I Keep Buying This Stock (I Bought More Today)

Welcome back everyone. Today on the Joseph Carlson Show, there is a stock that I keep buying. I'm buying another $3,000 of it today. We'll be going over which company it is, why I keep building up this position, why I believe it's a buy. We'll be discussing all of it. Now, we also have a lot of other news to get into. Of course, we have the big news. The United States officially bombed Iran directly, dropping 13 MOPs, Massive Ordnance Penetrators. These bombs weigh 30,000 pounds apiece. They were targeted specifically at Iran's nuclear facilities. Now, this is a huge escalation, entering the US directly into this conflict. But so far, investors, the market, don't seem too concerned about this escalation. We'll be going over why the market is reacting the way it is, as well as getting commentary from other people like Tom Lee on why he thinks the market is so resilient. Another thing that happened over the weekend was the Tesla RoboTaxi event. We have people excitedly anticipating this day. We've been awaiting it for a long time, where Tesla finally gets to the point of launching their RoboTaxi vehicles. Now, I watched a number of footage from all different vehicles and rides and different drivers and the different content creators that went to this event, and I have a lot to say about it. We'll be doing a full review, my overall thoughts of how I think this launch event went, whether I think Tesla investors should be bullish or bearish based on this event. Now, last week, we had this crazy news that Sam Altman, members of his team at OpenAI, were receiving $100 million signing bonuses that Mark Zuckerberg was trying to poach his best people, and he was willing to pay any amount necessary. Now, that was just from Sam Altman, and we've since received more on this news. We now know that it's real. Sam Altman wasn't making this up, and it gets even crazier, with Zuckerberg directly reaching out to these people. We'll be going over this report on how intently focused Mark Zuckerberg is on building up his team. And then we have a bunch more stuff to get into. Hims and her stock is crashing 32%. We'll be looking at that, as well as Amazon launches their second batch of Kuiper internet satellites. We'll be looking at that as well. So obviously, we have a ton to get into in this episode. Let's go ahead and start off with the company that I keep buying. The stock is in the $3,000 worth of Equifax today. I'm continually building up this position because I'm very bullish on this company. Equifax is a company that I would describe as much better than it appears on the surface. I think that looks can be misleading. And even though Equifax looks like an old stodgy company with nothing particularly interesting about it, this is truly a great company. Now, if we just look at the revenue of this company, you can see that it's growing over time. It has ebbs and flows, grows a little bit faster at some points than others, but ever since around 2002, it's an old company. Ever since around then, it's grown very steadily. And that's because it's a credit bureau. When you're a credit bureau, you're basically in an oligopoly. You're in a shared monopoly. Those in and of themselves are very high moat businesses. It's almost impossible to replicate what a credit bureau is today. Now, that's not the exciting part of the company. We know that Equifax has grown year after year. They've grown organically due to the housing market and the need for additional credit ratings has grown. Knowing who you're lending money to is a really big deal. They play a crucial role in that. But if we look at this more specifically, in fact, if we break down this revenue growth by segment, it paints a much clearer picture. We have the KPIs here in Qualtrim. Equifax is broken up into three key segments. The first one is the workforce solution. This is the biggest and fastest growing segment of the company. The work number is not the only part of workforce solution, but it's by far the most important part. We also have USIS. This is the credit reports segment of the company. Of course, a good part of the business. It's better than 90% of the businesses in the world. But again, it's not the most important part of this company. Then we have international, where they bucket all of their products in total revenue internationally. This has probably been the slowest growing portion of the company. If we look at what the company's doing here, and the reason that I remain so bullish on it, it's for two reasons. First of all, we have the credit report part of this company. If we look at just the growth of that, it grows during time periods where people take out more loans, where interest rates are lower, where people are transacting more with home mortgages. Now, organically, this grows over time anyway, but interest rates going down has an outsized impact on this. If interest rates go down in the future, which I believe they will, lower interest rates is a strong catalyst for this company. Now again, this part of the business, I believe is better than most businesses in the United States. So even the lesser good portion of Equifax, I still believe is better than most businesses. The most exciting part to me is the work number. It's in the workforce solutions. Now, the work number, just a refresher, is a work history verification service where you can look up someone and see their entire work history. What companies they worked at, how long did they work there, what did