The Bubble *JUST* Popped | WTF Just Happened.

I don't know if you can see the theming that's going on here, but we got a Baymax of a certain color. We got a Bionicle of a certain color and a light up from Five Below that was actually 599. So, it wasn't Five Below. Also of a certain complexion. There is a theme here and the theme is generally not one that we are very enthused by. The theme has to do with oh my lord the NASDAQ 100 tanking all of a sudden. What the houble hockey sticks happen? Is this over? Are we screwed? All while at the same time somebody literally I've never seen a subject line like this emails me. Let's make a deal. Trump voice. They put that in quotes hyphen Trump voice to upgrade to the reinvest one package. This is the stuff that we have to deal with today. Okay? It's it's very special. It's something else. So why why did this happen today? Well, it happens to be because Open AI did a little poopsy dupsy with their pre-IPO marketing to try to make it seem like they were actually catching up with Anthropic, who is literally kicking AS. So much so that this morning, one of the things that I uh mentioned to course members was that uh the anthropic and opening I think it was in the course member live stream. Uh it might have been right afterwards, but anyway, uh what the anthropic discounts that they used used to hand out for extra tokens have started to fade. See here, Anthropic pricing power. Usually Anthropic offers 20% off of $100 of extra tokens, 25% off of 250, 30% off of a,000. So if you go in and you spend $1,000 on credits, which I know that sounds insane for most people who aren't like operating businesses, like I get I totally get that, okay? And that's act like most people who look at AI, they're like, "Bro, I don't even want to pay the 20 bucks a month. Like, I'll use Bu for free." I get it. Trust me, I get it from all angles. That is why we added these modules in the Reinvest One uh terminal coming out where we have agents for consumers and the reinvest business blueprint, which is basically agents for businesses, whether it's property management, insurance, realtors, lenders, salespeople, whatever, right? Like this is a lot in this product that we're offering. There's a coupon expiring later today. But what's fascinating is they've actually secretly killed that coupon where once you use it once, they just rug pull you. Don't you get used to using a 30% off coupon. We're going to rug that. We're going to make you feel special by pressing that. Don't worry, man. You need, you know, that's what they're doing. And this this all feeds into this disaster that happened earlier because of this article with OpenAI. But that in just a moment. Basically what they're doing is they're going, "Don't worry, we got you. Need extra credits? Sydney Sweeney here will offer you 30% off. Just uh just go ahead and push the button." And then you go sign up, you take your extra credits, and you're like, "Oh, I get 30% off." You blow through all of them. And then you're like, "Hey, Sydney, can I have some more?" And then she's gone. She was never there in the first place. Turns out she was just a mirage. She has nothing to do with anthropic as far as I'm aware yet. [laughter] Although I feel like she kind of goes in to the down under businesses and then like props them up a little different. I mean, we got to get off this topic. But anyway, now the coupon's gone. So you go back and you're like, "Hey, Anthropic, there's no Baymax. There's project 2025." It's like, "Wow, BUT I WANT MORE TOKENS." It's $1,000. and they're they're pulling it off. So, this pissed off the market today. The market's like, "Holy smokes, what is going on here?" Well, what's going on here is that about a month and a half, I think it was about a month ago, we ended up having a report. Oh, it was at the end of September. uh that was actually posted by the very financial times who's correcting it now late last month. Oh, it's even less than a month ago that was provided based on information provided to investors. So basically some investors got some pamphlets or handouts and apparently some people misunderstood that opening eyes revenue was actually $70 billion on an annual recurring revenue basis. Okay. Well, it turns out those revenues are actually closer to $50 billion. Now, I I don't know how obvious that is, so I'm going to make it really really obvious because it's kind of a big deal. These companies, the whole AI bubble thesis, remember our two canaries in the coal mine, okay? We've always started with two I don't know how to spell canaries, so I'm going with two cans. We're going with 2can. If anybody wants to sell me a toucan, by the way, I would love to buy a toucan. I don't know if I can buy a toucan, but I kind of I like a Froot Loop kind of one. But anyway, a toucan. We got two cans. Okay. The number one most important one is the labor market. How long