: one like GLP ones that we all know so well,
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Speaker 9: and so great results this morning for them, up to
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Speaker 9: twenty three percent weight loss in a study, which is
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Speaker 9: the most of really any of the shots that we've
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Speaker 9: seen yet.
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Speaker 5: I'm doing the math here twenty three. Wow, you make
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Speaker 5: John skinny again?
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Speaker 9: Yes, exactly right, I gues it's like it's a quarter
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Speaker 9: of someone's body weight almost.
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Speaker 5: It's pretty incredible.
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Speaker 2: Just give me unintended consequences there. I just feel like it.
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Speaker 5: I don't know it does.
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Speaker 4: In Madison story, it's said that participants on the highest
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Speaker 4: dose experience of more than sixty two percent reduction in
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Speaker 4: knee pain. And I feel like when people think of weight,
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Speaker 4: most of them associated with vanity or just looks, but
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Speaker 4: for others it could really mean health changes and lifestyle improvements, and.
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Speaker 9: Totally that's a really important part of this.
12:29
Speaker 5: And the market.
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Speaker 4: In your story, also you say that it's expected to
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Speaker 4: hit one hundred billion dollars by twenty thirty.
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Speaker 9: Right, And a lot of that is exactly what you
12:36
Speaker 9: were saying, that this is more than just I mean,
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Speaker 9: for some people, they are going out there and looking
12:41
Speaker 9: to lose a couple of hoss. But in terms of
12:43
Speaker 9: you know, reasons for why insurers should cover these drugs
12:46
Speaker 9: and reasons why these drugs are expected to be such
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Speaker 9: a big market is because they are helping people with other,
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Speaker 9: you know, important health issues like heart disease, knee pain.
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Speaker 9: Lily's studying this drug in liver disease or kidney disease
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Speaker 9: and heart disease and all of these things that are
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Speaker 9: linked to weight loss. But there is also potentially some
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Speaker 9: weight loss independent reduction of inflammation and things like that.
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Speaker 9: So these drugs are working in pretty incredible ways. They're
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Speaker 9: also setting them now in addiction and things like alcohol
13:14
Speaker 9: use disorder. So there's just so much here, and that
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Speaker 9: is a really important piece of this.
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Speaker 2: So I guess the end all be off for these
13:21
Speaker 2: pharmaceutical companies asn't relate to this particular area. Is I
13:26
Speaker 2: guess to get it into a form that more people
13:28
Speaker 2: can use ipill, maybe reduce side effects, but most importantly
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Speaker 2: at an affordable cost. Is there an expectation that those
13:37
Speaker 2: three things can happen at some point over the next
13:39
Speaker 2: several years.
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Speaker 9: Yeah, and I mean they are starting to happen. That's
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Speaker 9: one of the things that Trump administration actually struck a
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Speaker 9: deal with Novo and Lily to lower the cost of
13:47
Speaker 9: some of these medications beginning next year. There's also efforts
13:51
Speaker 9: from the pharmaceutical companies themselves to lower the direct to
13:54
Speaker 9: consumer cash pay prices so that people who don't have
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Speaker 9: insurance coverage for these drugs, which is still a lot
14:00
Speaker 9: of people can get them metamore affordable price. So that's
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Speaker 9: brought down the costs from over one thousand dollars a
14:06
Speaker 9: month to more like two hundred three hundred dollars a month,
14:09
Speaker 9: and so there are some of those efforts. Part of
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Speaker 9: the Trump administration deal was also that the lowest dose
14:14
Speaker 9: of the pills, which are expected to start rolling out
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Speaker 9: within the next couple of months next year, they'll start
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Speaker 9: at one hundred and fifty dollars a month. So that's
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Speaker 9: also pretty steep reduction from where the prices are at currently.
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Speaker 4: We see investors really cheer this move today. But how
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Speaker 4: high are the stakes is if they fail? Because it's
14:31
Speaker 4: experimental and I'm not the expert on this, but it's still.
14:35
Speaker 5: Experimental exactly, and the stakes are high.
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Speaker 9: And we've seen because the drugs that are currently on
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Speaker 9: the market with Goovi and Zebound are so good and
14:42
Speaker 9: they work so well, that the stakes for developing next
14:46
Speaker 9: generation drugs are higher. I mean, you have to get
14:49
Speaker 9: more weight loss than the drugs that are currently on
14:51
Speaker 9: the market. And at the same time, the safety risks
14:53
Speaker 9: are really real. We don't want drugs that are going
14:56
Speaker 9: to give someone even more health problems. I mean, of
14:58
Speaker 9: course always, but the sort of risk benefit analysis with
15:01
Speaker 9: weight loss drugs are different, and that's one of the
15:04
Speaker 9: things that we begin to see too with some of
15:06
Speaker 9: these next generation compounds. Amjin, for example, has a drug
15:10
Speaker 9: that had really high rates of side effects. It's supposed
15:12
Speaker 9: to be a once monthly drug, but investors haven't loved
15:15
Speaker 9: that one because of the high rates of side effects.
