Podcasts > The Prof G Pod with Scott Galloway > Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

By Vox Media Podcast Network

In the latest installment of "The Prof G Pod with Scott Galloway", dive into a breadth of topics from the dynamic world of business and economics alongside host Scott Galloway and his conversational guests, Advertiser Ed Elson and others from the advertisement sector. This episode unspools a tapestry of market headlines, corporate strategies, and financial projections poised to reshape industries and investor portfolios.

The discussion navigates through the decision of Shein to consider a London IPO, the impressive rise of BYD's electric vehicle (EV) production over Tesla, and the surprising halt of Apple's car project in favor of AI development. It contrasts the steady performance of European "Granola" stocks with the volatility of the US "Magnificent Seven". Whether you're an industry professional or a curious learner, this episode offers insightful commentary on the fluidity of market trends and the strategic chess moves of leading global companies.

Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

1-Page Summary

Podcast Support and Sponsors (Public, Schwab, Kohler, LinkedIn Jobs, Atlassian, Sonos)

Scott Galloway acknowledges and discusses the sponsors supporting his podcast. He starts with PUBLIC, highlighting their 5.1% interest rate and his personal investment in the company. Schwab's support is discussed through their Schwab Investing Themes, which allow investors to put their money into modern concepts like AI and electric vehicles. LinkedIn Jobs is praised for the efficiency of its network, with 86% of small business job postings finding a qualified candidate within a day. Atlassian is credited for its suite of software, including Jira and Trello, used by most Fortune 500 companies. Kohler is recognized as a sponsor, while LinkedIn Ads is pitched as an effective B2B marketing tool. Finally, Sonos is spotlighted through Galloway's positive review of their latest portable speaker, the Move.

Economic News Headlines (FTC lawsuit, Warner Bros Discovery, Universal Music, Klarna, Google AI chatbot)

The headlines cover several major market events including a conflict between TikTok and Universal Music Group (UMG) due to the latter pulling their music from TikTok after failing to renew their licensing agreement. This could affect up to 80% of TikTok's music content, potentially prompting users to shift to other platforms and shining a light on independent artists. While the issue indicates a power restructure within the music industry, there's hope for reconciliation as UMG has settled licensing deals with other platforms.

Shein Considering London IPO to Avoid SEC Scrutiny

Shein, with a base in Singapore, contemplates a London IPO potentially resulting in the largest IPO of 2024, while facing scrutiny over labor practices and sustainability. Addressing concerns, Shein has audited and ceased business with 300 suppliers over labor issues. However, allegations persist of using cotton from Xinjiang, known for forced labor practices. Transparency surrounding its supply chain has been demanded by US officials. Shein's business model boasts high growth, driven by an asset-light approach and sophisticated software, resulting in an efficient inventory turnover and solid EBITDA margins. The London listing could enable Shein to escape the stringent requirements of the SEC.

BYD Overtaking Tesla in EV Production and Valuation

BYD has surpassed Tesla in EV sales, with 530,000 cars sold in the fourth quarter compared to Tesla's 480,000, marking a shift in the EV market's landscape. BYD also enters the luxury supercar segment with a model capable of high-speed performance. With a market capitalization of $76 billion and a more modest valuation than Tesla, BYD's aggressive growth is a focal point for the industry. Tesla's higher market cap but steep valuation signifies the contrast in market perceptions of these EV giants.

Apple Ending Its Car Project to Focus on AI

Apple is discontinuing its electric vehicle project to focus on AI, thereby ending widespread speculation about its automotive ambitions. Given the challenges faced by other EV manufacturers like Rivian and the complexities of the automotive sector, Apple considers an acquisition of Rivian as suggested by Gene Munster. The recommended strategy would allow Apple to maintain an indirect presence in the vehicle industry while prioritizing AI. The potential Rivian acquisition opens a different path for Apple in a market characterized by high losses per vehicle.

European "Granola" Stocks vs. US "Magnificent Seven"

The discussion compares European "Granolas" stocks, such as Novo Nordisk, L'Oreal, and LVMH, with the US "Magnificent Seven". The Granolas have been pivotal in driving the European stock market to new heights, responsible for 60% of its gains in the past year and less prone to volatility than their US counterparts. Despite trading at double the average market price, their growth and stability, rooted in consumer and pharmaceutical sectors, contrast with the potential for significant fluctuations faced by the tech-dominated Magnificent Seven.

