Google Just Spent $32 Billion On A Cyber Security Company

Welcome back, everyone. Today on the Joseph Carlson Show, we have some breaking news. Google just officially agreed to buy a company called Wiz. Wiz is a cybersecurity company. Specifically, it is a cloud security company. And this deal is massive, a $32 billion deal. In this episode, we're going to be looking at all the specifics. Why is Google paying this much for this company? How much revenue does Wiz already do? How fast is it growing? Is this a good deal for Google? How does it fit into the broader picture of Google? And what is their aim here? So we're going to be going over all of it, all the specifics of this. We also have a lot of other news to get into. For example, Zoox, the Amazon-owned robotaxi, is officially being tested in California. And we have the story of someone that took a ride on Zoox. We'll be looking at that experience. We also have a little bit of controversy to get into. Mark Rober, one of the most popular YouTubers on the platform, released a video recently that was somewhat critical of Tesla. It compared Tesla's autopilot system to LiDAR, and it highlighted the differences in technology. Now, this video had many flaws with the portrayal of it. It tested autopilot instead of full self-driving. There were different takes. It didn't really add up right. And it's received a ton of backlash. Online, people are really hating on Mark Rober, saying that his reputation is done. His channel is destroyed. It's all over because he went after Tesla in a very bad way. Now, we're going to be looking at this video with a critical lens and Mark Rober's response, because he recently gave an official response to this, explaining his perspective in greater detail. So, we're gonna be looking at that as well. Now, we also have news that Costco is pressuring Chinese suppliers to push prices down on the tariffs. And we have news that Netflix is getting further price increases from Wall Street. More bullish sentiment on the backs of their new price increases. So, we have a jam-packed episode to get into. Let's go ahead and get started. Now, we start today off with the breaking news that Google has decided to acquire a company called Wiz. And the price they're paying that they've agreed upon is $32 billion. Now, investors are a little bit cautious right now. The stock is down 2.6%. That's more than the broader indices, including the QQQ. So, investors are taking a step back, assessing this deal. But if we first start off by looking at the mechanics of the deal and what Google says they're trying to get out of it, we can do that before looking at the financing. For example, Google released this blog post explaining their reasoning behind the deal. They're trying to sell the deal to investors. They say, as we see in the news every day, cybersecurity risks continue to accelerate with the number and severity of breaches continuing to grow. Meanwhile, as more organizations go digital, most deployments are now multi-cloud or hybrid, introducing complex management challenges. At the same time, software and platforms are becoming deeply embedded across products and operations, bringing new and evolving risks for private enterprises, governments, and other public sector organizations. So, they're setting the framework for how big of a complex and technical challenge security is becoming. Traditional approaches to cybersecurity struggle to keep up with the evolving landscape. Organizations with modern IT environments need a cybersecurity solution that spans multiple clouds, as well as hybrid and on-premise environments, that can protect against threats to and from AI models, that can use AI to extend defenses, and that can fully integrate software development and operations into the security portfolio. Now, that is a technical mouthful. But overall, they're just saying that cybersecurity is becoming a bigger issue. With artificial intelligence, the ways that hackers can gain access and controls to different systems is becoming far more sophisticated. So, they need far more sophisticated defenses against these attacks. So, AI has all these benefits of enhancing technology, accomplishing all these great things, but it's also a tool that's going to be heavily leveraged by hackers. So, this problem is growing. I agree with the premise of it. What are Google and cloud security solutions today? Now, this is where it gets a little dicey, because if Google says, we need to buy this cybersecurity company because we have no cybersecurity, that's a problem. It does naturally raise the question, Google, if you're buying a cybersecurity company, what systems do you already have in place? Is our data safe with you already? Well, they try to explain how this is quite a bit different than just basic Google cloud security. They say, today, we help customers detect and respond to attackers through both SaaS-based services and cybersecurity consulting that enable Google to be part of customer security teams. This includes services like Google Threat Intelligence, which delivers detailed, timely, and actionable threat intelligence. Google Security Operations, which allows customers to collect telemetry data, apply threat intelligence, and identify high-priority threats. And Mandiant Consulting, which provides frontline expertise and deep understanding of global attacker behavior. So, it seems like Google already has a pretty robust security system from what they're defining here. But now they go on to explain how Wiz is different, and it adds and even broadens their security profile. What does Wiz do? Wiz is different from the services we offer today. It delivers