Square Stock – What Google’s Announcement Means for The Trade Desk and Magnite
In this episode of Fintech Zoom Money, host Chris Hill is joined by Fintech Zoom senior analysts Andy Cross and Jason Moser to discuss The Trade Desk (NASDAQ:TTD), Magnite (NASDAQ:MGNI), and other ad-tech companies tumbling after Alphabet‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google announced some big changes. Also, Costco (NASDAQ:COST) and Target ((NYSE:TGT)) fall on earnings, and Zoom Video Communications (NASDAQ:ZM) reports a big jump in revenue, but the stock tumbles. On the acquisitions side, Okta (NASDAQ:OKTA) buys rival Auth0, and Square (NYSE:SQ) buys a majority stake in Jay-Z’s streaming service, Tidal.
Plus, author Joann Lublin talks about her new book, Power Moms: How Executive Mothers Navigate Work and Life.
To catch full episodes of all The Fintech Zoom’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on March 5, 2021.
Chris Hill: We begin with a shakeup in the digital advertising industry. Google is promising not to use technologies that track people individually across the Internet, and one ripple effect of that announcement is that shares of The Trade Desk and Magnite, both dropped 20% over the span of 48 hours. Andy, a bunch of different angles here, let me start with this. Does this announcement from Google fundamentally change the business of The Trade Desk and Magnite?
Andy Cross: Chris, it does not. First of all, Google’s been talking about this for the past couple of years. They first proposed this in 2019, this idea, this privacy sandbox, looking for a better way to help their clients serve advertisements in a way that doesn’t involve what’s so called third-party cookies. This is not necessarily new. This week, they came out with that announcement that is much more pronounced that “Yes, we are ready to do this now, so we’re pushing it ahead.” That privacy sandbox is going to remove the use of these third-party cookies that the likes of The Trade Desk and Magnite and others used to help serve and target advertisements. From that perspective, it is a big impact on those businesses, but it’s not a secret, and I think The Trade Desk has been thinking about this and talking about this, specifically, and Jeff Green, their leader, the founder of The Trade Desk. I can’t imagine that they’re not surprised by this and they are looking at lots of different solutions. But fundamentally, it does not change their business, it will be a challenge for them to be able to navigate this new environment. though.
Hill: Jason, even without this news, I feel like The Trade Desk would be selling off a little bit just because of the sell-off that we’ve seen this week and last week with Nasdaq stocks.
Jason Moser: Yeah. I think you’re absolutely right. The Trade Desk, like many other popular names in the tech space, has really flown in a short period of time, and we saw the recovery in the advertising market materialize earlier in the pandemic. That really, I think, lit the candle for companies like The Trade Desk to come roaring back, and the stock has been tremendously over the past year for the most part. I mean, this news, it’s material, it matters given Alphabet’s position in the market. We talk about walled gardens, this is one of the biggest walled gardens out there. It’s interesting to see how Google is talking about this new technology versus what they’ve used in the past. It’s this cohorts idea. Who knows how it ultimately will work. They seem to believe that the cohorts make more sense than the PII, the Personally Identifiable Information, that the companies like The Trade Desk and Magnite rely more on. Maybe there’s something to that, but I think Andy’s right, I mean this is not The Trade Desk’s first rodeo, so to speak, and they’ve certainly been giving this a lot of thought in how they will deal with this from a business perspective.
I’m a little bit on the fence here with this. I’m still not fully convinced [laughs] that people ultimately care about their privacy as much as the headlines may have us believe. I think people love to whine about it, and then I think they like to go back to posting their lives for all to see on social media, so you can see the conflict I’m getting at there. I think convenience still trumps privacy for most. With that in mind, I look at companies like The Trade Desk, I think they’ll be able to handle this relatively easily because of all of the investments they’ve made in their businesses up to this point, and given the knowledge they have in the space.
