Deep Dive
Shownotes Transcript
It's time for the heavyweights of the S&P 500. You're listening to Motley Fool Money. Everybody needs money. That's why they call it money. The best thing in life. But you can get them.
From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Ricky Mulvey, sitting in for Dylan Lewis. Joining me over the airwaves, Motley Fool senior analysts, Jason Moser and Asit Sharma. Great to have you both here. Ricky, how's it going? Good to be here, Ricky.
It's going well. We've got big macro, big tech in a look at travel. Let's start off with the big macro. Asit, U.S. GDP fell by 0.3% this quarter. Shipments to the port of Los Angeles will be down 35% from one year ago. That is what
director Gene Sirocco told CNBC. However, nonfarm payrolls came in well ahead of expectations at $177,000 for April. And some airline CEOs are saying we're already in a recession. That's what the Southwest CEO Robert Jordan told Bloomberg. So, Asit, that's the mess of the big macro going on. Are we sliding into a recession?
Ricky, the famous speculator Richard Dennis, used to say that it takes two data points to make a trend.
He meant that for speculators, meaning, thereby, when you see the first data point, be ready for that second data point, because that's the time to jump into the trend. By this token, by this thinking, this contraction in the U.S. economy, which a lot of it happened very late in the quarter, certainly is pointing to a not-so-great quarter for the next go-around, which to me means, yeah, we're sliding towards recession. I think the ports number that you
indicated here is important for people to understand because we haven't visibly seen the effects yet of tariffs that have gone into effect really practically this week. And so as the weeks wind on into this new quarter, I believe we're going to see some shelves that have fewer products. We're going to see now hikes on prices of big ticket items, maybe even some smaller ticket items. We'll start to feel the pain in the economy. Now, as you point out, it's a mixed picture because we've got
a strong payroll number that came in. I will note, there were sectors of the economy like healthcare that showed strong hiring. Some parts of this market are performing well. We know big tech, which we're going to talk about some, is having a decent recent performance. But overall, my take is, yeah, we're almost in a recession. I wouldn't be surprised if we call it formally in just a few weeks from here.
J. Mo, what's it ultimately mean then for stock investors looking at this data, feeling a little bit worried about the economy if we are, in fact, sliding into a recession? Yeah, I mean, I think those data points are all very clear. And, you know, the old saying, right, you can't turn a ship on a dime, it takes a little while. And I think that's important to note because a lot of companies were really planning for
for what we're actually going through now as the first quarter was ending. It's not like they can just readjust and everything goes back to normal. It takes some time to actually adjust and for that adjustment to then flow through the ultimate financials. I saw some interesting data
Earlier this morning, nearly a quarter of Americans, 24%, are scrapping plans to make significant purchases, like the home or a car, as of today. And another 32% say they're putting big-ticket purchases on hold.
And I think that says a lot. That says a lot to me, at least. And when it comes to recessionary times, we associate recessions with bear markets, and that's very fair, because typically we see market underperformance during recessions, obviously. The flip side to that is, it's like we make most of our money during bear markets, we just don't know it at the time, that old Shelby Davis saw. It is very difficult to go through it at the time as an investor. But again, I think it reiterates
why we invest the way that we invest here at The Fool and taking that longer-term view and ultimately just trying to find good businesses, buy them, and then own them for the long haul. Because eventually, things will improve, things do turn around. There are going to be a lot of political ramifications that come from all of this if we don't get these problems solved sooner rather than later. We've got an election coming up here in 2026.
And the voters will have their say if things aren't going as swimmingly as we hope they will be. So, it is difficult. You need to always be prepared for a rainy day. But as investors, these are the times when you really want to be keeping an eye out there for a lot of those great businesses that perhaps can be going on sale, so to speak.
Well, JMO, this is something you've talked about on the show before. When there's dislocation, uncertainty, that's when the big can get bigger. And that's kind of what Amazon CEO Andy Jassy said in the latest earnings report, quote, when there are uncertain environments, customers tend to choose the provider they trust most.
Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain areas with more relative market segment share than when we started." He was kind of talking about COVID there, but I'll kick it to Asit first. Do you expect that trend to continue with this trade spat where you see the dominant companies getting even more dominant?
In some ways, this is very possible for businesses like Amazon that have scale. One thing, Ricky, that I think is underappreciated about Amazon is that they are a platform business on the e-commerce side. We sort of forget that. CEO Andy Jassy also pointed out that Amazon mostly sells goods at a lower price point, including some $100 billion of groceries annually.
because they've got these millions of sellers and hundreds of millions of SKUs on the platform, if some sellers drop out because of tariffs, he's pretty confident that we will be able to substitute our goods and that the goods we're buying, we don't have a great brand loyalty to. He's got a point there. Amazon is this big machine for substituting goods. They can get stronger. And
Really, the indications of the business this past quarter just pointed to that overall strength. We saw net sales increase about 9% to $156 billion. I thought net income had a very admirable increase, $17.1 billion in this first quarter. That's versus $10.4 billion in the year-ago period.
I saw Amazon pulling in some inventory. They increased their inventory account for the inventory that they sell. They try to get ahead of these tariffs. But overall, management really wasn't that worried about tariffs. Amazon Web Services just continues to be this juggernaut. They have achieved gross margins of almost 38% because they can exercise some pricing power and they're very good on costs. They're also cutting costs from
for customers who are using AI on the platform. Overall, this was a very decent quarter for Amazon. It undergirds JMO's thesis here. I see some near-term trouble ahead for Amazon. That might last a quarter or two as investors adjust to the reality. Maybe next quarter, that results just won't be as strong in the near term. But man, looking at the long-term between the e-commerce business, the AWS side, which is continually investing in AI infrastructure,
And a lot of stuff that we just don't have time to mention that Amazon has its fingers into, like launching satellites into the air. Yeah, I think you've got a pretty solid business that can get stronger in this environment. Yeah, Amazon, the platform, I'm very grateful for the basics that CEO Andy Jassy is talking about. I can get a hand soap refill delivered right to my door for like $4. I'm not going to a grocery store for that again. But when you look at the actual business results, Asit, most of that operating income is coming from Amazon Web Services. Yeah.
That's operating income in total up by more than 20% from a year ago. And for AWS, they're signing deals with Adobe, Uber, and Nasdaq. Also pointing out at shopping sales, which helped customers save half a billion dollars across the world. When you look directly at those business results, what are you seeing as an investor here?
Basically, the build-out that Amazon did on its e-commerce side, Ricky, over the past several years, which cost tens of billions of dollars, is largely Compete. They have some variable cost advantage on that side. All the things that you just mentioned, those are the real drivers of the business. You keep expanding Amazon Web Services, you already have an e-commerce business that's built to withstand a little bit of stress, be it tariffs or anything else.
This is a business which is investing at $100 billion run rates every year into its GPUs, its data centers, etc. They think that enterprise businesses have another 10 to 20 years to go to convert their stuff into the cloud. Forget AI. You can see why I called it a juggernaut and why those results, as you said, show and are being propelled by Amazon Web Services.
Meta is telling investors a story with AI and glasses, and Apple is using $100 billion to buy back stock. We'll talk about that after the break. You're listening to Motley Fool Money.
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The big tech earnings keep rolling and Meta was telling investors a story with artificial intelligence and glasses. The overall message from Zuck seemed to be AI is going to sell Meta users more stuff and keep you on those platforms for longer. J-Mo, what were your big takeaways from Meta's quarter?
Ricky, what happened to the word metaverse? This company pivoted and changed its name just a couple of years back based on this premise that we were all going to be living in this digital economy known as the metaverse and just completely upending our lives and doing things so differently. Now, all of a sudden, metaverse has just disappeared from the company's lexicon altogether. I think it was mentioned once or maybe twice in the earnings call altogether.
