Earnings Watch Party: Qualcomm, Arm, Uber, Disney and MicroStrategy

Hello everybody, thanks for joining today. I'm going to share my screen, let you see how I prep for this call. Let's go in here and create a portfolio for the stocks we're supposed to talk about today. We got a good lineup, got some interesting stocks to talk about for sure. As always, please put your questions Concerns and requests, feedback into the chat or the Q&A. I want to hear what you have to say. Let's talk about Qualcomm. So how did Qualcomm do? They came out last night; they beat, but the market was not too excited about their outlook in terms of demand. So I think one of the issues with Qualcomm is that the cell phone market is sort of topping out. How much more growth are we going to see in cell phone? How much is Qualcomm going to be able to transition into AI? Because they're doing great. I mean, they're beating on the bottom line and the top line. Uh, you can't complain about that. But when we dig a little bit deeper here with Qualcomm, we see what we've seen with a lot of these tech stocks, and that is that, look, it's a great business, super profitable, high positive economic earnings, high return on invested capital, return on invested capital around 29%. That's going to definitely put it in the top tier in the S&P 500. But you've got an expensive valuation. All the good news is priced in. You guys have been listening to me for a while. I'm going to beat this drum again and again. And that's that, look, crowded trades don't work. When everybody knows about a stock, that's when it's time to sell, not to just keep piling in. I get it. Roaring Kitty, meme stocks, Tesla, piling in has seemed to work. But it's a dangerous game. It's like driving at night without your headlights, because at some point when stocks get this far ahead of themselves, they're going to collapse. They're going to revert back to the fundamentals. Stocks can't lie forever. At some point they have to reconcile to cash flows. Facts matter eventually. And I'm not saying here that Qualcomm is going to crash. I'm just saying there's not a lot of upside here. And that's why you see when a company beats on the top and bottom line, Any hint of bad news and the stock's getting crushed, down 4% in a day when the rest of the market is flat. That's a bad move. And doing a little bit of research on the fundamentals is going to help you with that. It also doesn't hurt the fact that we had a strong miss earnings distortion score. Now, the earnings distortion score is more of a short-term indicator compared to our overall rating. Our overall ratings are focusing on the long-term fundamentals of the business. Earnings distortion score gives you a really quick and dirty sense of whether or not the company is going to beat or miss earnings. All right. And so what we're looking at here is the difference between core earnings and accounting earnings. You can see there's a divergence that's, that's popped out here lately. That's why we're seeing a strong miss, because this divergence as a percent of assets is a big number. A lot of decimal points there because we're very precise about the amount of earnings distortion And so when earnings distortion gets this high, you can see compared to last year, earnings distortion rose 846%. That's a red flag for an earnings miss. And I think earnings misses come in different forms. Sometimes the company comes right out and misses. Sometimes they change guidance, and that's their way of trying to soften the blow. And that's what we saw with Qualcomm. We'll count it as a victory either way, because what we're saying is that the fundamentals of the business aren't going to support estimates. And I will tell you that the fact that our earnings distortion scores do as well as they do is a real tribute to the power of our fundamentals and the incremental insight. Because those of you who've seen any of my trainings, you've heard my story about when I was on Wall Street, how the Wall Street analysts would fake their numbers or fake their earnings estimates. They'd have an earnings estimates number that they gave out to the street for the stocks they liked that was extra low, so it'd be easy for the company to beat. And they'd have another earnings estimate that they use in their models to create their target prices and to talk to institutional clients. So, you know, being able to predict a miss, whether it's in guidance or an actual miss, that's a big deal because Wall Street's constantly beating the numbers down for the stocks they like to make it easier for them to beat. So coming back here to Qualcomm, the earnings distortion score gave you an early indicator that you're going to see a miss. Either in the outlook or in the top and bottom line. Now, longer term, we're looking at a, a good company but a bad stock. Whenever you see the