[#65] HUGE Stock Unlock News + What We're Doing in the Markets!

I've never hit it before. God damn it. We're live. Um, for over two years, I think maybe two years now, Daniel Prank, who has, I think, over a quarter million subscribers on YouTube and his random technical co-founder, that's me, come on live to talk about stocks. We are both very nerdy on fundamental long-term investing, have been for over half a decade now, and we like taking live questions. I think today we're actually going to talk about a lot of theory of fundamental investing and a little bit of a sneak peek into some extremely deep research we've been doing that will materialize into awesome features for you all in stockandlock. com. Uh people have been asking us about Airbnb. The company I used to work at Oscar has been memeing. I had my first viral treat tweet and showed up in a Benzinga article the other day which I find absolutely hilarious. That was so funny dude. It was ridiculous. Yeah, Daniel. Um, feel free to set the tempo here. I think you had an idea for what you wanted to start off with today. Yeah. So, I have been I'll actually preface this a little bit. So, Jake, I think, is a little bit more strict about what we share publicly as to what we're working on. I'm cool. Maybe I'm wrong about that, but historically, I feel like that's been the vibe. So, like I'm very careful about, you know, the screenshots that I share. But yesterday in the Discord, I was just kind of freaking out and I was like, I literally I can't not share this. So, I did and I've convinced him to let me share it with all of you today live. So, I want to show everyone some things that we have been working on behind the scenes at Stock Unlock literally since January. This is like a very long project. You could argue that this has been a project that has been going on for years, right? In terms of the initial insights creation. Yes. So, what we're looking at here, I need to let everyone know this is very in beta. Okay. This is like this was shipped to me yesterday just to start testing. So, this is like preba if that makes sense. This is not what it's going to look like for users. It's going to be pretty. But this is Google's historical insight score. So for those of you who may not know on stock unlock, we have our insights score right here that scores the fundamentals of every stock basically. It's also industry specific. So like on banks and utilities, the scores will um the metrics that go into the score will change. But one thing in a stock unlock today is that this score is a point in time score of today. We have never been able to look at what is constellation software's insight score in 2016. What was it? Right. Well, we're working on fixing that and we're building that. So, this is Google and we can take a look at its historical insight score and this is what uh we have going on. Now, additionally, you can change this graph if you want to see Google's historical growth score, its profitability score. So you can see Google's always been a very profitable company throughout its entire history. Um now one thing we're adding is the valuation. This is actually not even on stock unlock for users today but we have created some valuation scoring system and this is still in development. It doesn't work for every stock but it is still pretty damn cool. Okay. So look at Google here. You can see that during the stock market crash of 2020. Yeah, Daniel, ju just to rudely interrupt you for people who are listening to this with no video, there is a color-coded chart of Google's stock price where each color on the chart uh maps to the one to five score on the stock and lock insight scores that you all know and love. Yeah. So you can see here when Google stock fell during the stock market crash of 2020 if we zoom in here its valuation score actually went to very good and if we had this back then during the stock market crash you know users on stock unlock could have came here looked at Google's valuation score as the stock was falling and it's like oh its valuation score is now very good maybe it's looking interesting and then you can see uh as the stock expanded to its high here in 2021 the valuation score went to bad. So it looks like it was getting kind of expensive there. Then in the correction that happened in 2022 when Jake and I were pounding the table buying Google shares, you can see that the valuation got very good once again. So this is freaking awesome. As I said, we do have some work that we still need to do to clean this up a little bit, but so far what I've seen, it's like I think it's pretty decent so far. I'll show you another example here of Paulo Alto. This was another one where it just looked freaking fantastic. So let's look at uh let's turn that off. Look at the valuation once again. So we

can see here that in 2022 or sorry 2023 there was a brief period where Paulo Alto's share price corrected and it got down into that valuation being very good. And I went you know this stock is on my watch list now. I went back and I looked and like if I was watching Palo Alto, this is the area right here where personally, even without this, I would have been buying this stock. So, I'm very excited. I think uh the initial testing here looks awesome. Definitely still needs work, but it's coming along. I think one thing that's very cool about it is we've had uh with some light modifications but for all intents and purposes the same insights algorithm which is a little bit customized per industry right now in stock and lock for several years and one of I'd say to be forthcoming the issues we've had as a business expanding that is the amount of time it takes someone right now to learn the insight score and trust it is something that most users just aren't going to do. They are either coming from your channel or they are super deep investing nerds. Most people look at it and say, "How do I know this works? How can you prove this to me? I don't give a crap what you guys think. Like, what does this mean? " So, what is cool is we're not even yet customizing the score farther down, which is the next step. We're just taking our current algorithm, which we know has always kind of worked well, and now actually seeing like the visual proof, which Daniel was just showing you. So, uh I was a little not like skeptical, but you never know how it's going to turn out. And what I think people aren't really seeing, especially those who aren't on the code side, if you are, shout out to all the engineers out there. Uh the technical infrastructure powering this and to record historical scores and back test them as well as completely refactor how this entire system is built. Uh we are now going to be able to sprint with iterating on different algorithm versions, customizing them, including KPIs, and really 10xing this whole concept. Um huge shout out to Daniel. I like to call you the brainchild behind the insight score. And maybe a question just to like make this a little bit more tangible to people because it was just a lot of numbers and graphs. This relates a lot to your investing and what you do on how you've built your YouTube channel. Correct. Like would it be a correct assumption to say or think these scores in some way embody the mathematical framework you go through for some of the things you check? It's never a, you know, okay, the score is good, I'll invest. But it is a really good gut check on that. Is that the right way to be thinking about these? Yep. 100%. Even the valuation scores like it's basically what we've tried to do is turn the way to do fundamental analysis into a scoring system even