they do at the company, what was their role, and how much money were they making? The work number contains almost all or all of that information for everybody that opts in. Now, of course, they have all the legal rights to do it. Everybody signs off and participates in it. The work number has proper permission to get this information and there's lots of companies that benefit from it. The array of companies that benefit from work verification is massive. You have government entities wanting to know if you really have the income that you have. They've all partnered with the work number, both local municipalities and federal agencies. We also have lenders, banks, everybody loaning money wants to verify that you make money so that you can pay back the loan. You have insurance brokers wanting to assess your risk. You have landlords wanting to know that their tenants that they're renting to can really pay the rent, and so on and so forth. The amount of use cases for the work number is massive. The product has enormous potential and it's incredibly difficult to replicate. There's no company in the world that has accumulated the partnerships, the network, and the database that the work number has, so they are full steam ahead. It's important to remember when you're buying companies in your portfolio to be focused on the basics of investing. What creates value for investors? Where does shareholder returns come from? They don't come strictly from innovation or how exciting the company is. In fact, sometimes the opposite can happen. Some of the most exciting companies in the world, so-called highly innovative companies, have been some of the worst investments. Arc Innovation has marketing materials and documents going over their highly innovative investment strategy. You can look at this marketing material and it can sound very compelling. Investing in stuff that's disruptively innovative, intelligent devices, autonomous mobility, precision therapies, neural networks, next-gen cloud, digital wallets, digital assets, smart contracts, so on and so forth. You see this type of stuff and it's marketed all the time, but this isn't what generates shareholder returns. That's why it's easy to contrast the difference in outcomes between these types of strategies. Arc Innovation over the past five years has returned 0.42%. It's been completely flat, while Texas Roadhouse, a company that doesn't do much on the innovative front, is up 266%, not counting dividends. Investment returns come from free cash flow per share growth. They come from profitability. They come from highly profitable companies growing quickly and purchased at reasonable valuation. In my portfolio, I hyper-focus on these types of companies. My favorite type of company overall is the subscription revenue type of company. It's why in the story fund, I have Netflix as a top position. I hold Costco as another long-term significant bet in my portfolio. The way that Costco makes money is by its membership. It is overall a subscription-based company. Apple transitioned from a hardware company to a seller of software. Microsoft is a subscription-based company. Same with Salesforce. S&P Global and Intuit are examples of two other fantastic subscription-based companies. And then we have Equifax, which can be put into that same category. Equifax has a strong majority subscription-like revenue that I believe will continue to grow in the future. And on top of that, they're launching a lot of new products. Now, typically I like to buy companies like this on a significant dip, but it doesn't look like we're going to get that anytime soon. We just had a major geopolitical event and so far the market isn't reacting. Now, this is something that we discussed that could happen in the previous episode. We said that the US is getting closer to directly bombing Iran. And we knew this because both figuratively and literally the US was getting closer. There were ships and planes and military and naval assets moving closer to Iran in preparation for this. As well as the United States president has been commentating on this, saying that it's a real possibility. Well, this weekend, of course, we had the news that the US directly bombed Iran. The US flew B-2 stealth bombers with Tomahawk missiles, as well as these MOPs, massive ordnance penetrators. They're 30,000 pound bombs that can dive deep into the mountain and they're called bunker busters. And the goal here was to get critical hits on these nuclear development sites to slow down their nuclear program. On the success of it, J.D. Vance said, I'm not going to get into sensitive intelligence about what we've seen on the ground with Iran, but we've seen a lot. And I feel very confident that we substantially delayed the development of nuclear weapons. And that was the goal of this attack. The vice president has also insisted that this is not going to drag the US into a long drawn out war in the Middle East. He's aware that everybody is against that, that nobody wants that. He says that we're not at war with Iran, we're at war with their nuclear program and that these are targeted limited strikes. Now, investors are currently in the process of pricing and judging this event, trying to weigh whether or not Iran being further away from nuclear development is worth the risk of escalated war. And as of right now, the market's relatively flat. I think the market is correct in being mostly flat today. I don't see this as a big bullish catalyst. There's no reason that stocks should surge up