Latest / What the Flux / RBA hikes rates to a decade-high | Chemist Warehouse heads to the UK | Duolingo loses its winning streak

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RBA hikes rates to a decade-high | Chemist Warehouse heads to the UK | Duolingo loses its winning streak · What the Flux

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  Speaker 1: This is what the Flux. I'm Brett and I'm justin
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  Speaker 1: and it's Wednesday, the sixth of a dose.
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  Speaker 2: Boy, get this, more than half a million customers of
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  Speaker 2: sea Bus the super fund will see their insurance premiums jump.
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  Speaker 2: We're not talking a pitdly few percent. We're talking an
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  Speaker 2: average increase of forty six percent from July.
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  Speaker 1: Wow.
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  Speaker 2: And when one super fund moves like this, you can
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  Speaker 2: expect some others to follow suit.
• 0:26
  Speaker 1: Everything getting so expensive. According to the latest Flux survey data,
• 0:30
  Speaker 1: more than fifty percent of young Australians invest in ETFs
• 0:33
  Speaker 1: is their first investment. But have you heard about active ETFs. Well.
• 0:36
  Speaker 1: In the Fux Academy this month, we're talking about the
• 0:38
  Speaker 1: rise of active ETFs and how they can outperform the market.
• 0:41
  Speaker 1: So if you want to learn more about active ETFs
• 0:43
  Speaker 1: and win some prizes, make sure to download the Flux
• 0:45
  Speaker 1: app and check out at the academy this month.
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  Speaker 2: Three massive stories today, Jasi boy, let's do it for
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  Speaker 2: our first. The Reserve Bank has hiked rates for the
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  Speaker 2: third consecutive meeting to four point three five percent, and
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  Speaker 2: this is the highest cash rate in over a decade.
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  Speaker 1: The IBA just did something no other may your economy
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  Speaker 1: is doing right now, b man, so tell me more so.
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  Speaker 2: The RBA is Australia's Central Bank, aka Australia's financial control center.
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  Speaker 1: They set the interest rate that not so quietly affects
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  Speaker 1: every single mortgage, every loan and savings account in your
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  Speaker 1: entire life.
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  Speaker 2: Now, jazy boy. Back in twenty twenty two, the RBA
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  Speaker 2: got a lot of heat for being too slow to
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  Speaker 2: raise rates during the inflation spy.
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  Speaker 1: So the RBA's move yesterday is very much them trying
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  Speaker 1: not to make the same mistake again.
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  Speaker 2: Yeah. So, the RBA has raised the cash rate for
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  Speaker 2: the third meeting in a row, up twenty five basis
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  Speaker 2: points to four point three five percent.
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  Speaker 1: And a man, this wasn't even a close call. The
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  Speaker 1: RBA board voted eight to one in favor of the hike.
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  Speaker 2: So why are they doing this when the US Fed,
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  Speaker 2: the Bank of England, the European Central Bank all paused
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  Speaker 2: rates last week.
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  Speaker 1: Because in Australia inflation is a running hot yeap.
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  Speaker 2: The RBA is now forecasting inflation to hit four point
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  Speaker 2: eight percent, which is up from their earlier forecast to
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  Speaker 2: four point two percent.
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  Speaker 1: So, b man, the RBA is working hard on its
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  Speaker 1: monetary tightening policy.
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  Speaker 2: It is, so what's the key learning here?
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  Speaker 1: Monetary tightening is when a central bank raises interest rates
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  Speaker 1: to cool spend, to slow borrowing with the goal of
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  Speaker 1: bringing inflation down.
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  Speaker 2: Think of it like this, Jasey boy. The economy is
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  Speaker 2: a bit like a car going too fast, and the
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  Speaker 2: IRBA is trying to pump down.
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  Speaker 1: Brakes three times in a row.
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  Speaker 2: Higher rates mean your mortgage repayments go up, which generally
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  Speaker 2: means you spend less. It also means that businesses typically
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  Speaker 2: invest less as well, and prices, in theory stopped rising
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  Speaker 2: as quickly.
