Prof G Markets

EA Private Equity Deal Signals Gaming Sector Opportunity

"We talked about how Electronic Arts was taken private for $55 billion, largest take private in history. And despite a booming industry with over 60% growth in players over the past 10 years, video games account for only 3% of global ad spend. Our view from an investment perspective, it's a good one."

The speakers discuss the historic private equity move involving Electronic Arts, highlighting the untapped advertising potential in the video gaming sector. They note that although the gaming industry is booming in terms of user engagement, ad spend is significantly lower compared to traditional media, creating an opportunity for investors in private equity plays. This commentary suggests that, even though the gaming experience might change with increased ads, such deals are viewed positively from an investment standpoint.

Pfizer and TrumpRx: Navigating Pharma Tariff Pressures

"The final thing that was agreed in terms of drug prices with Pfizer was guaranteeing MFN prices for new drug launches. And the concept here was the administration said, look, we don't want you to agree a drug price with us and then go and undercut it when you go and launch in one of these next European countries."

Analyst Courtney Breen discusses Pfizer's role in the TrumpRx initiative, highlighting that Pfizer agreed to lower drug prices and accept MFN pricing in order to dodge pharmaceutical tariffs. This move is part of a broader framework to reduce regulatory uncertainty and stabilize the U.S. pharma sector. Although the direct impact on pricing may be limited in scale, the agreement offers relief from volatility by clarifying future pricing dynamics.

BYD Outlook: Navigating the Post-Subsidy Environment

"I think we're about to see the next chapter play out in the way that Chinese industrial policy works. I don't see BYD's sales decreasing again in another quarter. They'll likely continue to increase."

John McNeil provides an optimistic view on BYD amidst a recent price war and falling sales. He explains that the current decline is largely due to temporary pricing adjustments enforced by Chinese policy. Looking forward, he expects BYD to bounce back as the consolidation in the industry leads to increased competitiveness and sustained sales growth.

Tesla in Transition: Shifting Focus Toward Autonomy and Robotics

"I think the business has moved away. It moved its focus away from a car business. I think Elon came back from China about a year and a half ago and essentially said to his team, the car business is lost. And we need to now move on. And the existential products that Tesla has to have in his view are autonomy and robotics. And that's the future of the business."

John McNeil highlights Tesla's strategic shift from a traditional car manufacturer to focusing on autonomy and robotics. He emphasizes that despite the diminishing importance of the core car business, Tesla is well-capitalized with over $30 billion to fund this transition. This commentary reflects a transitional phase with inherent uncertainties as the company repositions its long-term growth drivers.

Avoid Fermi America IPO: A Bad Investment Play

-4.17%current return

"This is not going to end well, and I will lock that prediction in right now. This is WeWork all over again. This is Aspiration all over again."

The host delivers a strongly negative commentary on the upcoming Fermi America IPO. The company, promoted as an AI and energy hybrid venture, has no revenue, no assets, and an inflated promise of providing 11 gigawatts of future power. The commentary warns investors that the IPO is overhyped and likely to crash, drawing parallels with past debacles like WeWork and Aspiration. This serves as an actionable signal for investors to avoid or pass on this IPO.

Undervalued TikTok US Deal and Potential Bid Dynamics

"Supposedly, that company is worth $14 billion. Supposedly, it is actually less valuable than Domino's Pizza... if this were a company trading on the open market, you'd probably be looking at a valuation above $50 billion."

The discussion centers around the US TikTok deal, which has been pegged at $14B—an extremely low valuation relative to its likely free market worth. Analysts compare it to other tech companies trading at much higher multiples, suggesting the deal may be structured to favor select investors. There is also commentary on potential legal and bidding strategies, with hints that a bid might be organized to challenge the low pricing, thereby capturing significant marked-up value if market conditions normalize.

EA LBO Deal and Mobile Pivot Commentary

-0.63%current return

"But if the Saudis can monetize by expanding EA into mobile, because EA sucks at mobile. You know, so they're able to take these properties like soccer and football and Star Wars and Battlefield and The Sims and make mobile games that work. They'll double that cash flow."

Electronic Arts (EA) is being taken private in a $55B leveraged buyout. Commentary highlights that despite flat revenues and stagnant growth, the new investor group (including Saudi interests) sees potential by pivoting EA from its traditional game sales model to exploiting mobile and free-to-play segments. The expectation is that a successful mobile transition could potentially double EA's free cash flow, which serves as a rationale for the high valuation premium in the deal.

Perpetual Bitcoin Futures: A Risky Derivative Playground

+2.50%current return

"So, for all of the talk that we hear about Bitcoin becoming the next gold or the next building block of the global economy, what we have not heard much about is the method by which this cryptocurrency is traded for the most part. ... In no uncertain terms, this is a casino."