today. But I also don't so far see this as a reason to sell out of companies. Like I said, I think there's a chance anytime there's escalated chance of conflict that the market could sell off. And I would buy that dip if it happened. But right now, it doesn't look like we're going to get a big sell off because of this. What would cause a sell off in the US stock market based on this conflict is continued escalation, specifically if other big countries join Iran in the fight. But right now, it doesn't look like that's happening. Bloomberg reports that Iran's leaders are discovering that they're on their own against the US and Israel without a network of proxies and allies that have allowed them to project power in the Middle East and beyond. Without other larger allies stepping in directly to back Iran and their nuclear ambition, it doesn't look like this is going to escalate much beyond this point. Tom Lee shares a similar sentiment highlighting the resilience of the stock market. In some ways, it actually strengthens the case for stocks to do better into Iran because at the start of this year, we would said US bombing a nuclear facility is a black swan. Oil would be 120. Stocks should be down 10%. And then we have the event and oil is not really surging and stocks are up. So I'd almost say that you've put another stress test into the market. We've seen it pass it and I think it means stocks should do pretty well into Iran. It all depends on this moment of if there's continued escalation. Iran is going to retaliate to some degree. The leadership knows they have to do at least some type of symbolic retaliation against the United States, but really depends on whether the true stakes get meaningfully higher and higher, whether the market becomes concerned about this. One of the things that Iran could do in retaliation is closing something called the Strait of Hormuz. It is a shipping lane, which would cause oil prices to go higher. I do, but Brian Sullivan was off camera was mentioning a lot of strategic reasons why that may not be the case. I'm sure he's going to have his views, but I would say I'm watching oil and if oil isn't surging, then I think it just means that the risks of the straits being closed is lower. There's some debate on whether or not they'll really do this or for how long, because although it would impact US oil prices, it also impacts Iran's economy dramatically. So this would be a double edged sword action from Iran. Now, a question for investors right now is if even an escalated conflict can't bring down the US stock market, does it mean that prices are so high today that there's nothing worth buying? Tom Lee and I agree on this subject that even though there's some companies, some meme stocks and popular social media stocks that are trading at incredible valuations, that isn't an indication that the entire market is overpriced, similar to 2021. 2021 was unique and that almost nothing was undervalued. And that's not the market that we're currently in. I mean, those are echoes of 2021, which is some stocks get fantastically bizarre valuations and I'm not naming any. You want to name some? And then there is signs of speculation. But the one thing that was true in 2021 that's not true now is when I meet with fund managers in 2021, they said there was no stock they could buy because everything was expensive. That's actually not true anymore. Now the people I talk to are saying, look, the numbers have been better and numbers are going up, but the macro is making them uncertain. So there's actually a lot less risk taking by institutional investors. There's a small number of stocks that are trading at astronomical valuations, but there's a lot of companies that are trading at reasonable valuations. We'll see whether or not Tom Lee is right that the overall market will go up this year, but I do agree with him that there are many stocks to buy today. Now, moving on, we get to the news that Tesla finally launched their robo-taxi network. It officially happened yesterday. On Sunday, they had a launch event. They invited mostly Tesla influencers, people that are prominent figures in the Tesla community to congregate in Austin. And with around 10 different robo-taxis, they launched the event. This was just a fun event for a lot of people. You can tell that they're having fun here gathering. It's something that Tesla investors have been anticipating for literally years. Some of them have been in the stock for like 10 years talking about the launch of this. And so they're obviously happy to finally get to this point. And I think that's reasonable. One of the funniest things about this video though, the dancing here I think is good. I'm not criticizing that. But one of the funniest parts of this video that I noticed is as he's dancing, filming the robo-taxi launch, a Waymo drives by in the background. Did you catch it? There's the Waymo cruising by in the background. No driver in that driver's seat or passenger in that passenger seat. That thing is just driving itself. And that was one of the things that a lot of people invited to this event commented on. That they saw Waymos everywhere. One of them said that they saw like 300 Waymos. Everywhere they went, there was a Waymo. Waymo has been in this area for years. So they are operating at a pretty good scale here. Now there's a few things to note about this event. The area that it launched is about four miles across. It's a small geo-fenced area. If you map it out and compare it against the initial area that