1-Page Summary

Additional Materials

Clarifications

  • Scott Galloway's podcast sponsors include companies like PUBLIC, Schwab, LinkedIn Jobs, Atlassian, Kohler, and Sonos. PUBLIC offers a 5.1% interest rate and investment opportunities. Schwab provides investing themes like AI and electric vehicles. LinkedIn Jobs is known for its efficient job network. Atlassian offers software like Jira and Trello used by Fortune 500 companies. Kohler and Sonos are also sponsors of the podcast.
  • Universal Music Group (UMG) and TikTok were in a conflict due to UMG pulling its music from TikTok after a licensing agreement renewal failure. This move by UMG could impact a significant portion of TikTok's music library, potentially leading users to explore other platforms. The dispute highlighted power dynamics in the music industry and raised concerns about the availability of music content on TikTok. Despite the conflict, UMG had managed to secure licensing deals with other platforms, indicating a possibility for resolution in the future.
  • Shein, a fashion retailer based in Singapore, is contemplating going public on the London Stock Exchange to avoid the strict regulatory oversight of the U.S. Securities and Exchange Commission (SEC). This move is seen as a strategic decision to sidestep potential scrutiny from the SEC regarding its business practices and supply chain transparency, particularly concerning allegations of using cotton from Xinjiang, an area associated with forced labor practices. By opting for a London IPO, Shein aims to navigate regulatory challenges and capitalize on the benefits of listing in a different market jurisdiction.
  • BYD, a Chinese electric vehicle (EV) manufacturer, has exceeded Tesla in EV sales, selling 530,000 cars in a quarter compared to Tesla's 480,000. This shift in the EV market landscape highlights BYD's aggressive growth and market performance. BYD's market capitalization is $76 billion, lower than Tesla's, showcasing differing market perceptions of these EV companies. This development signifies BYD's rising prominence in the EV industry.
  • Apple decided to discontinue its electric vehicle project to shift its focus towards artificial intelligence (AI) technologies. This move signifies a strategic pivot away from developing a car to investing more resources into AI research and development. By ending the car project, Apple aims to reallocate its efforts towards enhancing AI capabilities across its product ecosystem. This decision reflects Apple's recognition of the challenges and complexities in the automotive industry, leading to a strategic refocus on AI innovation.
  • The comparison between European "Granola" stocks and US "Magnificent Seven" highlights the performance and characteristics of two different sets of companies in their respective regions. The "Granola" stocks typically consist of companies from sectors like consumer goods and pharmaceuticals known for their stability and growth. In contrast, the US "Magnificent Seven" often includes tech companies that can experience significant market fluctuations due to the nature of the industry. This comparison showcases the contrasting investment opportunities and risk profiles between these two groups of stocks.

Counterarguments

  • PUBLIC's 5.1% interest rate might not be sustainable long-term or could come with certain conditions that are not immediately apparent.
  • Schwab's Investing Themes may oversimplify complex investment decisions and could lead to herd behavior or overconcentration in trendy sectors.
  • LinkedIn Jobs' 86% success rate might not reflect the experience of all businesses, especially those in niche industries or with highly specialized roles.
  • Atlassian's software, while popular, may not be the best fit for every company, and there could be competitors offering better-suited solutions for certain business needs.
  • Positive feedback for Sonos' Move portable speaker may not represent the experiences of all users, and there could be competing products with advantages over Sonos' offering.
  • The conflict between TikTok and UMG might not lead to a significant user shift as users may adapt to the changes or UMG may eventually renew their licensing agreement.
  • Shein's decision to list in London to avoid SEC scrutiny could be seen as a way to avoid transparency, which might raise concerns among ethical investors.
  • BYD's surpassing Tesla in EV sales does not necessarily indicate a long-term trend, and market conditions could change rapidly, affecting future sales figures.
  • Apple's decision to end its electric vehicle project and focus on AI might be criticized for abandoning a potentially transformative industry or for not leveraging its resources to overcome the sector's challenges.
  • The comparison between European "Granola" stocks and the US "Magnificent Seven" may oversimplify the investment landscape, and there could be undervalued companies in the US or overvalued companies in Europe that are not accounted for in this generalization.