I'm not holding that against them. I appreciate the fact they're able to pivot making these investments in AI because I think that's the right thing. Talking about the fact that Meta AI now closing in on one billion users. We know that one billion user mark is something that Mark Zuckerberg cherishes. He always talks about platforms, saying, once you get to that billion user scale, that's when you can really start making a difference. It seems like Meta is basically there with its AI aspirations.
But certainly, a good quarter. The market received it very well. If you look at total revenue there, $42.3 billion. That was up 16% from a year ago. Earnings per share, $6.43, up 37%. So, they're doing a wonderful job of bringing everything down to the bottom line.
Now, that said, I think it's always worth paying attention to the Reality Labs side of this business, because that's where they're making a lot of these immersive technology and metaverse-style investments. Revenue of $412 million, that was actually down, but this thing is still chalking up massive losses. I mean, $4.2 billion in operating losses just for the quarter. And that is just consistent, quarter in and quarter out. At some point, that becomes a little bit concerning.
Especially when you couple that with the fact that they essentially raised guidance on their capex spend for the year. Now, this is all fairly AI-centric spend, right?
But they raised their guidance for CapEx spend for the full year to a range of $64 billion to $72 billion. That's up from $60 billion to $65 billion just a quarter ago. So, clearly, they are spending a lot of money, but it feels like it's the right investment here, at least in regard to AI.
Speaking of AI, it's cool to see the Ray-Ban Meta AI glasses are actually gaining some traction there. Those sales have tripled over the last year. Zuckerberg offered this interesting data point. More than one billion people worldwide wear glasses today. I don't know, it feels like it could be more than that.
Regardless, he sees that as just this massive market opportunity, right? He thinks that it's very highly likely that these will become AI glasses over the next five to 10 years. Now, if that's the case, well, I mean, he's putting the company in a good position for success there as well. But I guess we'll have to wait and see whether that materializes or not.
We've gone from more of the metaverse, JMO, to the glasses-verse, but I think I'm okay with that. Let's go to Microsoft. This one, Asit, got the biggest positive reaction from investors from all of the big tech earnings reports. What were investors applauding here? Investors really liked that Microsoft's cloud revenue is still going very strong with all the uncertainty that investors have to worry about across the investment landscape with tariffs and just everything
economic anxiety, it's good to have a company that can show very strong results. Microsoft Cloud's revenue was up 20% to $42.4 billion. Now, that cloud revenue encompasses different things. It's both the Azure business and some cloud business linked to Microsoft 365. So, that's sort of a big number. But when you peel that down, the Azure business, which is what
Most of us think about and we think cloud and AI was a very strong performer. It grew by 33%, and 16% of that acceleration was tied to AI initiatives. So, I thought Microsoft did a really nice job of working on its cost structure while keeping that top line.
in very fast gear. So, total revenue for Microsoft, $70 billion. That's an increase of 13% over the prior year quarter. And net income also increased very nicely, about $26 billion. That's up 18%. So, on all fronts, Microsoft is really showing that despite a lot of
trepidation in the markets and in the business world, its customers still want to spend on AI and they want to get that cost edge that they're seeing, which is part and parcel of using generative AI tools. Tough to find any yellow flags for investors in this report, but that's what you want to look for if you're a contrarian. Asit, did you find any yellow flags here from Microsoft? Oh boy, buddy, did I? You want to talk yellow going orange going red?
Just kidding. Yeah, I guess there's one yellow flag we can talk about. Microsoft is taking every dollar of increase in its operating cash flows and throwing that into capital expenditure. So while it has this phenomenal ability to generate cash, some $37 billion this quarter, Ricky, it's taken every bit of that and spending it on GPUs,
data center build-outs, all kinds of stuff that's related to AI. Now, this to me is a bit of a yellow flag because it is looking very far into the future and saying, if we keep building the capacity, we're going to have a return on the capacity.