market implied growth appreciation period here more than 100 years, you're looking at something that's really expensive. It's going to take more than 100 years of profit growth to justify the current stock price. That's based on the consensus estimates. for revenue growth and our extrapolation of historical performance. We're basically trying to understand how wide a moat the market is giving this company. And we measure that moat in years or in the duration of time that the company can grow its profits. Because if a company can grow its profits forever, it has an infinite value, right? So at some point in time, there's a duration for profit growth, just like there's a duration on Your coupon payments for a bond, it's not going forever, right? There's a maturity date. Well, the market implied growth appreciation period is analogous to a maturity date for a bond, and it's part of the valuation calculation. We're the only firm that provides that for you, only firm in the world that does that kind of work, because we— look, we're diligent. We're going to do that additional level of diligence. Now, the suspended rating, by the way, is due to the fact that we're expecting a new filing any day now, right? They just came out with earnings, and so we should be getting a new filing And that means we'll get a significant amount of new financial data. We will parse that data as soon as it comes out. So our models are based on the latest and greatest. And by the way, the earnings reports are not the latest and greatest. Part of the reason I'm doing this call, everybody, and we're starting to do this during earnings seasons, is that earnings seasons are important, but they are more about commercials to sell stock. They are more about a dog and pony show where Wall Street and the companies get you to focus on the numbers they want you to focus on. Those top-line superficial numbers. The real numbers, they'll come out for a week or so, maybe a couple weeks, sometimes just a couple of days. You never know when they're going to file the complete financial report. The point is there's a difference. And so what I want to do is come in and say, look, whatever they're telling you, top line, bottom line forecast, here's what the fundamentals show. And no matter how good the 10-Q looks or how good the earnings report was, that's all priced in, my friends. So I would tell you that the earnings report in many ways inconsequential unless they're going to reveal some groundbreaking, earth-shattering news, which they did not. Nevertheless, look, it sells clicks. CNBC wants to talk about it. Wall Street wants to publish reports about it. They want you focused. They want you titillated day to day, minute by minute, on on superficial, inconsequential data. Why? Because that means you don't have time to do real work. You got to shut all that stuff out and do real work if you want to understand what's going on. And that's where our new constructs come in. That's what we do. We, we love this stuff. We're going to do this kind of work and we're going to do it every day and we're going to do it— that's proven. If you've watched any of my trainings, you know that we do do it better than anybody else in the world. It's proven by Harvard Business School, MIT Sloan. And the Journal of Financial Economics. So with this rating system, and by the way, this is for our pro subscription. So our professional members get access to all this kind of data. So do our institutional clients. The earnings distortion analysis is, I believe, institutional only. But the rest of this is pro. And you get a breakdown. You can see how economic earnings and accounting earnings are doing well. Return on invested capital, really strong for this business. You know, Qualcomm, like, being the preferred chipmaker for cell phones has been an extremely good business for Qualcomm to be in for a long time. Question is, is it going to be a great business for them to be in forever? It's a tough one, especially with the way AI is coming along and moving the needle in the business and all of technology for that matter, and demand for chips. So you can see margins kind of up and down here, but we're not talking a wide range. We're talking between 22.7— I'm sorry, the low here is 22.4 and the high is 28.9. That's a pretty big difference. Margins got quite a bit of volatility. Capital turns or balance sheet efficiency is a little less volatile. I'm guessing free cash flow has been pretty huge for these guys. So yeah, $3.5 billion, $5.5 billion, $520 million, $10 billion of the last 12 months. These periods are the same because the last filing we got from Qualcomm was a, was a 10-K, and we're expecting their Q1, their first quarter Q, imminently. So our trailing 12 months is the same as the last fiscal year. But yeah, that's, that's, that's significant strong free cash flow generation. Great