a seamless cloud security platform that connects to all major clouds and code environments to help prevent incidents from happening in the first place. Wiz's solution rapidly scans the customer's environment, constructing a comprehensive graph of code, cloud resources, services, and applications, along with the connections between them. It identifies potential attack paths, prioritizes the most critical risks based on their impact, and empowers enterprise developers to secure applications before deployment. It also helps security teams collaborate with developers to remediate risks in code or detect and block ongoing attacks. In other words, it gives startups, enterprises, governments, and public sector organizations the ability to protect themselves comprehensively. Wiz is an innovative leader, creating new categories of cybersecurity solutions in the last 12 months, including code to cloud security, cloud native runtime defense, further strengthening its impact. If you do a cloud market breakdown, Google's currently in third place behind Microsoft Azure and in first place with Amazon AWS. Amazon already owns the majority of customers. Most businesses and startups are using Amazon's AWS. And Amazon tries to lock in those customers. They try to keep them on AWS. They try to solve their every need. They try to offer unlimited tapped growth. They try to keep them just using their platform like any company would. Google's trying to make it easier for those customers to also use Google so that they can take some of the revenue from Amazon so that they can compete with Amazon AWS better. And by offering services that make it more secure to use multi-cloud, they have a higher potential of taking revenue from Amazon and Oracle and Microsoft and every other competitor. That is the intention behind this acquisition, not only just to get the revenue of Wiz. A lot of people are just looking at the price to sales of Wiz and the revenue that this company generates, but there's other impacts of this. They're trying to make the route easier to get customers from other cloud partners, to have them use a more multi-cloud model. And Wiz is a company that specializes in making your data secure across multi-cloud. So there are specific motivations for Google to purchase this company beyond just getting the revenue of Wiz and having another great product. They want to make it so they can take customers from other cloud companies. They almost spell it out right here. We are aiming to provide customers with better security for enterprise systems and a lower cost of maintaining a strong security posture across their on-premise and multi-cloud environments. They're trying to bring down the cost of multi-cloud. So that's Google's take on this deal. They believe it's more of an integration and overall enhancing their services, allowing them to do more multi-cloud deals. And when people are looking for partnerships, they may now choose Google because they have this Wiz integration. So there's more to this deal than just the price to sales. When we just look at the price to sales or the cost they're paying for Wiz, it does look pretty pricey. For example, just last summer, so not even a year ago, Google was trying to buy Wiz for $23 billion. Now that was the offer. $23 billion didn't close. Wiz got some cold feet. They said that they were going to go public. They thought that it wouldn't pass regulators. They didn't think it was enough money. For whatever reason, they held out. And for Wiz, that was the right thing to do because they got $9 billion more, not even a year later. So this deal is going up in price like crazy, adding on 50% more cost roughly in less than a year. That's an incredible appreciation of value for this cybersecurity company. But also over the past year, Wiz grew by double. So the revenue is doubling in a single year. Now Wiz's revenue, if we look up the revenue of other comparable companies, Wiz is expecting to If we compare that to a company like CrowdStrike, we can do a little bit of a comparison. CrowdStrike over the trailing 12 months did around $4 billion. So Wiz is going to be roughly one-fourth the size of CrowdStrike, growing quite a bit faster than CrowdStrike. CrowdStrike's worth $90 billion. Wiz is being valued at $32 billion. So Wiz is getting a premium over CrowdStrike, but it's growing faster and it's being integrated into Google Cloud. It does look expensive, but this deal doesn't look unreasonable. As a Google shareholder, I want Google Cloud to be highly competitive. I want it to have the latest and greatest security measures. And Google's in a situation where they can afford this. If we look at Google today, they have options for their cash. If we look at how much cash they have right now, Google has a lot of money to burn. They're currently sitting at, in fact, let's go ahead and zoom in here, just the past five years their cash balance went from $142 billion down to $95 billion. And most of that is through buybacks and dividends. So they've been distributing billions and billions of dollars to investors every single year through buybacks and dividends. In fact, we can see those buybacks and dividends in the return of capital chart. Last year, they returned $70 billion back to investors. Now $62 billion of that was through buybacks and $7.36 billion of that was through dividends. But $70 billion just last year, just in 2024. So they are spending a tremendous amount of money on buybacks and dividends. But they're still today left with $95 billion in cash, $10 billion in debt that leaves them with a net cash position of $85 billion. Meaning that with this $85 billion, Google can