Waymo launched, it's around half the size. So Tesla took a very conservative approach on this initial launch. They didn't want to take any chances. They launched it in a very confined area. You could only ride back and forth in the highlighted portions here. We got to take a look at the Tesla robo-taxi app. And from what I could see, it looks very similar to Uber. Obviously the Tesla engineers took a few learnings from it, but it also looks really good. I actually really liked the app. I think it's really well done. It looks kind of polished here. You can zoom in. It just looks like Google Maps or Apple Maps or anything else. You can see the robo-taxis moving if you zoom in. You also have integrated controls so that it will automatically sync your Spotify, Apple Music, your Netflix, that type of thing with the Tesla vehicle upon entry. You also have some specific controls like calling support or pulling over at the bottom. Now there's tons of footage shared online. Lots of people live-streaming drives. There's still live-streaming drives. And I sat back and watched a couple drives and it was rather boring, which is a good thing if you're running a robo-taxi network. You want boring. You want uneventful. You want a car simply going from one place to the other without anything exciting happening. And that's typically what happened. We have examples like this of someone highlighting that Tesla properly slows down for a speed bump. It's cool that it was able to recognize the speed bump and adjust the speed of the car. There's also people that drove that posted full-length drives on YouTube. You can go in and just watch the entire thing. And again, for the most part, everything I saw, I was watching a number of drives and I thought it looked pretty good. I didn't see any problems with it. It seemed to drive smoothly. People in the passenger seat and the back seat had a good experience. And every one of the Tesla vehicles, they do have a safety passenger, someone monitoring the vehicle sitting there. So that's the person in the passenger seat there, but the ones in the back seat are the passengers. Now, as you can see, they're just cruising around. There's nothing unusual. You can look at the Tesla in different situations. It's stopping at red lights or yellow lights, yielding to traffic, going through all these different types of situations. And it seems to handle them just fine. This is what all the footage was showing. So I'm sitting back pretty impressed with what's going on here. Now, at the same time, there are some complaints with people saying that the pickup location is pretty bad. You have to, in some case, walk blocks and blocks to get to a pickup location. That's an easy fix for Tesla, something that they can likely change over time with some simple updates. The important thing here is the driving, that Tesla's are behaving correctly, that they're driving normally. And again, I watched multiple rides, full length rides, multi miles, and I didn't see any issues. Now that was the case until this one part of this one drive. It looks like Tesla ran into some problem with the logic or the mapping. Either way, something went wrong and it caused the Tesla to behave a little erratically here. Here's the exact footage, and this is posted on the Tesla Daily channel. Now, if you didn't see it, or you're just listening to the podcast with audio only, basically what the Tesla does here is it looks like it's going to turn left. In fact, the mapping looks like it's going to turn left, and then it stutters and the wheel jerks left and right while it's on. It's already moved out of its lane in the intersection, like it's going to turn left. But instead of committing to the left turn lane, it looks like it decides to go back right. Now, it's going back right while a car, presumably behind it, thought it was going to go left because it was initially going left. That car decided to pass the Tesla, and now it's kind of pushing its way back in right, and you can hear that driver behind them honk at them because they're trying to illegally merge back into the lane. Then when the Tesla seems like it doesn't have enough room to get back in the lane, it just crosses over these double yellow lines, bypassing the other cars to get into the left turning lane here. Now, this didn't result in anything. There was no accident here or any big event, but it doesn't look great. This looks like a problem specifically with the navigation or full self-driving. Now, I want to highlight again, this is the only real problem I saw out of watching five or six full drives. So, I am highlighting the one thing that went wrong. But with cars and safety, the one thing that goes wrong is the important thing. That's what gets highlighted. You don't surface all the times it got it right, you surface the time it got it wrong. Tesla's Robotaxi network is going to be judged by these type of events, whether they result in collisions or accidents. Now, it's true that Waymos do things like this from time to time as well. We have examples of a Waymo like this, blocking an intersection, blocking emergency vehicles from being able to pass for about 30 seconds. So, there's examples of autonomous vehicles doing this, and they're never going to be perfect. Now, while Waymo does that from time to time, Waymo also has thousands of vehicles on the road doing 200 plus thousand rides per week. So, they're at a much larger scale already, which makes sense to have more opportunities for edge cases or weird events. In this