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

Podcast Support and Sponsors (Public, Schwab, Kohler, LinkedIn Jobs, Atlassian, Sonos)

The podcast ecosystem thrives on sponsorships and partnerships. Scott Galloway takes a moment to acknowledge and talk about the various organizations that back his endeavors.

Scott Galloway begins by recognizing PUBLIC, noting their high-yield cash account that offers a 5.1% interest rate. Galloway discloses his own investments in the company, indicating a personal endorsement.

Schwab is also mentioned for their support, with an advertisement highlighting Schwab Investing Themes. Investors are enticed with the prospects of easily putting their money into contemporary ideas such as online music, videos, AI, and electric vehicles, using Schwab's research and technology.

LinkedIn Jobs emerges as a significant supporter of the 'Prop G' podcast. Galloway elaborates on their network of over a billion professionals and touts the efficacy of their service, stating that 86% of small business job postings on LinkedIn find a qualified candidate within 24 hours. He reinforces the success with the statistic that over two and a half million businesses have hired through LinkedIn.

Atlassian backs the 'Prof. G' podcast, and Scott discusses how their suite of software, which boasts products like Jira, Confluence, and Trello, facilitates team collaboration. The software is globally trusted, with 75% of the Fortune 500 companies relying on it for operational efficiency.

Kohler is recognized as a s ...

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Podcast Support and Sponsors (Public, Schwab, Kohler, LinkedIn Jobs, Atlassian, Sonos)

Additional Materials

Clarifications

    • PUBLIC: PUBLIC is a financial services company known for its high-yield cash account offering competitive interest rates for customers' savings.
  • Schwab: Schwab is a financial services firm that provides investment opportunities and tools for individuals, including themes like online music, videos, AI, and electric vehicles.
  • Kohler: Kohler is a company that sponsors the podcast but specific details about their products or services are not mentioned in the text.
  • LinkedIn Jobs: LinkedIn Jobs is a platform within LinkedIn that connects professionals with job opportunities and is highlighted for its effectiveness in helping businesses find qualified candidates quickly.
  • Scott Galloway is a well-known entrepreneur, author, and professor of marketing at New York University's Stern School of Business. He is also a popular public speaker and commentator on business and technology. Galloway is recognized for his sharp insights on the digital economy and his engaging presence in various media platforms.
  • Jira, Confluence, and Trello are software products developed by Atlassian. Jira is a project management tool used for issue tracking and agile project management. Confluence is a collaboration tool for creating, sharing, and organizing content. Trello is a visual project management tool that uses boards, lists, and cards to help teams organize and prioritize their work.
  • NetSuite by Oracle is a cloud-based enterprise software company acquired by Oracle in 2016. It provides a range of business solutions tailored for small and medium-sized businesses, including accounting, customer relationship management, and e-commerce software. NetSuite is known for being one of the fi ...

Counterarguments

  • While PUBLIC offers a high-yield cash account with a 5.1% interest rate, it's important to consider the potential risks associated with any investment and the fact that interest rates can fluctuate.
  • Schwab's Investing Themes may simplify the investment process, but investors should be aware that thematic investing can lead to a lack of diversification and increased exposure to market volatility in specific sectors.
  • LinkedIn Jobs claims a high success rate in job placements, but some small businesses may find that the platform doesn't cater to their specific industry or that the cost of posting jobs is prohibitive.
  • Atlassian's suite of software is widely used, but some teams may find the tools too complex or not the best fit for their specific workflow and collaboration needs.
  • Kohler and NetSuite by Oracle are mentioned as sponsors, but without details on their products or services, listeners cannot assess th ...

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

Economic News Headlines (FTC lawsuit, Warner Bros Discovery, Universal Music, Klarna, Google AI chatbot)

The headlines reflect significant happenings in the market, from lawsuits and failed acquisitions to the evolution of technology in business operations and tensions between content creators and distribution platforms.

Conflict between TikTok and Universal Music Group over licensing

The conflict between TikTok and Universal Music Group (UMG) highlights an ongoing power struggle in the music and social media industries.