Cross: I’ll just note also, Jason, that it does not apply to Google’s Mobile Apps yet. In mobile, it’s such a big part of the evolving digital ad space. That’s an important point and I think you’re right, I think The Trade Desk continues to make these innovations. This does not mean that Google is not targeting us in some capacity, just a different way that they think is a better privacy practice than what they do right now. That’s debatable though, honestly.
Moser: Yeah. Let me get back to The Trade Desk stock performance real quick and we can move on. But it’s just worth noting, the ad spend on the platform, we talked about this, I think, a couple of weeks ago. The ad spend on the platform for 2020 was $4.2 billion, that was up 34% from a year ago. Spend in the fourth quarter alone was $1.6 billion, that was up from $1 billion a year ago. If you look at the overall spending in total global ad spending, that actually fell 4.5% in 2020. The Trade Desk picked up a lot of share along the way in 2020, which speaks to the stock’s performance. That makes a lot of sense. This pullback seems relatively reasonable.
Hill: Let’s move to a couple of big retailers. Target’s fourth-quarter report had pretty much everything you would want to see as a shareholder, including same store sales up 20%. CEO Brian Cornell is not offering guidance for the current fiscal year, and that may be a small factor in shares of Target falling 8% this week, Jason.
Moser: Yeah. It looks like down 13% since earnings, which I feel like maybe we’re seeing a little bit of a victim of your own success thing going on here with a number of these businesses. The pandemic has been a real tailwind actually for a lot of businesses. We knew going in that there were a lot of businesses that at least had the infrastructure in place to respond to such a shift. They answered the call, though, and they really showed their omnichannel capability, I mean, Target and a number of other businesses really answered the call. If you note in the call, Target management said they saw unprecedented share gains across all five of their core merchandise categories in the year. That speaks to how well they were able to respond to the pandemic in 2020. But investing is all about the future, and you have to look forward to this next year. You start wondering, do things normalize here? Because they’ve been exceptional for some of these businesses, and I think Target’s one of those businesses. What does that normalization look like?
To the numbers you mentioned, the comps up 20%, that was traffic growth of 6.5% for the quarter on top of 13.1% increase in average ticket, digital comparable sales up 118%, accounting for two-thirds of the company’s overall comp growth. Then you look at the performance of Shipt, which was that acquisition, I think, we’re back at 2017. For the year, Target sales on the Shipt platform grew more than 300%, memberships were up 130%, so there are a lot of great numbers. That’s where I’m getting to that victim of your own success thing. In regard to the guidance, I don’t know though to really read too much into that. Cornell noted on the call, providing guidance, he feels would be an exercise on false precision at this point. They’re focused on execution, and that’s the word they used. It’s about execution, less about guidance. That’s their mindset for the coming year. I feel like maybe they’re being a little bit conservative because they think there’s some reasons to be optimistic for the back half of the year. But again, they’re going to be coming up on some tough comparables.
Cross: Yeah, Chris, it was interesting on that profit picture because they took $246 million, a $0.41 per-share pre-tax charge for COVID premium wages. God bless them for supporting the people who are out there, helping us go shop everyday and on the frontline. I felt that was maybe a little bit surprising. I think that hit the earnings picture and was lower than what analysts were expecting. Again, evidence of what we love to see in some of our favorite companies, and Costco certainly stands above so many. Sales up 15% for the quarter versus 10% a year ago, also saw some acceleration there, even though down a little bit from the previous quarter. You mentioned these strong e-commerce sales up 76%, membership fees up 8%. Strong U.S. renewal rates, of course, at 91%. They now have almost 24 million paid members, up 506,000 members since the first quarter. Very strong in the fresh foods, continues to be a strong part of their business. But across all of the areas from the merchandise side, really strong. Again, they also are on the forefront; by come March 1, they have increased their hourly rate by $1 dollar, and now are at an average of $16 per hour versus $15. From a stakeholder-friendly business, from a conscious capitalism business, Costco continues to do really well and the stock’s down about 18% over the past year. Now, sale is at a much more reasonable 30 times, which is earnings there, more historical norms. For the first time in a while, I think those of us who don’t own Costco shares should get a little bit excited.