I will say, though, to that point, arguing against myself, Satya Nadella, keep in mind, the CEO of Microsoft is the original cloud builder. He built that Azure business, and he knows better than maybe a handful of people on the planet exactly how much to build and when to pull back on data center releases, etc. So I think he'll manage it well, but they are still risking that money and those profits on the future.
I think we're going to do a full show sometime of just Asit arguing against himself. But until then, let's move on to Apple, which announced plans to invest $500 billion in the United States. And JMO, also a $100 billion share repurchase plan, which will, let me check my notes, take 3% of the shares off the market, $100 billion for 3% of the shares. Also some flat-ish revenue in spots, but what'd you see in the results?
Yeah, it was a relatively uneventful quarter. Apple, obviously, a very large and important company.
The market's reaction, a little bit to the downside. It's understandable. Revenue growth of 5%. I was actually pretty impressed by that, to be honest with you. Earnings per share up 8%. That missed estimates just slightly. Maybe that contributes to a little bit of the market's negative reaction there. But I also think, they were talking about the tariff side of the equation. If things remain the way they are today, then that could contribute ultimately up to $900 million worth of costs for the business here that
Obviously, they'll be able to recover from it. It's not something that would be so detrimental to the business, but it's a near-term concern that investors ought to be concerned with. I was actually really impressed with iPad revenue that was up 15% from a year ago. Maybe that was a little bit of a pull forward, maybe folks getting out there, getting prepared for potential tariffs, raising prices. But I do think,
As with most companies, the conversation revolves around tariffs and how companies are dealing with these. Apple, I think, has done a very good job over the last several years trying to diversify their supply chain. They're making big investments in India. In conjunction with Indian conglomerate Tata,
Ultimately, they estimate that India is going to contribute more than 20% of global iPhone output in 2025. So, going back to the top of the show where we talk about these are times where the strong get stronger, I think Apple's at a perfect position here to deal with these uncertain times.
And then as we wrap up, the four companies we've talked about today, Meta, Apple, Amazon, Microsoft, they make up about 20% of the whole market cap of the S&P 500. Quickly, asset. Is that a concentration that investors should sweat? In normal times, yes. But in tariff times, maybe you like that concentration. They're still making money. J-Mo, how about you? No, I like what he's saying there. These are the times when the strong get stronger. And so they're the ones that are going to be able to weather the storm.
Up next, we're going on a trip, a look at the travel industry. You're listening to Motley Fool Money. Eczema isn't always obvious, but it's real. And so is the relief from Ebbgliss.
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Welcome back to Motley Fool Money. I'm Ricky Mulvey sitting in for Dylan Lewis. Universal Orlando's Epic Universe opens later this month, the first major theme park to open in the United States in more than two decades. Motley Fool contributor Rick Munerez got in early and he joins my colleague Mary Long to give his recap and discuss how hotel chains and cruise lines are holding up as travel slows down.
On May 22nd, a new theme park will be fully opening its doors to the public. That park is Universal Epic Universe. It's the first major new theme park to come to Orlando in more than 25 years. The park has five separate lands, Super Nintendo World, the Wizarding World of Harry Potter, the Ministry of Magic, How to Train Your Dragon Isle, a celestial park with fountains and restaurants, a dark universe that highlights classic monsters. We've got Rick Munarez here who just happened
to come back from what? What was it, Rick? Three, four days of checking out the preview of this park?
Let's start with that. Give us the recap. What'd you think of Universal Epic Universe? Yeah. So I spent three days and I still can't wait to get back because it's amazing. I've never seen a park that looks this good before it opens, but like any park that's about to open, there's still a lot of growing pains. Its biggest ride, its most popular ride is still having some buggy issues. It has three weeks to get it right. So I'm not going to say it's tricky to get on the ride. You
And unlike Disney and other places that do have virtual lines, these spots, because the ride is down more often than it's up, it's a hard ride to get on, the Ministry of Magic ride, which I was able to do once in my three days. But everything else is beautiful. The details are great. The ecosystem is there for all these restaurants.
different, very different restaurants. There's a hotel literally in the back of the park where you can walk in from the back of the park for its own private interest for people staying there. So, yeah, it's an amazing park. I'm glad it's here. And more importantly, I'm glad to see what it's going to become because it's right now, it could really use probably a couple more rides right now for the capacity that is going to be hitting up soon.
