Paramount Gets Warner Bros. Discovery, But Netflix Comes Out a Winner

17:51Travis Hoium:Lou, we also heard from Snowflake. What did we learn in the quarter?

17:55Lou Whiteman:A decent quarter, but here's what I find so fascinating because the narrative has been about how AI is going to eat everybody's lunch, right? That everybody is doomed because of AI. And Snowflake definitely falls into the category of companies that are supposedly doomed. So, contrast that with their cash from operations and free cash flow. They had a great$345 million in free cash flow. Where did that come from? Deferred revenue. Deferred revenue is revenue that customers are paying for future performance or future obligations, but because it's in the future, it's not hitting the P &L sheet right now.

18:35Lou Whiteman:So, on one hand, you have Snowflake is doomed because of AI. On another hand, what's actually happening is customers are putting down hundreds of millions of dollars in cash to use Snowflake products in the future. I feel like the market should at least meditate on that a bit and think about what that might say for Snowflake's prospects.

18:59Travis Hoium:When we come back, we're going to talk about potential other buyouts that would be interesting in 2026. You're listening to Motley Fool.

19:09Lou Whiteman:Now war is declared and battle come down.

19:13Jon Quast:London calling to the underworld. Come out of the cupboard, you boys and girls. London calling, now don't look to us. Phony Beatlemania is putting the dust.

19:27Travis Hoium:London calling, see we ain't got... Aber was ich noch erzählen wollte, meine Nichte kämpft sich ja ganz schön das Studium. Semesterbeitrag, Laptop, Bücher, Software, Handy, Internet. Ey, so ein Master ist echt teuer.

19:38Lou Whiteman:Ach, say her, she can get it back.

19:41Travis Hoium:You mean from the tax? But she doesn't pay. No, it's a loss. She makes it simple with Visa Steuer. And if she works, it's kaching. That's it?

19:52Lou Whiteman:Safe. Visa Steuer.

19:54Travis Hoium:Hol dir dein Geld zurück.

19:55Lou Whiteman:Now try it out.

20:08Travis Hoium:money in this segment, we like to have a little bit of fun with investing. And since we've been talking about the Netflix Paramount Warner Brothers Discovery drama, we thought what other deals or mergers make sense or might even be fun. I'm going to throw out a few ideas for you guys. Lou just threw out a spicy one for us that I'm excited about a little bit later, but I want to get your thoughts on this and whether these would be good ideas. Let's start with one that I've been talking about for a while. That is Spotify merging with Ticketmaster. John, does this make any sense to you?

20:44Jon Quast:It doesn't make as much sense as Spotify moving more into a video platform. I really like that idea. You want them to become Netflix. Yeah, or at least have a Netflix component that integrates well into the audio that they already do. That makes a lot of sense to me. Look, Spotify has a good thing going, so I'm just reluctant to suggest anything that might mess that up. But sure, there are plenty of synergies that a business like this can have with a business such as Ticketmaster. That could be some really cool integrations, some really cool promotional things that it can do if it had that. I don't hate the idea.

21:19Jon Quast:I'm not necessarily in love with it, but it makes sense.

21:22Lou Whiteman:It makes a ton of sense. There's obvious synergies. The question is, is it worth it for Spotify to spend about half of its market cap to gain those synergies? And that's where it gets a little harder. Spotify is about, I think,$100 billion, and Live Nation Ticketmaster's parent is, what, about$40? So, you figure with a premium, something approaching$50. I don't know if I think it's worth the hassle of the price. If they could have gone back in time and gotten this years ago, I think it would be a natural ad. Also, Spotify has done a pretty good job moving away from the baggage that comes with you ruining the music industry.

21:58Lou Whiteman:They've kind of moved on from that. Way to just step right back into the middle of the dog park, so to speak, if you do that. Or maybe you're the savior.

22:08Travis Hoium:Everybody hates Ticketmaster, but very few people hate Spotify. So maybe you're the savior. You lower your fees a little bit. I don't know. Maybe it's a good thing.