Hill: Zoom Video’s fourth-quarter revenue was 370% higher than a year ago. Despite that, Jason, shares of Zoom Video are 15% lower than a week ago.
Moser: Yes. Well, speaking of companies that have run a long way in a short period of time, Zoom is certainly another one of them. I was thinking about this over the week, and Zoom’s earnings release really brought this to the front of my mind. But things can change in investing, and there can be valid reasons to sell. It’s certainly never about holding companies just blindly, but if the business is doing well, then it’s not really productive to worry about what the stock price is doing at any given time. Ultimately, I think that’s why time might be our greatest edge as individual investors. That speaks to me when I think about Zoom because, while the stock has obviously pulled back considerably on this earnings release, that is not really due to the company’s poor performance, because it’s not performing poorly, it’s performing wonderfully.
To the numbers that you just spoke to there, it’s amazing to think about, that this is another one of those companies that really has benefited from this shift in the way we do our work. It’s a fair question. Is this going to be the way that we do things from here on out? Probably for some and for others, maybe not as much. But when you look at the numbers, 467,000-plus customers with more than 10 employees now, that was up 470% from the same quarter a year ago. 1,644 customers contributed more than $100,000 in trailing-12-month revenue, that was up approximately 156% from the same quarter a year ago. That net dollar expansion rate continues to perform above 130% for the 11th consecutive quarter. Maybe there is a little bit of a victim of your own success dynamic at play here too, but I do think, with Zoom, it’s become less about this video app, and I think it’s neat how they talk about this on the call. It’s becoming a video communications platform. It’s doing more than just connecting with someone on your phone and speaking via video chat, and Zoom Phone I think is a great example of that. They see a big market opportunity out there for the telephony market, they see a $23 billion-plus market by 2024, so that’s another opportunity they’re pursuing. Gross margin was down a little bit in the quarter, but that really was due to an increase in free usage related to the pandemic, an admirable thing for them to do. All in all, a business that continues to perform very well. We obviously like management with Eric Yuan. He’s always got a nice sense of humor. He opened up the earnings call with, “I’m not a cat.” [laughs] For those of you who remember that call between the lawyers and judge, or whatever, where the lawyer showed up as a cat and couldn’t figure out how to turn it off, Eric had a little bit of fun with that on the call and that got it kicked off on the right foot.
Hill: The Cloud identity management business came out with strong fourth-quarter results that were overshadowed by an acquisition. Okta is buying Auth0, a rival security company for $6.5 billion worth of stock, and I should mention, Andy, that shares of Okta were down to 23% this week.
Cross: Yeah, Chris, it’s a lot of dilution for Okta. But what this helps them do is address more of the client side, so very simple client access. When you go to a website, you want to get access to that website. That’s really all Auth0’s specialty. Okta’s really on the enterprise, the workforce identity, so helping workforces, enterprise, large companies have managed their identity system and access lots of different Cloud and third-party apps. That’s really their specialty. The client side, the customer identity side is only a quarter of Okta’s core business that’s growing faster than the other business. So they said, “Hey, Auth0 really specializes in this, works with developers to help build those tools, and we want a part of that.” So for $6.5 billion, yes, Auth0 is about a $200 million in sales business, growing 50% a year. It’s about the same sales multiple that Okta sells at, maybe a little bit cheaper looking forward, too. Overall, from that perspective, you could see the pairing together could be very effective for Okta’s core business to expand on that with the client side. It did overshadow the quarterly results that were pretty good from looking at the quarter, but the guidance was a little bit weaker, I think, than people expected, looking at more like 30% growth versus 40% top-line growth. That’s another reason. That, the dilution, and the price, I think, have hurt Okta’s stock price in the near term, but long term, I think it’s a pretty good deal.
Hill: Back in 2015, Jay-Z bought Tidal, a music streaming company, for $56 million. This week, he sold a majority stake in Tidal to Square for $300 million in cash and stock. As part of the deal, Jay-Z will be taking a seat on Square’s board of directors. For anyone asking why Square would buy a music streaming business, CEO Jack Dorsey says it’s about finding new ways for artists to support their work. Jason, I’m going to go out on a limb and guess that Jack Dorsey is more bullish on this deal than you are.