case, there's only 10 Tesla vehicles, only for a single day, and it's already had a pretty big error, which I think is a bit concerning when you take into account the limited scale they're already operating at. They're seeing this problem on day one, and this isn't even an edge case. An edge case for an autonomous vehicle is something happening far out of the ordinary that only happens once in a million. Things like police officers being in the middle of an intersection. Things like dogs running out from a car. Things like fog, rain, extreme sun glare. But in this case, there's nothing that happens that's an edge case. From what I can see, it's a totally normal intersection with nothing abnormal happening. So, why did the Tesla screw up on a normal intersection? That's a question for the Tesla engineers, and this is going to be a question of how quickly Tesla can fix these issues. How much their future updates can address them to make them so they don't happen at greater scale. The Tesla engineers are going to need to address these specific situations, make sure these type of errors don't happen in the future, because they'll run into more and more of these type of edge cases or wacky behavior as they scale up their vehicle fleet. Bigger fleets, more cars, mean more chances of crazy things happening. Now, overall, all things considered, the good and the bad, the way that this was conducted, I consider this a successful launch of the Robotaxi network. I think Tesla, even in this very controlled environment with safety monitors, with a very small geo-fenced area, all of this doesn't really matter. The big thing that Tesla had to prove to investors is that it's making real steps, real definitive steps towards getting the Robotaxi launched. And they did that this weekend. So you can grapple with the specifics of it. It's on a very small scale. They're charging $4.20 a ride. They have mostly influencers there with people in the passenger seat. There's a lot of caveats, but even so, Tesla is moving in the right direction. And I believe investors should look at this event as a bullish iterative development in the company. Tesla still has a lot to prove. Scaling from 10 vehicles to hundreds of vehicles introduces lots of opportunities for edge cases and weirder things to happen. Things that Waymo has been dealing with for years. So there's still a lot to be said for the future. But as of right now, I believe that this is an incrementally bullish move for Tesla. So it makes sense that the stock is up today, that investors are more bullish on it. And I think that this move is deserved. If I was a Tesla investor waiting for four years for this company to release the Robotaxi network, even with the small caveats, I would still be happy about this change. One company that this leaves into more question, I believe is Uber. The only real reason that I haven't bought Uber stock is my concern over autonomous vehicle technology. Not just Tesla, but with Waymo. These companies are proving that this technology works, that it can work, that it can scale, and that it can take market share. Now, Waymo is far ahead of Tesla at this point, but Tesla could iteratively expand to more cities and saturate more territory. Some of the uncertainty with Uber's future is already priced into the company with a lower multiple and a lower valuation. And I share those concerns. I think the market that Uber controls, basically all by itself right now, is going to be challenged by this new technology over the upcoming decade. But we'll have to wait further to see how all this pans out. Now, moving on, we get to this news story, which is a follow-up of a news story which Sam Altman said that Meta is offering some of Sam Altman's best employees $100 million signing bonuses on top of $100 million salaries. So just massive amounts of money. Altman said that so far, their top talent hasn't decided to go with it. That's all we knew back then. And maybe Sam Altman was exaggerating. Maybe he was a little bit overstating it. Well, that's not the case. We have further details on this that it goes even deeper than you would expect. The smartest AI researchers and engineers have spent the past few months getting hit up by one of the richest men in the world. Mark Zuckerberg is spending his days firing off emails and WhatsApp messages to the sharpest minds in artificial intelligence in a frenzied effort to play catch up. He has personally reached out. So not members of his team, not his recruiting staff or HR. He has personally reached out to hundreds of researchers, scientists, infrastructure engineers, product stars, and entrepreneurs to try get them to join a new super intelligent lab he's putting together. Some of the people who received the messages were so surprised that they didn't believe it was actually really Zuckerberg. One person assumed it was a hoax and didn't respond for several days. Now, that does have to be very odd to be one of these AI researchers and have randomly a celebrity status CEO like Mark Zuckerberg message you on WhatsApp or send you a quick message saying, hey, what's up? I want you to join this secret lab of super intelligent people building all this crazy stuff in the future and I'll give you generational wealth in the process. So I think it's understandable that people didn't necessarily believe it was really him to begin with, but that's really what Mark Zuckerberg has been doing. He's also, if he can't just buy the employees, he's wanting to indirectly buy the employees by