can we absorb the layoffs that we know are happening? How long? And and one of the things that I think is happening with this is you have businesses that are actually booming with artificial intelligence. I think in part we are, you know, like I think one of the things that like reinvest it's like okay yeah cool we started as a little real estate company and honestly I personally think still think we're basically you know the when we fundraised in the past like okay we're valued as like a real estate company that's always been thesis now we're we're blowing up what we're doing with artificial intelligence and I think it's really freaking awesome now the problem with that uh is that goes on for a lot of companies for a long period of time, but the question is how long and nobody knows. At some point that revenue keeps growing, keeps growing, but at some point you don't actually have to add proportionately more employees. So, for example, you know, we are, I think, blowing up with our revenue numbers. I mean, our our sale event that we just started 3 days ago, we're knock we're we're about to in three days knock on the door of a sevenf figure month in three days, which is crazy. But so, our employee count has basically done this. And so our revenue has been going up as well. And what's really cool about this is like this is symbiotic. It's everything's cool. Everybody's happy. You know, the the canaries are singing. This is great. But at some point, you can actually keep doing this without doing this. And this is really important because this is what I call there we go layoff absorption. So in other words, the the people who are getting abs ab ab ab ab ab ab ab ab ab ab ab ab ab ab ab ab ab ab ab absor whatever the people who are getting absorbed from other businesses that are laying people off who aren't killing it on revenue they go somewhere but eventually you don't need these anymore we don't know when that point is going to happen yet we're still like in this part of the AI cycle so the jobs canary is still good but the second canary in the coal mine I've said it a million times before is open AI and anthropic and when you have a business that's pitching, hey yo, we're doing 50 ARR now and they were saying or at least branding or whatever they were doing, they were doing 70. That feels like we just got rugpulled out of 29%. Right? So that's a little bit of color as to why people are a little freaking pissed off today. And I get it. I look I But come on, man. It's 1:12 right now. Since 1:00, I've got 1 2 3 4 5 6 7 8 9 10 11 11 emails to deal with. I should be getting back to these emails. Instead, I got to talk about open AI. But it's fine. I think it's important because AI businesses are the canaries of the coal mine. And so, we have to kind of put this into perspective. So, we're going to go through this article. We're going to argue, we're going to talk about like what does all of this mean, right? But I want you to think about this. Most people I don't think are really fully using AI yet. I think there's a lot of scratching of the surface. I think some people are, but I don't I don't think everybody is. What I just think is is really cool. And I I made this little chart also with the help of AI, but also inspired by me. But I made this little chart that I think is kind of useful useful to visualize. So we call it the AI it's obvious. It's the AI flywheel, right? So AI enhances your content. If you're content producing content, AI enhances your ability to sell. AI enhances the very products you're generating, especially if you have human in the loop. Human in the loop products are I think going to be very well uh do very well. And that could be, you know, like what we're doing with like we're using AI with cyber security, but it's human in the loop cyber security. I reinvest stocks or reinvest homes or reinvest research, insurance, artificial intelligence, property management, legal, price shopping, property inspections. Obviously, it's not like a humanoid robot walking around to freaking pop them property. It's documenting habitability of properties and when's the last time we did our inspection. Do we have all the photos documented? What's on missing on our checklist? When do we need to follow up again? When are we getting alerts? It's property management AI. It's responding to them. It's customer support, right? all of this like AI lights a fire under every damn part of a good business and and that's why I think my little baby startup went from this shell of okay cool we've got a 100 tenants we've got properties like we could do a lot and then it's like AI comes around it's like wow we can actually do a lot with way fewer people and so we actually got rid of some GNA staff we just didn't need anymore I mean God bless the folks I I'm aware that a lot of them have uh have you know other opportunities which I'm very grateful of and we're