Moser: Well, probably. Listen, he also knows a lot more about that business than I do, so I’m going to give him the benefit of the doubt. I’ll get to that in a minute. It’s a very easy thing to ponder and question and even doubt, but I think, at the end of the day, it is a tiny bit in the context of a very successful business. The skeptic might view this as just a way to get Jay-Z on Square’s board, I don’t know. I do think it’s important for investors to know, at the end of the day, this deal could completely flop, go to zero. It would not impact Square’s core business in the slightest, just a fraction of the $4 billion they have on the balance sheet. Now, to your point, I like the idea. It’s about giving the artists more of what they’re producing. It’s about giving them their due. I don’t know exactly how they’re going to do that, but I have to believe, given Dorsey’s love of Bitcoin, he’s probably eyeballing the whole non-fungible token thing at this point, particularly given the reason that the band, Kings of Leon, is going to offer their next album in non-fungible token form. There’s some interesting developments in that space that might help protect the artist’s art a little bit more, I have to believe he’s probably looking at that. But I think you made a good point earlier in the week, Chris, when you said, and this is unlike Twitter, I think Dorsey has earned the benefit of the doubt from us in regard to this business, Square. He’s done a lot of things right, so I’m going to let him run with this one and see where it goes.
Hill: Shares of MercadoLibre (NASDAQ:MELI) falling 15% this week despite the fact that fourth-quarter revenue was a record $1.3 billion. And maybe this is just more of what we’ve been seeing recently with the sell-off of Nasdaq stocks, but there is a lot to like in this report.
Cross: Chris, I think the gross profit picture was a little bit bleaker because of so many of the investments they’re making in their logistics business. They now have seven airplanes and they serve eight different routes across Mexico and Brazil, which is interesting I saw, but their gross profit margin fell because of those investments. Also, some of the lower product margins they sold during the holidays, so that hurt. But from the revenue side, Chris, like you said, the revenues grew more than almost 150%. The record 37 million buyers now across their platform, gross merchandise volume, so the stuff they sell across their platform, was up 110%. It was a little bit down from what it was in Q3, so maybe some concerns there on the growth. But Mercado Pago, the payment platform, and the fees, continues to be a bright sign, the total payment volume up 134%. Off platform, total payments is now 75% of Pago’s total payment volume. They’re not just online, they’re also going offline, so really expanding their product offerings and their solutions.
Hill: For more than 25 years, she wrote the Wall Street Journal’s Career Advice column. She was also part of the team covering corporate scandals that won the Journal the Pulitzer Prize in 2003. A best-selling author, Lublin’s latest book is Power Moms: How Executive Mothers Navigate Work and Life. She interviewed over 100 business executives, starting with the boomer generation paving the way, as well as ones from Generation X, millennials, and now Gen Z that are following in the footsteps, and in some cases living in the shadows of their trailblazing mothers. She recently talked with my colleague, Kate Herman, about what she discovered in her research.
Joann Lublin: One of the things that I found in this cross-generational look is that things are getting better for working moms in their 30s and early 40s as they move into executive roles. It’s because of three things that are different. Well, one is we have, obviously, great improvements in technology. We would not have been able to have this year-long experiment and work from home due to the pandemic, if we couldn’t be doing what you and I are doing right now. My generation, we often stayed late at the office simply because it was technologically slow to dial up when you got home. You didn’t have that flexibility that these younger moms have. The second thing is that the workplace has changed in terms of employers being much more understanding of the needs, and how important it is to attract and retain, not just working moms but working dads, too. Because that’s what the millennials and the people coming after them are looking for. They want companies and other workplaces that are not just family friendly in name only. The third change that I saw in this younger cohort of executive moms is that their spouses, who overwhelmingly were husbands, were hugely supportive of not only their choices to be committed to their careers, but were committed to being equal parents and to be partners on the domestic front. These women would not have chosen these people to be their life partners or stuck with them for very long, if they weren’t amenable and they were willing to revisit the issues when circumstances change or when it got too hard for them because of that, what’s called the mental load, who keeps all the trains running on time at home.