business again, but an expensive stock. And that's what you see in the second half of this. It's important to understand the difference between a good business and a good stock, right? I mean, you can have great businesses, but if the valuation implies that they're going to take over the world— like in our call yesterday, you should watch the replay, did a great reverse DCF analysis on Spotify, and that stock price literally implies that Spotify is effectively going to be able to own all the music and have like 200% market share. I mean, it basically implies Huge amounts of revenue growth, super high margins, and zero capital investment. So they're going to just going to get market share for nothing. They're not going to have to buy and invest in things like Joe Rogan or anything new. They're going to be able to continue to sell other people's music at a huge profit without those other people wanting to get a piece of the pie. And, and we're seeing something similar. It's not as bad with Qualcomm, but again, this shows you a really expensive stock. All right, keep those questions coming in. We got a question about our index. We can talk about that at another time. You can go to— go to the— if you go to the solutions page on our website, you can check that out here. Indices. This will talk about the indices that we have. And then there's another index out there called the Bloomberg New Constructs Core Earnings Leaders Index, and that's actually been licensed to be an ETF. All right, let's talk about our next stock, Arm. Actually, let's go with Disney next. We'll go in order of market cap. So Disney, also about to get a new 10-Q, also in our focus list. And you say, wow, an unattractive stock on your focus list? Yes, it wasn't unattractive when we put it on the focus list, but we're long-term oriented and we have a belief that Disney's business is going to turn around. You know, one of the reasons we believe that is that we've seen over time that they've had really high returns on capital. And I think if you, if you go through and we check out some of our original reports on Disney, one of the things we've pointed out is that returns on capital for this company have done really well over time. They've done— they've made acquisitions and return on capital has gone up. That's a rare thing. Most of the time, companies that do acquisitions, Warren Buffett says this all the time, right? It's like the worst thing that companies do oftentimes is they go out and buy, management team gets cocky and they go buy another company because they want to get bigger and they want to be, have bigger revenue and they want to be in a bigger peer group for executive compensation. All kinds of reasons that, that managers make bad investments when it comes to acquisitions. But for Disney, it's been good, right? They created a lot of value. Why? Because they have one of the best ever platforms for monetizing content. One of the best ever. Oh, you might say that's Netflix. Well, Netflix hasn't really made any money until recently. And by the way, you know, Netflix is, was a loss leader. They, they, they burned billions of cash for many, many years before they became profitable. And I think the best way to think about Netflix is Bill Gurley, one of the smartest investors out there. You should pay attention to that guy. He pointed out, he made the great, the great point that Netflix was able to use capital as a weapon. for like a decade. What does that mean? That meant they were able to operate at a loss for a really long period of time. And now they have a streaming business. Guess what? So does everybody. Right? So does everybody. So I don't know how much of a long-term competitive advantage that will be. I do know that Disney has a, has a streaming business now too. And, and look, it's another way to onboard customers in a way that monetizes content better than anyone else. And when I say monetizes content better than anyone else, Look at the advantages they have over Disney, right? They've got not just streaming, they've got movie theater, they've got merchandising, and they've got theme parks. These are ways to monetize content that Disney— that, I'm sorry, that Netflix cannot match. They've tried. They cannot do it. Maybe they'll do it in the future. I don't know. But Disney can do that. And what we're seeing now for Disney is that returns on capital have been depressed for a good bit. For quite a while. They're on the, they're on the rise. And I think Bob Iger is going to get the job done. I think it's, there's, there's quite a bit to turn the ship around here, but we're seeing returns on capital trending in the right direction. Look, COVID was a killer for these guys. COVID was a killer for Disney. I mean, it probably hurt them as bad as anybody because of the, the theme park business. But theme parks are coming back in