UMG pulling music from TikTok

Universal Music Group has made the drastic move of pulling all its music from TikTok, including tracks from its signed artists and music written by anyone affiliated with Universal. This action comes as a result of the two companies failing to renew their licensing agreement.

Potential impact on TikTok and music industry

Estimates suggest that up to 80% of the music on TikTok will be affected by Universal's decision. Galloway emphasizes the changing power dynamics, noting that content companies like UMG, which invest heavily in their products, are beginning to resist platforms that have traditionally held more power.

With 86% of all videos on TikTok containing some form of music, and the takedown threatening to silence or remove around 70% of content, TikTok’s user experience could be significantly compromised. Users may reassess their loyalty to TikTok ...

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Economic News Headlines (FTC lawsuit, Warner Bros Discovery, Universal Music, Klarna, Google AI chatbot)

Additional Materials

Clarifications

  • The failed licensing agreement between TikTok and Universal Music Group stemmed from their inability to reach mutually agreeable terms for the use of UMG's music catalog on the TikTok platform. This disagreement led to UMG deciding to remove all its music from TikTok, impacting a significant portion of the music available on the app. Despite successful licensing agreements with other platforms, UMG's decision to pull its music from TikTok reflects the complexities and power dynamics involved in negotiations between content creators and digital platforms. The situation underscores the importance of licensing agreements in the digital content landscape and the potential consequences when agreements cannot be reached.
  • The implications of Universal Music Group (UMG) pulling its music from TikTok could lead to a significant impact on TikTok's user experience, potentially affecting around 80% of the music content on the platform. This move may prompt users to explore alternative platforms like Instagram Reels or YouTube Shorts for uninterrupted music access. Additionally, independent music artists could see increased visibility on TikTok due to the absence of mainstream tracks, potentially reshaping the music landscape on social media. Despite the current conflict, there is optimism that UMG and TikTok could still reach a resolution, as UMG has successfully negotiated licensing agreements with other platforms like YouTube and Instagram.
  • Mainstream tracks being less available on TikTok can benefit independent music artists by providing them with a chance to gain more visibility and exposure on the platform. With fewer mainstream songs dominating TikTok, independent artists have a higher likelihood of standing out and attracting attention from users. This shift in content availability could lead to a more diverse music landscape on the platform, allowing lesser-known artists to shine. Independent music artists may seize this opportunity to connect with a broader audience ...

Counterarguments

  • UMG's decision to pull music from TikTok might not significantly impact TikTok's user experience if users are adaptable and find creative ways to engage without mainstream music.
  • The estimate that 80% of music on TikTok will be affected could be overstated if a significant portion of content uses original sound, sound-alikes, or music from other labels not affiliated with UMG.
  • The power dynamics between content companies and platforms are complex, and it's possible that platforms like TikTok still hold considerable power due to their vast user base and the exposure they provide.
  • Users may not migrate to other platforms as readily as suggested, due to platform loyalty, unique features of TikTok, or the inconvenience of switching platforms.
  • Independent music artists gaining visibility might not reshape the music landscape significantly if the absence of UMG's music is tempo ...

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

Shein Considering London IPO to Avoid SEC Scrutiny

Shein, often described as a Chinese company, actually operates from Singapore and is considering a London IPO to avoid scrutiny from the U.S. Securities and Exchange Commission (SEC).

Labor and sustainability issues in fast fashion

The fashion company, which could potentially undertake the biggest IPO of 2024, has faced legitimate concerns surrounding its labor practices and sustainability. The apparel industry, at large, is grappling with the need to improve upon these areas, especially when it comes to environmental, social, and governance (ESG) criteria. Shein has taken action by auditing its supply chain and discontinuing business with 300 suppliers and factories in China over fair labor concerns.

However, there have been allegations that Shein’s supply chain may involve forced labor, with lab tests indicating the presence of cotton from Xinjiang, an area notorious for such practices. Senator Rubio and the SEC have been vocal about the need for Shein to disclose more about their manufacturing processes. This casts a shadow over the viability and ethics of the company’s ability to maintain low prices for its clothing.