down to valuation. So like I guess I shouldn't say too much what goes into it because we are trying to build some proprietary tech here. Yeah, it's basically putting everything we've learned about investing, like fundamental investing, long-term investing, into this scoring system. So, it's not like one of my jobs here at Stock Unlock is to pay attention to our competitors and see what they're doing. Every single freaking scoring system I have ever seen has momentum or like vibes. What is the 200 SMA doing? Or like what are articles? are they bullish right now and like that will boost up the company's share price. So this think about this when a stock is going up these other scoring systems will be like oh its momentum is good so it boosts up the score as the stock is going up then when the stock starts going down momentum changes and then that lowers the stock score. So like just think about that from a fundamental basis. That's literally saying that as the stock is going up it's becoming more attractive and as it's going down it's becoming less attractive. If you've read the intelligent investor, you know, fundamental investing, that is exactly backwards. That's why when you look at our scores, when the share price goes down, it score actually gets better because its risk is being reduced. So, I think we're going to kill it. Um, and yeah, I just think uh we have a huge edge because we're focusing on the right things, I'd say. I really like the question from Yaric. Are we brave enough to reshare the screen and pull him up on that graph? Uh, we can't because we only have the S& P 500 stocks. Oh, okay. But we can do Palunteer because that is a Okay. I'll take it. How do I do this again? Share your screen. Share screen. On this topic, just to make fun of you a little bit, I was schooling Daniel on how to set up his internet correctly the other day. This kid has a router in his basement and he's on the second floor of his house complaining about 50-minute YouTube uploads. Um, anyways, love you, man. Uh, but I I'm happy that I'm here to, uh, bootstrap you technically and you could bootstrap me on everything else that involves brain activity. Yeah, tech is surprisingly enough not my strong suit. Okay, so this is Palunteer

flash green right before Palunteer went off. Is that what I'm seeing there? Uh, it's insight score. This is the overall insight score. It did get pretty good here at about $176 in October of 2023. Before that, the insight score at the bottom here was actually kind of bad. Um, what we can actually do is click on this and I will open up what Palanteer's scores were on that specific day, which is what? Wait, I did not know. No, wait. I did not know that Quran built that in. And just to work on this very quickly, a mathematical note on this. What I have noticed on these insight scores is as a company's insight score changes over time. We have seen several instances where a company had an insight score of around like 2. 5 to a three which then over the next maybe say one to two years grew to like a three or a four and we've seen so many times right when it gets to that um three four if you can almost think of this as a kagger. Um so you measure like a revenue cagger. Are they growing like their top line 10% a year? Think about insight scores that way. So, if you don't mind bringing up Palunteers again uh for the overall, what you what we're seeing right here is exactly what I'm talking about. It went from red to orange to green. What this might mean in my opinion is that the stock might have been super overvalued relative to fundamentals. And what everyone knows about Palanteer is it moon. It came back down, but their fundamental performance kept going up no matter what the bears or bulls were saying on it. and right when it flipped green, I know Daniel's playing around with it on that overall score is right before it took off. So, we're not saying we've cracked the market and the score works in every stock. If you only invest based on the insight score, you're not using it right. However, this is very exciting. It's actually proving exactly what Daniel and I have been pounding the table on for years in terms of what investors should be looking at for long-term stock holds. Yeah, let's just uh let's take a look at some things here. So, this is Palunteer's overall score. Uh you can definitely see that it went from bad to average to good right here. If we take a look at its financial health, this company's always had a great balance sheet. I strongly believe that this definitely makes sense. Its growth has also always been pretty dang good. Looks like its growth actually got better around here. And then you can take a look at its profitability. So back here, Palunteer I believe was I don't know if they were cash flow negative, but their operating income was pretty negative due to all the stockbased compensation going on and whatnot. Then they started focusing more on profitability and you can see their profitability score went from bad to good to very good right here by January of 2024 and then their profitability has been very good ever since then. So yeah, you can see some interesting things. their valuation um based on our current score has always been pretty bad. But overall though, you can see uh things did improve. The fundamentals of the business definitely improved. Uh what are some other ones? Am I still here? Yeah, I'm still here. Are you not talking? I started talking and realized I was muted which is great because that's a feature and I naturally didn't want to talk and interrupt you. So it worked perfectly but curios I was actually feeling weird that you were not talking because usually uh Oh try I tried I tried. Yeah. Um it was just more of comments because I love that conversation we had yesterday. We were talking about how nuanced you can get with this valuation score, right? Like how close is the metric that you're valuating on going to zero? what is the valuation of just the stocks in that sector as well as doing five 10 backyear tested kaggers of just the individual stock you're looking at. Uh we are literally right now and we'll continue to make these 10x better and when we relaunch this historical feature um it will be built off of the backbone of what already is a great score um with a lot more put into it um as Daniel's explained to you guys. I really cannot wait to get nerdy with those numbers. Uh because these graphs are going to kick ass. So before we do Lulu, I'll get back to Lulu, but I want to show you guys something I found with Adobe because I have been nerding out. Like again, I just got access to this yesterday. So I've been nerding out hard. So I want to show you all some things that I've been thinking. All right, as like someone who's involved with developing this. So this is Adobe's overall score. Now, ideally, what you would want to see is the overall score not being extremely high, literally at the peak of the stock, right? So, when I saw this, I was like, well crap, that means our score here didn't work. So, then you can click on this and this one should work. Palanteer breaks, but So, you can click on this, see its inside scores on this date. So, it's taking a look at this. Okay, analysts were bullish. the company's financial health. Uh we need to do some work there. But if you take a look at its growth at this time, book value was growing 23%, revenue 21, operating income 38, net income 50, cash flows 30. Like when you