You talk about the beauty and the detail, okay, and also the fact that they need more rides, but the park itself is importantly not just about rides and roller coasters. They've also got a lot of advanced animatronics on display. How does that add to the overall experience, getting to interact with these animatronic creatures?
Universal, when they started, it was a movie studio. They started a movie studio park and the whole theme was ride the movies. So they would put you in rides where they basically, you know, jostle you, shake you around and you're looking at all these screens and stuff like that. And that's great for that. But Universal,
but people wanted more. And, and this, this park does deliver more on that. Yeah. Yeah. They have a lot of animatronics throughout the park characters that are, that come to life. But even in the rides, if you've ever been to, to let's say we've been to universal studios, uh, islands adventure in Florida or universal studios, Hollywood in California, uh,
The most popular ride there, one of the most popular rides, is the Harry Potter Forbidden Journey ride, where you're basically riding on a four-seat bench and you're being rocked around these great screens. You're in a Quidditch match, you're facing off against Death Eaters, all these things.
Now imagine that, except it's Universal Monsters and Frankenstein is in your face, Dracula's in your face, the werewolf is chasing you from one point A to point B with an actual creature there in the ride. So it really adds some intensity that I've never seen in any other theme park. This is really a next level experience that I think once they get all the bugs worked out, it's going to be very popular and popular for the tourism industry in general, at least in Central Florida.
It's one thing to go to a theme park like this and to experience it as a guest, right? But you're an analyst and you're an investor. So I'm sure you had some other thoughts running around your mind as you're experiencing this as well. Anything in particular stick out to you as an investor while you're walking through the park? I spent three days in the park with me, my wife, and my youngest son. We spent two nights at the Grand Hellyes Hotel, which is a hotel that's inside the park. And
And I spend more on those three days for the three of us that I have for a year of our annual passes to Universal. So there's a lot of money being made here. I'm very excited as an investor that at least my money is going somewhere to a publicly traded company. But yeah, it is the kind of thing, it's a model, it's an ecosystem.
And it is the kind of thing where it's exciting to see that people are still willing to spend this kind of money in this kind of environment. And what they've done is they're not selling annual passes at all to Epic Universe, and they're probably not going to do it anytime soon. So if you want to go there, you have to pay $140, $150, $160 for a day at the park instead of spending $500, $600, $700 for an annual pass. And you can go all year round. So they are going to be making a lot of money at this park.
I think when we think about the Walt Disney Flywheel, parks are a pretty important piece of that. That's pretty broadly recognized. Universal Epic Universe is a piece of Universal Studios, which is owned by NBCUniversal, which is owned by Comcast. Comcast, very big company. Is the theme park segment of Comcast business undervalued or ignored by investors? What do you think about that?
Well, theme parks are almost like a third, a quarter to a third of Disney's business. The theme parks for Comcast is basically 6%, 7% of the revenue mix in the last couple quarters. And this is fair because when you think of Comcast, you think, oh, this is my Xfinity cable provider. This is NBCUniversal. This is my cable TV and internet provider. They do both. So
It's almost a utility. It's not a very exciting company. Trades at a low multiple. It's very slow growing with its legacy business is not doing so well. But their theme parks, they're putting a lot of muscle, not just this park. Just a couple weeks ago, they finalized plans to be opening a Universal Studios park in
in the United Kingdom for the first time. So they are taking this seriously. Uh, they did make a move about, uh, two plus decades ago to try to acquire Disney, which was shot down, uh, fairly quickly. So I think they tried to emulate that model and say, Hey, if we had a, like a theme park experience around the world, uh,
And at the kind of Disney level, things can get interesting. So, yeah, it is being ignored by investors. And for Comcast, they're putting more interest into it now, now that they see it's a steadier business. And unlike its cable business or even broadband connectivity, it has a good chance to keep growing rather than declining in the years to come.