15:18
Speaker 9: In Lily's trial today, there were pretty high rates of
15:21
Speaker 9: side effects as well. People were having some weird like
15:24
Speaker 9: nerve pain tingling sensations and then the classic nausea, vomiting,
15:29
Speaker 9: constipation that are seene with these drugs, and so that's
15:32
Speaker 9: a really important piece to watch as well.
15:34
Speaker 2: Thirty seconds and asking for a friend hair loss drugs
15:37
Speaker 2: once that that's gonna be the next week.
15:38
Speaker 9: I mean, they're kind of starting to be out there already.
15:41
Speaker 9: A lot of these companies too, like Hymns and Hers
15:44
Speaker 9: and a lot of these telehealth companies are really going
15:46
Speaker 9: hard on the hair loss drugs.
15:48
Speaker 4: Wow.
15:49
Speaker 2: I mean I went to like had at dinner with
15:51
Speaker 2: some of my high school buddies recently. It was grim.
15:53
Speaker 5: It was grim. I mean, I'm just laying it out there.
15:56
Speaker 4: They can go to Turkey, yes, or the hair loss
15:58
Speaker 4: drugs they are gender neutral. Is that the right fra?
16:02
Speaker 1: Yeah?
16:02
Speaker 5: Yeah, yeah.
16:03
Speaker 9: And there are some I mean Hymns and Hers has
16:05
Speaker 9: some products that they've developed specifically for women and they
16:08
Speaker 9: have different formulations like shampoo, whatever. So people are, you know,
16:12
Speaker 9: more comfortable with different products.
16:15
Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
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16:36
Speaker 5: Let's take a look.
16:37
Speaker 2: One of the questions that I think the FED has,
16:40
Speaker 2: I think investors have is how's the US consumer doing
16:43
Speaker 2: out there?
16:44
Speaker 5: And there's a lot of ways we try to get
16:45
Speaker 5: to that.
16:46
Speaker 2: We talked to Michael Halean he covers all the restaurants
16:48
Speaker 2: for Bloomberg Intelligence to talk to analysts who cover different
16:52
Speaker 2: parts of the economy and see how their companies are
16:55
Speaker 2: kind of talking about the consumer. One of the folks
16:57
Speaker 2: we like to talk to is Lindsay, Dutch consumer Hardlinei's
17:00
Speaker 2: senior analysts for Bloomberg Intelligence think, you know, I think
17:03
Speaker 2: companies like Best Buy, Dixboarding Goods, that kind of thing,
17:07
Speaker 2: the hard lines, lindsay, talk to us about how your
17:10
Speaker 2: stocks performed in twenty twenty five and what's the expectation
17:14
Speaker 2: for twenty twenty six for some of those hardline rekillers.
17:17
Speaker 8: Hi, Paul, thanks for having me. I think if you
17:20
Speaker 8: look at, you know, the guidance for the rest of
17:23
Speaker 8: the year, I think a lot of these big hardline
17:25
Speaker 8: companies are baking in a lot of uncertainty with the consumer.
17:29
Speaker 8: But the reality is that if we look back, you know,
17:32
Speaker 8: to performance to date and results to date, results have
17:36
Speaker 8: you know, largely been better than expected. And and a
17:39
Speaker 8: lot of these retailers are sort of tracking to the
17:43
Speaker 8: upper half of their guidance range for the year because
17:46
Speaker 8: that consumer has stayed pretty pretty resilient. You know, we
17:49
Speaker 8: see strength you know, continuing to come from that higher
17:52
Speaker 8: income consumer, while the lower income might be you know,
17:55
Speaker 8: continuing to pull back a little bit. And if you
17:57
Speaker 8: think about companies like best Buy, All, Tom Williams, Sonoma,
18:01
Speaker 8: Dick Spoarding Goods, you know they are bringing you know,
18:04
Speaker 8: premium products, new products, exclusive products to that consumer, and
18:08
Speaker 8: the consumers are willing to pay up for that.
18:12
Speaker 4: What was the one trend that shocked you this year?
18:14
Speaker 4: Now that you look.
18:14
Speaker 8: Back, I think a lot of the trends have been
18:17
Speaker 8: a continuation of what we've been seeing. I think, you know,
18:21
Speaker 8: if we go back to late twenty twenty two, that
18:24
Speaker 8: is when the first pullback in that discretionary spend has been.