look its fundamentals were actually really good at the peak there. So like yeah, you know, it's not ideal that the score was the best at the peak, but at the peak it's its fundamentals were actually very good. Now when you look at the valuation, you can see the valuation though was getting a little bit stretched up there. So I think there's a lot of different things that we can do with this. Like maybe if the overall score is good and you know the company's overall score is like 4. 3 whatever its fundamentals look great but its valuation is stretched as you can clearly see right here like we can just point that out. We could highlight that maybe make a warning like yeah you know the company has great fundamentals but its valuation is getting pretty dang high. Then you can actually see that as Adobe stock fell I bought my Adobe shares literally right here in this dip. But you can see that as Adobe stock fell, its valuation score got back to very good. And it's actually back to very good once again right now. So this stuff is all awesome. I cannot freaking wait to uh build on top of what we have here. And yeah, it's just really cool. So now we can take a look at Lululemon. All right, so Lululemon looks like its overall score has been pretty good. Looks like another Adobe situation, which is why that came to my brain. Let's take a look at its valuation, though. Okay, so apparently based on our current stuff, it valuation right now is pretty dang good. I just love the bands when you go back in time because what all investors really want to do is catch the stock before the breakout. And what we are really seeing, especially looking back towards the left side of that graph, it does seem to be doing that. Uh I know you have the growth score toggled on now, but for the overall score, it was green. Even cool stuff that we could do, right, is like you can clearly see that Lululemon's growth score was very good, very good. It's been good all the way up until basically right here recently. Now, you can see that its growth score went from very good to average to bad now. So, like these are also trends that we could start pointing out, right? like, hey, Lululemon's valuation looks like it's getting pretty good, but its growth score has been declining for the past few months, and it's gone from like 4 to2. So, that's also like warnings that we could create. You know, the possibilities are endless. Could be a lot of fun. Cool. Um, not to like overshill here, um, mobile apps are coming along too. and I'm very excited about those. You and Ad uh the UX guy we have on our team have been absolutely killing it. All right, so there's a couple things uh we could talk about. Um I know that uh you had some feelings about the Airbnb announcement. I did too. I weirdly cannot find that on their investor relations page, which I need to look into more later, but they did their uh pretty hyped up by Brian Chesy, the CEO summer release. Um, another topic that has come up a lot is the Oscar and hymns thing. I'm not sure if that's like a sore subject for us, but people have been asking about that. Let us know in the chat what you guys uh would like us to talk about here, and if not, Daniel, I'll pass the ball over to you. Um, actually, we got a question here. Is this feature available in the cheaper version? Um, our essentials tier, none of the tiers are cheap. Uh, they both have high value. Uh but the essentials here would will most likely have this. I will bite my tongue just because Daniel and I haven't talked about it, but u I would yeah there are definitely going to be a lot more insight features across all the tiers. Uh admittedly we're not even 100% sure the right way to deliver this. What we are showing you today is a like admin panel just behind the scenes like we're testing this out quite literally after doing two or three months of data pipeline work, tons of behind the scenes stuff. Uh, our CTO Karan literally vibec coded this with AI and like Yeah, it's like an allnighter or something. So, what you just saw was not what we would be releasing to customers. Exactly. Yeah. Know, like this, as I said, this will be cleaned up before it's in people's hands, but you can kind of even see like Jake and I were kind of just discussing feature ideas on the go as we're using this. So, like in terms of what's going to be shipped, what the features are going to look like, and what's going to be paywalled or whatever, like we we'll see. It's uh but no, we want to add more value to everyone. Everyone will be getting more value out of this. David

did ask notifications on valuation portion of this will be fire. It's funny you say that because yesterday when I was testing this data like as I was actually sending you the screenshots, David, in the discord, I was messaging Jake and our team and I was like, imagine if on Palo Alto you had a notification set up where if the valuation score gets to four or gets to like a good, then you get a notification. So on your watch list, you could set these things up where it's like if valuation score gets above X, you get a notification sent to your phone immediately. Like that I think that would be incredible and we can definitely do that. This is all possible and it's all going to be coming. Everybody say a prayer to the Apple iOS store gods. Please accept our app. Do not blanket us as a brokerage. We do not give financial advice. Amen. Android will be fine though. Android's chill. The things the engineers care about and get concerned about. Yeah. So, I think it's just cool because I know even as a user of Stock Unlock, like we haven't really had any major updates in I would say sixish months now. Like we've been doing some light improvements. The screener just got a nice improvement the other day, but it's like nothing big has happened, but just know that a lot of big stuff is happening and will be coming for sure. I'm sharing my screen quick just to politely partially rebuttal. I agree. Um, most of it's been behind the scenes and the grasping at air feeling for me is people have no idea how hard we are cranking. uh around two years ago actually it was just you and me at this company. Uh the other co-founder had left. Uh we were actually four people at one time before that. The other contractor we were working with left and building up this team uh retaining talent and unfortunately going through a couple bad hires throughout the process was really painful. But we are really moving quickly right now. We have five full-time engineers including myself, full-time UX designer, Daniel Prank wearing all the hats, as well as we've had Nester who most of you have interacted with who through customer support. Shout out to you, Nester. Hope that you are enjoying vacation. Uh, but anyways, what I'm showing right here, if you're not in it yet, you've been under a tree. This is a free Discord. This is where we post all our updates. And yeah, uh, the cadence has been a little bit lower, but if you're curious what we've been up to, you can also check there. Cool. All right. Should we talk about uh Airbnb? I would love to hear your thoughts now. I know we talked about it a little bit when you were in Canada recently, but you know. Yeah. So, unless if you've been living under a rock, uh Airbnb is one of my larger investments. Uh I am incredibly bullish on the company long term. Uh Daniel has said some nice things, but has been a little more skeptical. And to set the stage for this chat, Daniel and I were actually in Canada for his bachelor party. Congratulations, man. It was a great time. and we had about two or three hours in the car and we talked a lot about stocks and investing of course. Uh so the Airbnb uh summer release came up setting the stage here. Brian Chesy was really hyping this up. He was like