buying the companies they work at. At least in one case, he discussed buying a startup outright just to get the talent within it. While the financial incentives have been mouthwatering, some potential candidates have been hesitant to join Meta platform's efforts because the challenges that it faces in AI. Meta is behind. So even though these people are getting these crazy offers, they do want to align themselves with the company that will ultimately win in AI. Meta struggled to develop cutting edge artificial intelligence technology reached ahead in April when critics accused the company of gaming the leaderboard to make a recently released AI model look better than it was. They also delayed the unveiling of a new flagship AI model, raising questions about the company's ability to continue advancing quickly in an industry-wide AI arms race. Zuckerberg is reportedly furious that Meta is falling behind in AI. And now he's on this rampage of trying to buy his way brute force to getting the talent necessary. Zuckerberg also held discussions with perplexity and offered to buy the AI search startup. According to people familiar with the matter, we have the $100 million pay packages that he's offering to multiple people. And of course he paid the 14 billion for the AI startup scale. Now you can say that this leads to bad culture, but I don't believe that's the correct take care. What I see is a person that will stop at nothing to win the AI race. He will literally pay any price. He will personally recruit any talent. And in terms of the tactics of whether or not this will work or not, he may not be able to get every employee he wants. There are some that will be comfortable where they're currently at, but I believe overall it'll work. Zuckerberg is going to accumulate a lot of talent with the approach he's taking. Now we also have news that the stock Hims and Hers is down 32% today. Even for Hims and Hers, this is a relatively big drop. And the reason why is a rather big reason. Novo Nordisk reportedly terminated its collaboration with the company. Now this was a partner of Hims and Hers, a company that they are working with. And not only have they terminated their agreement, but they've made a lot of accusations for Hims and Hers. For example, they say in their release that Hims and Hers has failed to adhere to the law which prohibits mass sales of compounded drugs under the false guise of personalization, and are disseminating deceptive marketing that puts patient safety at risk. They say that we will work with telehealth companies to provide direct access to Wigovi that share our commitment to patient safety. And when companies engage in illegal sham compounding that jeopardizes the health of Americans, we will continue to take action. The quote semi-glutide active pharmaceutical ingredients that are in the knockoff drugs sold by telehealth entities and compounding pharmacies are manufactured by foreign suppliers in China. So they say that they're putting customers safety at risk, that they're an illegal sham, and that their compounded drugs are made in pharmacies in China. Now for investors in this company, this shouldn't be a huge shock. Hims and Hers is in an industry that's highly litigious. These type of legal problems and disagreements happen all the time in the pharmaceutical industry. They also happen more frequently in industries that Hims and Hers compete in. Newer verticals of pharmaceuticals like telehealth. In terms of risk factors for a company, there's few that have more lawsuit risk than Hims and Hers. So investors in it are going to see this type of volatility over time. Now finally, we get to news that Amazon has launched a second batch of Kuiper internet satellites. This is a portion of Amazon's business that if you're not paying attention to, you may forget that they actually have. Amazon has so many good businesses that Project Kuiper, this satellite business, is kind of on the backburners. It's one of these things that investors don't really mention all that often, but could end up being incredibly valuable. And the Project Kuiper business is growing. It's taking bigger and bigger steps to get to real profitability. Now they're using different partners to launch these satellites into the air. They say that this one was launched using Alliance rockets and it carried 27 Kuiper satellites. They say that they're continuing this new chapter in low earth orbit satellite connectivity. Now to compare this to Starlink, Starlink currently has around 8,000 satellites orbiting the earth. Starlink, of course, has those nice little dishes you hook up to. You have internet access basically anywhere in the world. I have two Starlinks at home. I have the Starlink 3 and the Starlink Mini, and they are amazing product. Anytime I plug them in and point them at the sky, I have high-speed internet within five minutes. So this is an incredible product that has enormous applications. Amazon is basically copying the playbook, trying to get up enough Kuiper satellites to be able to offer internet capabilities. I think this is actually a really big deal, and I'm glad that this is included in the Amazon bucket and not as a separate private company. I'm sure that Tesla investors would like to have Starlink as part of the company. I think if you put a poll, most of them would want that. In the case of Amazon, you're getting the early starting of a Starlink-like company, but it is part of Amazon. Now that's it for this episode. Hope you enjoyed. See you in the next one.