22:17Lou Whiteman:Again, if you're paying a premium for something, the reason that everybody hates Spotify is, I mean, it's Ticketmaster, sorry, is that the business model works so well. I doubt you pay a premium and then, you know, drastically neuter the opportunity.

22:32Travis Hoium:It just is one of those things that every time I get an email from Spotify about some artists that I listen to and go, you know, hey, there's a concert coming to your area. I just think there's so many commonalities between those companies that it makes a lot of sense. But I think at the end of the day, every time I look at it, Lou, I sort of come down to where you are, where would it be worth the price? Live Nation, ironically, isn't actually all that profitable. Maybe you're right there. All right, let's go to one that I think could be more fun. Disney buying Lego. This would add more IP to Disney.

23:08Travis Hoium:That's what Disney does really well. More stuff for their theme parks and more consumer goods. Lou, does this make sense to you?

23:15Lou Whiteman:I don't like this just because I don't want Lego getting any more expensive. And you know Disney would jack up the prices. I think it sort of makes sense. It definitely made sense in the past era of Disney. I don't know if current 2026 Disney is really just looking to add up new universes the way it used to. So, I doubt there's be much momentum here. But Lego is a great franchise. They have some parks. They have all of the IP you could get. But I definitely think Bob Iger 10 years ago, if 10 years ago is now, Lego would make a ton of sense. I don't know if I see Disney really, really going in this direction right now today.

23:57Jon Quast:I agree with Lou. I don't know if it goes in this direction. However, among the companies that exist in the world, very few would make sense for Disney and Lego would be among the ones that make sense.

24:09Travis Hoium:What about a company like Nintendo? Again, that would be a much, much bigger deal. whole different can of worms but one of the things that has been rumored about the new ceo at disney is that he's going to lean more into things like gaming and maybe even spin off some of these non core assets whether it's the cable companies whether it's the sports business that's going to focus you more on ip movies games that's nintendo's wheelhouse anything there john

24:34Jon Quast:oh tons of stuff there that would be a match made in heaven i don't think that it could ever get done just because of the sheer immensity of the Nintendo brand, the Nintendo company. But oh my goodness, Disney would be like a kid in a candy shop if it got Nintendo. All right.

24:56Travis Hoium:What about one of the legacy media companies that actually survived in the company that is trying to disrupt them? I don't know exactly how well their business model is doing, but New York Times and Substack. It seems like the direction of New York Times is to lean into these writers more, they're bundling. Substack doesn't really have much of a bundle, but Lou, does this make any sense or am I barking up the wrong tree?

25:19Lou Whiteman:It kind of makes sense, but here's the thing. Substack's main selling point is writer ownership that the writers own it. And that's not the New York Times. I mean, New York Times is trying to invest in writing, but that is not really their game. Antitrust could be weird here. I don't know what antitrust regulators would say, but it does feel like that almost by default, and I respect the New York Times, but almost by default, you would lose a lot of the value that the perceived value in Substack if it was part of the New York Times. So, I feel like you'd be paying maybe a billion dollars, I think it's the valuation I've seen for Substack, so not an insignificant amount, and then see a lot of your best assets, maybe, I don't know, you'd have to figure out a way to make sure they don't walk out the door.

26:07John?

26:08Jon Quast:I agree with Lou here. I do think directionally, this is a very interesting idea. Substack does seem to be kind of the future of reporting and these good journalists who are on the platform, this independence that they have. But the New York Times would have to change who the New York Times is to make this a good deal. I think that it would be skating to where the puck is, but you'd have to leave something of yourself along the way. And I'm not sure the New York Times is willing to do that.

26:38Lou Whiteman:One other idea? Yeah. I think you'd have to like talk to Cox Enterprise about this, but if I was the New York Times, I'd be much more interested in, I think, trying to get Axios for probably half the price. I think that fits the brand much better. Yeah.