The timing of this park opening comes at what feels like, I don't know, a bit of a precarious time for the travel industry. Okay, yes, we're about to head into peak summer season, but we've also got airlines cutting guidance and reducing capacity for the second half of the year. Earlier this month, Goldman Sachs lowered its outlook for hotel stocks like Hyatt, Hilton, and Marriott, saying that it expects average revenue for available rooms in U.S. hotels to grow by only shy of half of a percent this year.
From where you're sitting, you know, you were just at this park and you mentioned there's a lot of people spending a lot of money. What's the state of travel look like from where you're sitting when you really zoom out and look at the whole, whole industry?
I'm as cautious as everybody else. It looks very cloudy beyond right now. Obviously, as far as hotel operators and other airlines and other companies, businesses that rely on travel, you have a case where right now international travel is going to be iffy while there's an international trade war going around. You think, okay, domestically, obviously, we in the U.S. love to travel. We love our road trips. That will help out some of these
companies, some of these hotel chains. But if the economy starts taking a hit, first you take the hit on the corporate end, which is a big part of the hotel business. If companies aren't really hiring that much, they're not really sending people out to conventions and travel to smoke out business. And people too, consumer, the residential business, folks like me and my family, that's also going to take a hit if we have to start saving our money. So I wish I was more optimistic and hopeful. I think there will be operators that will do better than others. But
Yeah, I think it's right to be cautious right now until we get some kind of clarity that this is over and the recession is not going to get worse. Recession is not going to happen, rather not get worse, that the weakening economy is going to buck the trend and start going in the right direction soon.
It seems that there are some travel companies that are maybe bucking this trend. We had Hilton report earnings earlier this week, and seemingly no worries from that company about the uncertain macro environment. Earnings for the first quarter came in at $300 million. That's up over 13%, pretty notable from the year before. Things looked so good during the first quarter that management even raised its outlook for the full year.
Is Hilton perhaps ignoring the bigger picture of this uncertain macro environment? Or do you think, oh, no, they might have figured out something that other travel companies and hotel operators may have missed? I don't know if they cracked the code, but they are gaining share. They are gaining market share. They're doing better than the competition, and that's showing. Their guidance for this year is for revenue per available room in the U.S. to rise between 0% and 2%.
And so, in the mid-point, 1%, that's better than 0.4%, 0.5%, whatever Goldman Sachs said for the whole industry, their outlook was. So, the company is doing that well, and they're finding ways to increase their margins. Earnings are growing faster than revenue for them. So, they are doing those things correctly right now. But I don't know if they have a solution, because if people aren't going to be traveling, it's not as if Hilton has this kind of lock where they'll never let people check out like Hotel California or anything like that.
