Latest / What the Flux / Domain vs REA drama deepens | Meta’s $135 billion bet | Tesla doesn't want to sell cars

Transcript

Domain vs REA drama deepens | Meta’s $135 billion bet | Tesla doesn't want to sell cars · What the Flux

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  Speaker 1: This is what the Flux. I'm bred and I'm justin
• 0:07
  Speaker 1: and it's Friday, the thirtieth of January. Just over a
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  Speaker 1: year ago, the government said that the worst is behind
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  Speaker 1: us when it comes to inflation, but new inflation data
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  Speaker 1: shows that underlying inflation increased to three point four percent
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  Speaker 1: in the December quarter out, which was above the RBA's
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  Speaker 1: forecast and well above it's two and a half percent
• 0:25
  Speaker 1: target range. With the RBA meeting for the first time
• 0:28
  Speaker 1: this year on Tuesday, all eyes were on the RBA
• 0:30
  Speaker 1: boards a big decision. Will they pause or will they raise.
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  Speaker 1: We'll cover it all in the Flux app next Tuesday.
• 0:35
  Speaker 1: Very nervous times for the six million mortgage holders in Australia.
• 0:38
  Speaker 1: Be Man, Huge, Foxdam. We often talk about investing on
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  Speaker 1: the podcast, whether it's through company updates or ETFs or
• 0:44
  Speaker 1: direct investing, and something we sometimes speak about as well
• 0:47
  Speaker 1: is income investing. In the Flux app, we break down
• 0:49
  Speaker 1: the case for inviting fixed income into your share portfolio party.
• 0:53
  Speaker 1: So that you want to learn more about fixed income ETFs,
• 0:55
  Speaker 1: make sure to download the Flux app and check it out.
• 0:57
  Speaker 1: Three enormous stories today Juzzy Boy, Let's do it for
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  Speaker 1: our first domains. Fight with Area just got more complicated
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  Speaker 1: after a US activist investor fired some shots at domain's
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  Speaker 1: new owner, Coastar. Oh is Domain's magical war chest about
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  Speaker 1: to shrink before it was even dished out? Tell me
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  Speaker 1: we'll be man. Okay. So Costar is an American real
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  Speaker 1: estate data and analytics giant that's focused on commercial real estate.
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  Speaker 1: A few years ago it got to be bored of
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  Speaker 1: commercial property and it decided it wanted to play in
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  Speaker 1: residential too, And since then it's spent billions acquiring homes
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  Speaker 1: dot Com in the US, on the market in the UK,
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  Speaker 1: and of course Australia's very own Domain. Now this was
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  Speaker 1: meant to be Domain's glow up moment, think deep pockets,
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  Speaker 1: globe backing, limitless capital. In fact, be Man Coastar CEO
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  Speaker 1: said he was willing to quote each nails to make
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  Speaker 1: sure Domain succeeds. That is some serious dedication to the
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  Speaker 1: cause the old nail consumption. But now be Man. Activist
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  Speaker 1: investor Dwnload, the influential founder of hedge front Third Point,
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  Speaker 1: has just released a scathing letter to Coastar's board. He
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  Speaker 1: said Coastar has quote week board oversight custrous capital allocation
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  Speaker 1: policies and years of strategic blunders, and is particularly fired
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  Speaker 1: up about Costar's expansion into residential real estate portals. Lobe
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  Speaker 1: is demanding the Costart refocus on its core commercial property business,
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  Speaker 1: and this is a huge deal for Domain because if
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  Speaker 1: Lobe gets his way, Domain's budget could be slash. So
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  Speaker 1: what's the key learning here? When you're part of a
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  Speaker 1: global company, your budget is only as safe as your
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  Speaker 1: parent company's performance and stability. When a giant like Costart
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  Speaker 1: buys a company like Domain, it loses its independent status.
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  Speaker 1: Domain no longer answers to just its customers or its
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  Speaker 1: own ASX shareholders. It effectively answers to the parent company
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  Speaker 1: shareholders too, and Domain, as the subsidiary, becomes a lever
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  Speaker 1: that Costar can pull to fix their own challenges. Yeah,
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  Speaker 1: you see, man. When Costar acquired Domain, Aria's investors fear
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  Speaker 1: that Domain would outspend Aria on marketing, AI tech hiring.
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  Speaker 1: But while they're under attack from activist investors, Domain might
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  Speaker 1: be told to just sit tight or self fund. So
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  Speaker 1: given Aria's share price drop more than ten percent when
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  Speaker 1: the news of the Domain acquisition first, you can bet
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  Speaker 1: there might be some very relieved investors right now for
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  Speaker 1: our second story, Meta has generated record profits and it's
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  Speaker 1: now investing one hundred and thirty five billion US dollars
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  Speaker 1: as part of the AI race. One hundred and thirty
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  Speaker 1: five bill. Nothing to sneeze out here, be man, the
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  Speaker 1: Zuck is back in growth mode. So tell me all well,
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  Speaker 1: Josey boy Meta is the parent company of Facebook and
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  Speaker 1: Insta and WhatsApp, you know, just casually connecting over three
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  Speaker 1: point five billion people every single day. And jose boit.
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  Speaker 1: Meta has had its own ups and downs over the