this is going to be the beginning of our next chapter. Stay tuned. Like this is when how we define we're expanding outside of our core. And I will be the first one to agree with you Daniel in terms of like the overhyping. I also think that the summer release was overhyped relative to what uh Brian was saying like tweeting right before that. So I'll withhold most of my thoughts to obviously let this be more of a conversation. Uh but I think you felt somewhat similarly and maybe a little bit stronger than me. So uh I'll let you kind of go first instead of me wording your thought you. Yeah. So, um I would say Airbnb, as I told you, is like a stock that I've always watched and it's one that I've kind of been waiting like I want to see how things play out. If things improve, maybe I'll take a position in it. I was also very happy to miss the bottom. Like, if things did play out, things started improving and the share price doubled, then, you know, whatever. That's fine. So, yeah, I've kind of just been waiting and I wanted to see what all of these new features were. I feel like the CEO was really hyping this up for a very long time, you know, like you got to watch this. This is a major release. This is going to change our company. And then the release happened and I was like extremely underwhelmed. Personally, I felt like it was an experiences rebrand. Like a lot of the stuff they've already actually had on the app, it's just like more apparent that you can book experiences now. And I've actually I didn't tell you this yet, Jake, but I was looking at some Airbnbs cuz uh Shelby and I were thinking about maybe going to on a trip this winter. And what

Airbnb does now is when you type in the search bar, it well, at least for me, this has been happening. It actually searches experiences first instead of Airbnbs. So like when I just go to the search bar now and I'm like, "Oh, I want to go to Hawaii. " and then I hit search for my dates, it will show me experiences and I'm like, "No, no, no. That's not what I want. I want to see Airbnbs. " So, that's also another change that they made that I feel like has actually lowered the quality of the platform and it's definitely did the wrong search. They'll have it where it's experiences services stays. So, yeah, you have to click on stays. Yes. But I believe that their default search now is experiences. like when I search I want to go to Kona. All right, maybe I'm wrong. Uh, one I thought was very interesting, um, if you could word it quickly was your haircut example because I think that will tee me up for a partial agreement, partial rebuttal. Okay. Yeah. So, one of their Sorry, I was just trying to get it to work. Um, one of their things with this new launch was they have experiences and services now. So, they were saying that they want to get into the kind of like gig economy and people will be able to post their services like a barber can post their services on Airbnb and then you can book a haircut on Airbnb. I was telling Jake that I'm extremely bearish on this. I do not think people are going to use it. Um, just like as a consumer, like I'm not going to look at Airbnb to go book a haircut because at that point you're competing with Google. Here's the thing. Google actually, let me back up. If you're a barber shop, I'll just stick with the barber shop example. But if you're a barber shop, I love it. Keep digging yourself into the barber shop hole. Yeah. You are going to 100% put your business on Google because that is where people go to find businesses. you know, barber shop near me, that's your flow. That's how you find it. So, every single barberh shop that wants to be successful and have relevancy is going to be on Google. That is not the same for Airbnb. If I'm a barber shop, I don't really care about posting on Airbnb. So therefore, as a user of potentially using Airbnb services, if I'm looking for barber shops, I am going to feel like I may be getting 1/100th of the potential um services that I could be getting if I just went to go and look at Google instead. So unless all of those services that are existing on Google today go to Airbnb, like at that point, then it would compete with Google. But if you're just using Airbnb, you're going to be missing out on potential services that you could be using that potentially have higher quality and better ratings. So again, I just think they're competing with Google, and I am so bearish against that. I do not think that's going to work. Cool. Uh, one thing that we do agree on isn't is the overhyping. I do have a rationale behind that. And to just say it again, I do think that Brian was uh he's a founder as well. They also went to Y Combinator. Uh they've been working on this for a while and I can only imagine him seeing like the whole future world of the things they plan to do. Uh and again, this is just the first of many releases. So this was the first uh release and he has said that they will build on each other. So I was actually surprised when he started hyping this up so much because on earnings calls the tempo was a little different. It was more of like, hey, we've been doing a lot of refactoring. We're getting ready to expand beyond our core, similar to Amazon that started selling books. Google was in search is like Airbnb is going to be like the place where everyone goes uh to run their life, whether that's traveling, getting around, finding things to do. Um, so I think that he got a little bit ahead of his skis in terms of overpromising on this. Um, I'm not sure if I would say it was an experiences rebrand. They did bring in services as well. However, it didn't feel like super fresh new thing. I was kind of like, okay, that's nice. Uh, but like why did you hype it up that much? So, 100% agree with you there. Now, will very respectfully say uh one for the sake of argument, but I do actually feel this that uh you are really viewing this through the wrong lens in terms of using the haircut example because you're not going to use this for haircuts. That's not what it's meant for. I would actually group that with the same group of people that say, uh, why would I ever use an Airbnb when I can get a hotel? Brian Chesy has actually said, and I agree with him, there are plenty of situations where you should actually get a hotel. He has answered these call on earnings calls. Um, I'm going to relate this back to the experiences thing. Uh, but you know, if

you're just a business man or woman and you need one night stay and you're like doing an overnight in Minneapolis, there's no reason for you to do an Airbnb. Brian Ches even said himself he would get a hotel for that night. So this is so just as if so just like the Airbnb experiences and not saying hotels don't exist anymore. Um experiences is a very broad term and I don't think that the haircut example at least to start off and right now is what it's going to be used for. The way I see this actually working in practice is uh we have used experiences on Airbnbs before. Uh what made me bullish on is I was in Colombia. I was on some tour people from all over the world. There was like 25 people on the tour. I was a loser that went up to every single person on this tour group and I asked them where did you book this tour and I think the number was 22 um 20 plus uh out of the 25 people so almost everyone booked it through Airbnb experiences there two or three that didn't um not to sound rude were like people that almost needed a walking cane. Um, so what I think is going to happen with the services and experiences is Airbnb is looking to monetize more outside of their stays. And let's just be very