a big way. And I think that's going to mean we're going to see returns on capital change for Disney. And what that means is like when we're thinking about our focus list here at New Constructs, right, we're going to go through and we're going to come through, we're going to create different scenarios for the future. Now, I mentioned our market implied growth appreciation period. Those are always going to be based on a default scenario. And those default scenarios You'll see here's a forecast scenario. The default's going to be based on consensus revenue growth and extrapolation of past results. So if— and recent past results. So what it will not take into account is a return to normal margins, which is what we're doing here in this optimistic scenario. So even if we beat the revenue forecast down to back towards closer to consensus, But then we see margins coming back up, not to the greatest they've ever been, but to higher levels, which we're seeing here with 24%. Right. And then, you know, capital growth, not too high. We can make it a little bit higher here. We can call this, you know, we say they do a couple acquisitions here and there. We can save that off and we can see the implications on the valuation of these, of this forecast, of these, of these estimates. And you'll see that in that analysis, right? I didn't say margins are coming back right away. It's gradual. But if you believe that Disney is going to have any kind of return to its former self, then I— and we do— then we believe that the stock, despite looking bad now, has a better future. And that's really sort of the benefit of, of this, of the modeling capabilities that we have there for our institutional clients, to go in and put in your own your own future. I don't recommend this to— that kind of activity for most individuals or even advisors. Do you have time to go in and come up with your own version of the future? Not necessarily. That's not what you got to do with our models all the time. Most of the time our models are used to like throwing a best-case scenario or worst-case scenario, like what I talked about with Spotify where we just kept putting in higher and higher expectations to get a sense of how expensive it is. But a really, I think, great feature Especially for professionals, right, is to be able to go in and understand, really understand, when we look at this optimistic scenario, what kind of implications that has when you have a different view of the future. And by the way, if you are investing in different individual stocks, you shouldn't be doing it if you don't have a different version of the— or view of the future. If you believe that the market's got it right, well, then, you know, what's the point of being in a stock? So you can see here that if we assume a turnaround in profitability, Not as high as it once was, but up here to 1.1%, or return on capital versus cost of capital spread of 1.1%. It only takes about 8 years of profit growth to justify the current stock price. I, for one, think Disney is going to be around and be a growing business for more than 8 years. I mean, let's go out maybe 20 years. Right now we're talking about closer to $150 a share, $147, $148 a share, $149 a share. So yes. We think Disney's going to do that, and we think the market's going to figure that out. We can kind of dig a little bit deeper, like what kind of implied revenue does that mean? You know, that's, that's not a huge increase over what the company's done in the past. Let's take out Notepad. So yeah, I mean, we're not talking about a business that is really breaking long-term stride. We're just saying they get back into their long-term stride, and that's why we're still believers. We still believe that they have the best ability to monetize content. Merchandising, theme parks, merchandising content, big competitive advantage. So notice I didn't really even talk about the earnings, uh, a little bit, right? I talked about how the streaming had, you know, they're profitable in streaming, they beat their earnings number. But again, you know, what do I care most about? I care most about the long-term fundamentals and competitive position of the business. The stock's not moving much. I don't think there's any significant news, and, and that's, that's what we're here to talk about, is what really matters, not just necessarily the headlines. All right, let's get into Arm. Arm is a, a good example of, you know, decent company, expensive stock. I mean, wow, price-to-economic book value of 36 times. Um, this has been on our focus list short model portfolio just because ever since this one came out, the valuation has been absolutely gangbusters. I mean, huge. I think when we looked at Qualcomm, I said that was expensive, right? Its price to economic book value is just 2.2. Arm is at 36.0. I mean, that's a big number. Let's see, what is