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.
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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.
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, 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 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 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.
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
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 ...
Podcast Support and Sponsors (Public, Schwab, Kohler, LinkedIn Jobs, Atlassian, Sonos)
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.
The conflict between TikTok and Universal Music Group (UMG) highlights an ongoing power struggle in the music and social media industries.
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.
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 ...
Economic News Headlines (FTC lawsuit, Warner Bros Discovery, Universal Music, Klarna, Google AI chatbot)
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).
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.
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 ...
Shein Considering London IPO to Avoid SEC Scrutiny
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 ...
BYD Overtaking Tesla in EV Production and Valuation
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.
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.
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 ...
Apple Ending Its Car Project to Focus on AI
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.
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.
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 ...
European "Granola" Stocks vs. US "Magnificent Seven"
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