clear, part of my thesis on Airbnb is they're running a 40% cash flow margin. Their core business is growing regardless of these new launches and they're buying back around 3% kagger of their share outstanding float per year and still able to invest massively into the business. So let's just say this is a total flop. No, that's not what I'm investing into, but I do think that the investment money is still safe and Darl would say would still be a it's just by nudging spy beating investment. So, what I see with this experiences thing is people are going to start to use them more while they're traveling with Airbnb already. And then what Taylor and I, who's my fiance, have already talked about is the use case right now is more of like, oh, what do we do for date night? Uh, so the things I'm seeing in New York City is, you know, private sessions with artists, um, doing, uh, very unique experiences that you can't just really Google for. Um, I should have come more prepared because I don't remember the ones that I was looking at. And, uh, yeah, again, just to tie this up and go back to my first point, was slightly underwhelmed. I'm going to see how the services traction catches on. And I do think it was overhyped, but I also do think that this started the groundwork for how they begin to expand outside of just travel. And we'll see. We'll see how it goes. Yeah, I definitely agree with you. Like the thing about Airbnb stock today is I don't actually think it's pricing in a lot of growth. I think it's like 17 times cash flows now, which is like, as you said, even if this totally flops, I don't think the stock is going to be cut in like 50%. because I don't even really think the stock is pricing in that much growth today. So yeah, it's not like it's trading for a super multiple where it has to really deliver. I would say it's trading for a multiple where it doesn't even really have to deliver. So I agree with you. Yeah. Well, um we've already talked about Airbnb a lot in here. I think that people were asking about uh hearing a little bit more about Oscar as well. Daniel, I'm not sure if you're checking the comments if there's anything you uh we want to get to live before moving on to that topic. No, Oscar is hot right now. You uh were quoted in a Benzinga article about it. Former employee. You're the Oscar master, new meme stock lord. Okay, I just want to put this on the record. I was talking with Taylor last night. Um, and I was just like, "Babe, I don't understand virality. Like, this makes no sense. " I was like, I didn't even say anything. I came here and just like farted out a tweet that in my opinion really does not have any value in it. If anything, it's more of a fist pump and I was able to capture very luckily like the intraday high hit right before it went back down, which makes the stock price graph look amazing. Um, yeah, this was quoted in an article to the point Jake, co-founder of Stock and Lock, shared his personal story on X that he's been holding a company share since he was an employee at the firm. It's not a firm, it's a company. Uh, he highlights the fact that this is becoming a retail meme stock is the best thing that's ever happened to my net worth. I still don't understand why people read that crap. Anyways, getting back into stocks, Oscar Health, um, I believe it was founded, Wow, I should actually know this. I think it was 2011 or 2012. The reason why is the two founders uh one was Josh Kushner, one was Mario Slashler, they both went through the uh US healthcare system. Uh most of you guys know Josh Kushner. He is brother-in-law of uh to Trump because his brother is Jared Kushner. Super rich family. Uh he is the co-founder of Thrive Capital. Very rich, very well-connected guy and super smart. Uh he deserves everything that he has in my opinion. Mario came from Europe and was just like, "The US health care system sucks. " So, they became the first licensed health insurer in New York State in I think over 20 years. Uh the

state didn't even know how to grant them the papers since it had been that long. And they were able to do this through the ACA, which is the Affordable Care Act, otherwise known as Obamacare. It has been nothing short of a bumpy ride. I don't think people really are talking about uh the fact that this public valuation is still less than the private valuation of the company when I worked there as an employee for four years. Uh which I think is very telltale of the fact that this stock or rather private company before that has had a lot of ups and downs and there is a massive regulatory risk with this stock. It could quite literally be killed by regulation. I'm not saying that lightly. It's just a fact. So, I'm happy to answer more questions about this. It has of course been getting a lot of attention online. I do think that the valuation of the stock was priced almost to nothing. Uh, so you can see the low here at almost at $2. It was getting into penny stock territory. And when you're talking about a fall from grace, this is over a 90% drop from the IPO. I saw my net worth literally crumble. And I got to the point of saying, "F it. I literally don't give a crap. " Like I kept watching the company obviously I know the people that work there. Uh some of the notable things that they've done and then I'll shut up is they have rebuilt their own claims processing system. So what no one understands I'm talking to because I don't know if you could unless if you actually worked at this company and had a very deep understanding of healthare is that processing a claim is one of the most complicated freaking things I've ever seen on the planet. In order to actually provide health insurance, people go, they get service, the doctors send claims. There's tons of billing codes. None of them really match up. There's tons of different systems uh that have been dated since the 80s. And the reality is that no health insurance company has actually built their own claims processing system since around the 80s. Dare I said the beginning of the 90s. Everyone is quite literally licensing old school systems called impact and things that are coded in cobalt where you don't have a lot of visibility into the system. I'm talking tech that's so old where you're constrained to six character placements because they were playing with bit registers. Most of you probably don't know what I'm talking about, but all you need to understand is it's super old. And they were hiring people straight out of Ivy League colleges, poaching people from Google, Facebook, uh, Bridgewater Associates, all the top companies. and they were able to recruit a ton of top talent here. They have a world-class engineering or it took over 10 years for them. They still weren't done with it by the time I left to rebuild that claims processing system. Now, why is this important? When you make money as a health insurance company, it is as simple as you want to pay out less than a dollar of claims for every dollar of claims that comes in. Uh, sorry, I should have said premium. Uh, so you're getting paid on the premiums that people are paying for their health insurance plans. many of them are subsidized and then for all the premiums that come in you want to pay out less when you have your own claims processing system. The amount of granular detail and efficiency you can drive both for the human capital cost of managing that and I know this sounds sad but as well as having insight into denying claims is absolutely incredible. Their MLR which is a medical loss ratio is about 74%. So around 74 cents I believe of every dollar that comes in uh is spent. I think the limit