26:52Travis Hoium:The combination of different business models would probably be a challenge for the New York Times and Substack, but I don't know. You're right, John, that a lot of the breaking news is now not necessarily coming from the big media outlets anymore. It's coming from these smaller producers. One of my hobby horses recently, as I look over at my Peloton bike that is collecting dust and my Garmin watch is that these two companies make a lot of sense together. Garmin is a much, much bigger company. It is a profitable company. Peloton is struggling. I think they need to find a buyer. They're just, they're, they're losing subscribers.

27:29Travis Hoium:And there's a lot of Garmin is trying to move into that subscription business. And I, one of the reasons I'm not doing it is because I'm already paying for Peloton. So is there something there, John, where they can pull these two businesses together, kind of match up the common user base and maybe make a bigger business than the sum of its parts?

27:51Jon Quast:In a different timeline, Peloton would be the larger, more successful company compared to Garmin and Garmin would make sense as a bolt-on to Peloton's business. I'm not sure how much it makes sense to bolt on Peloton to Garmin's business. If Garmin is the one in the driver's seat. However, I do see the integration capability between the two. You're wearing a Garmin that is monitoring so much of your own health. And then you're jumping on some Peloton equipment that is also integrating with that. That makes sense, But I'm not sure how much Garmin wants this, although the two businesses do have things in common.

28:28Lou Whiteman:So my grand theory on these exercise apps is that they all advertise with people that look a lot buffer than I am. And they're selling the dream that if you just sign up with this or if you buy this equipment, if you do whatever, you will look like the model. And then inevitably, we know what happens. That's not what happens. And so, these things tend to be fads, which is a way to say that I would never buy one of these subscription businesses on the way down. I agree with you, Travis. I think a deal in theory could make sense. And, you know, Garmin, I think, would like to go in the subscription.

29:01Lou Whiteman:But, you know, you're still going to pay a billion plus, probably, what, two billion, I think where Peloton is. Unless they can, you know, I think that why would you pay for these falling knives tend not to bounce back. All right.

29:17Travis Hoium:Well, hopefully my Peloton bike is still usable for the next few years, but maybe I'm on the wrong side of this. Lou, you brought up this one before we started recording this segment, and I kind of like it. Make the case for Berkshire buying PayPal.

29:34Lou Whiteman:It just feels like a Berkshire business. I mean, my criticism of PayPal is it's a mature financial services company. Where are they going to grow? But they have a massive cash flow generation ability. They're buying back their shares at an impressive pace. They are doing the things that mature companies do. Their problem is that they're still sort of viewed through the fintech prism. There's been a lot of talk about PayPal, who might buy them. I think a lot of that, Travis, we talked about it earlier in the week. I think a lot of that is opportunistic potential buyers and not really a desire to sell.

30:09Lou Whiteman:They have a new CEO coming in. I think they'd rather give the CEO some time. But Berkshire, with their massive amount of cash to buy this company, take it out of the quarter-to-quarter spotlight of what growth is, and just use that cash generation ability to invest in the business and invest elsewhere, it just feels like a Berkshire-type asset. It would be very much Berkshire to invest in a financial services business once it's past the bleeding edge and when it's more just predictable and we get this now.

30:44Jon Quast:I agree with everything that Lou just said from a financials perspective. I think from a valuation perspective, it makes sense for Berkshire as well. The one thing that I would say is up for debate here is whether PayPal has a durable competitive advantage. And I think that Berkshire would be interested in, does this business have something going for it five years from now, 10 years from now that we can be certain about? I think that there's an argument that you can make for both sides of that. And I wonder where Berkshire would fall down as far as PayPal's competitive advantage.

31:16Travis Hoium:You know what would help with that competitive advantage is if PayPal was the one operating payments for Dairy Queen and Geico and all of these other businesses that Berkshire owns. So that could definitely be a help. Let's end on this one. DoorDash and Lyft. John, this was your idea. Make the case for it.

