Electronic Arts and Activision Blizzard both reported earnings and the news was generally positive, but there’s a lot of nuance to it. Matt Cochrane and Simon Erickson join 7investing Now to break down what the numbers mean and to discuss what investors should be looking for in the quarters to come. We’ll also take a look at at the battle between AMD and Intel in the artificial intelligence space.

Transcript

Sam Bailey  0:14

Welcome to 7Investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.

Dan Kline  0:24

Good afternoon 7Investors and welcome to the Friday edition of seven investing now my name of course, is Daniel Brooks Kline. I’m being joined as you can see on the screen by Matt Cochrane and Simon Erickson. Gentlemen, we’re going to hit the ground running today we have too much show for how much time we have. So there is not going to be any dillying or dallying. We will dilly dally next week when there aren’t as many earnings coming up. But we’re going to talk EA and Activision earnings. Then we’re going to talk Intel, AMD and the fight for AI. We’re of course also going to take your questions and comments. We would love to hear from you. So anywhere you’re watching this in theory, if you share in the chat. I say in theory, just because sometimes it doesn’t work on some platforms, but for the most part, any place to share a comment we will try to get it.

But let’s start with Activision Blizzard (NASDAQ: ATVI). We’re going to talk a little bit about something they talked a lot in their earnings call about the dark clouds hanging over the company. What does that mean? Earlier this quarter a lawsuit was filed against Activision Blizzard by the California Department of Fair Employment and Housing that alleges discrimination and sexual harassment against women at the company. Matt, what was the fallout of that and sort of give us the the 10,000 square foot overview of what the company has done?

Matt Cochrane  1:39

Yeah, so last month, they were hit with a lawsuit and you know, it alleged a lot of like discrimination and sexual harassment against women at the company. The present Blizzard president, not the Activision Blizzard CEO but just the president of the Blizzard division was mentioned in the lawsuit which said like he was aware that employees were leaving because of sexual harassment as early as 2019. And the lawsuit said like Activision Blizzard had a frat boy culture. That’s a quote from the lawsuit, and was a breeding ground for harassment and discrimination against women. It should be noted women like make up about 20% of Activision Blizzard workforce. But the lawsuit said like very few had reached top roles within the company. So in response, like 1000s of employees staged a walkout – after the lawsuit was filed, and after management’s first response to it. And then just days before the quarterly earnings were announced, this week, the president of Blizzard, Brack, stepped down and Executive Vice President Mike Ybarra and Jen ONeal were named co leaders of the Blizzard division.

Dan Kline  2:50

So Matt, there are clearly some cultural issues here. But is this going to negatively affect the company? Or is this really just something internal that they have to handle?

Matt Cochrane  2:59

Well, it’s both right, I don’t think like it’s not like, I don’t think it’s directly affects the company where you’re gonna see it in next quarters, earnings numbers or anything like that. I don’t think people will stop buying or playing Activision games because of it. However, I do think it’s gonna hurt them at when they try to recruit talent. I mean, there’s only so many game developers and coders out there that are like top level. And when there’s a lot of competition for that talent. This obviously, like hurts Activision’s, prestige, and role in recruiting that cut that type of talent. So I do think it hurts them. And if they don’t make big changes, like long term, you’re definitely going to see it affect the top and bottom lines.

Dan Kline  3:40

Simon, I’m gonna let you weigh in here, because there are a lot of companies in the tech space that do not have great reputations as places to work. There are a lot of companies in the gaming space that have this same reputation as not being great for women. Is the fact that this has become public and they’re addressing it actually kind of a positive in terms of like, like, I joke about this, but I opened a Wells Fargo Bank account right after their scandal, because that seemed to be like the time they’re least likely to do something wrong. Am I wrong and reading it that way? It actually feels to me like this being public is actually going to be a good thing for them.

Simon Erickson  4:14

It’s obviously something that’s not okay. And it is good that they’re acknowledging it, Dan, this is something that’s been rampant for a lot of game makers. You know, you’re just you’re on tight deadlines. You know, you’ve got a kind of a culture that’s made up of workaholics, a lot of the times it’s a lot of a lot of different companies have claimed similar things to what Activision is going through. I completely agree with what Matt said that the real impact for investors in this story is going to be Can you can you hold on to those key developers that are out there? We’ve already seen Activision struggle with that in the past, right. Their next big game was supposed to be one called Destiny A few years ago, co developed between Activision and other developers. Bungie was the team that was on and they just couldn’t get along. They had a cultural mismatch and Bungie ended up taking all the rights to Destiny with it and that hurt Activision. And of course, you have to address the Like this, there’s talent that makes an important part of this entire industry that you want to make sure you’re retaining those.

Dan Kline  5:05

Talent is unbelievably important. We don’t think of video games this way. We’re going to talk about Hollywood and sort of the relationship of Hollywood to video games. And they don’t work exactly the same way but the creative process is pretty similar like in terms of developing storyline and learning the best people. But let’s take a little bit of a look at the numbers here. Second quarter 2021, non gap earnings were $1.20 per share. That’s up 48.1%. Consolidated revenues increased 18.8% year over year to 2.29 billion. There’s some adjustments there that would take it down to about 7.5% per year. So it really depends how you look at those numbers. And overall, monthly active users were down. Monthly active users were 408 million compared with 428 million as of June 30 2020. So Matt, that is a small drop. And let’s remember where were we a year ago, during this quarter, we were in the worst of lockouts. We were in the summer, where I just let my son play as many video games as he wanted. Does this number bother you? Are you do you just take it as sort of cyclical based on where we are as a society right now?

Matt Cochrane  6:13

No, I don’t, it doesn’t really bother me. I mean, you know, there’s a last year everyone was home, everyone was playing. Well, I mean, a lot of people were playing video games. We had a lot of people were working from home, or they couldn’t go to work. And so they were they were stuck at home and video games was a huge beneficiary of that. So yeah, I expect these numbers, especially the monthly active users to be down a little bit. They’re not down too much. And on a two year basis, I think they’re still up pretty good. So I’m not worried at all about that.

Dan Kline  6:42

Yeah, when you’re talking 408 million versus 428. that’s relatively rounding errors here. And again, there’s just some people that are working this summer, or doing things that are not conducive to playing video games. So that number doesn’t bother me at all.

We would love your questions and comments, we see a couple of them coming in. We’ll get to them either in line with the topic or in between talking about companies. So feel free to ask away.