18:28
Speaker 8: But this is the first year that we've seen more newness,
18:32
Speaker 8: and newness is really a key driver to getting consumers
18:37
Speaker 8: in the store and to fueling transactions. So the best
18:40
Speaker 8: retailers are getting both transaction and ticket growth. But I
18:45
Speaker 8: think those innovation pipelines that maybe we're you know, settled
18:49
Speaker 8: down a bit during COVID, they've picked up again and
18:53
Speaker 8: bringing more newness is driving those transactions.
18:56
Speaker 2: How promotional do you think retailers will be in twenty
19:00
Speaker 2: twenty six to kind of drive the consumer to the
19:03
Speaker 2: store or to the mouse to click.
19:07
Speaker 8: So promotions are very important to bring shoppers to the store,
19:12
Speaker 8: you know, especially for someone like a best Buy. You know,
19:15
Speaker 8: promotions are very key, especially around holiday. We have seen
19:19
Speaker 8: that promotions are about flat, you know, in twenty five
19:22
Speaker 8: versus twenty four, and I would sort of expect a
19:25
Speaker 8: continuation of that in twenty six unless we see a
19:29
Speaker 8: huge spike in demand, in which case the retailers might
19:31
Speaker 8: be able to pull back on that promotional lever a
19:34
Speaker 8: little bit. But this year so far it's been about flat.
19:38
Speaker 8: You do see companies like a William's Sonoma very select promotions.
19:42
Speaker 8: This has been a strategy coming out of COVID. They
19:45
Speaker 8: sort of have stuck with it. They're even sticking with it,
19:48
Speaker 8: you know, through this season going into next year. Pottery
19:51
Speaker 8: Barn was a big focus for them. You know, they
19:54
Speaker 8: need a rebound in that brand and growth is slowly
19:57
Speaker 8: coming back, but they are staying steadfast and keeping those
20:00
Speaker 8: promotions very limited.
20:03
Speaker 4: I was going through your notes and then I read
20:04
Speaker 4: that many retailers are resuming or accelerating brick and mortar
20:08
Speaker 4: expansion plants because this leads to installing online sales. And
20:12
Speaker 4: that's just kind of the reverse trend that I was expecting.
20:14
Speaker 4: But you made a point that gen Z shows a
20:16
Speaker 4: strong preference for in person shopping. Can you talk to
20:19
Speaker 4: us more about that and how each generation is different.
20:23
Speaker 8: Sure, Yeah, in store shopping is definitely back and just
20:28
Speaker 8: meeting the consumer where they are. So retailers, I think
20:32
Speaker 8: are more focused on all channels, whether it's said whether
20:37
Speaker 8: they have an app, they're online site, their brick and
20:39
Speaker 8: mortar stores, but brick and mortar as a whole. You know,
20:43
Speaker 8: we are seeing more openings than closings, and that has
20:46
Speaker 8: been a trend for the past couple of years. But
20:49
Speaker 8: when we think about sort of the retail real estate market,
20:51
Speaker 8: the demand has been solid coming out of COVID and
20:54
Speaker 8: so vacancy is starting to get low and there's really
20:57
Speaker 8: no new properties being built. So these retailer was looking
21:00
Speaker 8: to expand, which is great for their businesses. You know,
21:04
Speaker 8: they really have to work hard to do so and
21:06
Speaker 8: find good space to open stores because there's just not
21:09
Speaker 8: that much of it. But best Buy has talked about
21:12
Speaker 8: gen Z's preference for in store shopping, so has Alta
21:15
Speaker 8: Beauty and and so we're definitely seeing that across the board,
21:20
Speaker 8: but especially that younger generation.
21:22
Speaker 2: There's plenty of retail space on Lexinton Avenue and fifty
21:24
Speaker 2: eighth streetment. Lindsay John from The Highlands rights in and
21:28
Speaker 2: you want to ask about the beauty segment Atlantic Islands.
21:31
Speaker 5: Atlantic stones confuse the two the Atlantic Islands, Alta Beauty,
21:35
Speaker 5: ELF Beauty. So for how how does that category look for.
21:38
Speaker 2: Twenty twenty six.
21:40
Speaker 8: So demand has showed a strengthening sort of in the
21:44
Speaker 8: back half of twenty five. I think that momentum can
21:48
Speaker 8: continue into twenty six. I think for Alta in particular,
21:51
Speaker 8: they have done a great job, you know, bringing elevating
21:55
Speaker 8: their assortment and bringing on exclusives and that has really
21:58
Speaker 8: helped them. Comps are going to get tougher next year
22:02
Speaker 8: and they need to continue to drive growth and I
22:05
Speaker 8: think for them, you know, leaning into their salon services
22:08
Speaker 8: could be a key way to do that. Leaning into
22:10
Speaker 8: wellness is a key way to do that. There's multiple
22:13
Speaker 8: levers that they can pull. The categories that are showing
22:17
Speaker 8: the most strength is really fragrance and skincare, and we
22:21
Speaker 8: would expect that demand to continue into next year.
22:25
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