31:38Jon Quast:Yeah. If I'm CEO of DoorDash, I would acquire Lyft right now and figure out what I'm doing with it later. I would let it operate. You're saying the price is too good. Exactly. I mean, what is it trading for? Five times its cashflow or something like that. I would, I would acquire it, allow it to operate independently. And if I let it operate independently, I think this works out well for me. If I figure out ways in the future to integrate it into one kind of roll-up platform, better go toe-to-toe with Uber, maybe I do that. I think you can buy it now and figure it out later.

32:11Lou Whiteman:I love this. I think it's a great idea. I don't think there's any chance of it happening because DoorDash said we're going to spend a couple hundred million on building our infrastructure and the stock got punished. So I don't know. I don't think the market would like it, but maybe because it is a real, you know, it's not just, I promise you we're going to spend and what's going to work out, it's going to be a real asset. But Lyft is a very, very good second fiddle in its industry. And there's a lot of ways that a smart management team, I think, could combine this to Dash's platform. I don't think it's going to happen, but I love this idea.

32:48Travis Hoium:They're also partners. And this is kind of the non-Uber ecosystem. I think this makes a ton of sense. The other one that I would throw in there, too, that has been kind of rumored to be looking at a company like Lyft is Zoox. and that's, you know, this is an Amazon company, but what if one of these autonomous vehicle units gets spun out, maybe acquired by like a DoorDash of the world, they can have custom made vehicles. I don't know. There's just, there's a lot of opportunity here. DoorDash has a nearly$80 billion market cap. They have the money to play with. I love this as well. Maybe we'll be talking about this deal at some point in the future.

33:21Lou Whiteman:So Tony Zhu, call your banker. John only wants a 5 % finder's fee. Otherwise the deal should come together quick.

33:28Travis Hoium:All right, when we come back, we're going to get to Stock Center Radar. You're listening to Motley Fool Money. The devil went down to Georgia. He was looking for a soul to steal. He was in a bind because he was way behind and he was willing to make a deal. When he came across this young man, saw him on a fiddle and playing it hot. And the devil jumped up on a hickory stump and said, boy, let me tell you what. I guess you didn't know it,

33:48Jon Quast:but I'm a fiddle player too. And if you'd care to take a dare, I'll make a bet with you.

33:54Travis Hoium:Deine Chancen, business on purpose of course of künstler intelligence in the commerce also where you don't have a face to show you where you can't do a job that you can't do any of the customers want anything to do or you want to do a little bit of a small brand and if you are interested then you are always with our workshop at 8.3. the AI revolution in e-commerce www.ecommerce.com and you are just a little bit I hope you are on the way

34:28Travis Hoium:As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Lou, one of the interesting pieces of news this week was that Joby is moving closer to actually flying their eVTOL aircraft.

34:57Travis Hoium:And one of the first places they're going to do that is in Dubai. And you're going to be able to access it on Uber. Is this a big deal or nothing?

35:04Lou Whiteman:I mean, it's somewhere in between. But what part of this is new? We knew about the partnership. We knew they were...

35:10Travis Hoium:Well, we saw what the app is going to look like. And it's kind of cool to have a little helicopter icon there to be able to pop into eVTOL.

35:16Lou Whiteman:Sure. But I mean, we knew this was coming. We knew Joby was going to launch in 2026. We knew it was going to be Dubai. Look, it's not insignificant, but right now, the press release arms race is going strong. Joby's Arch Rival Archer, they just announced a deal with Starlink today. It's like everybody's trying to get their friends together. Once we're actually in the air, we can judge the economics, we can judge the stocks. I mean, look, this is great for Uber. It's great optionality. But just like Waymo right now is just a teeny tiny part of the business with potential. Joby, it's going to be even a smaller part of the business.

35:53Lou Whiteman:These are stuff for investors to monitor, to be aware of, to hope for the future. But this is not actionable right now. This is all just kind of, you know, oh, neat.