So let’s talk about distribution here. Because I think that speaks to sort of the changing nature of this industry in general. Activision Blizzard reported online revenues of 2.2 billion, that’s up 27.3% year over year. Retail channel sales were down 18.5%, and other revenue, which I’m not sure what’s included in that decreased 23.1%. So here’s my logical thought here. Digital is growing, because there’s no need to buy physical games. Matt, speak to this. And then Simon can weigh in. My son buys games, he downloads them on our Xbox like we we use, you know, GameStop the same way I use Barnes and Noble. I go into Barnes and Noble, I look at books that I buy them at home, and I feel guilty, so I buy a coffee, but GameStop doesn’t sell coffee. So it seems to me this industry is moving digital. So those changes just show that this company is tracking like you’d expect it to track.

Matt Cochrane  8:01

Yeah, no, this is a well known trend in the industry has been going on for several years now. And it’s been helping like, not just Activision but EA and Take Two’s margins go up, because instead of like printing out games on disk, and you know, putting putting them in stores and the packaging and all that stuff, you just download games. And that’s, that’s just a trend that’s been continuing for quite some time. And is it ever going to get to like 100%, digital and 0%, like, physical games? Probably eventually. But it’s a slow trend that’s really helping these company’s margins.

Dan Kline  8:32

I don’t think it’ll get to 100%. And Simon, you can weigh in here, because I think there’s always going to be that like LP factor where they might put in special artwork, or maybe you buy the latest Star Wars game and it comes with an R2D2 or whatever. I think there’s always going to be some incentive for the physical. The thing that’s actually surprised me is that Activision Blizzard, not alone, But they’re choosing to go through marketplaces, they go through Xbox, they go through switch, they go through Steam, whatever it is, and they don’t go on their own. Because obviously, if you went on your own, you could cut the margin. But of course, Microsoft’s not going to want that. Sorry, Simon, kind of a broad non question there. But feel free to take it where you’d like to.

Simon Erickson  9:13

It’s great, Dan, and I hope I’m not jumping the gun on a future question you want to ask us here, but you said something about how video games are different than the rest of the entertainment industry. I think that’s important to remember. In addition to what Matt said about how we are now digitally downloading the games rather than buying them from GameStop, which is very true, video game makers are also much more and more reliant on the in game purchases as a way to kind of smooth out revenues. So rather than just selling the game upfront, and then disappearing, they say we want to get a larger, larger take from each one of our players over time.

And that’s directly related to how often you’re playing the game, right? You might have a Netflix or Disney plus subscription at home that you pay every month whether or not you’re watching movies every day. But with video games with these in game purchases that you’re making, you actually have to be playing and engaged with the game to be racking up the bill for that. And so I think this is kind of one of those where you have to have a relevant game that is popular. That’s a top of the charts that people are playing all the time if you want those revenue streams to continue. I know we’re going to be talking about EA (NASDAQ: EA) in a little bit here. I know that more than 50% of EA’s revenue now is from those in game transactions, I believe that Activision and even Take Two (NASDAQ: TTWO) are pretty similar to the majority of revenue contributors now as well. But that’s more and more important to Dan, I mean, you have to stay popular because that’s where these companies are making their money.

Dan Kline  10:28

Yeah, so let’s talk about this a little bit, I’d like to hear from both of you. Because I think you’re both a little more a meshed in this culture than I am, which is zero for me other than than being a parent. But there’s a balance here, right? Where those in game purchases have to be more things like skins and cosmetic, or songs or whatever it is, and not so much game enhancers. Because if if there’s pushback, right, if I can go into a Call of Duty, and I have money, I’m not, you know, 17 years old. I can go in and spend $100, and all of a sudden, I have a tank. And even though I’m bad at the game, I’m dominating. They really have to balance that right? Like, that’s not something Disney has to think about.

Simon Erickson  11:07

Yeah, it’s becoming more and more competitive. I mean, like, when you look at this, we’re not just playing Mario Brothers and Mario Kart at home by ourselves anymore. Even though a lot of people are still enjoying it that way. I mean, eSports, and the competitive nature of so many of these games, these team based games is pushing it where when you’re more and more competitive, you want to do whatever you can to win, right? Not just skins and the things that you know, look pretty on the characters that people are paying up for. But weapon upgrades, you know, additional levels that you know, things that will make your character or your team more competitive, is more and more important.

And then now we’re seeing League of Legends attracting 15 million people for their finals. You know, several other games are getting 30, 40 million people tuning in across the internet. Gaming is a lot more than just the game sales itself. It’s creating advertising revenue, promotions, merchandising, things like this. This is similar to like the NBA Finals, or the the NFL Super Bowl. I mean, these are ecosystems that are developing. And more and more, you got to start paying attention to that is revenue contributor as well.

Dan Kline  12:05

NBA Finals. Yes, Super Bowl, not not quite there. The global, the global numbers on the Super Bowl are astounding, but I do understand. I do understand the point. And yeah, there’s a whole look, there’s a whole counterculture of this, or maybe it’s the actual culture, and I’m the counterculture of people on YouTube and Twitch, live streaming gameplay and putting up tips and tricks. If my son is frustrated when I see him playing a game. I’ll tell him just like Google that and like you’ll find someone who shows you how to get through that section. That’s all new to me.

And we saw with Activision Blizzard here. They post gains and PC, they post gains and console, they also posted gains in mobile, Matt, I know Call of Duty mobile was a massive launch for them. Do you think these traditional gaming companies going into the mobile platform? Because for me, I don’t feel like I want to play Call of Duty on my phone, but but I also don’t play it on a console. So that’s probably not fair. Do you think there is a sort of massive opportunity because everybody has a phone? Everyone doesn’t necessarily have an Xbox?

Matt Cochrane 13:06

Uh, yeah, no, definitely like a Call of Duty is a massive franchise for Activision Blizzard. Like, they’re, you know, when it comes to Activision Blizzard, they have, they have really three franchises that like really, really matter to its top and bottom lines and Call of Duty is right up there. And Call of Duty. I think it’s the most popular video game across like the younger demographics for video game players. And its mobile game this year is on pace now to do a billion dollars in revenue, which is just huge for the company. These these are streams of revenue that these companies like Activision or Take Two or EA did not have it just just a few years ago. So these are like new opportunities for them to grow like very popular franchises. And I, as of yet I don’t think you can play like mobile to like with with a console player, but you can play mobile to mobile. And people can do that, like on their lunch breaks or at work or like, you know, you just have your phone with you everywhere you go. So while you’re waiting in line at the DMV, or whatever you’re doing, you always have that available and people are playing because they love these games.