always supportive of helping people to be able to move on. But since we have hired way more people than we've let go because of the development that we're doing now because we've added this whole software business and it's really freaking good. Now that said, uh you know, like I said with the revenue thing here, how long does that last? And so anytime you get anything that makes people nervous about, okay, revenue can keep going, fine, but are both of the canaries going to keep going? Anytime you get something that concerns people about revenue with OpenAI or jobs, those are the things that make people nervous. That's why this made the market nervous today. That their numbers were actually lower than expected. The metric along with the equivalent figure for OpenAI's rival Anthropic is the most important indicator for overall AI demand. Yeah, it's not agents, okay? Like I'm I really am not trying to dump on AMD. I'm a big fan of AMD. We called their breakout at 456. We've been very bullish on AMD. We we you know uh we were we had our hand on the pulse of AMD and our alpha reports back at 250 even on the breakout that was over there. I can't remember exactly where that line is. So, but AMD has been fantastic, but this recent run on uh Agentic AI is a little overblown because AMD's valuation is probably twice that of a lot of the other chip players that are going to be really clutch when it comes to Agentic artificial intelligence. And there's a lot of excitement about CPUs, but remember AMD's big dollars right now are from frontier level CPUs, not everyday, you know, CPUs that you need for metamuse or basic function tasks. Uh, and so there are some risks. And so I did a full video on this breaking down some of the risks to CPU stocks uh because of AI. You could sort of look through the channel on that. Uh but what we watch here uh is broadly that if one of the canaries feels like it's sick, then the market sells off. Now, is one of the canaries sick? Well, I would answer to that and say no. This person Jonah uh has posted ticker trends. Sticker trends provides some useful data and they've been sort of tracking the uh annualized recurring revenue trends for this company and there are some questions between uh gross and versus net. So for example, ticker trends was using net numbers and maybe some people got confused by gross numbers blah blah blah blah blah doesn't matter. The point is this is sort of the growth trajectory that people map out for OpenAI. And while this looks like, you know, a really nice cumulative ramp, which is what it is, the percentage of growth is slowing and that's what makes people nervous. It's kind of like when you draw these charts and you say, "Oh, token consumption's way up." Yeah, tooken consumption was up 50x from 24 to 25 and then it went to like quadrillions by Google uh you know at their 2020 6 IO event and they're like oh 25 to 26 we're at quadrillions now great but you didn't 50x anymore you 6xed that's still really good but the growth rate declines that's the same reason m companies like Micron have trouble is not because it's a not not a good company that's not growing but it's because a company like Micron has to deal with this, you know, call it problem of large numbers where, you know, it's like, hey, why when is this going to break out again? Why does it feel like it continues to get stuck? And it's because even though the trailing PE ratios and PEG ratios are really low, even the forward PEG ratios are low and growth is expected on on a percentage basis to flatten out or even decline. And so, anytime we see that the potential underwriters of the AI bubble, if you will, are starting to roll over, people get really nervous. And we saw that nervousness today. And there are some pros and cons that happened today on a technical basis. Uh first of all, when this news dropped, we saw the NASDAQ drop from about 754 all the way down to uh almost 10 points, almost 11 points actually, down to 743. That is a very aggressive decline, very rough. Uh, so what what I would say is the recovery was good, but the bad thing was we still ended up down 1.34% on a day that yields actually fell. So take a look at this. Uh, and we've got this right here. Let's take a look at yields. My call on Treasury yields has been that 227 is the top. We are literally at 227. So, so far so good. I know sometimes we we rubber band up a little bit. Uh but uh this is my take that the top is basically in. And one of the reasons I say that is because I noticed that the the rise in the 10-year Treasury yield has slowed down substantially. We covered that yesterday. So, I don't think we really need to rehash that, but it's it's worth considering. While the slope of the line was really starting to get concerning, it's since quite flattened out. Uh and this is good. But on a day like this, we were still down 1.3%. And we have now rejected the ceiling