Galloway notes the importance of fair labor practices and posits that as a public company on a Western stock exchange, Shein would face increased scrutiny and be pressured to adhere to fair labor practices.

Shein's growth, business model, and path to IPO

Eleven serves as an example of Shein's meteoric growth; the company reportedly earned approximately 30 to 35 billion dollars last year and is on track to earn 45 billion this year. With a growth rate between 30 to 40% annually, Shein operates an asset-light business model that doesn't rely on owned stores or planes. Instead, it uses sophisticated software and AI machine learning to create on-demand fashion that closely tracks customer behavior. This syst ...

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Shein Considering London IPO to Avoid SEC Scrutiny

Additional Materials

Clarifications

  • Shein, a company often associated with China, operates from Singapore and is exploring a London IPO to potentially sidestep regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC). This strategic move could allow Shein to list its shares on a different stock exchange with potentially less stringent regulatory requirements compared to the SEC, which oversees companies listed in the United States.
  • Labor practices and sustainability in the apparel industry are areas of concern related to how clothing is produced and the impact on workers and the environment. Labor practices involve issues like fair wages, working conditions, and workers' rights. Sustainability focuses on minimizing environmental impact, reducing waste, and promoting ethical sourcing of materials. These issues are increasingly important in the fashion industry due to growing awareness of social and environmental responsibility.
  • Xinjiang, a region in China, has been linked to allegations of forced labor in cotton production. Lab tests detecting Xinjiang cotton in a company's supply chain can raise concerns about potential ties to these labor practices. Such associations can lead to scrutiny and questions about ethical sourcing within the company's operations.
  • Senator Rubio and the SEC are calling for Shein to provide more information about its manufacturing processes due to concerns about forced labor practices and the use of cotton from Xinjiang, a region known for such issues. This demand for transparency is aimed at ensuring that Shein upholds fair labor practices and addresses any potential ethical concerns within its supply chain. The scrutiny from Senator Rubio and the SEC highlights the growing importance of companies being transparent about their sourcing and production methods, especially in industries like fast fashion where labor and sustainability issues are prevalent. By pushing for more disclosure, Senator Rubio and the SEC are emphasizing the need for companies like Shein to operate ethically and responsibly in their global supply chains.
  • Galloway emphasizes fair labor practices for Shein as a public company to highlight the increased scrutiny and accountability that publicly traded companies face regarding their ethical standards, especially in Western markets. This scrutiny can impact investor perception, brand reputation, and regulatory compliance for companies like Shein. Fair labor practices are a critical aspect of corporate social responsibility and sustainability, infl ...

Counterarguments

  • Shein's decision to avoid SEC scrutiny by considering a London IPO could be seen as a red flag, suggesting that the company may not be willing to adhere to the higher transparency and regulatory standards required by the SEC.
  • While Shein has audited its supply chain and ended relationships with certain suppliers, it is important to question the effectiveness and thoroughness of these audits, and whether they truly address the root causes of labor and sustainability issues.
  • The presence of Xinjiang cotton in Shein's products, if true, raises serious ethical concerns, and the company's efforts to address this may not be sufficient to ensure that forced labor is not part of their supply chain.
  • The pressure for Shein to adhere to fair labor practices as a public company may not necessarily lead to significant changes if the regulatory environment in the listing country is less demanding or if investor pressure is not strong enough.
  • Shein's rapid growth and profitability may come at the expense of ethical considerations, and the company's focus on minimizing waste and inventory could potentially lead to other negative impacts, such as overconsumption and environmental degradation.
  • The asset-light business model, while efficient, may contribute to a gig economy that can result in unstable emp ...

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

BYD Overtaking Tesla in EV Production and Valuation

BYD (Build Your Dreams), the Chinese automotive manufacturer, has officially unseated Tesla as the leading electric vehicle (EV) company in terms of cars sold, potentially heralding a significant shift in the EV market.

The company announced its entrance into the luxury supercar market with a model priced at $233,000. Their new luxury vehicle boasts impressive performance with an acceleration from zero to 60 mph in just 2.3 seconds and a top speed of 190 mph. This move signifies BYD's growing ambition and competitiveness in the high-end segment of the EV market.