Dan Kline  14:12

So I’m going to tee up a comment on the second one from Andrew Conley to sort of lead into the end part of our discussion on Activision here. So JT, if you want to bring that one up, it would be great. The video game industry collectively is larger than the music and movie industries combined. That is actually true. I’m not I would question that it wouldn’t be but that is true. And here’s why I ask that. Simon, this is kind of a franchise business, right? Like this isn’t some new game mobile. It’s Call of Duty mobile and Call of Duty like Star Wars or the Simpsons or whatever has a built in audience. So Activision when they do that, or, or Nintendo when they take Mario Kart and put it on your phone. They’re basically taking a known property and bringing it to a new platform that gives it a better chance to succeed to succeed, right?

Simon Erickson  14:56

I think so I draw the parallels with you know how many Marvel based movies have been made in the last 10 years that are sequels of the same characters that everyone’s familiar with. It’s kind of like the same franchises that Activision has. I think they’re getting a little long in the tooth Dan, my own personal opinion. I mean, the Warcraft franchise is 30 years old. The Call of Duty franchise is 20 years old. And I don’t know exactly when Candy Crush was, was first developed. But I know that you know, the King Digital acquisition was what was it five or six years ago now to and Activision is still referencing these as the drivers of results.

My concern is, is is Activision truly being innovative enough to stay in front of where the video gaming industry is headed. They missed the boat on Fortnight, you know, they they fell behind, they did have Overwatch, which was very successful for them, but they were certainly not the most popular in that game. And, you know, we’ve saw Destiny kind of falling apart. And now you’ve got Facebook putting 10,000 engineers onto their VR platform. And I think that Activision as one of the world’s largest developers and publishers of video games. I respect that this is a franchise business. That you want to keep churning out sequels to the ones that people are familiar with. But on the other hand, there’s only so many of those users who are going to stick around for 10 or 20 years, and keep playing those games. I think we have to see some new franchise put a foot in the ground, the players really want to get involved.

Dan Kline  16:21

Let me ask a quick follow up here. And then we’ll let Matt take Max Lucas’s question. As we move off of Activision, because we still have a lot, we still have EA, we still have AMD and Intel to talk about. But Simon is this a bit like Disney, where it’s okay, if like 10 of their 12 movies are sequels and franchises, as long as they take a couple of shots. Because if you’re Activision, if you have a new franchise every five years, and that franchise could give you you know, 30 years of revenue across platforms that haven’t even been invented yet. It seems to me as long as you’re taking really smart shots, you’re probably going to be okay, but me, I don’t know this industry all that well. So maybe I’m wrong.

Simon Erickson  16:58

I would prefer acquisitions. I would prefer going out and buying a team that’s got a really hot property that Activision thinks that they can monetize and create those franchises out there, right. I mean, it’s different than Disney, Dan, you know. I think there’s a Pac Man world out there. Maybe there’s a Starcraft world too. But it’s not as big as Disney World is right. And it’s not going to sell as much merchandise and have a direct streaming service directly to your home for all these things that’s as popular. I mean, you’ve got an entertainment juggernaut that’s just been around for more than a century, that’s been incredibly successful. Activision’s margins right now are reliant on those players that are playing games that don’t require a whole lot of new development. They put some tweaks on here and there, they create a sequel here and there, they say, okay, we’re gonna sell more, we’re gonna keep our 40% operating margins. Is that sustainable five or 10 years from now I am questioning whether it is as an investor.

Dan Kline  17:44

I think it’s a nice basis. But you’re right. It’s it’s innovate or die, because there’s going to be diminishing returns. And we’ve seen it with with Star Wars. Sometimes where a franchise to grow it has to go away. And none of these ever go away. You might see like a gap in periods where they don’t make a new game. And that builds up some excitement. But it’s not the same as you know, Disney, When are they going to make a mutants movie, you know, with the x men? Or when is Daredevil coming back? That’s real excitement. That’s difficult to do here.

Matt, we’re going to take max Lucas’s comment. JT is having some some technical issues over at the house. So Nope, nope, he was able to put it up. So Matt if you want to read that, that would be great. And then you can answer it, and then we will move on?

Matt Cochrane  18:27

Well, yeah, I actually think this is a great response to like Simon’s point, because I think I disagree with Simon here. But Max says will we start to see more game franchises create liquid games that don’t have new versions that come out, but are just updated real time, Grand Theft Auto five has kind of started to do this and to his point. So Grand Theft Auto five came out in 2013. And in 2020 sold 20 million units of Grand Theft Auto five, which was the most since the year it was released. And like all they’ve done is like, just keep updating this world. Players want to be immersed in a world. You know, I mean, like the major versus the hot topic. But in a kind of a way these video game companies have created like mini metaverses of like, what we might see in the future, like within some of these gaming worlds.

And like you’ve seen that with Grand Theft Auto five, you’ve seen that we’re about to talk about EA and we can talk about Apex legends or Call of Duty with all the different releases of Call of Duty. When Call of Duty makes a release from like World War Two or modern day warfare, that’s almost a there’s a lot of different things in there. It’s still battlefield strategy and things like that, that these players get immersed in. But it’s like it takes a lot of that’s a lot of work and research that goes into it. And I think the players appreciate those new versions, more so than they would like almost any other game.

So if you’re one of these companies, and you have a choice to like devote a lot of developers into what will be a sure new Call of Duty, like whatever Spanish Armada version, right? Which so everybody plays that, and then a or a new game that nobody’s familiar with of that franchise. I’m not a shareholder of Activision, I am of EA. But as a shareholder, I want to say yeah, no put it into put it into these known franchises where there’s a dedicated, dedicated player base, like that loves these games. And I, it’s not just the older players. Call of Duty is popular with teenagers. In fact, I think it’s the most popular game with teenagers. So there’s obviously new players coming on board with it. And you start to create these network effects.

So like my son was talking about the other night. He played Rainbow Six, which is a game made by Ubisoft, and he likes that better than the game he was playing, because you don’t have to wait long to get into a new game. And because the game he wasn’t playing wasn’t as popular and you have to wait like 15, 20 minutes before a new game happens. But there’s so many players on Rainbow Six, that there’s basically a new game every time you want to. And that’s the same with Fortnight or Call of Duty, or any of these really large games. So you have a network effect, the more your friends play it, the more you’re gonna want to play it.

Video games is so social right now. And I think it’s not like when when I was a kid and you’re I’m like, I’m stuck at home, and I’m playing Super Mario Brothers by myself, or with my brother. And it’s just like the two of us, you know, this is how boys and girls socialize now. And I think that’s a very important aspect. So the more players again has, the more social it is. And I really think you’re just starting to see, like Max said is like these liquid worlds that are just constantly updating. And it’s not like, you see that with all kinds of software tools like Microsoft Windows, you know, now, they just roll out updates constantly, instead of like selling like a whole new version. I just think that’s where we’re going where it’s games are just constantly updating and iterating. And as a shareholder. I like that I want them to put devote their resources to like known IP that people love.