here. Now, uh what's very interesting is 74865 was on our alpha report this morning. It's been on our alpha report for about the last two weeks. It has been a breakout point for the NASDAQ 100 to get us to our next price target, just like Palunteer, $200. And then the breakout after that is on our radar for a course member uh short to medium-term trade ideas. And we do these every day in the alpha membership. You know that this is though a little bit on a technical basis concerning and I think it's because I'm going on vacation tomorrow. You know that's another thing that's in our alpha report is Kevin's vacation calendar. But anyway, we now rejected this line twice. And a lot of people who are new here might think, "Oh, Kevin, you just added that line after it happened." But even if you just go back to watching this very morning public live stream uh you will end up finding that that line was there and so the fact that we rejected this line rough I mean definitely twice almost three times 5 cents over here 11 cents over here is not ideal with yields coming down five basis points I would have liked to have broken through this and so that's where what we talked about Also, and I'm not saying this to say we're always right. I mean, I didn't think we would lose 748. I also didn't think we were going to get a bad report on the Canary in the coal mines today, right? So, let's be clear. That's bad. I want to be very clear about that. I'm not saying perfect. But what we did say this morning and yesterday morning was guess who does well when the sucking is going on. It's not SpaceX. SpaceX is one of the suckers. And that's not supposed to be a bad thing. is just supposed to say they need to raise money to keep their business pumping for AI chips, right? They suck money, vacuum it out like Luigi in Luigi's Mansion. They're sucking the coins out of the closet. They're shaking the vases. They're they're, you know, shaking or pulling off the pillows from the couch cushions, right? And SpaceX is down like what 14 13ish%. I mean, we're down 15 or so points just in the last couple days. And what did they announce right here? Oh, yeah. we might have to fund raise $40 billion. Well, duh. Duh. That was all over their balance sheet. They don't have the money to spend $420 billion. Duh. We know that. But what's crazy is there's one company that doesn't suck. They only blow. Apple. During the same period of time of the sucking, Apple holds on to our 332. As soon as the others start sucking, Apple starts blowing up because they don't raise money. So, this is all circling back to that concern about circular financing. Oh my gosh, the bubble's going to burst. Oh my gosh, it's over. We're all screwed. Let's keep reading the Financial Times article and then I'll give you my opinion as to what this kiss of death is or is it not? uh with OpenAI. We'll talk about that. So, uh US stocks fell sharply following the Financial Times report on Thursday, extending losses from earlier in the season with the NASDAQ down 17. Yes, blah blah blah. So, let's see here. The discrepancy arose from attempts by OpenAI's own investors to produce a direct comparison. Oh, what is this? SpaceX agrees to acquire nationwide 800 megahertz lowband spectrum license portfolio. Huh? Low band. Which one do you need to get into properties? There's one that you need to get like sell service into. Which band gets sell service into houses? Low band or medium band frequencies? Uh it is low band. Low band gets into houses better than mid-band services. Low band, which is between 600 to 850 meghertz, uses longer radio waves that easily pass through exterior walls, windows, and deep into basements or interior rooms. While data speeds are slower and offers the best odds for reliable indoor and rural coverage. Bingo. Okay, so what do we have on the newswire? Coming across the freaking newswire, bro, I have so many damn computers sitting around. I I think I have like seven computers sitting around right now. It's so bad. Part of it is just because like they got to the the agents got to cook. I got the agents cooking, baby. They're cooking. That's the cool thing. I could sit here and make videos and then ah the agent. Your very next action. Oh, okay. Perfect. Let me just keep my agent going over here. Great job. Uh, okay. Perfect. All right, we'll keep this Fable Maxer maxing over here. I'm just kidding. It's not on Fable Max. That That could end up being wasteful. Let's go over to this one right here. What is this? That's the wrong button. What does this one SAY RIGHT HERE? OH, DAMN. THERE it is. Report. SpaceX agrees to acquire nationwide 800 megahertz lowband spectrum license portfolio. This is to get cell phones indoors. Is it is indoors one word or two words? Whatever. All right, it's pinned now. [laughter] Yeah. Okay. So, where were we? Thanks for the freaking distraction. You know what else is distraction? I'm