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  Speaker 1: The problem is, be man, there's a lag. The rate
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  Speaker 1: hikes often take twelve to eighteen months to fully flow
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  Speaker 1: through the economy.
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  Speaker 2: So it means that RBA is essentially flying partly blind.
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  Speaker 1: And b man. The US went through the same rate
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  Speaker 1: hiking playbook back in twenty twenty two and twenty twenty three.
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  Speaker 2: Yeap, the US Fed hiked rates from zero point to
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  Speaker 2: five percent to five point five percent across sixteen months.
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  Speaker 1: Whereas in Australia we only reached the peak of four
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  Speaker 1: point three five percent.
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  Speaker 2: Which is where we are again right now.
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  Speaker 1: So the RBA is hoping that this hike and potentially
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  Speaker 1: more later this year, will slow down the inflation.
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  Speaker 2: But with factors out of their control like petrol prices
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  Speaker 2: and war, even the IBA is kind of flying blind.
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  Speaker 2: Here for our second story, Chemists Warehouse is taking its
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  Speaker 2: discount pharmacy model to the UK after buying into a
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  Speaker 2: Britaish chain that has been losing millions of dollars. Chemist
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  Speaker 2: Warehouse jingles coming to the UK Radio. What is going
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  Speaker 2: on here? Okay?
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  Speaker 1: So chemistware House first launched in Australia in the y
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  Speaker 1: twok aka twenty.
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  Speaker 2: Twenty five years later, we're talking five hundred stores nationwide,
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  Speaker 2: twenty thousand employees and one point five million prescriptions filled
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  Speaker 2: every week.
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  Speaker 1: Wow. And then a mega merger last year with Sigma
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  Speaker 1: Healthcare that created a thirty four billion dollar retail and
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  Speaker 1: wholesale giant pretty much over night.
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  Speaker 2: And Jazz the ware Chemists ware House ain't stopping here
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  Speaker 2: in Australia now.
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  Speaker 1: They've open nine stores in New Zealand, seventeen in Ireland
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  Speaker 1: and sell online in Jubai and China.
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  Speaker 2: So next up London.
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  Speaker 1: Yeah, the land of Boots and Marks and Spencer is
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  Speaker 1: about to get the bright yellow colors and irritatingly catchy
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  Speaker 1: jingles of Chemist.
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  Speaker 2: Ware House yep. Sigma is buying a seventy five percent
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  Speaker 2: steak in London based green Light Healthcare.
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  Speaker 1: It's a twenty two store pharmacy chain and this deal
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  Speaker 1: licenses the chemistware House brand across those stores.
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  Speaker 2: And while Sigma is ultra profitable, green Light posted a
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  Speaker 2: pre tax loss of two point one million Australian dollars
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  Speaker 2: in twenty twenty four. So rather than start from scratching
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  Speaker 2: the UK, Chemist Warehouse will license its brand to green Light.
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  Speaker 1: So it's chemistware House at the front, but green Light
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  Speaker 1: at the back.
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  Speaker 2: So what's the key learning here?
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  Speaker 1: Study a business overseas from zero is one of the
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  Speaker 1: hardest things the company can do, but licensing your brand
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  Speaker 1: to someone who already exists that is a very different game.
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  Speaker 1: H Instead of spending years and lots of money building
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  Speaker 1: new stores, hiring new staff, Sigma and the hemasware House
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  Speaker 1: will just buy into a network that already has all
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  Speaker 1: of those things.
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  Speaker 2: So green Light gets to keep running its pharmacies. Chemist
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  Speaker 2: ware House just slaps its distinct branding on the doors
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  Speaker 2: and hopes.
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  Speaker 1: Its formula works just as well as.
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  Speaker 2: It does in Australia, because we know how costly and
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  Speaker 2: risky it can be for Australian retailers to expand overseas,
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  Speaker 2: and not all have succeeded. Ahem, Bunning's trying to move
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  Speaker 2: into Britain failing costing them a one billion dollar right
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  Speaker 2: down in twenty eighteen.