Dan Kline  21:56

Few people know this. But Matt spent two weeks in the hospital in 1983 with a severe case of Pac Man fever. It was driving him wild. Simon, because Matt disagree with you here. Let me give you you know, 30 seconds a minute to rebut and then we can move on to talking about Electronic Arts.

Simon Erickson 22:13

Yeah, we promised a spirited debate. And now Matt and I are going to you know, fight it out on a Call of Duty Black Ops to see who is the ultimate winner in this discussion. Just kidding. Of course, I think that actually this the same dynamic you mentioned, Matt actually plays in EA favor. It might work against Activision Blizzard. But that same dynamic of the franchise is constantly changing. It’s something that’s actually very good for EA. We’ll talk about that in a second, I’m sure.

Dan Kline  22:36

So before we jump into Electronic Arts, or EA as they call themselves, but I will always think of them as Electronic Arts. So I don’t even know what the official name is anymore. Let’s talk about the first of the month, we just passed the first of the month, I’m not even sure what date it is, the sixth of the month, I think. On the first of the month, we release our new stock picks. And what does that mean? That means that if you’re a member of 7Investing, you get an email or you can go into our site, and it tells you why here are the new picks and each one of us picks our highest conviction stock for that month, and then we produce a write up on it. I know my write up topped 3000 words, not that amount of words is what’s important, but there’s a lot to it. And we also shoot a video. I just finished editing the transcript from my video. So you can actually watch the video. Or you can read the video. It gives you as much as you want, or as little as you want about our picks. How do you get access to this? It’s very simple. You sign up at 7Investing.com/subscribe. And you can pay us either $49 a month or and this is the deal. $399 per year it’s easy. You get invited to members only calls. You get all sorts of proprietary data. There are people asking us Oh, what about this company? What about that company? A lot of those companies that you’re asking about are covered in subscriber only updates. There is just an unbelievable amount of information for the value. Simon, I’ll give you the last word since you are the CEO and founder of the company.

Simon Erickson  24:06

Oh man, what a great group of picks this month, Dan. I mean, I really if you look at the chart that you’re showing you I really like your and Matt’s companies that you recommended. Big fans of both. Some of these are really off the radar of a lot of investors, right you see that very high risk pick from Maxx, biotechnology. I would even argue that an Anirban’s pick this month is really off the radar even though it’s a large cap. It’s one that a lot of people hadn’t heard of, and even my recommendation this month, very high risk in the space economy that has got a huge potential, but also a lot of risks involved. I’m pretty stoked, Dan, I think we came up with some pretty awesome companies this month and looking forward to seeing how they do in the next couple years.

Dan Kline  24:42

Yeah, I’m very excited. I’m very excited about the process. Like I talked a lot about my video, how was conversations with Matt, that led me to really look into the company and it’s one of the advantages the seven of us have of just interacting is that sometimes things pop up on our radar because of how much we talk and how supportive and non competitive. We’ll throw out Hey, what about this company? And it’s like, oh, wait a minute, I looked into this. And this isn’t even my space. But I have all this backup from say, Matt or Maxx or whoever. It’s really exciting and we hope you become a member. But before we run out of time, we would of course, love your questions and comments as we move along.

But let’s hit the ground running with Electronic Arts. EA reported fiscal first quarter net income of 204 million or 71 cents a share. That’s down quite a bit that. 365 million at $1.25. In the year ago, period, revenue was up a slightly 1.5 billion up from 1.4 6 billion in the year ago quarter and bookings which account for deferred revenue were up 3% to 6.14 billion over the trailing 12 months. Matt were these good numbers I can never tell like it’s always a little bit tricky. To compare these.

Matt Cochrane  25:55

They were good numbers. Like their earnings was down because they had a one time benefit. Last year tax benefit last year. There was an extra week and last year’s quarter. So there was things like that that like that made the comparables a little tricky. But it was good numbers and more importantly was its guidance. Like I was actually I am an EA shareholder I was very excited about its guidance. EA has been steadily giving money back to shareholder. Repurchased 2.3 million shares this quarter. The last 12 months it’s repurchased 7.2 million shares, and it started a dividend. So now it’s paying a dividend. So it’s a it’s an income stock. But no, I was very excited about the numbers. I thought they were very good, especially its guidance.

Dan Kline  26:37

So EA is a little bit different than Activision Blizzard, because they have all of the major sports franchises. Doesn’t mean other people can’t outbid them. But those tend to be 10 year contracts. They don’t all come out every year, like UFC only comes out every couple of years. But for the most part, these are new games every year. Matt, let me let me dial this back to the question you just talked about where games are going to move into what you call a liquid world where they’re just constantly going to be updated. Can I expect at some point that I’m gonna buy Madden on like a subscription basis, or I actually get EA Sports games, a lot of them on my Xbox subscription. Is there some point where I’m just gonna own FIFA soccer, and the rosters are gonna update as the seasons and the changes are going to come? Is this model about to change?

Matt Cochrane  27:22

If they look good, so what they do is like they actually they have like, a lot of ways they monetize these leaks. And FIFA is actually its biggest one, even though I’m much more familiar with, with Madden. FIFA is its biggest one. And the way it does, it is like so it has the the FIFA game like FIFA 2020 comes out. And you know, everybody rushes out to buy the latest version of the game. But then there’s also the FIFA mobile game. There’s also the FIFA online game, which like, is really big in Asian markets, which is like a lot of it’s free, free to play against online players. And then you also have like the FIFA ultimate teams. So like, people subscribe to like the the ultimate teams. And what that means is like you can customize your own teams, you can get past players. So like for instance, like going back to Madden and you can do the same thing for Madden or in their NHL games too. But like I’m a Miami Dolphins fan. So if I want Dan Marino on my Miami Dolphins Ultimate Team. I can have Dan Marino on my ultimate team. You know and so it’s the same with FIFO players. If your favorite player just retired, you can go to your ultimate team, customize it and get and get your favorite player back. And so that’s like really really popular with with with these sports gamers.

Dan Kline  28:34

And Matt just for all of our viewers around the world so they don’t get mad at us is actually FIFA

Simon Erickson  28:39

I was wondering myself and I wonder if I’ve been missing out all these years.

