I'm BAAAAACK!; Greetings from the Consumer Electronics Show in Las Vegas; Scott Galloway's 2023 Predictions; Orcas and whales in Antarctica
I just returned yesterday morning from an amazing trip to Antarctica (see last item below), so I have a lot to catch up on...
1) After a night at home, I was getting stir-crazy, so I'm on the road again (I'm kidding... sort of)...
This morning I flew to Las Vegas, where I'm attending the annual Consumer Electronics Show today and tomorrow – seeing the latest technological innovations and trends and looking for big ideas to share with my readers. Keep an eye out for my next two daily e-mails for updates. (Empire Financial Research paid subscribers of course get any public company ideas first.)
2) I wrote a great deal about Sam Bankman-Fried ("SBF"), FTX, and Alameda Research in November and December (archive here), so I just want to close the loop...
Everything played out exactly as I expected: Now that Alameda's former CEO, Caroline Ellison, and FTX co-founder, Gary Wang, have taken plea deals and confessed to participating in massive fraud, SBF is almost certain to be convicted and sentenced to a long prison term (my guess of 20 years may prove to be low). Good riddance! (That said, I of course believe that he's innocent until proven guilty and is entitled to defend himself before an impartial jury.)
3) Longtime readers know that the three people I quote most often in my daily e-mails (other than Warren Buffett and Charlie Munger) are NYU marketing professor Scott Galloway, veteran investor Doug Kass of Seabreeze Partners, and Bloomberg columnist Matt Levine. They're incredibly smart and provocative, which is what I aspire to be as well...
Today I'd like to share Galloway's 2023 Predictions, highlighting the parts I agree with most.
He likes the same three tech titans I do: Amazon (AMZN), Alphabet (GOOGL), and Meta Platforms (META). Excerpt:
Amazon, Alphabet, and Meta Register Historic Profits
Layoffs are bad for company morale and worse for those who get fired, but they're often good for business. The average tech worker cost their employer at least $100,000 in salary plus benefits and dilution in 2022. Call it $150,000. Fewer humans means substantially more profit per share. Google and Meta, with 30% operating margins, can either fire 25,000 people each or increase their top-line revenue by $12.5 billion and register the same operating income. They, and hundreds of other tech firms, will choose a version of the former.
(Galloway's prediction is looking especially prescient today in light of Amazon's announcement that it's laying off more than 18,000 employees, well above the 10,000 estimated earlier and equal to roughly 5% of its corporate workforce.)
Galloway also likes Airbnb (ABNB), an open recommendation in Empire Stock Investor (subscribers can read the full write-up right here... and if you aren't a subscriber, you can find out how to gain instant access by clicking here). Here's what he says:
I believe the best-performing large tech stocks of 2023 will be Airbnb and Meta. For different reasons. Airbnb stock is pricier, but we believe it will grow into its valuation. Seventy percent of the company's site traffic comes from direct, organic visits – that's compared to 40% for Marriott and Expedia. This brand strength results in a net margin twice those of its hospitality peers. Airbnb also generates half a million in revenue per employee, more than most tech companies – and 10 times greater than hotel chains. The company can reinvest at a rate that will further increase the delta between the business and its peers. I believe, already, that ABNB is the strongest hospitality brand in modern history. "I got a Hilton in Los Angeles," said nobody, ever.
He follows up on Meta:
I hate Meta and... its equity will outperform the market. The Zuck's growth plan (the metaverse) is something his most formidable enemy could not have dreamt. We said this before it was cool, and the market concurred this year and took the stock down 75%. In one year, Meta lost its gains from the previous five. Sure, the metaverse is dumb/stupid/ridiculous, but Meta is still a $120 billion business and a cash volcano with (despite Zuck roofieing his colleagues with a Big Gulp Grande Venti ayahuasca trip to the metaverse) exceptional operating margins. Facebook and IG are no longer the hot new thing, but the population of the Southern Hemisphere and India still use them.
Lastly, I share Galloway's optimism about the U.S.:
U.S. Reasserts Dominance
The Situation Room and Tucker Carlson are incentivized to tell us "America is awful, news at 11." Their apocalyptic vision is misguided, bordering on delusional, as we are in a position of strength relative to our global peers: Over the past two years our stock market has outperformed China's by 30%. Our inflation rate, while high, is nowhere near those of European nations including Germany (10%+), the U.K. (11%+), and Italy (12%+). We are energy and food independent and have again demonstrated our mastery of the world's master: technology... Nobody is lining up for Chinese or Russian vaccines. The U.S. has pledged $47 billion in military aid to Ukraine, greater than the combined contribution of every other country.
Aid to Ukraine will be the best trade of 2023. For only 6% of our defense budget we continue to repel an enemy and signal to the world the United States of America is (again) an ally without equal. As Elton John reminds us on his seventh "Farewell" tour: The bi**h is back.
4) Antarctica was the 76th "country" and seventh continent I've visited – and the most unique and amazing!
In upcoming daily e-mails I'll share more about my 12-day boat trip on a vessel named Plancius, what I learned, and how clever travelers can do the same trip I did at half the price I paid... But for now, I want to share a 17-minute video the guides put together of the entire trip, and details about the most mind-blowing experience we had.
Last Friday, as the Plancius was cruising along, we saw a few orcas in the distance – yawn. But then we came closer and the guide said they had likely killed a minke whale and were diving up and down, feasting on the carcass (which we couldn't see), which was sort of interesting...
But then things got really interesting...
There was a humpback whale nearby and soon the orcas had surrounded it. We thought at first that we were watching a kill, but instead we later learned that they were toying with it, practicing killing as a pack (but not actually doing so) – and this took place right next to the ship! It was insane!
In the debrief afterward, the lead guide on the ship said, "I'm in the clouds and will be for days after this experience," and another guide said it was the coolest thing they'd seen all season...
Here is the first collection of video clips I took (with my camera phone), focused on the orcas. Pay attention especially at 0:20 when four orcas come up together, like synchronized swimmers – here's a screenshot:
Here is the second collection of clips, focused on the humpback whale. Pay attention at 0:33 when it surfaces right next to the ship, showing its underside – here's a screenshot:
Lastly, here's a clip of two orcas who swam by our ship on day two and here are other clips of humpback whales we saw at other times.
I posted additional pictures on Facebook here.
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.