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  Speaker 1: Or even Smiggle right now in a world of pain
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  Speaker 1: with its overseas expansion.
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  Speaker 2: So Sigma just says to hope the Brits give Chemist
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  Speaker 2: ware House the green light so.
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  Speaker 1: They can expand their brand even further into a very
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  Speaker 1: new and lucrative market.
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  Speaker 2: For our third and final story, due Lingo has beat
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  Speaker 2: its quarterly targets, but its share price is still slumping
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  Speaker 2: eleven percent.
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  Speaker 1: The green owl is not going to be happy about
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  Speaker 1: that one bee man, so tell me.
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  Speaker 2: More, jaziboy. We all know Duelingo, the language learning app
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  Speaker 2: that's been teaching people French and Spanish and Mandarin and
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  Speaker 2: many more languages since twenty twelve.
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  Speaker 1: One passive aggressive notification at a time.
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  Speaker 2: Yeah, it's become the world's most popular language learning app
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  Speaker 2: with millions of users worldwide, and.
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  Speaker 1: It really became the go to app for gamifying education.
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  Speaker 2: Now Duelingo's revenue hit two hundred nine two million bucks
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  Speaker 2: in the first quarter of this year, which actually was
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  Speaker 2: better than analysts expected, and.
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  Speaker 1: Their daily active users up twenty percent, paid subscribers up
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  Speaker 1: twenty percent.
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  Speaker 2: Two tick and tick.
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  Speaker 1: But it's straight could be about to end because Duelingo
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  Speaker 1: warned investors that its growth is going to slow right now.
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  Speaker 2: Yeah, basically said it's prioritizing user experience and long term
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  Speaker 2: retention over near term monetization.
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  Speaker 1: We're talking retention features, and.
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  Speaker 2: Duelingo says it doesn't really expect this to pay off
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  Speaker 2: until twenty twenty seven, and that cent share is slumping
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  Speaker 2: by eleven percent.
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  Speaker 1: The reason behind the shift in tactic, b Man, Jewelingo
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  Speaker 1: has got some major competition in the ed tech space.
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  Speaker 2: Is that correct, Jasie Boys? So what is the key
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  Speaker 2: learning here?
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  Speaker 1: Sometimes doing what's best for the long term it looks
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  Speaker 1: like failure in the short term.
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  Speaker 2: So instead of chasing short term profit, dueling Go is
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  Speaker 2: making a long term bet.
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  Speaker 1: Yeah, it's plan is to invest now in making that
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  Speaker 1: so much better than just asking AI that users never
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  Speaker 1: want to leave, and its long term investment is probably
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  Speaker 1: the right core When you look at other ed tech
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  Speaker 1: companies like check yep.
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  Speaker 2: That was the once fourteen billion dollar homework helping platform
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  Speaker 2: whose stock fell forty eight percent in a single day
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  Speaker 2: after chat shebt cropped up in twenty twenty two and
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  Speaker 2: is now.
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  Speaker 1: Down more than ninety eight percent since it ties in
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  Speaker 1: twenty twenty one. So for other ed tech companies like Jeweling,
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  Speaker 1: they've got to think about how to beat AI or
• 6:33
  Speaker 1: risk losing users to bots real fast. If you've been
• 6:36
  Speaker 1: investing in looking at new ways to beat the market,
• 6:38
  Speaker 1: or looking at different ways to build out your core
• 6:41
  Speaker 1: and satellite portfolio, the Rise of Active ETF Academy will
• 6:44
  Speaker 1: break down what they are, how you use activetfs, Plus
• 6:47
  Speaker 1: you can win some pretty juicy cash prizes to make
• 6:49
  Speaker 1: shut it. Download the Flux app and check out the
• 6:51
  Speaker 1: Rise of Active ETFs in the Academy this month.
• 6:53
  Speaker 2: Thanks for listening and we'll see you on Friday.