Dan Kline  28:43

Yeah, again, just so my brother when he watches this show does it angrily You know, I’ve mentioned before my brother’s an executive in the Premier League with Tottenham. so I come on you spurs.

Matt Cochrane  28:55

It’s all football.

Dan Kline  28:58

NHL you know 2021 for me as well. Simon, your thoughts here? Do you think the the the franchise strategy here do you view it any differently than the way you viewed it with Activision Blizzard? Because obviously sports is sort of ever renewing with draft picks and the like.

Simon Erickson  29:16

Yeah, completely agree. I think it is very different because of the competitive nature of live sports you know, translates directly to FIFA World Cup and Madden NFL and all the games that EA has got such a lock on in those contracts on. Right so FIFA has got what is it volta coins is the currency that they use for that you can upgrade your players you can add skins, you’d add new characters, like they’ve created a currency with this within this entire game. And that’s feeding those two thirds of revenue that Matt described as a live services with the top line phrase revenue contribution. I mean, you just see the impact of something like that is huge. And I think that a company like that that’s got the lock for the sports franchise has benefits from that tremendously.

Dan Kline  29:54

And Simon EA is not alone in this but these companies are very broadly have been really smart about increasing revenue opportunities, right? With, like, you know, all the different add ons and things we talked about, but even just like tournaments and, and additions to games and sort of new ways. I mean, I know my son comes to me, like twice a month was like, Can I buy this pack? And if I spend 17, I get all the packs forever, but I could just buy this one for five, like, like, they’re very innovative.

Simon Erickson  30:19

Games change every year. Right, Dan? I mean, who would have said 10 years ago, the Milwaukee Bucks we’re gonna win the NBA championship, right? And now Take Two’s got the NBA 2k franchise, you know, which is incredibly popular in Asia too. And players change teams and teams get good. And then you want to cheer for your home team and everything else. I think that this is a natural fit, in my opinion for live sports.

Dan Kline  30:40

Yeah, I think the you know, the the issues we have with franchises don’t really apply here. Because you could argue that putting out a new Call of Duty every year is gonna burn the audience out. Or even if you just have one that’s ever present and growing, that at some point, you’re just going to bore of it. Whereas yeah, as an adult, you know, as a 47 year old man, I can’t say I buy the new NHL every year, again, not relevant because it’s in my Xbox subscription now, but previously, I might wait a year or two and buy it for $30 instead of $60. But I do think the core hardcore audience is gonna want the new game every year. Matt, let’s talk a little bit about mobile. EA games you don’t think of as being mobile, but I actually think I’m wrong there.

Matt Cochrane  31:21

Well, actually, you’re wrong until very recently, like just even like a year and a half ago, their mobile division was sorely sorely lacking. But I will say they have made like they have reorganized their mobile gaming division and they’ve been very active in this space. They’ve made four acquisitions just this year alone. Well, one of those is still pending. But they they acquired MetalHead, which is the maker of Super Mega Baseball. They acquired Codemasters for $1.2 billion. They’re the main maker of the popular Formula One mobile game. And also Dirt Rally, they acquired Glu Mobile for $2.1 billion. They make games like Covet Fashion, Design Home, and MLB Tap Baseball. And it’s still pending, but they’re trying to acquire Playdemic from Warner Media for $1.4 billion. They make a game called Golf Clash, which has more than 80 million downloads to date.

And you know, not only are they acquiring valuable mobile IP, but they’re also like acquiring a lot of talent. So like, for instance, in the Glu mobile acquisition they made, they added 500 mobile game developers, you know, to their payroll. That’s significant. Hiring that many mobile game developer developers would be quite an undertaking. So just acquiring a company like that, and adding these mobile game developers to your payroll, it goes a long way.

Dan Kline  32:45

And buying your way to a new market is not is not generally a negative. I’m gonna assume Super Mega Baseball is just like Barry Bonds against Roger Clemens, but I might be totally wrong in where they’re going. Matt, let me we’re gonna take some questions here. We’re gonna take Max Lucas’s question here in a second. But is this an area where EA can afford to have failures? I would assume in the mobile space, you’re probably throwing a lot at the wall right to see what sticks because, you know, in general, these are not $100 million, or you know, $200 million game developments when you’re talking mobile games.

Matt Cochrane  33:19

Well, that’s one of the advantages of like acquiring the companies you know, the its acquisition strategy. It’s like these are known these are known hits. They’re known IP. They are they already have audiences. And like another thing like making your your your your Madden franchises, your FIFA franchises mobile, like you have a you have a dedicated player base for those games, too. But yes, we’re thinking they can afford a few misses here and there.

Dan Kline  33:44

Yeah, I mean, there’s gonna here’s the in the digital, in the mobile space, there are a lot of misses. I would argue that Apple’s entire gaming strategy has been misses, though I’ve been paying them whatever it is a month to never ever enjoy any of their games. But of course, I also am someone who plays live backgammon and live Solitaire online. So perhaps I am not the core target audience.

Max Lucas says, I asked Dan this on Twitter. If you want to bring that up, JT. That would be great. But will these videogame companies start to add NFT’s. Like you could buy a skin for $5. But if you want the limited edition, one in 10,000 skin with the NFT costs $1,000 I think there’s a really interesting question, Simon, this is kind of in your wheelhouse.

Simon Erickson  34:25

Yeah, there’s going to be a marketplace for this. I don’t think it’s going to be the revenue, I don’t think it’s going to move the line or move the bar quite like the game sales or the in the in game purchases are. Max I think you’re going to see a marketplace for the skins that are in the one 10,000th anniversary, or the really super exclusive one that will sell for a zillion dollars that everybody’s really jealous of the person who got to buy that. I think that’s more of going to be a sign of the times I’ve just kind of seen NFT’s become more popular in gaming and music and everything else we’re seeing them. I don’t know if that’s going to have a huge impact on the game makers revenue but maybe that’s wrong too. Maybe it actually is. And this can be a huge, huge marketplace for these.

Dan Kline  35:03

I think we’re seeing a lot of experimentation. Like we’ve talked about concerts being done live in Roblox. I want to say it’s Ariana Grande a clearly not my target demo that’s doing something live in Fortnight. You might see a, you know, admission based events and just sort of, and that’s gonna tie into what we talked about with virtual reality on other shows where, you know, as these gaming platforms change – and that’s the interesting thing about a Madden or a Call of Duty or any of these franchises. It’s pretty likely that if someone develops a successful virtual reality gaming headset. with nobody really has so far, that any of these popular games are eventually going to port over. And I think we see both of these companies EA and Activision, being smart enough to take advantage of that we saw in the 80s and 90s, some of the successful game makers didn’t jump to the right platforms fast enough. And that has been a problem and whether you’re going to be on switch and whether you’re going to develop a PC game, there’s a lot of expense and choices to be made here. But I do think owning franchises is well positioned. Matt, I’ll give you the last word before we segue into talking about Intel AMT and the fight for the future of AI. Well, that sounds like a movie I’m not going to watch. But uh, Matt, your thoughts here?