easily pay for this deal in all cash. And that's exactly what they're doing. And between the two options of simply doing more buybacks and just bumping up their buyback number, returning a bit more to shareholders, or doing a strategic acquisition to greatly enhance the ability to sell their cloud services, which is their fastest growing portion of their business, I would choose this route. I think strategically it's a better option for Google, even despite the high price. So when I look at the options of Google to use their giant cash balance, they can either sit it here and earn interest. That has very low perspective returns. I'd rather just do that in my savings account rather than invest in Google and have them do that. I need Google to find better ways to use their cash than sit there and earn interest. The other option is buybacks. If Google instead chose to do $32 billion worth of buybacks based on the current market cap, that's around 1.6% of the market cap. So they could buy back a bit of their market cap. That would increase the stock price by around 1.6%. If you're going to do that in pure mathematical standpoint, that'd be good. But overall, that doesn't have the longest long-term implications. Just punching up buybacks a little bit does help out the shareholder in the short term, but this acquisition has the possibility to be a very big intrinsic value creation over the long term. So again, looking and considering the different options that Google has, enhancing buybacks, holding cash, or doing strategic acquisitions, this is one that I can get behind. This is an expensive deal, but not every deal that's expensive is automatically a bad deal. Now with Google stock down 3% today, investors are just a bit nervous about this. And this is exactly what you can expect with a company that's already facing some challenges with questions around search and the durability of the moat, questions about the large CapEx spend they're already doing. Then you throw in an acquisition and it becomes a little bit of a muddled story. So it makes sense to me that investors are trading this down. It's typically the case, the company doing the large acquisition trades down a little bit. That's normal. But just keep in mind, Google has some excellent properties. They're still generating a ton of cash. This is a company getting cheaper by the day. It trades at an 18 Ford PE ratio. On 2026's earnings, it trades at a 16. Even looking at the free cash flow and adjusting for stock-based comp with the impacts of all the CapEx they're doing, it's at a 2.6. That's still not crazy expensive, even looking at it in the most unfavorable light possible. So as a Google shareholder, the way that it's trading right now makes sense. I'm not going to complain about that, but I still think this one is a decent long-term bet. Now moving on from that news, I want to talk a little bit about the general market sentiment. Today, the market's down yet again. We're going through a little bit of a correction. In fact, the market's corrected at record speeds, going down 10% in only 16 days. That's a very quick correction, and it looks like it could head into a bear market. Maybe we'll go down 20%. With the uncertainty regarding trade policy and all the different concerns going on, combine that with high valuations, we have a nice setup for the market trading down. Just today, my portfolio, the passive income portfolio is down. Let's take a look. It's down $11,000. We can take a look at the story fund here, my secondary portfolio. This one's down $6,000. We're down around $17,000 on the day between the two portfolios. Yesterday, these two portfolios were up around $17,000 to $20,000. We're having swings daily in this portfolio between the two of them of around $20,000. One of the interesting things I looked at, just looking at the portfolio's volatility, it trading around, these stocks getting priced differently, is that the entire first year that I was investing, my whole first year starting off this portfolio, was building it to $20,000. Now, in a single day, I'm having those type of swings. That is an incredible situation to be in. At some point, what you started out with your portfolio, contributing the entire year, building it up, getting it to $10,000 or $20,000 or $50,000, whatever it may be, is going to be daily swings of that same portfolio in the next 10 to 20 years. It'll become a tiny part of your portfolio. Overall, I don't have anything big to share today. I just wanted to point out, if you keep building your portfolio, if you don't let the market dictate your sentiment, if you keep buying, especially on red days, and buy into great companies, buy a diversified portfolio full of high-quality companies. If you don't want to pick them out yourself, just buy a great ETF that's already diversified and continue to contribute over and over and over again. Especially contribute on days like today. Especially contribute when the is telling you not to. When investors are becoming bearish. When everybody's scared, that's the time to buy more. Keep pushing, keep depositing, keep building it, and you'll have a massive portfolio over time. Now, let's go ahead and move on to some news. The first bit of news we get to highlights that even though we often talk about Tesla and Waymo as kind of the only two factors in the ride and robo-taxi business, they're not necessarily the only two companies that are involved in this business. In fact, there's a lot of companies now looking at robo-taxis. Amazon is one of them with a company they own called Zoox. Now, if you look at a Zoox, this is what it looks like. They're a bit funny looking. In