is actually 80%. So I actually think they have to pay some of that back out. Um I need to look at the regulations as to how exactly they do that. Anyways, let's bubble back to reality. Hopefully people are starting to realize that health insurance is very complicated. I probably could have just talked for another 20 minutes on it. However, that is a little bit about Oscar Health that you're probably not hearing from other sources online. And I feel confident saying that because I worked there for four and a half years. Um, and funny enough, uh, left there to start this company. So, not to keep smoking my own crap here, but what is hilarious to me about the Benzinga article is I am talking about Oscar Health analyzing it through Stock and Lock when I now work at Stock and Lock. And the next level of inception will be analyzing Stock and Lock stock on Stock and Lock. But that's still a couple years away. So, yeah, happy to answer more questions. I know people have had a lot for me. Some of them, some people online didn't believe I worked there. Whatever. Uh, I did. Didn't your former boss see that article and like texted you or something? He's still texting me. Yeah. Let me I was in the bathroom at a uh I was out at date night. I was honestly a little buzzed, too. We had some drinks and I was just like, "Why is my old boss texting me? " Uh because I didn't know uh I didn't know this was out. So he was just like, "Yo, like everyone at the company is like talking. " He's like, "You got quoted in this article. Like what is happening? The universe is just hilarious. " So yeah, it's funny for you. Like I've

known you this entire Oscar health experience of yours and watching that stock go down to $2. I remember when it was actually at $2. I think you messaged me and you were like, "Daniel, I know like it's not your type of stock, but like this thing is actually looking like stupid cheap. I'm surprised you didn't buy more. It is such a large component of well, it wasn't at the time, but it's such a large component of my stock portfolio net worth. Like this is over this is like triple the size of my Airbnb position. Yeah. And I have been heavily buying Airbnb like aggressively. Um, what people should understand is the shares I own in Oscar, I did purchase them, but I didn't purchase them on the open market. I exercised private employee stock grants that I had. But yeah, dude, going from the IPO, and by the way, I still worked there. When they IPOed, I was running models and stuff. I'm like, okay, this is how health insurance companies are priced. We're IPOing at around $6 billion at 38 a share. Worst case scenario, let's say like the market tanks or something, maybe it goes down to 20 relative to the money and stuff we were making at the time. It can't possibly get worse than that. But of course, I'm wishful thinking. I'm looking at like the thousands of shares that I have and just being like, "Okay, let's say that they keep going and keep meeting their goals and their projections that they were setting. " Different CEO at the time, too. Tons of respect for the guy, but just didn't cut it as a public company CEO. Um, I was feeling pretty good. I'm like, "Oh, we're going to go start a company. Like, it's totally cool. like if I need to fund myself and I need money, I have this huge pile of stock. Like I'm good. Like I'm the bank. And to literally watch that drop over 93% in value to go almost down to four digits worth in terms of the total value of the stock holdings from plenty of six digits of value. It was an exercise of patience. And I do remember that conversation very well. I wanted to be careful because I looked at that and I was so close to buying more. because um people were basically pricing it like it was going to go bankrupt. But the reason why I didn't is they were partially right. Um the political climate was very uncertain. Uh Trump doesn't like anything that's non him branded. So the fact that there's Obamacare in there, um I don't think it was wrong to think that he was going to come in and try to like blow that up. And most of Oscar's insured population are subsidized by the government through the ACA. it was an existential risk. It still is. That's what I think that's what nerves me about this. There's so many people just like with hymns and maybe we can roll this into hymns that just seem so blindly convinced that it's a 10x opportunity. And I think anyone that tells you that with very high conviction, you should just stop listening to them immediately. There's someone here named Josh Lewis saying long time no talk. Do you remember this person? Are they from Oscar? I definitely remember the name Josh Lewis. Josh, give us a little more color there. Um, and for those of you listening to the recording on your favorite podcast app, uh, we do these shows live, so come hang out with us sometime. Yeah. Okay. I do remember. I It's one of those things where I'm squinting in my head and it'll like come back to me. Oh my god. Wait. Yeah. Josh, are you still holding your Oscar Sarah? Do you still work there? He says he still works there. Oh, let's go, dude. Let's go. Yeah, Donald Higgins texted me the other day. That's what we were talking about. He still works there, too. Is Sue John still at the company? All right. You know, we got to take this offline, but yeah, I was about to say, Josh, what are you doing in the stream, man? Have you been hanging out here for a while? And I just didn't know. I hope you're doing well. I'm glad to hear you're still working there. I'm sure s'mores and people are still there. That is a there's a great company culture there. I'm sure it's still alive and well. I think invite me to happy hour, Josh. If you have my email, get me to an Oscar happy hour uh for me to make a guest appearance. I think we're gonna roll that into hymns or try to Oh crap. And I just looked at the time, too. Yeah, let's talk about HIMS and then we'll uh roll it to a close here. I'm going camping this weekend, so I'm going to be without sell service up in the woods drinking some beers with my dad. God bless. Oh, yeah. Hashamea. All right. I guess I can start this one. So, yes, I hold him. I still have my HIMYM shares. I did trim a little bit in that recent uh rally because I wanted to fund another uh stock purchase, but no, man. Like, I agree with you with what you said about Oscar. Like, I think there's risks to him that I don't even know about because to be quite honest, like this stock is out of my circle of competence. Like when people are sharing links like, "Oh, RFK is gonna ban