it for— Spot was crazy expensive. Spot's at 12.0, another super expensive stock. Tesla's is negative. Okay, that's even worse. You get the idea, right? So let's take a look at what we got to do if we want to put in some forecasts here for Arm. Let's get a sense of how expensive it is. What do we got to believe to get our model to produce a value equal to the current stock price? Because right now, even in this neutral scenario, I've got some jacked-up estimates in here, right? We got profitability margin— I'm sorry, return on capital versus cost of capital margin going from -11 to positive 518%. You know how many companies in the S&P 500 have a return on capital greater than 500% right now? Zero. So, be the most profitable company and grow at 9% compounded annually for 100 years. You know what kind of revenue that would imply? $16 trillion. I think that would put them— if we go to the top largest countries by GDP in the world, $16 trillion would be number 2 behind the United States. Of course, that's, that's in 100 years that, that, that they would achieve. But you, you know, you get the idea. So let's put in a different forecast here. Let's, we know that if we assume these numbers, that we're not going to get close. I bet if we put margins in here that are way higher, see what's, what's, what is Qualcomm's margin? It's got a great margin. It's up there around 25. Okay, so let's say that Arm gets up to 25. We'll leave the revenue growth assumptions the same. We'll save that off. Let's see, 30% for 20 years. That's probably pretty nutty. Let's knock this down to 20. We'll save that off. Keep those questions coming in. I promise we are going to be tight on getting through all 5 stocks. I won't be able to get all of your questions. If you raised your hand, that doesn't do us much good. What I need you to do is enter that into the QA or the chat. All right, so we updated neutral. That didn't work. All right, so the 25% forecast, 25% margin and revenue growth numbers didn't work. So let's actually, let's, why don't we go 50, 50, 50, 30, and I think, 50% for 5 years, 30% for 10 years, and 30% for 15 years. Let's see if that's aggressive enough. Okay, that gets us there in 16 years. You see this like serious level of increase in the value of the stock because we got really high margins and really high growth rates. So what we're showing right now is that to justify $173 a share, the company's got to grow revenues at 35% compounded annually for 16 years and earn an average return on capital versus cost of capital spread of 351%. That's the average over the next 16 years. So that's like immediately improving return on capital in a big way. So there we go. Let's just put this into— just focus on this one scenario. There are the implied values over time. All right, so let's see what this means in terms of Revenue. The revenue that we're showing they're going to have to get, and that would be in 16 years, is $406 billion. That's a pretty big number. Where does that rank in the S&P 500? See, it just turns out that I have a model here that ranks the— that shows the S&P 500 stats. I pulled this down from our system before our meeting today, save you a little bit of time. It's like a cooking show, right? Like I've got everything together so that whenever we need the answer, we just get the answer. So revenue, ranking the S&P 500 by revenue, Walmart and Amazon, a little bit over $600, well over $600 billion. They have a big drop-off for tech companies. Notice low-margin companies, high revenue makes sense, right? High-margin companies, you know, they're just not going to be as big. High-margin, high-return on companies, right? It's, it's rare. Like, and Apple's an outlier. Like they're huge, right? Like even a lot of these other— there are not many other high-margin or high-return on capital companies listed in, in, you know, in the top group of revenue. So, but what we saw with Arm is that they got to be around $400 billion. That puts them in the top 3 in the S&P 500. Today, right? Big number. Okay, so let's see what it means for return on invested capital. Got to get up to 800— sorry, 785%. You know how many companies in the S&P 500 that have had a return on capital over 600% in the last 5 years? Zero. So you've got incredible revenue growth, incredible return on capital. And then let's look at NOPAT. The NOPAT would be at $85 billion. Where does that rank across the S&P 500? Notice that the NOPAT ranks are quite different versus the revenue ranks, right? Because again, margin— Apple's like this anomaly, right? They've got high margins and big revenue. Pretty amazing business. We had a great call on that one too a couple days ago. You check out on the replay. So these guys are at $85 billion. That would put Arm at number 4 in the S&P 500, probably in the world behind only Apple, Microsoft, and Google. So what is that