fact, it's compared to in this article is like a Disneyland ride. It feels like you're getting onto something different, unique. It just looks different than any other vehicle I've ever seen. It's almost symmetrical front and back, which is different than vehicles. The tires stick out beyond the bumpers of the vehicle. That's also different. And then you have giant, those are LiDAR sensors at the top corners of each part of the vehicle. And then you have cameras before that. So they're also going with the route of using LiDAR in combination of camera all around the vehicle. Inside, you have like a boot seat that face each other. So as passengers, you can actually face each other. And this is being rolled out now into different cities. Zoox is now being tested on the streets of San Francisco. And one person shares their story. They say, as we rode through the streets of San Francisco and our company's autonomous vehicle, we talked through all the backend things required to launch a robo-taxi service later this year. Quote, right now, tiny, small, medium, large. The chief executive told me about her strategy of scaling Zoox. We're still putting the foundation in place and making sure that everything that we've said we're going to do, we're doing. Her approach is rooted in sweating the small stuff. It's a belief at odds with Silicon Valley's mantra of move fast and break things. And born in the fact that execution is key to making robo-taxis work. And small stuff really isn't so small. The biggest problem that could occur with robo-taxis, the thing that could kill years of progress in this category is having a tragic accident. One that was completely avoidable that a human would have avoided. If a robo-taxi service has that type of event happen, it will set them back years. So the approach here is to move slow and not break things. And I think they're taking the right approach. Now, they narrate this a little bit, and I don't necessarily agree with their narration here, but they say this is in striking contrast to the go quick, go bold approach taken by Elon Musk and others who have heralded the coming age of robot cars. They say that Tesla is being fast with their approach, go quick and go bold. But right now, they're not even on the road really testing to the same extent other robo-taxi companies are. So I don't think they're necessarily going fast with robo-taxis. The Tesla CEO for years has said that electric car makers was on the precipice of deploying driverless vehicles. He once suggested he would have 1 million robo-taxis deployed by 2020. I'm sorry, Tesla investors. It's just reality. Elon Musk, as you know, as you know, I'm not pointing this out to Tesla investors for the first time, but he over promises things a lot. It's something he does. It's just part of the package of Elon. He will say something's going to happen, and he always gives like a two-year timeline. Sometimes it takes five to 10 years. Now, they point out that right now, the leader currently right now, and I'm not saying overall, I'm not saying maybe in the next five or 10 years, but the robo-taxi company that's currently in the lead with the most cars accepting the most paid rides is Google's Waymo. They have long ago embraced the boring side of fleet management, and it's way ahead in the race, having already deployed robo-taxis in San Francisco, Los Angeles, and elsewhere. And they're expanding in multiple cities right now. And Zoox and Tesla are competing to be second place in getting robo-taxis officially deployed. Like Waymo, Zoox has built a call center-like operation that monitors its vehicles in real time and can remotely help vehicles deal with situations. There are also operations to keep the vehicles clean and maintained. Now, Zoox is close to deploying its taxis for the public, initially with free rides to select participants this year as part of an early rider program in Las Vegas and San Francisco. That will be followed later this year by paid services, first in Las Vegas. One of the fun things about owning stocks like Google and Amazon, which I'm a shareholder in both of them, is that for Google, Waymo is not some significant part of the story. Nobody's really investing in Google specifically for Waymo because it's such a small part of the revenue and the overall story. Google has so many incredible properties with YouTube and Android and cloud and search and all the things that they have, Gmail and so on. Waymo is just a small portion, but it's a nice little thing to have. Maybe Waymo turns out to be a highly profitable, great part of the company that's really valuable. The same thing for Amazon. With Amazon, Zoox isn't some big line item. It's not a big deal for the company, but it's a nice thing to have because it may grow. Maybe they figure out the big problems here, they scale fast with Amazon's wallet, and they become a very competitive force in Robotaxi. So both Zoox and Waymo are not necessary for Amazon or Google to succeed, but they're just nice things to have. Another part of the story that I think adds a little bit more potential upside. Now moving on, we get to a bit of controversy that the YouTuber Mark Rober, he's the former NASA engineer, he's the one of the It was the Glitter Bomb for Porch Pirates, an awesome video series. He's a really likable YouTuber. He just does fun, lighthearted things. He teaches engineering in a fun, insightful way, especially for kids to learn. So far, he's been great at avoiding controversy, but he dipped his toes into a bit of controversy when he went after Tesla. I should have warned him. I could have given Mark Rober a warning. If you criticize Tesla, you