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  Speaker 1: last couple of years with its whopping spend on remember
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  Speaker 1: the metaverse, it really hurt its share price. Yeah, but
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  Speaker 1: now Meta has crushed its quarterly earnings. We're talking revenue
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  Speaker 1: of nearly sixty billion US dollars, which is up twenty
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  Speaker 1: four percent, while it's net income of nearly twenty three
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  Speaker 1: billion US dollars is up nine percent. And both of
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  Speaker 1: these results are quarterly records. And Josey Boy Meta announced
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  Speaker 1: their plan to spend between one hundred and fifteen billion
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  Speaker 1: dollars to one hundred and thirty five billion US dollars
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  Speaker 1: on capital spending in twenty twenty six and the bulk
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  Speaker 1: of that spending will be in their new meta superintelligence
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  Speaker 1: labs aka a high all part of their plan to
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  Speaker 1: compete with Google, OpenAI and Anthropic and then Man, that
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  Speaker 1: spend is nearly double what they spent in twenty twenty five,
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  Speaker 1: which was just over seventy two bill and this means
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  Speaker 1: that the barrier to entry into large language models is
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  Speaker 1: becoming even higher. Yep, So what is the key learning here?
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  Speaker 1: AI is quickly becoming a game where scale really matters,
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  Speaker 1: because training and running advanced models require some serious dough.
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  Speaker 1: We be talking upfront investments in AI chips and data centers,
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  Speaker 1: energy networks, many many employees, and that is where capital
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  Speaker 1: intensity actually becomes a competitive advantage for meta. Think about
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  Speaker 1: this one, Jazzy boy. Only a handful of companies can
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  Speaker 1: really afford to spend one hundred plus a billion a
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  Speaker 1: year on AI, So metas spending effectively raises the barrier
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  Speaker 1: to entry. Yep. There may be smaller competitors with better ideas,
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  Speaker 1: but without the infrastructure they may struggle to compete. Throw
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  Speaker 1: on top of that, metas throwing hundreds of millions of
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  Speaker 1: dollars to lure AI experts with upfront bonuses. So by
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  Speaker 1: investing early and at scale, Meta is trying to lock
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  Speaker 1: in their long term positioning, even if it means sacrificing
• 4:59
  Speaker 1: on some short term efficiency. For our third and final story,
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  Speaker 1: Tesla's annual revenue has fallen for the first time ever
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  Speaker 1: after Elon Musk shifts Tesla's focus away from cars car
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  Speaker 1: company that doesn't actually care about car sales. Hey, good figure,
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  Speaker 1: what is going on here? So Tesla is the electric
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  Speaker 1: vehicle maker found it in two thousand and three, best
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  Speaker 1: known for turning electric vehicles from niche science projects into
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  Speaker 1: mass market car and for the first time ever, Tesla
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  Speaker 1: reported an annual revenue decline. Yeah, it's twenty twenty five
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  Speaker 1: sales slid three percent to ninety four point eight billion.
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  Speaker 1: And why's Tesla lost its EV crown b man Well,
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  Speaker 1: lots of reasons, but the main one are the major
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  Speaker 1: competition from BID and other companies. So Tesla is converting
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  Speaker 1: the factory space for models and x into a massive
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  Speaker 1: production hub for the Optimus humanoid robots. Tesla's also doubling
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  Speaker 1: down on AI by investing two billion US dollars into
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  Speaker 1: Musk's other startup, Xai, And again it's part of Tesla's
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  Speaker 1: plan to shift away from ev cars into driverless cyber cabs.
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  Speaker 1: Lot's going on here, but be man. Despite these disappointing
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  Speaker 1: final results, Tesla share price actually actually remained flat. So
• 6:03
  Speaker 1: what's the key learning here? A company valuation depends on
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  Speaker 1: which business investors think you're in. If Tesla is viewed
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  Speaker 1: as a car manufacturer, then Houston Tesla's guard problem revenue
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  Speaker 1: dropping year on year. December quarterly deliveries across all models
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  Speaker 1: fell sixteen percent from the same time last year. But
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  Speaker 1: if Tesla is viewed as an AI and robotics company,
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  Speaker 1: then the declining cars aren't such a biggie because it's
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  Speaker 1: not the future. The investor lens changes completely. So Tesla
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  Speaker 1: is hoping that as its electric vehicle business declines, the
• 6:31
  Speaker 1: overall company is dropped up by AI, robotics and autonomous
• 6:35
  Speaker 1: vehicles that you can name. But that's why the share
• 6:38
  Speaker 1: price remained flat despite worse quarterly results. Ever, fox am,
• 6:42
  Speaker 1: did you know that only twenty eight percent of individual
• 6:44
  Speaker 1: stocks on the S and P five hundred actually beat
• 6:46
  Speaker 1: the indexes in twenty twenty four And that is where
• 6:48
  Speaker 1: fixed income quietly plays its part. They diversified portfolio to
• 6:52
  Speaker 1: make sure to check out the Flex app to learn more.
• 6:54
  Speaker 1: Thanks for listening, and we'll see you on Monday.