trying to make video content here. They're 21 minutes deep trying to talk about Open AI and how this is going to end the world. You know what else is distracting? His freaking email box. of of I mean it's it's a good thing. It's it's a good thing. It's these are these are all wonderful and respectful people who are trying to upgrade to reinvest one because they've been loyal and wonderful course members for a long period of time and they're like Kevin we would like to upgrade. This is I literally just took this screenshot. Look at that. I couldn't even take the screenshot right. I mean this is just the last I don't know what is it 15 minutes here. 1 2 3 4 5 6 7 8 9 10 11 12 13 14. Oh, and there's the next one that just came in. That was crazy. Anyway, all right. So, where were we with this OpenAI piece? So, it says Oracle dropped almost 6%. Oh, how low did Oracle go? Let me see here because I still think they bottom out around 132. Wow, they got down to 135 again. Wow. Okay. Interesting. All right. So, US tech size fell. the discrepancy arose from this blah blah blah. So this has to do with the the pair calculate the figures in different ways with anthropic including revenue from sales via cloud partners such as AWS while Google or while open AI does not. So in other words AWS is taking the total rev number and then subtracting out the commissions as a way of a cost of goods sold. Open AI is just saying, well, this is the re net number that we're getting. And so investors try to gross up basically to compare the two. So, all right, this is the this is just the stupid boring bull crap SEC kind of disclosure nonsense bull crap BS that nobody really cares to freaking understand. So, let me try to make this as simple as freaking possible. If you sell $100 of lemonade, $100, okay, and then you got the sign guy, all right, the guy at the corner at the street, the sign guy, okay, who's telling you, "Hey, the lemons are over there. The lemonade's over there. You're going to pay this guy, the schmuck, 10 bucks." Okay, open AI or or anthropic is uh basically saying, "Hey, we did a $100 of revenue." And this schmuck was what we call a cog in the cog wheel. A cost of goods sold. Cogs. Get it? Cogs. Like like a cog in a wheel or clock, I don't know, whatever. Okay. Open AAI uh is doing this a little bit differently. They're saying the sign guy is actually collecting that revenue for us. So he's not actually over here. Okay, the sign guy is up here and he's going to collect $110 or well actually in this case it would be $100 to make the same. He's going to collect $100 and he's going to give us $90. So our revenue is $90. Okay. So, in order to compare Anthropic to OpenAI, you have to do a bunch of adjusting and it all ends up looking really circular. And then you take all of this circular mess and you you divide it into little slices that are too small to really know what's going on. And then you sell those to companies like, you know, Black Rock. Or maybe you don't like Black Rock, so you go to Black Stone. Or maybe you prefer letters because you don't want to know and you go to like a KKR because you know KKR is starting to get pretty similar to K. The point is we all know it's a Bubbly bubbly. It's just not ready to poopy yet. So this is all just one big misunderstanding. It's kind of like if somebody forgot that Kevin was going on vacation tomorrow or that I don't know, somebody forgot that the coupon code was expiring tonight or somebody was like like this person here I I don't know how to pronounce your name. I'll try my best. Hi, I would like to upgrade. I do have an old membership. Can I use the same email address to upgrade? 129. Literally just came in 60 seconds ago. See, I got to get off of this and start helping because, you know, we got to like a lot of people are buying this upgrade because I think people Oh, we're getting close to our seven fig. That's awesome. Um, anyway, I got to get to the bottom line of this. Gez, Kevin. Gosh. OpenAI later told its backers that its annualized I don't even know what I was saying anymore. Uh, OpenAI later told its backers that its annualized recurring revenue had jumped more than 70% since July, prompting figures that was about $70 billion. The company did not deny. Right. the company basically stayed silent but other people were talking about that right and you know whatever doesn't doesn't so much matter okay then you got however the new presentation shows close to $30 billion of annualized revenues in July as a private company openai is not required to regularly disclose its financials yep we know that so they don't technically just because some people on X are circulating these rumors or the Financial Times is circulating it people Don't these companies do not they're not obligated to come out there and respond to every incorrect statement. Solar Seduction says, "Oh no, you went live again. I missed