have to have your ducks in a row because Tesla investors will stop at no ends to destroy your reputation if you get on their bad side. So I could have sent him a warning that there's some clear problems with his videos. They're going to be under heavy scrutiny and people are not going to react well to this. Now in Mark Rober's video, he had multiple different tests. He put both Tesla's autopilot system against a LiDAR system. He tested it against rain and fog and bright lights, and he drove through a cartoonishly painted wall to see if Tesla could identify it and LiDAR could identify it. And again, most of these tests showed that Tesla was good on a lot of them, but the cameras fail on multiple of them where LiDAR succeeds. Now the big problems that he had with this video were on multiple parts. One of them was he compared autopilot to LiDAR. Now autopilot is old technology. That's not the latest and greatest from Tesla. Autopilot is more like auto steering on a freeway. It's kind of like assisted driving, right? It's just something so you can take over and kind of steer a little bit. It's like what dumb cars have. Tesla has full self-driving. That's their more advanced system. That's the latest and greatest. That's what's being trained on artificial intelligence. So a lot of people are confused of why did he compare older technology to the newest LiDAR tech. That in and of itself created at least the perception of intentional bias. So that was one problem. Another problem was that Mark Rober seems to have a good relationship with these LiDAR folks. He has one in the car. You can see the LiDAR badge on him. They helped him out with testing and he thanked them for letting him borrow the car. And a lot of people even assumed that he was sponsored by the LiDAR group for making the video. Like they paid him to make the video to present themselves in better light compared to their competition, which was Tesla. So this created another perception of a very bad bias. So that was the problem number two. Now another issue, a third one, was that he did multiple takes and he revealed this on Twitter, incidentally. People kind of sniffed it out by looking at the dash and showing that he was going two different speeds. So this also creates a perception of being dishonest. You know, he has multiple takes and he's only sharing one. Did the other take show something better for Tesla? Is he only showing the takes that are bad for Tesla? Now with all these questionable things going on in the video, you can just imagine how Tesla fans and Tesla investors are reacting to this online, especially on X. They did not like this video and they made that very apparent to Mark Rober. Many of them saying that his entire career should end today, that he has no legitimacy. They compare him to other sellouts, other people, and so on and so forth. You get the idea. Now I agree with Tesla investors that there are very questionable things happening in this video. It does have a strong perception of bias. I think that does exist. So this should go under scrutiny. Mark Rober does have questions to answer. But I also agree that we should get his side of the story, at least have him explain himself as the creator of the video, before jumping to ultimate conclusions and trying to tear his career apart. Tesla investors, in many parts, do the exact same type of cancel culture thing that they're huge critics of. One person makes one video that has perceptions of bias and they instantly jump to trying to censor, control, and destroy his entire career. I don't think that's right, at least not without having him explain himself. Now with this controversy, he did go on to explain, at least from his perspective, his initial response. This is Mark Rober on the Philip DeFranco show, where he asks him about every single one of these questions and you get Mark's unfiltered response. I'm just going to kind of go through the bullet points of accusations and questions regarding the video. Like we talked about beforehand, if there are things that it feels like people would think that were missed or weren't covered or come out as we're recording today's video, you said you're open up to follow-ups? Yeah, sure. Totally. All right. So first one is less of an accusation and more a question. And that was, was there any reason you opted to test autopilot on the Tesla instead of full self-driving? My understanding with full self-driving is that you have to enter an address for it to work, as opposed to just being able to engage it. And this is what Tesla has called autopilot. And even Googling it, seeing what they determine as autopilot. And my understanding is that the sensor is not different, whether it's full self-driving or autopilot, knowing if that's a wall or not, that doesn't change. So I think I could, I mean, I'd be happy to rerun the experiment in full self-driving. I'm pretty confident it wouldn't be a different result. So to me, it was a distinction without a difference. Okay. That's his first answer. And I have to say that is the worst answer. Out of all the ones that he answers, this one is the worst one, because why would he not use full self-driving? Even if it's true that they are the same, a distinction without a difference, this is going to be a point of potential bias and criticism from Tesla fans. They're going to point out accurately so that full self-driving is different than autopilot. And even though he says that the sensors are the same, that it's the same technology, the sensors and hardware may be the same, but the system interpreting the sensors, the full self-driving system, the intelligence behind it is different. I also