36:05Travis Hoium:The Archer announcement, I think, was interesting because, yeah, Starlink on board. These are not going to be very long flights. If you can't get away from your device and you're being connected for 15 minutes while you're on an eVTOL aircraft, I mean, look out the window for a couple of seconds. I thought that was just sort of a strange announcement, but maybe we need to be connected 24-7.

36:28Lou Whiteman:Hey, it's all about who has the best friends.

36:32Travis Hoium:All right, let's get to stocks on our radar. John, you're up first. What are you looking at this week?

36:37Jon Quast:Listen, I'm tired of Lou beating me week after week. So I'm going with a stock that I think that even he would vote for over his own pick this week. So I'm going with Mercado Libre. This is symbol M-E-L-I. This is a business that many of our listeners probably don't know firsthand unless they're in Latin America. The company has operations in Mexico, Colombia, Brazil, etc. It has an e-commerce marketplace, fintech, logistics, advertising, lending. It does a ton. Here's the thing. The stock is down over 30 % from its high, and it doesn't have anything to do with business execution. In fact, 2025 was the company's seventh straight year of 30 % growth or better.

37:15Jon Quast:The stock is down because investors are worried about execution risk from here. It expanded free shipping, that compressed margins, it increased lending, and so now it's setting aside more money and reserves. Investors seem to fear that the business will suddenly make a major misstep after years of flawless execution. On one hand, I get it. There is a new CEO. So maybe a little bit more execution risk. But I think investors are being overly fearful here. The valuation is the cheapest it's been since the Great Recession. That's too good to pass up.

37:45Travis Hoium:Dan, what do you want to know about Mercado Libre? John, how are you going to say that our listeners aren't familiar with Mercado Libre? We did a whole

37:53Jon Quast:segment on them yesterday on this very show. I meant as a consumer, Dan. That's fair, I suppose.

38:02Travis Hoium:John, do you have firsthand use of MercadoLibre?

38:05Jon Quast:I do not. I lived in Paraguay and it didn't have a big presence there.

38:09Lou Whiteman:Lou, what's on your radar this week? All right, so John's right. I do love MercadoLibre, but I also love Rocket Lab. Dan, I'm going to talk to you about Rocket Lab, ticker RKLB. They released earnings this week. It was a beat on revenue and EBITDA, but really, investors didn't care. That's not what we're focused on here. Rocket Lab pushed the timing of its first neutron launch into the fourth quarter of this year. They had previously been targeting the first half of the year. Before that, they promised last year. We knew a delay was coming. They warned of a tank rupture when they were testing it.

38:41Lou Whiteman:But the timeline is probably a little longer than investors had hoped. This is important because the neutron rocket will increase the size of payloads that Rocket Lab can launch into space and in turn create a lot more opportunities for the company. Here's the good news. Rocket Lab ended a quarter with a backlog of$1.4 billion with a B in future space system business, nearly$500 million in launch contracts. The company continues to acquire components, making sure the supply chain is good. They still have over$800 million in cash on hand. As for the Neutron, I'm still optimistic. I don't think long-term investors are going to care if it gets off.

39:18Lou Whiteman:Five years from now, we're not going to care if it was this quarter or that quarter. They just need to get it airborne. But until this happens, Neutron will be an overhang and it could create buying opportunities. So I'm watching it close, Dan.

39:31Travis Hoium:Dan, what do you think about rockets? I just want to point out to all these rocket investors and everything is that we're never going to be on Mars, gang. It doesn't have a magnetosphere. We cannot live there. No, we're going to the moon now. Yeah.

39:44Lou Whiteman:No, you are 100 % that right?

39:46Travis Hoium:All right, Dan, which one is going on your watch list? We're going to go, I don't know, I kind of like both companies, to be honest. So we're going to go Mercado Libre because, you know, we talked about it yesterday. Thank you to John and Lou for joining me and Dan Boyd for the work behind the glass. I'm Travis Hoyam. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.