We've talked theme parks, we've talked a little bit about hotels and the broader travel industry. One aspect of the industry that is perhaps a bit different from those is the cruise industry. Earlier this week, we had Norwegian Cruise Line Holdings. They posted Q1 results. Both the top and bottom lines decreased on a year-over-year basis. Royal Caribbean, another cruise operator, reported on Tuesday, and they actually beat Wall Street expectations and raised their full-year guidance
mixed bag of results, depending on which company you look at, but they all operate in the same space. What do you make of these mixed results from different cruise companies? Yeah. The moral of the story is that a rising tide does not lift all ship makers, all ship cruise line stocks here. Royal Caribbean, the stock is up 63% over the past year. Norwegian Cruise Line is flat. There's a good reason for that. We saw it basically with the earnings report that they just
put out. Royal Caribbean, revenue rose 7%. NCL, as you mentioned, revenue declined. Royal Caribbean raised its guidance. NCL did not and taxed some parts of its guidance that lower. Everywhere you turn, you're seeing that Royal Caribbean is a company that has historically grown faster than Norwegian Cruise Lines, has produced better margins, turned profitable coming out of the pandemic before its two rival cruise lines. So, they are pretty much the class act, even though they're not as large as Carnival per se,
They're the ones who've always been the ones that investors put more money in because it's proven to be the better performer of the three. It's not the same, but obviously, they're all experiencing healthy bookings right now. But again, Norwegian Cruise had, to be fair, the decline. Part of it was that they had some of their large ships were in dry dock, they're doing refurbishments. Their full fleet wasn't there, but you still have the case of Royal Caribbean, just quarter after quarter,
It's not just this one quarter. Just go back and you'll see the difference between one company and Norwegian Cruise Line. There is a difference. Norwegian CEO Harry Sommer noted that the industry tends to believe travelers look to cruises more during times of economic turmoil because the thinking is that cruise ships offer more value than land-based holidays. Perhaps more value than a land-based holiday like going to a Universal Epic Universe theme park.
Do you buy that? Do tougher economic conditions tend to bring good times for cruise companies, if you look back historically? I would say yes, but mostly no. So yes, I live in Florida. So to me, I don't have to fly to any of the major ports. All three of the major cruise lines have ports, basically Port of Miami or Fort Lauderdale or even Port Canaveral when I'm up in Orlando. It's a short drive away. And
If you have a healthy appetite, and I assure you, I do, Mary, or if you have a zest for entertainment and you want to go on a beach vacation, there's nothing beats a cruise experience where you can just pack once and just go from port to port and enjoy everything it has to offer. There's a lot of stuff happening on boats. It's a very different experience than what cruising was 20, 30 years ago.
great product. Unfortunately, I can't agree with the CEO, Osama, here. If the economy gets rough, I think everyone's going to feel the rocky waves in this case. Their benefit right now is people book their cruise lines well ahead of it. You're booking cruises now even for 2026, and people rarely cancel. Royal Caribbean said that their cancellation rate for this last quarter was no different than it was before. People are not having cold feet about that. But
When we get to later in the year, the economy does have to play along. Because even though a lot of the people that go on cruises, they may be older, they may be wealthier. If the economy hits hard, it's going to rock all the waves there. Rick Bonera, it's always a pleasure. Really appreciate you coming on, giving us a behind-the-scenes sneak preview of this exciting new theme park and for taking a look at the broader travel industry with us.
Radar stocks are coming up. Stay right here. You're listening to Motley Fool Money. The legend lives on from the Chippewa on down at the big lake they call Gitche Gumi. The lake, it is said, never gives up her dead when the skies of November turn gloomy with a load of iron ore, 26,000.
As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. The Motley Fool only picks products that it would personally recommend to friends like you. I'm Ricky Mulvey, sitting in for Dylan Lewis, joined again by Asit Sharma and Jason Moser. Fool's
Before we get to radar stocks, I wanted to kick around this NFT story with you because 404 Media reported that last week,
thousands of NFTs that collectively sold for millions of dollars vanished from the internet because the person running the project moved the NFTs in this clone X artifact project to a free Cloudflare plan. So the folks that spent money on these NFTs just got an error message when they were trying to look for them in their digital collections.
The NFTs are back online now, don't you worry. But from Matthew Galt's reporting, quote, one of the original pitches of NFTs is that they would live forever on the internet. The idea is that they were a digital asset as good as real world assets like gold or silver, end quote. But now there could be destroyed or erased. Fools, are you pouring one out for the NFT community here?
I don't know. Personally, for me, I think I've always been pretty clear. I'm not a big crypto guy that extends into NFTs. It's very difficult for me to actually explain the tangible value there.