think this was a weak answer because he says that he didn't use full self-driving because you had to enter in an address, just enter in an address behind the wall, somewhere down the road. It doesn't matter what the address is, just somewhere behind that, the wall that you created. Mark Rober is smart enough to know he could have just entered in some address on the other side of that wall. So out of all the answers he gives, I actually think this is the weakest one. He's off to a weak start here, but I think his answers get better. A clip that you posted on Twitter where you said, here's the raw footage. Can you explain what it is that we're seeing and what you're trying to explain is happening in that? You said, not sure why it disengages 17 frames before hitting the wall, but my feet weren't touching the brake or gas. So I think people were saying that I was manually just drove it through because 17 frames, by the way, is like less than a half of a second before it hits the wall. Again, my hypo, I don't know why it would disengage. I was not pulling on the steering wheel. And by the way, even if I did disengage it, it's less than a half a second before the outcome would not be different. My guess is maybe the sensors, the ultrasonic sensors, which I think are on the bumper, they probably just disengage if they sense that something big is there and it just stops being in the self-driving mode or autopilot, whatever you want to call it. So this is another answer that highlights something here. He says that the reason it wasn't engaged on impact was it automatically unlocked. It automatically disabled autopilot right before he crashed into the wall. And this is something that other people have criticized Tesla for the fact that they might potentially disable autopilot or full self-driving right before impact. So they can say during an accident that full self-driving wasn't active during the accident, even though it was until a second before the accident. So what he's highlighting here may actually be a bigger issue for Tesla if it's found out that they're automatically disabling autopilot or full self-driving right before impact. That might be something else that he can look at, but I think he's being truthful here. He's saying that it was engaged and automatically disabled within half a second before impact. So that's all I'm saying is like some people clipped right after and said, look, it's not on autopilot. And I was like, I don't know. Like I'm just here. Like I don't have a horse in this race either, by the way. I just wanted to go out. I love my Tesla. I'll probably get a new one when they come out. He says that he doesn't have a horse in this race. For a lot of people, that's very difficult to believe. These people that are competitors to Tesla, they look like they're sponsoring the video. So when he says he doesn't have a horse in this race right now, that doesn't look truthful. I'm just here to look at the data and I think I struck a political nerve or something. And the video was about LIDAR and all the cool ways LIDAR is used. So I felt like this was a fun test to run. And papers have been run on it. Can you fool a self-driving car with a wily coyote ride? Papers have been written on this. So it's like, well, I should just run the test. That's what it was. Regarding the raw clip and what's in the video, there've been people that say that it looks like you may have had multiple takes or possibly gone through the wall multiple times. Were there multiple takes? Can you give any insight there? This is what you put in the end video. So the first day we went out there, I think you can even see it. We didn't have the Styrofoam wall. It was just a vinyl sheet. And it was clear if you just drive up with it, you can see the Tesla tells you the math of what it's looking at. And if you drive up to this wall with the road, it doesn't register anything. It doesn't register a cone. It's so like, whatever the brain, the math that it's doing in the computer, it doesn't register when you paint a road that something's there. Like even if you just drive up to it. So anyways, we did a take. It went right through. I think that was the one that maybe was at 40 miles an hour or something. But it was just like, instead of cutting through it, which would visually look cool, it just kind of tore the side and a little flap came up. So it was like, that was a very interesting finding that it actually worked. And by the way, I'm happy to give you the raw footage of that take too. So you'll see it going through the wall, but it's more of a flap. And then we're like, holy crud. So that take he just showed is different than the one he posted on his main YouTube channel. And he's just explaining here, this is a YouTuber's perspective. This is what YouTubers do. They do multiple takes of stuff and they usually use the best one. I'll do it in my video. If I botch a take, if I say something way wrong, it doesn't come out right. I'll rerecord it and do it again. So it's better for the viewer. And he's doing the same thing. He recorded one of them where he had the same result. He drove through the wall. The Tesla system, it didn't interpret the wall as being a wall, but it didn't look as cool. It didn't have the same effect as having the carved out zigzag structure that he burst through the wall with. So he did another take to make it look visually more cool. That's well within the bounds of normal YouTubing. Now, if the results had been different, if in one take Tesla successfully stopped and another Tesla went through the wall, and he only used the one that made Tesla look bad, that would be biased. But what he's doing