Kate Herman: So that actually is a perfect pivot to your concept of work-life sway versus work-life balance. I think work-life balance is something we all hear a lot about. Talk to us about work-life sway and what that looks and feels like.
Lublin: I am so enamored of this concept of work-life sway [laughs] that I wanted it to be the subtitle of the book. I said to my publisher, this is like a book’s title, “Power Moms: Secrets of Work-Life Sway.” She’s like, “No one will buy the book. They will have the foggiest idea of what you’re talking about,” and that’s true because I didn’t, until I heard about it the first time. I certainly knew that work-life balance was an impossible ideal. I talked about that in the one chapter in my first book, Earning It, that looked at working moms. The title of that chapter was Manager Moms Are Not Acrobats, because you cannot have anything close to a perfect balance, you cannot maintain that yoga pose of standing on one leg for any indefinite period of time. But when I started interviewing the younger executive moms, the very first one I met introduced to me this idea of work-life sway, and I was like, work-life what? [laughs] The concept is that when we have to be a 110% in the moment, focused on a job, task or what’s going on with work, we can do so without any guilt because we know if we need to sway and go with the flow because of some life or family crisis that has arisen, we will do so and then come back when it is relevant and appropriate.
This, of course, has been writ large during these many months that so many white-collar employees have been working from home in which in the middle of that Zoom call, the dog starts barking or washing machine you’ve been leaning on suddenly starts vibrating, [laughs] and your laptop doesn’t hold it. The mom who I interviewed for the book who herself is a parenting consultant, when she saw that she’d been quoted, she put something on LinkedIn yesterday saying she has three kids, 5, 7, and 9, and the only 27 seconds she could remember having for herself in recent months is when she snuck into the closet in the kitchen, and ate from a bag of chocolate chips.
Herman: Blessed. Very relatable. [laughs]
Lublin: Very quietly, so none of the kids would know she was eating chocolate chips.
Herman: That’s amazing. Well, one of the things that you talk about, Joann, is this notion of to help maybe achieve that work-life sway, to help make sure that we can enjoy the richness of all of this and be a power player in the workspace, but also be a power mom, is to choose wisely when it comes to an employer. You have to choose the right company. A lot of these names of the women that you have talked to you for this book are going to be very familiar to our Fool members who are watching. We’ve got Procter & Gamble, Nike, Home Depot, Coca-Cola, the list goes on and on. In your research, did you find some companies that are really helping these power moms get it right or conversely very wrong? Do you have any shining examples of either of those?
Lublin: I certainly did not focus hugely on the ones that were getting it wrong because the whole idea is to set role models for other workplaces to imitate. But in the last chapter of the book, which is looking at making work workable for working parents, I highlighted several companies that I thought were going above and beyond. Two of those were American Express and PwC. What American Express did was twofold. No. 1, they made parental paid leave more generous and they made it applicable essentially across the board irrespective of your gender or marital status or sexual orientation, if you were going to be a primary caregiver of a child coming into your life, you are entitled to 20 weeks of paid leave. When they put in this change at the same time, they took steps to make sure that the guys knew that this was expected behavior of them. Because until we change what we expect people to act like for men when it comes to parenthood, it’s still going to be a problem for women. They did things like have special programs where new or expectant fathers could hear from senior men who had done this, who had taken their paid leave and who had seen their careers benefit from it. They put in a 24/7 parenting concierge who you could tap way before you went off on leave and it was open-ended for how long that service was available when you came back from leave.