The segment explains the explosive growth of perpetual futures in Bitcoin trading, which now accounts for roughly 70% of Bitcoin trading volume. It emphasizes the unregulated, highly leveraged nature of these derivatives, comparing them to a casino and raising significant concerns about the inherent risks for crypto investors.

Evolving TikTok US Deal Structure and US Investor Involvement

-7.32%current return

"ByteDance originally had no interest in selling TikTok. ... But now the deal structure is such that American investors will own roughly 80% of TikTok US and hold six out of seven board seats, leaving ByteDance with less than 20% of the equity in the new business. Oracle will oversee the retraining of the algorithm while also taking an equity position, potentially via Oracle Cloud or even Larry Ellison contributing indirectly."

The conversation outlines the complex US restructuring of TikTok, emphasizing the creation of TikTok US with a majority American investor base. The proposed deal will see major tech and media players like Oracle (potential ticker: ORCL) and high-profile investors such as those from the Ellison and Murdoch camps take controlling stakes. Commentary suggests that while the deal remains in flux, the reorganization could realign control of one of the most influential social media platforms in the US, with potential implications for data security, algorithm oversight, and content moderation.

AstraZeneca Shifts Investment Focus, Highlighting UK Fiscal and Policy Woes

-10.95%current return

"we had some bad news last week with AstraZeneca deciding to not invest in the UK and rather invest its new plants in the States"

The speaker highlights AstraZeneca's decision to invest in new plants in the US instead of the UK as a negative signal concerning the UK's ability to attract foreign direct investment. This commentary points to broader concerns about the UK's fiscal policies, political uncertainty, and overall investment climate, which could impact companies with significant exposure to the UK market.

Robinhood Launches Social Platform to Boost Trading Engagement

+11.33%current return

"Robinhood is launching a social platform called Robinhood Social that will allow users to post their trades, follow investors and track the investments of celebrities. It is designed to keep users on the platform longer, which could translate into more trading activity."

Robinhood is rolling out a social media feature aimed at increasing user engagement and trading activity. While the move could help Robinhood counter trends favoring passive investing by boosting trading volumes, it also carries the risk of encouraging speculative behavior.

Paramount Skydance Prepares Bid for Warner Brothers Discovery

-0.05%current return

"David Ellison's Paramount Skydance is reportedly preparing a bid for the entirety of Warner Brothers Discovery. Warner Brothers Discovery shares surged more than 28% on that news while Paramount Skydance rose 15%."

Discussion centers on a potential all-cash bid by Paramount Skydance (led by David Ellison) for Warner Brothers Discovery. The market reacted strongly with significant gains in both WBD and Paramount-related shares, illustrating heavy investor interest in media consolidation.

Larry Ellison Predicted to Take Control of TikTok, Boosting Oracle

-5.02%current return

"We are going to lock in our prediction for TikTok's next owner. We believe that it will be the man who made $100 billion in 40 minutes. We think it'll be Larry Ellison."

The hosts predict that Larry Ellison, who is closely connected to Trump and already linked with TikTok through Oracle's partnership, will take control of TikTok. Oracle stock has already reacted positively, which could suggest further upside if the deal materializes.

Oracle9s AI-Driven Cloud Rally: A Bullish Market Context

-5.38%current return

"Oracle's spectacular rally drove up stocks like CoreWeave, TSMC, Broadcom, AMD, and NVIDIA. Oracle posted its best one-day gain since 1992 with shares surging 36% on robust earnings and upbeat revenue guidance. Since our March podcast, Oracle has tripled in price and is up 98% year-to-date, making it an exciting day to be an Oracle investor."

The discussion highlights Oracle's record-breaking earnings report and its massive AI-related contract components, including a $300 billion compute deal with OpenAI. With quantitative data such as a 36% surge on the day, tripling since March, and a 98% YTD increase, the thesis centers on Oracle being uniquely positioned in the cloud space as the only major provider not developing its own LLMs. Investors can view this as a bullish market context for Oracle (assumed ticker ORCL) within the evolving AI and cloud revenue dynamics.

Buy Google Stock Now for Undervaluation

+11.92%current return

"I think Google is way undervalued right now. If you're thinking about buying Google, I would argue the time to buy is right now. It's gotten crushed year to date, down almost 20%. It's trading at its cheapest levels in a decade, 17 times earnings compared to the S&P, which is trading at like 25, 26."

Ed Elson explains that Google appears undervalued, trading at 17x earnings versus the S&P's 25-26x, and down almost 20% year-to-date. He argues that this presents a timely buying opportunity for investors, especially given its current price near $230 per share and its strong technological positioning.