it." See, this is why you got to download the Meet Kevin app and you to have the notifications. YouTube will not send you all the notifications. YouTube's like, "Kevin, Kevin, too many notifications. We don't want people to uninstall YouTube." Like, find that. Bro, I swear I thought these were Stormtroopers. I saw that out of my corner of my eye like that that helicopter angle and I'm like what are Stormtroopers doing? I'm like oh my gosh. I've been watching also too much Walking Dead and we're in like the Stormtrooper Commonwealth part. No spoilers. But you know what I will say is Loose Seal is coming out for Halloween this year, baby. We were talking about Open AI, right? >> [sighs] >> It's the autism chatbt maker is in talks with investors for new private funding round to value the company at $1.4 trillion. That's why they are Oh, so they're going to do basically another fund raise before they go public. Sure, that's fine. And they need to catch up honestly a little bit to anthropic which I think they're they're trying to especially with DOT that can make phone calls for you. Some really powerful things you can do there. But anyway, it also has the backing of tech groups and yeah, we know whatever lossmaking. However, the company has delayed the plans to go public because of the threat of powerful AI. This is They should not air this. This is complete lying. The company has since delayed those plans to go public amid growing concerns about the threat posed by powerful AI. That is marketing 101. Our product is so good, we're actually going to sacrifice our revenue to do the good for humans and all of humanity. By the way, if you want to sign up for our subscription link below, it's marketing. That's all it is is marketing. Anytime greed aligns with doing the right thing, you have a little match. Okay, is really convenient when you being a little greedy bastard aligns with we're just doing the right thing. Let's be clear, one's more powerful than the other. They just happen to be aligned and then it's called branding. Wow. Amazing how that works. So anyway, that's stupid. You know why they're really delaying their IPO is because they want to let Daario step on the landmines first. They want to send that schmuck through the minefield so they can see what to avoid so all the anthropic people step on the landmines and Open AI does it. They're too afraid to go first. They don't have the balls to go out on the minefield, especially after what happened with SpaceX. Come on, man. the puppy me'd up to what 125 bucks or whatever. And you know, I mean, before went IPO, I'm like, "All right, man. If you could get it at IPO price, great. But other than that, I'd wait and see where this stabilizes cuz I think it's going down 30%." Boy, it went down 30% from IPO price, and it went down way more than that before that. You can watch my videos. I've since called that, hey, you know, the bottom, yes, in fairness, on the Leopold liquidation was around 104, but I think a more steady floor for SpaceX is about 132. And I actually think the company is a much better deal now than what it was at IPO. So, you know, I'm not bearish SpaceX, don't get me wrong. But that said, what is all this mean regarding Open AI and all this cookookie dookie crap? Okay, what is all this crap mean? Well, really what it means uh is people had a misunderstanding of what the revenue was supposed to be and how it was going to be calculated. This doesn't actually mean that we have, how should I put it? This doesn't actually mean the canary is sick. This means some dumbass looked at the canary and thought they saw it floating and levitating and then ran outside the mine is like, "Yo, the canary is levitating. It's doing so well." And then somebody goes in and goes, "Man, that was load of horse sh. This canary is not levitating. It's singing, but it's not levitating." That's what we're talking about here. This doesn't have nothing to do with this canary being sick. Not yet. I will be the first to tell you. How much do I have to pay Kevin to stop talking about Reinvest? So, rumor is if you go to reinvest one.com and you sign up, you get lifetime access to me shutting up. The rumor is I cannot confirm. I can neither confirm nor deny, but my understanding per rumor is that once you get the alpha membership, the trade alerts, reinvest stocks, reinvest homes, reinvest research, the nine courses, the live streams, the agentic AI for consumers and business blueprint. You stop hearing the pitch. It's actually really incredible. Um, yeah. If if only if only there was like a like a monk converting sound. >> You like that video? Check this one out. I think you're going to love it. >> Why not advertise [music] these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have [music] done so much. People love you. People look up to you. Kevin Praath there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.