telling us? Arm is effectively priced to be the top 4 most profitable business in the world. So I would say, you know, and the way to think about this As a new client, new contracts client, is do I believe the company's going to do better than that? Because the only reason to own the stock is if the company's going to do better. Otherwise, if you think that's about right, just as an example, hypothetically, well, then the stock's fairly valued, right? We're looking to identify situations where the market expectations are too low. Before we buy them. We want to buy cheap stocks. We want to buy stocks where the market price implies profits are going to permanently decline. That's what you see in our most attractive stocks list. That's what you see in our long ideas. We want good risk reward, great profits. Stock price implies profits are going to decline. Well, what we get unfortunately with Arm is decent profits, negative economic earnings, not even that great, a pretty poor return on invested capital. We got a valuation that implies this reverse return on invested capital. Is going to go to the moon while revenues go to the moon and profits go to the moon. All 3 of those things going to the moon at the same time, I would say that's optimistic. Bad risk-reward, unattractive rating on our focus list short. All right, let's talk about Uber. Strong miss. What happened with Uber? Let's take a look. Up a lot today. They beat 4th quarter revenue expectations, but hey, Offers soft guidance. What'd I tell you? Strong miss. Look out. Now, is Uber one of those stocks is going to go up no matter what because it's been going up no matter what for a long time? Yeah, yeah, I got to give them credit. We did take them off the zombie stock list. So that's the news. That was a teaser in our emails. We did take them off the zombie stock list because they did break even. We have seen return on capital go up. But as I pointed out with Arm, And other stocks doesn't mean it's a good stock. It's become a decent company. Can they maintain that? I don't know. Is it a utility service that never really makes money? I think so. I don't—I just don't see food delivery and taxis as ever having made anybody a whole lot of money in the history of the world. You know how many pizza delivery drivers you know have gotten rich off of? Piece of deliveries, or you know, for that matter, taxi folks. Yeah, people have probably done pretty well sometimes owning some medallions in New York City. But goodness gracious, do you want to be a taxi? Do you want to work in that industry? I don't think so. So what we're seeing here, good company getting to be a better company. Expensive stock, really expensive stock here. Five point one price to economic book value. It's not as crazy as Arm. But we're talking about a future that probably implies a whole lot more profit improvement and revenue growth at the same time. So Uber's got a lot of market share. They've got a really high margin for what is a commodity business. And it's not difficult for new entrants to start. Uber's another one of these companies that I would say has been able to use capital as a weapon. You know, one of my good friends on Wall Street, back when he was taking Lyft public, I was like, so, you know, hey, buddy, How can you in good conscience take this company public? Because I don't see a competitive advantage, right? It's a utility. No one's ever gonna make that much money giving out rides because guess what? It's a commodity. But any— anyone can do it. The software's not that special. We see startups in this space all the time. There's a lot of local Uber and Lyft people. There are people that do it for kids and teens and people that do it with military, higher touch stuff, right? And the drivers aren't really happy either. Right? Regular Uber and Lyft drivers, they're not any happier than taxi drivers. Uh, so it's in the, it's in the, it's in the higher-end stuff, but, you know, that's competitive. Anyway, my point being, Uber has been able, and Lyft have been able to use capital as a weapon. Lyft was never on the zombie stock list because they had a lot of capital. And my buddy who was a banker, ultimately, he admitted to me the only advantage they had was that they could raise a lot of capital. Capital is a weapon. What does that mean? That means they can destroy a lot of shareholder value Like, that's why you don't ever hear Wall Street say that. Oh yeah, this business is gonna be able to use capital as a weapon. That's code for we're gonna burn a heck of a lot of shareholder capital till this business works, and we hope it works. In the meantime, we're gonna sell the heck out of the stock, make a ton of money. That's why you never hear that from other people. But yeah, Uber is a decent business. You know, decent, not great. You know, I think a lot, you know, I like to see a