here is not biased because both takes Tesla went through the wall. And all of this aside from the point is not even a problem for Tesla. This is an unnatural occurrence. This is something you don't encounter while driving. Having a fake wall that looks like a continuous road is something that humans would drive right through. That's not something you encounter in normal road conditions. So Tesla investors are upset that the Tesla cameras don't interpret a fake wall as being there. That's not even a problem for Tesla. Normal drivers, humans would drive right past that wall in many cases. So this is not something Tesla investors should even be concerned about. But regardless, this is well within the normal bounds of a YouTuber. To do multiple takes and use the one that looks the most exciting, as long as he didn't intentionally bias the data, I don't see any problem with this. And he released both takes. So the second take was not an attempt to bias the data. It was only to make it look a little bit more funny. Luminar is the lidar company that worked with Mark Rober on this video. So a lot of people are saying he was sponsored, he got paid to bump up their stock to promote their product and make Tesla look bad. Now, I'm very agnostic. I really just wanted to see what would happen. This is the biggest point. And I think the best point you can illustrate is the lack of financial incentive to have one party look better than the other. And I guess on that, do you or anyone close to you, once again, it's based off of these accusations, do you or anyone close to you have any Luminar stock? I do not own any Luminar stock or I do not know of anyone close to me who owns any Luminar stock. Absolutely. And I know you said you love Tesla. Just to confirm, do you have any options or puts on Tesla? I have no options on Tesla. I have no puts on Tesla. There's no financial anything in here at all. At all. 100%. I'll go into court of law. Besides data, it's an interesting test. That's like the history of my channel. And just whatever the data shows is what I'll put up. Because I will say, I mean, regarding you saying this in the court of law, I mean, there have been a lot of people, granted, it's the internet, granted, it's YouTube videos. I've seen some folks like, I think it was Meet Kevin, saying that there's a possibility of a No, because it's like, I mean, anyone can sue in America, so I guess. But I think we could get it dismissed pretty quickly because it's like, I just have nothing to hide and I have no ulterior motives here. No one's paying me. I have no stock. I have no shorting. I'm planning on getting another Tesla. I don't even have politically, apparently it's a political issue. Politically, I don't even have a horse in this race. The interesting thing about being a content creator and creating videos and publishing stuff live for hundreds of thousands or millions of people to look at, is you never quite know how it's going to be received. There's always creative risk to every single time you hit the publish button. Every time you put a video live, you never quite know what's going to happen. And in this case, I think there's some things that Mark Rober didn't expect, this to be such a hotly debated, tainted subject by politics and all the events happening today. And I think Mark Rober got a little wrapped into this unknowingly by publishing this video. Now to me, he doesn't come across as someone that has the goal of trying to destroy Tesla and sticking it to Elon Musk. I don't think that's his aim with this video. The fact that he has no financial incentive to do so, there is no money being transferred here at all, is a pretty big indication that he has very little motivation to take the stock price down, which is the accusation a lot of people are making. Furthermore, another thing he mentions, which I think is a very relevant point, but it's one that's missed in this interview often, is that he mentions the process of creating this video and the thought process behind doing it was over a year in advance. So all the political stuff that's unraveled over the past six months weren't even part of the equation when he first thought about creating this video. I plan on upgrading my Tesla in like six months. So I'm just here for the data. And I don't think it means that their self-driving is terrible as in like, it's going to get better. But yeah, what happened happened. And if you could easily recreate and anyone, what happened happened, and anyone with a Tesla can easily recreate exactly what I did. So after looking at Mark Rober's response, I still believe that there's some criticisms for specifically that he could have used full self-driving. That would have been better than autopilot. I think a better side-by-side comparison, but he did clarify most of the major points. And I believe most of the major concerns specifically that he wasn't sponsored by the LIDAR company, that they weren't paying him to intentionally make Tesla look bad and their company look good, that he wasn't trying to take down Tesla stock or bump up their Luminar stock. This wasn't some financial shenanigan that Mark Rober was trying to pull. He says openly and with conviction, he has no financial ties to any of these companies involved and he just cares about the data. So if you argue that the data could have been done differently, he'll probably respond to those criticisms. But in terms of him having some hidden nefarious incentive to kill Tesla stock or take it to Elon Musk, I don't personally believe that exists. And I certainly don't agree with many of my peers in the creator industry that are actively trying to destroy