Matt Cochrane  36:20

Well, like the only thing I’ll say about EA, I mean, we’re talking about like whether you need new franchises or not, but like it has been very successful with its apex series like it’s on season nine now, like, video games have seasons, you know, talking about like liquid worlds, but it has 13 million weekly active players. And it broke a new record for peak daily praise players across all seasons, this last quarter. And the three latest is quote unquote in game events have driven the highest player counts for events to date for the game. And it’s expanding now beyond like a battle royale mode. So it has arenas which brings in new and lapsed players into the games. And so it that was in response to fortnight a year or two ago. And it’s been very successful with that. And it’s, you know, it’s an example of like introducing a new game that’s been very, very popular.

Dan Kline  37:11

So Nick asks, what could be causing Nintendo’s negative sentiment and I don’t follow Nintendo on a day to day basis. But here’s what I’ll say about them. They’re incredibly well positioned for NF T’s your ability to have like a Pikachu, something that somebody pays $100,000 for or a special Mario, whatever, they have characters that are beloved, but I also think Nintendo is a much slower cycle than the rest of these companies, they, you know, they really hit it out of out of the park with the switch, they released the cheaper version of the switch this year. And it’s by all accounts been very successful. But there’s always a question of whether they’re going to be able to top that I mean, they had they almost, you know, put themselves in real serious trouble with the Wii U which didn’t work in terms of connecting with consumers. But I do think there’s something people are missing with Nintendo is that’s the massive input. The massive impact they’re going to have from Super Nintendo World when it opens first in Japan, then in Florida, then on the west coast. This is going to take these IPS and bring them to this massive theme park scale Matt, you want to weigh in here?

Matt Cochrane  38:17

Yeah, well just a few things like they’re so they’re so they’re so dedicated to having their own hardware for their games. like think about how popular that Pokemon GO game was a few years ago where everybody had their cell phones out hunting, Pokemon like seemed like everywhere like in parks and on the streets and whatever. And like that like that pop that intellectual property has is so popular, but they’re so dedicated to only putting it on its own platforms. I think my biggest concern with Nintendo would be if I was a shareholder was like I would want them to open that up be start being more hardware agnostic yes still so come out with the switches still come out with your consoles and everything like that but like but like release a mobile games. I mean, they have so much great property imagine like, you know, more more mobile Mario games and more mobile like Zelda games and things like that. They have a lot of great property. And like I just wish they would release it more people are on mobile now you don’t carry your switch or Nintendo console with you, necessarily.

Dan Kline  39:20

They they have put a toe into mobile there is a mobile Mario Kart, but I agree. I actually think it’s long been a mistake that they don’t, you know, sort of have their devices because families are always going to want the Nintendo safe world or even games like Mortal Kombat to port them to switch the it’s not as violent as when you play it and I my kids 17 I don’t think about this as much, but it was something we were very conscious of. And we had a switch from very early on. But I want to see the next Super Mario Kart game be available on Xbox be available on PlayStation. I don’t think there’d be any resistance to that. And there’s just a massive audience there. And yeah, it might cost them some low margin. Hardware sales, but it’s just not that important. If they sell 22 million switches or 20 million switches like that’s, that’s not that relevant. But we are running out of time here. And I want to we push this topic off once before. So I don’t want to have to have it be our you know, coming up next, Matt Damon, oh, we ran on a time. We don’t want to do that. So Simon, this is what you brought to our attention. So there’s a battle going on between Intel AMD in the arm and AMD in the artificial intelligence world. But basically, AMD is trouncing Intel. And Intel is in the midst of a turnaround. What do you set the table a little bit for where we’re going to go with this? And then we are happy to get into the discussion?

Simon Erickson  40:36

Well, the foundation of the table is actually a statistic that Matt brought up fairly recently, which was showing Amazon Web Services growth of 37%, year over year. Right. So this is the largest cloud computing infrastructure provider out there. We’re building software as a service. We’re offering infrastructure as a service platform as a service. Everything is being built on the cloud right now, nobody’s doing on the corporate data center. And when you see a number that large, for the largest player in the space, you start to have to think yourself, okay, well, how is actually how is Amazon going to keep up with that demand? You know, how are they going to have the servers that are going to keep up with the machine learning that everybody’s asking for, for all this cloud based processing is taking place out there? And it’s turned me to look at the chipmakers? You know, these are the companies that are producing the processors that are going into the servers that are powering those cloud data centers. And I’ve compared them and it’s, it’s pretty striking that we’ve got some winners and some potential losers in this race, Dan. And that’s what I kind of wanted to chat about here on the show today.

Dan Kline  41:32

Yeah. So right now, AMD has a big lead. But I think you could argue that there’s room for more than one, it’s probably not great for AMD to own this market. Can Intel make a comeback? And sort of what moves they made? Because they’re actually losing sales? And that’s not great in a growing market?

Simon Erickson  41:49

Yeah, we looked at you know, there were we just saw quarterly earnings from all the big chip makers, and I wanted to highlight a couple of important key points from this. The first was that AMD is enterprise embedded and semi custom group. So the really high performance chips that they’re making grew 183% year over year, that’s fantastic for a company that’s got over $100 billion market capitalization. You also look at in video, you know, we know that Nvidia has really focused on the data center to Nvidia is data center sales are up more than 79% to $2 billion in the quarter last quarter. So this is really, really fantastic, right, you’re seeing these, these custom chip makers, getting a ton of revenue from the cloud data center. But then I look at Intel, who reports it their own data center sales fell by 10%, year over year. And I think that a lot of this has to do with with Intel wanting to have so much of the manufacturing and the production of those chips coming from its own fabs where it’s had some its missteps in recent years did it hasn’t kept up with AMD and Nvidia who are strictly designers of those chips, who are then sending them off, sending the designs off to Taiwan semiconductor, to actually do the manufacturing of them, that’s allowed them to get much smaller transistors on those chips and much higher performance chips. And it’s weighing them a lot of really good contracts, not only with the cloud providers, but a small Fruit Company from Cupertino that wants them for really, really high performance smartphones.