really strong credit rating. As well, before I say it's a really great business, but it's an expensive stock. Expensive stock. We have seen returns on capital going the right direction. Economic earnings, right, just barely breaking even, I believe, on the positive side. Just barely. Of course, accounting earnings are much higher. And yes, we saw a strong miss, right, which is why guidance was soft. They've also been running promotions like crazy at Lyft. I don't know if you've noticed. I'm sorry, at Uber. I don't know about you, man, but it's awfully easy to toggle between Lyft and Uber and choose whichever one's cheaper. I do it all the time. Return on capital getting better, right? Just barely breaking through here. Let's take a look at free cash flow. Not surprised here. Burned a lot. $15.2 billion, $5.5 billion, $6.6 billion positive for a couple of years here. It used to be adjusted EBITDA was the goal at Uber. And then COVID came and their private equity investors had a lot of exposure still. They came in and they kicked some tail. And said this adjusted EBITDA stuff, not going to stand for that anymore. You got to have a real number. That turned around the business. It's a great case study. And I bring it up because I want you guys to know, anytime anybody's using adjusted EBITDA, sell that stock immediately. Any pro forma crazy number, sell it, right? WeWork used community-adjusted EBITDA, right? And we know what happened there. Just sell it. If there are any kind of funny pro forma stuff, don't even be involved in that stuff. People ask me sometimes, hey, well, what do you think about that pro forma number? I'm like, it's going in the wrong direction, right? The worst number is revenue, right? After that, then it's a made-up profit number. And then after that, you've got the reported earnings number. And then you got to go a lot farther and do a lot more work to get to the real economic earnings. So yeah, I mean, accounting earnings, not good either, but accounting earnings are here. And between revenue and accounting earnings, you've got fake earnings, adjusted, pro forma, whatever you want to call it, fake earnings. Don't pay attention. So it did help when Uber moved away from that. But the fact that it was their goal for so long just shows you how bad it was run. There's all kinds of stories about how bad this business was run. I'm glad they're turning it around. All the good news is priced in, my friends. All the good news is priced in. Our last stock of the day, one of my favorites to pick on, MicroStrategy. Bad company, bad stock. I don't— I really don't really like anything about this. This is like a leveraged Bitcoin fund. Um, I don't think Bitcoin is, is really healthy for the individual investor. It's great for the individual gambler. Individual speculator, be my guest. I don't want to stop anybody from making money and speculating, but let's call a spade a spade. It's speculating. We're about investing. We care about building wealth. We care about doing the right thing over the long term. And we care about risk-reward. That's what our ratings are all about. Risk-reward. I can't predict the future. So I'm going to do the best next best thing, and that's to position myself with the best risk-reward possible. Anybody can tell you they can predict the future, you should run from that even faster than you run from people who are trying to sell you on pro forma earnings. MicroStrategy, I think we all know the story here. We wrote a nice piece on it a while ago, Hope Is Not a MicroStrategy. I will put that into the chat here for everybody to see. If you want to own Bitcoin, you should own Bitcoin. If you want to own A stock, well, you should buy the stock, but don't buy a stock to own something else. All right. Because, you know, as I point out here, there's 3 scenarios. Bitcoin does not go up a lot, or it does go up a lot or down a lot. Either way, you lose. If you own Bitcoin directly, you get all of that gain directly from Bitcoin. If you— if it goes down a lot, it's only going to be amplified in MicroStrategy because with MicroStrategy, You have a bad business on top of Bitcoin. So however Bitcoin does, the value of MicroStrategy goes down because it's a bad business. It's losing money, negative returns on invested capital. You know what that means? That's— they're taking their cap— your capital and burning it. Okay? Burning it. Negative return on capital. Burning, losing money. So that's going to detract long-term from the underlying Bitcoin that they own. However leveraged they are, just don't. I just don't. I don't. I don't. You want to leverage Bitcoin fund? Do a leverage Bitcoin fund. But I don't believe in MicroStrategy, and I think this is all just a big gimmick for this guy to switch away from a business that wasn't working. Right? You know what he do? Wake up one day and say, "Oh, you