Mark Rober's career, to de-platform him, to try to tell people to sue him into the ground because he portrayed a company you like unfavorably. That's not the route we should take with this. He explained himself quite fully that he has no financial incentive, that he has no dog in this fight. He's not sponsored by the companies. He's not invested in them. So actively trying to destroy everything he's built and saying that he's lost all credibility, I think is a huge overstep. So overall, I think there's things he could have done better in the video compared against full self-driving. And I'm sure there's going many people that remake the video. But right now, I think Mark Rober, I think he's fine. I think he should be given a little bit more leeway than what many Tesla fans are trying to give him. Now, moving on, we get to the headline here that Costco is pressuring suppliers in mainland China to cut prices following tariff raises. Now, instead of arguing about tariffs and whether they're good or bad, whether the policy overall is good or bad, I want to talk about Costco because Costco has some unique ways to deal with price hikes, to deal with pressuring suppliers that other companies don't have. For example, in this report from the Financial Times, they mentioned that many large retailers are also trying to pressure China to lower their prices on specific items they're supplying. And this is, again, response to the tariffs. But the interesting dynamic here is not that these companies are trying to get lower prices. Of course they are. The interesting dynamic is that Costco in particular is the one best position by far to pressure prices down from China's suppliers. And there's a specific reason why. So when we look at total revenue and we rank Amazon in the top, then we have Walmart, then we have Costco, you may come to the conclusion that Amazon is the best position, Walmart is next best, and then Costco in dealing with Chinese prices and putting pressure on Chinese suppliers. That's not the case. Costco is still by far the best position to pressure Chinese suppliers down in price, to make it so that they take more of the brunt of the burden. And the reason why is the amount of SKUs these companies sell, the SKUs. For example, the average Costco warehouse has around 4,000 SKUs in their warehouse. SKUs are unique items being sold. So when you go to Costco, there's not that many items. There's three to 4,000 in each warehouse. Now that sounds like a lot, but again, for a gigantic warehouse, that's just a lot of the same items. So you'll see Costco pallets and they'll just be many of the same items over and over again. You'll see rows of them. They won't have that wide of a selection. They'll just have a pretty good selection and a lot of those same items. So Costco's revenue is split up between only three to 4,000 unique items. All this revenue, almost $300 billion split between 4,000 items. Comparing this to Walmart and an average Walmart location, they will have 140,000 SKUs. Walmart has around double the revenue, but orders of magnitude, more products they sell. Meaning that Walmart doesn't buy as much of anything as Costco does. For every single item that Costco buys, every single item that they get supplied, they are a way bigger buyer than Walmart. They buy more of it. They buy it in bigger quantities. They are what's considered a whale. When you get an item into a Costco location, you know you're going to sell a ton of that item because you're only competing with 3,000 to 4,000 other items. Whereas if you get an item in a Walmart, you're competing with 140,000 other items. So Costco sells more per item by a large extent, making it so that suppliers have huge preference to get in their locations. And that's part of the reason that Costco can keep prices so low. The volume they buy of a single item is so great. Then if you look at other online stores like Amazon, it goes to millions. Amazon has millions and millions of unique items. So Amazon can't flex its muscle. They can't twist the wrists of suppliers in any single item the same way that Costco can. This dynamic of Costco being considered a big whale because they buy such huge bulk quantities of such few items is not a new dynamic. Costco uses that immense purchasing power to pressure suppliers to lower prices. Otherwise, they'll reroute their supply chain and go to And Costco uses that savings that they get from pressuring the suppliers to share back with their customers. That's the scale economies shared. So Costco's business model allows it to navigate these type of tricky situations even better than companies like Amazon and companies like Walmart. Their specific business setup is more prepared to deal with this. And it's a nuance that a lot of people won't get when looking at the retail segment. It's another valuable trait of Costco. Now finally, we get to upgrade news for one of my key stocks. Netflix shares are on the rise as Moffett Nathanson has finally turned bullish on the stock. Now, this is an investment analyst group that's been skeptical of Netflix in the past, reasonably so. They saw a lot of risk in the stock and now they just see it as being the winner. They said, in no uncertain terms, Netflix won the streaming war, case closed. They changed their neutral rating on the stock to a all the way to $1,100 per share. So now we have more and more analysts becoming bullish on sentiment. The stock looks like it's in really good shape right now. I think it's only a matter of time until this one's back above $1,000 per share. We'll have to wait and see. That's all for this episode. Hope you enjoyed. See you in the next one.