Dan Kline  43:08

So let’s talk about why this is more relevant. Now. We teased AI in the beginning, but artificial intelligence is going to exponentially increase our computing needs. So is this a case where AMD is just going to own that and maybe Intel has to spin into other areas? Or, you know, can Intel? And look, I think we want we don’t want all of our chips being made by Taiwan semiconductor, that that that seems to be a problem. But can you you know, equal that innovation? Obviously, Apple has been able to do it with with some of its own innovation. But do we think you know that that AI can lead to more companies winning? And will Intel be one of them? Or is it someone we’re not talking about?

Simon Erickson  43:51

There’s gonna be a lot of computing demand in the next couple of years. You know, we always talk about AI, we talk about the highest performance, you know, the best of the best, or we had seven nanometers or we had five nanometers, we’re gonna get down to one nanometer. I mean, we keep kind of pushing the bar. Everyone says Moore’s law is dead. It’s really not. I mean, you see CPUs that are getting smaller and smaller transistors that are processes that are being that are doing all this computing out there. And that’s what we talk about, but we forget that there’s a ton of other industries that are going to need a lot of computing to right, we talked about the Internet of Things. wearable devices are very, very small, small form factor, there’s going to be a lot of computing that’s taking place there. the automotive industry is in a severe shortage right now. You know, the chips that are going into self driving cars are the console’s of entertainment systems of cars. They can’t even get supply right now because they’re so backed up on things like this. Yeah, well, yeah. And has addressed a lot of this because even if they are not at the cutting edge of the most innovative chips that are out there, Dan, they know that they’re gonna have to expand their own capacity. You see him putting $30 billion to spend in their own fabs in the United States. They want to go out and buy global foundries for another 30 billion dollars, there’s a huge demand out there. It’s just Can you keep up with it?

Dan Kline  45:04

I did not know until the chip shortage that like our televisions use use chips. And we’re actually probably gonna see a black friday season where you don’t get those crazy. Like, I think I bought a 65 inch television last year for like 280 bucks. You may not see that this year, simply because there’s a lack of availability. So is this an area where well one let’s let’s talk about the history five years ago, AMD was maybe not even Pepsi to coke. They were like virgin cola Coke, like they were way down. So there is a path and a history that shows a turnaround as possible. But for Intel, do you like their management? Are you confident that even if it is going after all of these lower end uses, that they can stay? They do have the name recognition, we still think a little noise and Intel Inside? Can they sort of become a stronger player because they have changed the management up? Are you confident that they’re gonna get there? They’re there.

Simon Erickson  45:59

They’re the horse that’s behind in this race right now, Dan, I mean, if you look at AMD, like you mentioned 10 years ago, or even seven or eight years ago, they were kind of a second supplier, right? laptops are really big desktops are really big. And then Intel kind of missed the opportunity to get into smartphones. And then they kind of missed the opportunity to get into Cloud computing with the data center. And I think that because they wanted to keep the manufacturing in house and they haven’t kept up with their competitors. This puts them at a disadvantage right now in a really crucial time. Now, the interesting trump card on this is that they’re bringing back one of their most highly regarded executives, Pat Gelsinger has just come back as CEO of Intel, he worked with Gordon Moore, you know, back in the 70s, when Moore’s Law was just kind of getting, you know, its feet on the ground. And so for him to say something like this, it really is a statement, because he’s a very innovative guy, really a fan of disruptive innovation, and all of all of these things that we’ve grown to love about computing, maybe that reinvigorates Intel, but I will say it’s not like you can just snap your fingers and all of a sudden become number one horse in this race. The race for AR race, race for AI is a very lucrative, very addressable market, it’s going to be hard to fight this one. And Intel is coming from a position of disadvantage right

Dan Kline  47:09

now, we’ve seen a lot of tech companies do this, there were points where Microsoft and Apple were similarly on the ropes and managed to turn it around. On the other hand, there’s IBM, which has been trying to turn things around for a very long time. But while they’ve had some successes, they are certainly not the company. they once were. This is an area we’re going to talk about quite a bit. I think AI if we had to list like five topics that are going to come up the Internet of Things, ai space would be three of those five. So this is something we’re going to come back to as we close out the show a little bit here. wanted to take a question we got from one of our of our fans, if you want to bring up Eduardo’s comment, JT, I’m hoping you have it. If not, I can. I can read it here. It’s a he says, Hi, Steve. That’s our very own Steve side, which is a very nice addition to your services. Do you also support in investing in bonds? Or us or corporate, for older investors? If it is secure for investment? If not, what would you recommend? I have some thoughts here, Simon. But why don’t you as the person who set the agenda for this company, why don’t you answer the broad part? And then I can weigh in and soak in that?

Simon Erickson  48:17

Yeah, sure. Great question, Eduardo. It’s obviously a personalized one. Right. You know, we don’t give financial advice. We don’t get personalized retirement advice. We don’t really talk about bonds, because we’re, we kind of know that the lane that we we run in is is equities. But of course, there’s nothing wrong with it. I mean, people have different situations, you might want the income, you might want the stability. But I don’t I don’t feel like I’m really qualified to answer this one too, too. It’s too personalized of a question for me.

Dan Kline  48:41

in a broad sense, he mentioned older investors, and I will say that some of our picks have been very steady dividend paying stocks. And, again, we can’t speak to your personal situation. But for an older investor, part of your portfolio could likely be less volatile stocks, again, you know, your horizon, one person 70 year old is very different from another person’s 70 year old match. You want to weigh in a little bit here.

Matt Cochrane  49:09

Yeah, so not personal advice at all. I think the problem like bond investors will have though going forward is that like, they’ve enjoyed this a massive tailwind from lowering of interest rates for the last 3040 years, really, you know, I mean, they’ve gone bounced up and down a little in that time, but overall, that trend has been steadily downward since the early 80s. And that’s been a huge boon for bond prices, and now we’re at zero. So where do they go from here? You know, so like, right now you have you have existing new bonds have extremely low yields. And like existing bonds, like can their prices go any more up from lowering of interest rates? Can interest rates go negative? Yeah, I guess they can, but like, I don’t know if I’d be wanting to like base like my thesis on that. So I just think it’s gonna be hard for bonds have tailings from here, but like what you should do as far as allocation in your own portfolio, definitely consult a financial advisor.

Dan Kline  50:04

We focus on what we do well and that is picking individual stocks. But certainly there’s a lot of room for diversity in types of investors in the stocks we pick. Simon, you had one more comment you wanted to make before we hit our finisher here.

Simon Erickson  50:18

We were talking about NF T’s earlier. Dan, I wanted to ask if I created an NF t with a digital backgammon set that had the seven investing logo on it. How much would you pay for one of those on the marketplace?