But I think, frankly, the most important thing that American Express did was they recognize that having a lot of people go out for 20 weeks of paid leave is going to put a burden on those of us who are still working and don’t have children, or our children are grown or never plan to have children, and that can create huge amount of tension between the parents and the non-parents. They gave supervisors extra money to hire temporary, additional staff to fill in some of those gaps, and that’s a brilliant idea. PwC is a company that was in the forefront of making life easier for working moms way before this was the conventional wisdom in corporate America. As early as 2008, they put in a mentoring moms program and it was the idea of a woman who had had a child then came back to work and felt it would have been great to have other women who had been there done that to support her. These mentor moms, again, end up being paired with a mother to be, long before the child arrives and is supportive throughout their leave and when she comes back. Then if you fast forward and look at some of the things that they had done during the pandemic, among other multiple steps that PwC has taken, is that they have established protected time. You can say, “Sorry, guys, at least today, or maybe the whole of this week, I cannot do Zoom calls for work, I can’t be looking at texts or emails between 8:00 and 11:00, because I’m supervising schooling from home.” This idea that we recognize not only that parents have other demands on their time when we’re working from home, but that they are grown-ups, they are adults, and they can figure it out when they need that protected time period.
Herman: How are we not always on in the circumstances that we’re living through right now?
Lublin: It’s very simple. You turn off your phone [laughs] and you realize that frankly, you are not perfect, and you are not the be-all, end-all solution to all the problems that are happening at work, and you decide what time of day you will be reachable and when you will not. Going back to a couple of those executive moms who I had interviewed pre-pandemic, once the pandemic hit to say, “You worked from home, or you worked remotely before, you dealt with this, it’s always a non-issue before, what are you doing differently?” One of those women worked for a company where 100% of the employees were working remotely before the pandemic. In her case, she set those ground rules of protected time rather than the company coming back and offering it. She told her employer, between 8:00 and 11:00, or 7:00 and 11:00 every day, I am not reachable. So there are ways to set limits.
Hill: The book is Power Moms: How Executive Mothers Navigate Work and Life.
Chris Hill here once again with Jason Moser and Andy Cross. The NFL is on the verge of signing a series of new deals with different networks, looking to secure the broadcast rights to America’s most popular pro sport. The usual suspects are involved: Fox, CBS, NBC, and ESPN. But the most intriguing potential deal could involve Amazon ((NASDAQ:AMZN)). The Wall Street Journal is reporting that Amazon is talking with the NFL about locking up exclusive rights to Thursday night games. This would start after the 2022 season and be the biggest deal yet in terms of major pro sports moving away from traditional broadcast and cable TV. Andy, we got some big public companies involved in these negotiations: Amazon, Disney, Comcast, Viacom. Take it in any direction you want, but ultimately, I’m curious, what shareholders should be hoping for out of these negotiations?
Cross: We think the advertising wars are challenging and have a lot of big players. It’s nothing compared to the NFL rights wars, I think. It is interesting. I think, again, for me, this is more to the value of Prime. Amazon, such a large company with the ability to touch so many levers in what we do as consumers and how we interact, this is saying this is another value prop they want to do, and they want to continue to build up that Prime, and grow that member base, and add more and more value for consumer there. They’re seeing the NFL maybe as an opportune time and the Thursday night games, especially as a way that they can continue to add that value in a way for them that may not be nearly as expensive as other platforms. Also, they have their other expressions of entertainment, not just shopping, gaming. They also have a budding advertising business. I’m not actually super surprised to see them make this kind of push. The NFL, I think, has been under such scrutiny in the last couple years, and maybe they’ve seen an opportune time to strike while others might not be paying quite as much attention.
Hill: Yeah. Jason, even though, as reported in The Journal, if Amazon goes through with this deal, they’re going to be spending exponentially more for the exclusive rights to Thursday night. Right now they’re paying $75 million to $100 million a year just for non-exclusive rights. But it almost seems like the risk factor is a little bit lower for Amazon than it is for the traditional networks.