uh health insurance or health companies being able to promote their products. " I'm like, "Well, that's probably going to hurt him. " And then I see you tweet things like, "This one drug in him's new gummy is banned by the FDA. " And they're like skirting around laws. I'm like, "Well, I have no idea if that's true. " So like the reality is like I'm not a freaking medical guy, man. I don't know if this stuff is all true and how much of a risk it is. So for me it's like him straight up is just speculative for me. I'm going to take a shot at you right now as a friend. Um it is in your circle of competency. You're just lying to yourself that it's a stock that you should be invested in because you found that it has no moat but you are convinced that it does based on its fundamental performance which I don't blame you for. Just saying that to be a little bit provocative, but well, I mean, it's got like 47% of the online teleaalth market share in the US. Like they're doing something right. Yeah, that is very mody. They found a hack in the health care system and they're arbitrage market spending uh into it and I think they've done very well. I just don't want to be on that ride when the music stops, which is kind of my analogy. But to yours of my credit, I actually did trade in and out of that stock um and made a little bit of money. So that was fun. Oh yeah, let me bring up what I was looking at here because okay, similar to Daniel, I am not coming here and saying Hims is doing anything illegal. So before people get frustrated about this, I am actually just trying to ask questions. Um, if David's still in the chat, he actually was properly pointing out to me. Shout out to David for weighing in here that uh, finastra finasteride. Finasteride uh, is widely used and it's not just like him sells this, right? So, this is not like a him specific thing. They did not invent this. But where I keep on getting confused is this FDA approved finasteride, right? Okay. I went to the FDA's website and currently there is no FDA approved topical formulation of finasteride. Compounded topical finasteride products do not have FDA approved labeling. There are potential serious risks associated with the compounded topical finasteride products. And when I Googled him finasteride product, they were all they looked like topicals. Maybe I'm wrong. Someone can correct me there. So, can someone explain this to me? I don't get it. Maybe I'm just stupid, but something is just not adding up here. And I don't know if these are real posts either, but there's a couple people that came in and these are the stories I hear a lot. So, suicidal ideiation uh with finasteride or combining different medicines together. My last bearish point on hims is like for whatever reason in my gut I think the CEO panders too much to retail investors and I'm not I just like have not been convinced that he actually has these patients best interests involved. are pedalling marketing spend and packaging compounded pharmaceuticals which may individually all be FDA approved, slamming them into compound pills and then delivering it through like fancy marketing campaigns, Super Bowl ads, things like that. The amount of class action lawsuits that are starting to come up against this company are growing. So, what I think Wall Street is betting on, I'm not making this up here. Here's all the proof. What I think Wall Street is betting on is that this is a temporary hack. It's not a moat. You're already seeing other competitors come to market. I don't think Novo Nordis decided to sell GLP1s to everyone is actually good for them. And I'm just unsure how much longer this can go. Um, it's not a health insurance company. Ideally, you get these things through a health insurance company. And if the public doesn't want that, that's fine. But at least like work within a regulatory framework where you shouldn't be making these compound pills when you ideally need a physician to actually be monitoring someone's health and be taking notes on all the different things that you are mixing together. And there are a lot of complaints that are starting to mount up. So again, maybe I'm wrong on all this. I'm not trying to doom and gloom and say this is a zero. Maybe there is a huge moat here and I'm just too dumb to see it. But some I really want someone to explain to me this FDA thing with the finasteride and what's on the website. Yeah. I don't know. I have not looked into that. You own the stock. Yeah. Well, I'm wishing everyone here gains. Um, but that's what I mean is like this that like this stuff is a bit out of my circle of competence. Like I'm not going through every single compounded drug that's in him's pills or whatever and looking like how do these interact

with each other? when they're compounded? Is this one FDA approved? Like did I have no idea. I don't know. Like I' I've been saying from the start, this one for me is very speculative. I think the fundamentals are there. When I got in, I thought the price relative to those fundamentals were solid. You're over 2x on your investment, right? Uh no, like 160% now. Boo. Yeah. So like and you know four months. Yeah. And I and I've taken some gains along the way, like I've trimmed it down to fund some other positions. So like for me my mindset right now is kind of just I'm going to hold it unless something major changes I guess or if it like the other side of this equation is you know I don't invest in companies for a short squeeze but I think there's 40% of the float is shorted now and the stock keeps going up and like it's becoming a retail name and like those shorts got to cover at some point. So there is that factor as your mic is muted but well where it's like you know let's say HIMS goes to 100 and then 40% of the float is like damn we got to cover our shorts because we're being margin called that could get fun. Here is my tinfoil hack conspiracy theory. Do you know all of these like anonys like posting about him where it's like you go to the profile and it's like not really a real person? These things all come and go and people forget about them quickly. But Wall Street loves thinking and unfortunately it is true in some ways. You see Chimath like pushing spacks again right now that retail investors are dumb money and they love this. Um just to like play into like the Alex Carpenter like analyst mindset. It's like all these guys are like blowing cocaine and like thinking about like strippers and stuff as they like you know whatever it is that they're doing. Uh I think that they are operating a lot of these accounts. I think they are laughing to themselves at the amount of followers and like blind like following they're getting from all these like 18 to like 21 year old kids that have all of the sudden like him has become the identity of their life. And what I think that they're looking at is the lawsuit data and what could really kill this company, not making a prediction, just saying this is possible is someone from the FDA comes down and puts the hammer down and they're like, "Hey, you're not allowed to sell these anymore. " like we just had this class action lawsuit of like 10,000 filed complaints and like proof of all these medical malpractice and bad secondary side effects where you are not properly disclosing the potential risks and side effects of the medicine you're doing and similar to IP law when you f with the music company and like try to rip off someone's song like they do not f around. This is not something that you can like just ask for forgiveness on which is one of the reasons why I think there's much more of a moment around Oscar where it is incredibly hard to get a health insurance license. it is even harder to code your own claims processing system and if the market does move more towards ITRA uh or ITRA which we haven't talked about a lot but more open market uh place healthcare buying in the US which seems to start to become a bipartisan issue. I much rather be in a company with that base and that defensibility than a sleek marketing consumer subscription company making compound pills where they have already a ton of other copycat companies coming on. So that was my case. Yeah. Yeah, I mean I would agree that Oscar has a better moat based on everything you said. Like if it takes 10 years to develop whatever they developed, I don't even understand what they developed fully. But that sounds a lot more challenging than just like making a new app where you can become a healthcare e-commerce company basically. You know, like the replica the replicatability, if that's the right word, is more challenging at Oscar. It sounds like more challenging to replicate. Yeah, there is a I I've been thinking about this like can you have a regulatory moat in terms of like the barrier to entry is so hard to get in due to existing laws. So like healthcare could potentially be one of those for me. I was trying to think of other industries utilities as well. There's some utilities like there's some regulated utilities where new utility providers literally cannot enter the market. So it's like those are all the government regulated. They also do cap the amount that they're allowed to profit and stuff as well, right? Yes. Yeah. So you can't earn like 50% returns in the utilities market, but you're by law allowed to generate like 10 to 12. And you also sometimes cannot have new competitors come in. like you will own the market. Sounds nice. Does sound nice. That's why Birkshshire Hathaway got into the utilities industry. If you read Buffett's letters because they were sitting on tens of billions and they