In the latest reports, BYD has achieved a new milestone by becoming the top EV company in the world according to the number of vehicles sold, with a total of 530,000 cars in the fourth quarter alone. This surpasses Tesla's sales figures, which stand at 480,000 for the same period.

Financially, BYD's market capitalization reaches $76 billion, and it is currently trading at about 18 times earnings. In contrast, Tesla maintains a market cap of $650 billion, but trades at a considerably ...

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BYD Overtaking Tesla in EV Production and Valuation

Additional Materials

Clarifications

  • Market capitalization, or market cap, is the total value of a company's outstanding shares in the stock market. It is calculated by multiplying the current share price by the total number of outstanding shares. Market cap is used to gauge the size of a company and compare it to others in the market. It does not consider factors like debt and is different from enterprise value, which includes debt and other financial elements.
  • Trading at 18 times earnings means that the company's current stock price is valued at 18 times its earnings per share (EPS). This valuation metric, known as the price-to-earnings (P/E) ratio, is commonly used by investors to assess a stock's relative value. A P/E ratio of 18 suggests that investors are willing to pay $18 for every $1 of the company's earnings. A lower P/E ratio may indicate that the stock is relatively undervalued compared to its earnings potential.
  • Trading at 47 times earnings means that Tesla's stock price is valued at 47 times its earnings per share (EPS). This valuation metric, known as the price-to-earnings (P/E) ratio, is commonly used by investors to assess a company's stock price relative to its earnings. A high P/E ratio like 47 suggests that investors are wi ...

Counterarguments

  • BYD surpassing Tesla in terms of cars sold does not necessarily mean it has overtaken Tesla in all aspects of the EV market, such as technology leadership, brand recognition, or global market presence.
  • Entering the luxury supercar market is a significant step, but BYD's success in this segment is not guaranteed and will depend on consumer reception, reviews, and long-term performance of the vehicle.
  • While BYD's luxury vehicle boasts impressive performance specifications, these figures alone do not capture the overall driving experience, build quality, or customer satisfaction.
  • Sales figures for a single quarter may not be indicative of long-term trends, and Tesla could regain its sales lead in future quarters.
  • Market capitalization and trading multiples are influenced by a variety of factors, including investor sentiment, market conditions, and future growth prospects, not just current sales or revenue figures.
  • Tesla's higher valuation multiple may reflect its position as an established leader in the EV market and its potential for future growth, despite current challenges.
  • Revenue comparison without context may not provide a full picture of the com ...

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

Apple Ending Its Car Project to Focus on AI

Apple has taken a major strategic shift by deciding to discontinue its electric car project, a move that marks the end of about a decade of speculation and anticipatory buzz within the automotive and technology industries.

Potential for Apple acquisition of Rivian

Amidst this significant change, Scott Galloway brings up the possibility of Apple acquiring Rivian as suggested by analyst Gene Munster. Although Apple is known for its general aversion to large acquisitions, the current market capitalization of Rivian, which stands between eight and twelve billion dollars, poses an attractive opportunity for Apple. This potential acquisition could still keep Apple indirectly connected to the automotive industry albeit through a different strategic avenue, while allowing the company to concentrate its core resources on the AI segment.

Rivian's huge losses per vehicle

Discussing the broader context of Apple's exit from the electric car project, Galloway reflects on the automotive industry's unforgiving nature. This industry, noted for its capital intensity and low margins, has grown less appealing to Apple. Particularly telling is the state of companies like Rivian, which experiences significant losses per vehicle produced. As Apple has carefully monit ...

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Apple Ending Its Car Project to Focus on AI

Additional Materials

Clarifications

  • Scott Galloway is a well-known marketing professor and entrepreneur who often provides insights on tech and business topics. In this context, he is mentioned discussing Apple's strategic decisions regarding its electric car project and potential acquisitions in the automotive industry. Galloway's viewpoints offer additional analysis on Apple's shift towards focusing on AI and the challenges faced by companies like Rivian in the automotive sector.
  • Rivian's market capitalization is the total value of all its outstanding shares in the stock market. It is calculated by multiplying the current stock price by the total number of outstanding shares. This figure gives an indication of the company's overall worth as perceived by investors. In this case, Rivian's market capitalization is estimated to be between eight and twelve billion dollars.
  • In the automotive industry, "capital intensity" means that a significant amount of capital (money) is required to operate and grow a business due to high costs associated with manufac ...