Moser: I think absolutely. It was a far simpler time growing up in the [laughs] 70s and the 80s where you had essentially three networks just vying for this content. It was just pretty understandable how that would all shake. The NFL, I think, certainly realizes this. They’re doing a very good job of playing the old guard against the new guard here. You look at something like an Amazon. I mean, Amazon is already a place where a lot of people are going to get their video content via that fire device. That is a true competitor to Roku. This does make a lot of sense. It’s very much in line with what they’ve done historically in spending big, making bold bets. Exclusive is the key word here. Exclusive is a very expensive word. You got to pay a lot for it. But I think the NFL remains very popular even through the difficult times. It’s not bulletproof, but it sure feels like it’s close. I think Amazon would love to be able to use that NFL brand and say, “Listen, come here for exclusive NFL content.” It’s bound to change even more with the world of sports betting. I think there are just a lot of opportunities there, and for sure, over the course of the next 10 years, we could expect this to only be more and more the case, this content going to newer players in the content space.
Hill: All right. Let’s get to the stocks on our radar, our man behind the glass, Dan Boyd, is going to hit you with a question. Andy Cross, you are up first. What are you looking at this week?
Cross: Dan, I’m looking at Lam Research (NASDAQ:LRCX), symbol LRCX. It makes all kinds of equipment for semiconductor chip manufacturers like Samsung, and Micron, and Taiwan Semiconductor, the second largest in this space. It’s a $76 billion business, so quite large, with the usage of all kinds of connected devices in the digital revolution. Think 5G technology, entertainment, data centers, driverless technology. We rely more and more than ever on semiconductor and chip technology, and we need someone to be able to make the equipment that makes those chips. That’s really what Lam Research does. It’s interesting now, because of where we are in the semiconductor cycle. So we’re relying on these, we’re seeing a lot of challenges on the supply side as well as excitement on the demand side. That could really be very interesting for future demand and growth for Lam over this year and next year, not as cyclical as it used to be. Lam Research is one I’m putting it on my radar stock.
Hill: Dan, question about Lam Research?
Dan Boyd: Yeah. Sure thing, Chris. Andy, one of the things that you mentioned is that they make the chips, they have manufacturing capability of the chips. Do they own their own manufacturing facilities, or are they leveraged?
Cross: Yeah, Dan, they make the equipment that makes the chip. They make the big expensive equipment that makes the chips for the Samsungs and Microns of the world. They do that themselves, and they do it all over the world and provide that equipment to all different kinds of players.
Hill: Jason Moser, what are you looking at?
Moser: Taking a closer look at AppHarvest (NASDAQ:APPH), ticker is APPH. This past week I had the good fortune to interview president of the company, David Lee. Really fun interview, and we’ll be putting that out on Industry Focus in a couple of weeks in our SPAC series. But AppHarvest is a SPAC that just recently came to the public markets. All this talk about fintech these days. Listen, Chris, that’s not the only tech out there. Dan, have you ever heard of AgTech? Not AD, A-G, Agriculture. Connected Agriculture is a thing and companies like AppHarvest are using connectivity, Cloud, Edge, sensors, all of this to really help take agriculture and our food supply to the next level. They came public via SPAC, so essentially, pre-revenue. This is a small business right now. Net revenue for this first quarter is predicted to be in the range of around $2 million to $2.5 million. For the full year, you’re talking about $20 million to $25 million. It is really just a business getting its feet underneath it. But this AgTech space is real, it’s growing, it’s a big opportunity. Need business with a phenomenal vision and I’m looking forward to learning more about it.
Hill: Dan, question about AppHarvest?
Boyd: Apples or apps as in applications? The name, Chris. Jason, I don’t know. It’s too confusing.
Moser: I understand where you’re coming from. Just focus for right now on the tomato because that’s their specialty. If you like tomatoes, you’re going to love AppHarvest.
Hill: What do you want to add to your watch list, Dan?
Boyd: I do like tomatoes, but I like manufacturing even more, Chris, so I am going with [laughs] Lam Research.
Hill: All right. We’re out of time. That’s going to do it for this week’s show. Thanks for listening. We’ll see you next week.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Fintech Zoom premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Square Stock – What Google’s Announcement Means for The Trade Desk and Magnite