Everything that this story contains really exemplifies why I'm not that big of a fan, because I can't fully explain like how this stuff works. Like there's a technology here in play that I'm clueless to.
and stuff could just disappear overnight. It's always been the question, what happens if the lights go off? Well, then those assets just disappear. Will they come back? I don't know. Just make sure you understand what you're getting into before you actually get into it. Asit, you're a father and an investor. How should parents prepare themselves if their kids want to go up to them and say, "Dad, I want to spend some money on an NFT."
I would tell my kids to think about how they take out the trash. Because, you know, sometimes you can take out the trash if that's your chore and you're like, I'm thinking about school. I must be somewhere near the bin. I'm putting the trash in the bin. Other days, that thing has a leak in it. Pay attention.
With NFTs, you have to pay attention to the assets. There's a similar story out there in the Bitcoin world. Still, I think one of the people who is holding hundreds of millions of dollars worth of Bitcoin is still suing to get his hard drive out of a landfill, to excavate a landfill because he's lost that money. Digital assets really goes back to what JMO was saying.
They're digital. They don't have intrinsic value. If you're going to play with them, that's fine, but pay attention. Pay attention to how they're being stored, to how you have access or custody over that asset, because it turns out it matters. Speaking of redirection, let's get to radar stocks. For that, we're going to bring in our man behind the glass, Dan Boyd. We'll start off with Jason Moser for his radar stock of the week. J-Mo, what you got?
Yeah, taking a look at Twilio, ticker is TWLO. Twilio reported earnings this week. Remember, Twilio provides developers with tools that allow their software platforms and applications to incorporate things like voice, text, and video, and other communications features. But they reported a good start to the year. Revenue growth of 12%. That was a nice little boost there. And another quarter of positive gap profitability.
Ricky, this company is actually growing up. It's fun to see. Active customer accounts grew 7% to 335,000. Dollar-based net expansion rate improved to 107%. That indicates the company is doing a good job in establishing and then also growing those customer relationships. They continue to innovate. They've got this new offering called Conversation Relay. That's proving to be a key tool for their customers and helping developers
build AI voice agents, which I think is pretty interesting. But ultimately, since taking over at the beginning of 2024, CEO Kozema Shipp Chandler, really, he set out a very clear vision for Twilio with sensible goals regarding growth and profitability. And I think it's starting to pay off for investors. We're starting to see some traction here. And interestingly, Ricky, fun fact, the word tariff did not even show up in the conference call once.
Wow. I know. Dan, a question about Twilio. Yeah, Jason, this is one of these companies that is almost, I don't know, too boring for you. No McCormick, that's for sure. What's going on? Where's the spice? I feel like you're having fun with me, Dan.
Might be a good take. Asit, what's on your radar for this week? Reddit is on my radar, Ricky. This is, of course, the company that makes money with advertising revenue, display ads, sponsored posts, etc. I like the results that I saw out of Reddit. I mean, blew it out of the park. Total revenue increased 61% year-over-year to $392 million.
Free cash flow of $126 million. It's music to my ears. This company was losing money and wasn't very free cash flow positive. I want to just say one thing that they said on the call really
appealed to me. For seekers, Reddit's open nature is essential. It allows our content to surface across the open web and be easily found in search. We remain one of the last major platforms that doesn't require you to sign in to learn something because we believe that by giving everyone access to knowledge, we're helping fulfill the purpose of the internet. Okay, marketing speak, but marketing speak that appealed to me. Dan, quick question about Reddit. Yeah, Asit, what's your favorite subreddit?
I couldn't say here on the air, but I'll tell you after we finish taping. You know, that scares me a little, Asit. I shouldn't scare you. Okay, gardening club subreddits. The internet is a dark and terrifying place, but we got to wrap up. Dan, what's going on your watch list? Wow, extremely ominous from Asit there. Holy moly. I'm going to go with Twilio because boring is usually good.
That's going to do it for this week's Motley Fool Money Radio Show. The show is mixed by Dan Boyd. I'm Ricky Mulvey. Thank you to Asit. Thank you, JMO. We'll see you next time.