know what? My business really is terrible." So what can we do? It's been terrible for a long time. Crypto. And look, he stepped into it at the right time. Look, the last quarter was probably one of the craziest, most irrational markets we've seen in a long, long time. The market was flooded with liquidity. The Fed signaled it wasn't going to do anything to mess with the market during an election. Right? I mean, you know, all the forces were animal spirits go, markets go up, markets go up. Yes, yes. Everything— things got crazy. Carvana was up. I mean, just junk stocks, zombie stocks went up. Not good for fundamentals, but a great time for somebody to go, oh, I need to change my strategy around and maybe I'll just go with Bitcoin. I'm a Bitcoin company. Yeah, people love Bitcoin. Bitcoin's up a lot. Go if you— if that's what you're into, buy Bitcoin. But I would not— I would not buy MicroStrategy just to chase Bitcoin. Maybe you like Michael Saylor, you think he's a great guy. I don't know. Follow him on YouTube or get an interview or look at pictures of him, but don't buy a stock. That's what I think about MicroStrategy. Bad company, bad stock. I mean, let's look at— let's just look how bad returns on capital going down. Uh, earnings of course all over the place. I'm sorry, economic earnings going down, earnings noise, right? You can just see our stuff cutting through the noise here. Cost of capital going up, returns on capital going down. Uh, we got a couple requests here. One of these requests is for stocks we're going to be talking about in the future. We're going to be doing— we'll be doing an earnings recap on Amazon and other big stocks in the not too distant future. Uh, let me see some other stocks we're going to be covering. On the lineup here coming out. Yeah, we're going to be getting tomorrow Amazon, Capital One, Affirm, Fortinet, Eli Lilly. Next week we're going to get DuPont, Lyft, Dash, Cisco, GoDaddy, DraftKings, Airbnb, Hyatt. A lot of stuff. Some good stocks too on the list next week. This week there weren't a lot of really good stocks. So yeah, returns on capital going down. Negative, right? They got, I think, a negative margin now. You know, it's just a bad business. Look, capital turns going down, everything looks bad. Free cash flow, it's a freaking incinerator for free cash flow. I mean, barely positive, big negative, big negative, barely positive, big negative, really big negative. Yeah, I know they're taking on all this debt to buy Bitcoin. You know, they've bought like $4 billion of Bitcoin. Okay, good for you. Good for you. That's great. You know, you charge a much higher fee, right? This negative economic earnings is a much higher fee as a percent of assets. Negative $5 of economic earnings. That's a much higher fee. So percentage of Bitcoin assets, I bet you, than the fee that the Bitcoin fund charges. Not to mention the fact that this could get worse, and it's not set. And Michael Saylor can do whatever he can do. At least with a Bitcoin fund, you got a set fee. It's all about Bitcoin. This is a Michael Saylor fund. He might wake up and say, you know what? Yeah, you know, I really like Bitcoin. It was great for me, but this week it's going to be rabbits. And I'm in rabbits because I think rabbits are magical. Who knows? And then your stock's going to get hit pretty hard. So look, if they're a little bit irrational, they might be a lot irrational. I think you know what I'm talking about. Okay. Yeah. So we're gonna, again, as I mentioned, we've got another one of these tomorrow, same time. We'll be covering Amazon, Affirm, Eli Lilly, and some other stocks. Make sure you, you show up. If you registered for today, then you've already registered for, for that one, for tomorrow's call. And then we're doing a big, we're doing a big special in a couple weeks here where we're going to focus on secret metrics that drive really good stock price performance. We have— we've been watching these kinds of stocks for a long time. We recently provided a bundle like this around 6 months ago to clients, and those stocks as a portfolio strongly outperformed. So we're happy to roll this out again. Again, this is secret metrics that only New Constructs calculates that we use to pick out really good stocks. And we're going to be doing that in a couple of weeks. I put the registration link Into the chat there for everybody. So if you want to go ahead and sign up for that now, that's great. Otherwise, thank you for being here. Thanks for the great questions. I appreciate the requests. A lot of those requests you guys put in today, we're talking about tomorrow. So no, no preludes to that. We'll get some more information and have a better call on that then. In the meantime, thanks for being with us. I enjoy these calls, and please fill out the survey at the end. I'd like to know what you think. Bye.