Dan Kline  50:30

It’s funny because I don’t think if you created a physical one, I think I’d buy it. But but because for me and I know this is gonna sound strange. There are absolutely digital collectibles I would walk I mentioned Pikachu earlier. You know, I played Pokemon Go and like some of the Pokemon maybe I would buy, you know, a goofy something, they’re not for 1000s of dollars. But in terms of backgammon set, I like taking my back gaming set set and going to play in a coffee shop. And absolutely what I consider buying a collectible or displaying it the way someone might buy like a Simpsons chess set, or whatever it might be again, I’m not a huge collectibles person. I have some Lego miniatures and a few NFL things for my brother but for the most part, but there are NF T’s I would buy Matt, I don’t think you’re a backgammon player, but would you buy whatever game it is you play the the seven investing edition?

Matt Cochrane  51:21

like a like a real life version? Yeah, I’m like, Well, I’m much more likely to buy a real life version than an NF. T. Like I still don’t, I don’t really understand that whole thing.

Simon Erickson  51:31

We’re gonna have each of us be characters adjusted, maybe?

Dan Kline  51:34

Yeah, I’d have to be upon so I’m gonna pass on that. And I just picked that completely randomly. And I’m gonna say a sub. I think that would be the pond. As someone who was in the toy business, I’m going to say no to seven investing opoli because literally every day I’d have salesmen selling me like 300 different versions of opoli there’s a great Simpsons joke about all of the different Ollie’s they have. Robbie Shaw says his dad is still watching Pokemon I do. I’ve never really watched Pokemon aside from when my son had a phase where he really liked the cartoon when he was much younger, but I played Pokemon GO I was like the last guy. Like I played it. Very diehard. It’s a lot of fun. I spent an embarrassing amount of money on Pokemon GO It was a great distraction. I liked that you could there was a social aspect to it bars would have like Pokemon Go get togethers, but we are totally losing track here. So before we completely get off topic, JT let us hit our finisher. Do you think we’re at the end of a boom period for technology stocks? 10.4% said yes. 56.1% said no. And 33.6% said depends on the company. So I’m going to go a little contrarian here. I’m going to say yes, but I don’t mean that stocks that have boomed are going to crash. I mean that we had a very distinct period that was created somewhat before the pandemic and somewhat by the pandemic, that led to a cultural change for things like telemedicine and video conferencing. And I think that distinct period is over that. And I don’t mean again, we’re gonna we’re not going to stop zooming. But this catalyst that got all these people to a lot of these tech companies that has happened, and now we’re going to see how they’re going to grow and how they’re going to pivot. We talked a lot about Slack, which is now owned by Salesforce. And they’re integrating. I think it’s it’s actually JT street who’s producing for us today who said, Hey, they integrated poker, we should play poker on slack. Well, if poker catches on for Slack, that could actually be a revenue driver or an engagement driver. So I don’t think we’re looking at some like, you know, post 90s doom and gloom period for tech stocks, I hope sorry, it was zoom, and not slack that has done that. I don’t think we’re at some post 90s doom and gloom period, because that crash happened, because the cost of doing things online did not match the revenues. That is not what we have here. I just think we’re gonna see how clever companies can be because there was a period it was like, Well, what am I going to do for streaming? I don’t know anything like, like, I’m watching nine hours of curiosity stream, because I’ve already watched everything on the 75 other services I have, sorry to talk so long side when you’re smiling. So why don’t you weigh in here?

Simon Erickson  54:21

No, it’s definitely a combination in my mind of either No, or depends on the company. I mean, like we did see last year, a spike in web traffic, right? Because COVID and we are all know about that. And so many of these companies are their revenues derived from usage based models. When usage shoots up through the roof, people get really excited valuations follow suit, too. It’d be interesting to see which of those sustain and which of those kind of revert back to the mean. In my mind, though, digital transformation is still in first, your second inning. There’s some really long term developing trends that we should be paying attention to.

Dan Kline  54:52

It is very important to look at management because there are going to be a handful of tech companies. They’re probably not tech companies. We talk about a lot That simply benefit I talked about this a lot with Kroger. Kroger benefited because there were a grocery store at a time we needed groceries, how they pivot to competing with Amazon and Walmart is gonna matter. There are some tech companies. I mean, I’ve joked about it with brawny paper towel when you couldn’t get paper towels, everybody bought whatever paper towels was available. I think that was true with technology during some of this. So I would really look to are these companies leaders? Are these companies best in class? Do they have management? Or did they sell you something when no one else could sell it to you? And that could be an entry that could be Wow, I just discovered that brawny paper towels are just as good as bowtie and they’re, and they’re cheaper. But a lot of times that is a false. Hi, Matt, I’ll give you the last word here.

Matt Cochrane  55:44

No, I don’t think it’s at the end, I would say like, multiples are definitely higher. And I would not expect the same returns we’ve seen in the last two or three years. But like, like Simon said, I mean, digital transformation is still at the very beginning of that trend, or at least early to mid innings. Let’s call it that early, committed things. We got a long way to go. But I would not expect the same returns we’ve seen in the last couple years.

Dan Kline  56:09

For those of you who are not baseball fans, there are nine innings in a baseball game. I I feel like I have to explain this because baseball has fallen so far. No, I’m kidding. A little bit. I would expect people to at least know that part of it. So earlier a few minutes ago, we took a question from one of our members. We did that live on the show because we thought it would benefit a lot of people. But a lot of times we’re getting questions from members and we’re answering in our members only call we are answering sometimes directly to that member. So if you are a member and you email us at info at seven investing calm, sometimes we use it on this show sometimes we’ll use it in a members call. Sometimes, of course we’ll just answer your question. If you’re not a member, of course, you can email us at info at seven investing questions about our service questions about how you join that type of thing. If you’d like to interact with us and so many of you interact with us. That is a lot of fun. That is at seven investing on Twitter. If you’d like to tag me and only speak for me in post Do you think I’d be interested in feel free to do that I’ve made friends from that. I have a couple of guests coming up on the show in the next couple of weeks that are just people I’ve met over social media over Twitter. We are easy to get ahold of we are fun to interact with. We appreciate JT st stepping in for Sam Bailey. Sam will be back on Monday, I believe. But this has been an exciting show. It took a lot of prep this morning. So I’m very excited and how it came together. I think all of you for watching. We’ll be back on Monday for Simon Erickson for Matt Cochran for JT street for Sam Bailey who helped behind the scenes before the show. Thank you all and we’ll see you on Monday.