Counterarguments

  • Apple's decision to discontinue its electric car project could be seen as a lack of perseverance or commitment to innovation in the face of industry challenges.
  • The suggestion that Apple should acquire Rivian assumes that Apple's expertise in consumer electronics and software would translate to success in the automotive industry, which may not necessarily be the case.
  • Rivian's market capitalization, while potentially attractive, does not guarantee a successful acquisition or integration into Apple's business model.
  • The automotive industry's capital intensity and low margins have not deterred other tech companies from entering the space, suggesting that Apple's exit might be more about strategic focus rather than industry-wide issues.
  • Rivian's losses per vehicle could be a temporary issue as the company scales up production and improves efficiency, which is a common challenge for startups in the automotive sector.
  • The industry patterns and competition cited as reasons for Apple's exit could also be viewed as temporary ...

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Prof G Markets: What Killed the Apple Car? Shein Eyes a London IPO, and The Granolas

European "Granola" Stocks vs. US "Magnificent Seven"

The segment dives into a discussion comparing Europe's thriving stocks, referred to as "Granolas", with the US's dominant "Magnificent Seven," assessing their characteristics, performances, and volatility.

Characteristics and performance of top European stocks

The podcast defines "Granolas" as the 11 largest European stocks, which include giants like Novo Nordisk, L'Oreal, and LVMH. These pivotal companies have pushed the European stock market to record highs. Notably, the Granolas have accounted for 60% of the gains in the overall European stock market over the past year, demonstrating their significant role in carrying the market.

Moreover, in the past 12 months, the Granolas exhibited an 18% gain, while the broader Stocks Europe 600 index was up around 7%. These companies are also at the forefront of European M&A activity, responsible for half of it over the past five years. Trading at an average of 31 times forward earnings, they are priced at about double the European market average.

Volatility differences between European and US stocks

When it comes to volatility, the Granolas show a more stable pattern compared to their American counterparts. They are said to be two times less volatile than the Magnificent Seven. The stability of the Granolas can be ...

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European "Granola" Stocks vs. US "Magnificent Seven"

Additional Materials

Clarifications

  • "Granolas" are the 11 largest European stocks, including companies like Novo Nordisk, L'Oreal, and LVMH, which have significantly impacted the European stock market. They are known for their stability and performance in sectors like consumer goods and pharmaceuticals. On the other hand, the "Magnificent Seven" represents dominant US stocks with a technological focus and potential in AI, which may experience more volatility due to the nature of the tech industry.
  • EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance without factoring in financing and accounting decisions. Investors use EBITDA to assess a company's profitability from core operations and to compare performance across different firms. In trading, EBITDA is relevant as it provides a clearer view of a company's ability to generate profits before accounting for non-operational expenses. It is considered a useful metric for evaluating and valuing businesses in various industries.
  • The relationship between stock volatility and industry sectors can be influenced by the nature of the businesses within those sectors. Sectors like consumer goods and pharmaceuticals, which often have stable demand and predictable earnings, tend to exhibit lower volatility. On the other hand, sectors like technology, known for rapid innovation and market disruptions, can experience higher volatility due to uncertainties surrounding future growth and competition.
  • Trading at 31 times forward earnings means that investors are willing to pay 31 times the company's expected earnings for the next fiscal year. This metric is used to assess the valuation of a company's stock relative to its project ...

Counterarguments

  • The performance of the Granolas may not be sustainable in the long term, and past performance is not indicative of future results.
  • The valuation of Granolas at 31 times forward earnings could be seen as overvalued, which may lead to a market correction.
  • The Granolas' lower volatility might also mean they have less growth potential compared to the Magnificent Seven, which could be more appealing to growth-oriented investors.
  • The focus on consumer and pharmaceutical sectors might limit diversification and expose the Granolas to sector-specific risks.
  • The Granolas' significant role in M&A activity could be a double-edged sword, as not all mergers and acquisitions lead to increased shareholder value.
  • The comparison between the Granolas and the Magnificent Seven may overlook the differences in market dynamics and econ ...

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