didn't know what to do with it. And the utilities is an industry where you can deploy tens of billions. It's just going to be at like 10 to 12% returns, which is still good, but um not what Buffett aims for. But they just had so much cash that they were like, "Well, this is a place where you can just park $50 billion dollars, you know. " Definitely. All right. Uh I do actually have to go soon uh to catch my train uh in a few minutes. Do you want to take any of these last comments says our last one? Uh hello Alex. Alex pole. Hello man. It's been a long time. Holy smokes. Dude, go back to the beginning of the stream, Alex, because we dropped some insane value that's coming for Stock Unlock there. Uh, anyone who's just joining late, uh, all these recordings get posted to YouTube, Spotify. Uh, we have a comment here about Visa, Mastercard, I have not looked into them a lot. Um, I would mostly just have like a macro comment on Yeah. No, they're PayPal, but their stocks are dropping because stable coins are becoming a thing. like Amazon and Walmart introduced that or are saying that they want to introduce their own stable coins to bypass all the Visa and Mastercard fees and save billions of dollars a year. So people are worried that stable coins are going to become this new form of payment that can bypass Visa and Mastercard. So essentially these companies emotes are apparently being attacked. I don't know anything about this. I have not looked into it. This is one of those things where I'm probably not going to understand it. Um, yeah, I have I have good news. You don't and this is the same for me. Like we don't actually understand the exact technical buildout that Visa and Mastercard have as well, but like we as consumers use their products. Same with Stock Unlock. Uh people use our insight scores, but like they don't look at all the code or you know see all the work behind the scenes. So the good news for you and for me is even though things will eventually I think go more towards stable coin or stable coin equivalent money transfer means uh I don't think that we'll be interacting with them at that level. My bearish thought that I've had for a while on Visa and Mastercard is they have a duopoly. They make all their money off the fees. Um things change over time and I think there is an unstoppable title wave. I don't know if it's going to be one year, two year, five years, 10 years, 20. I have no idea. But I am convinced it is a matter of when, not if. The technological pressure to deliver money more efficiently and get around these fees is going to eventually crumple these companies because it's not just consumers. The reason why Amazon is doing this is for fees, right? There is other big money players here. And I think capitalism drives efficiency. And I am actually surprised that Visa and Mastercard still have the Moes that they do and how much they've been able to push back due to like regulation and regulatory oversight innovation in the space of sending money around. Now, I think it's good to move a little bit slowly. You don't want to mess this up. However, I think things are being proven up out enough now uh that we can move to that type of techn technological infrastructure where it's more blockchainbacked. It's actually a really good use case for it. And the current administration is super pro crypto. You have David Saxs who's the cryptozar appointed by Trump. Uh you have an organization in the US government that is heavily pushing pro- crypto and stable coin regulation. Um so yeah, I personally am not touching those companies. Yeah, I don't I've never owned a payment processor because I think we've talked about that a lot, but they all just kind of seem the sameish to me. I was doing some research on Visa's moat though, just for fun. And what I did see is that what it it's definitely a network moat. Like if you think about it, if you wanted to start a new credit card company today, why in the world would any business want to accept your new credit card over a credit card like Visa when hundreds of millions if not billions of people around the world have these cards? So the network moat is definitely there. And yeah, I guess for stable coins, it's like is that going to be strong enough to attack the network mode that Visa has? What is the switching cost in your opinion? How easy or hard is it to get another card or way to pay someone? Well, it's extremely easy, but the thing is they don't have the network. Like, if I go and get some new random card and it's not accepted at 99% of the businesses that I go to, but Visa is, then why do I have this new card? What's the point of it? That's the moat. Visa's moat is its network. Like, you can go to freaking Asia and they'll accept Visa. They a lot of places don't even accept Ammex. Like you have to have a Visa or a Mastercard to make payments in Asia. So it's like PayPal's actually pretty big in Asia too. But

that's the thing with stable coins. It's like I don't know anything about this technology, but is it easy for these companies to just set up stable coins and like transact that way? I genuinely have no idea. But it would have to be something that can attack a network mode because that's what Visa has. So prediction here I think that within the next one two years on stock unlock we will be accepting stable coins uh but through Stripe and right now we actually pay um I think it's 35 cent space fee maybe 40 cent space fee plus I think it's like a 2. 3% which is pretty meaningful like obviously they abstract a lot they save us a lot of time it's like totally worth it for us as a startup blah I'm not overly complaining about it but they have been talking stripe a lot about delivering a product backed by either their own coins or some like open source stable coin where they would be able to deliver a much lower fee. Uh it is just unclear to me as you say. I think that was a really good point Daniel. Um the actual methods of accepting payment and stuff is just like a physical thing at each storefront where there will need to be some seamless solution that's like easy to flood out. And yeah, I I think that is a strong pro point towards them. So anyways, I hate doing this. I got to run. Uh it has been a while since we've done a show that was over an hour long. So this felt super good. It's a therapy that I needed personally. Um and I'm going to be in the woods. So I'll continue getting that therapy all weekend. No technology, no phone, just trees and some beer. Sounds awesome, man. All right. You gonna hang out here or should I hit this endream button? No, I should get back to work. All right. Uh, thanks for hanging out with us everyone and have a great weekend. Goodbye everyone.