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see this in ' 05 and ' 06 and 07 almost the same thing. The rising tide lifting all boats. Everyone was making a lot of money. Holy smokes. Nvidia absolutely just dominated earnings as always. Eight out of eight of our last earnings reports. Nvidia's absolutely crushed it. And so here they are again beating on earnings.
But at the same time as Nvidia is beating and some of our favorite stocks are up ridiculously today. You've got Axon up 17% just in the day. Circle up 35% in the day into it up 6% on the day. While we've got massive green rocket ships and green candles, a lot of people are still actively concerned that private credit is collapsing in front of our eyes.
And to some extent, they have a point of concern. In fact, even though we're continuing to see spend in artificial intelligence, it seems to be driven by increasingly fewer dollars. And that tightness for liquidity is leading to more hedging, which we can see at things like Oracle's credit default swaps.
We can see that Oracle's credit default swaps are sitting at 163.7, now the highest level since 2008 and higher than the peak we saw in late January or the middle of December of last year. And so now people are wondering, this is weird, Kevin. What's going on? The AI spending keeps going. We keep hearing about more spending commitments, yet we're also seeing CLOS's sell off.
What even does that mean? We got talk about private credit funds having a lot of stress and selling for less than what they're worth. And apparently now Robin Hood is launching a private equity venture fund. How do we reconcile all of this? At the same time as you get the Citrini report that says the world is ending and artificial intelligence is so good it's going to take over the world and then Citadel responds and says no it's not AI is actually flatlining and it's not going to take over the world don't worry which then of course leads the very AI bears to say aha it is a bubble we have over spent so what's the truth and what actually is going on out there because it would be useful to get to the bottom of And so that's what we're going to do in this video.
Uh, and yeah, forgive me. I have been out for the last few days. I was holed up in a hotel room for like 3 days. Super sick. Didn't even want to think. I'd go to sleep and then I'd have like back pain and headaches from sleeping. And then I try to get up and I'd get dizzy and I want to go back and you got chills and fever.
It It's just been a rough last few days. But we're on the up and I've had plenty of time to think about all of this for us. So, let's break this all down together. And let's start as we usually like to do with the facts. The first thing that we have to know is that yes indeed Nvidia did beat earnings.
We know this because well, they just reported. They did report about 11 minutes late. And it's worth looking at their cash flow for a moment. Just zoom in on their cash flow statement. Yes, Nvidia generates $36 billion of free cash flow. So, if you do hear that Nvidia ends up investing $30 billion into OpenAI, know that they basically spent less than one quarter of their free cash flow by reinvesting it into OpenAI, which is basically just going to funnel it right back into Nvidia's income, which Nvidia's net income did double from last year.
So, you just can't throw shade at the Nvidia numbers. Nvidia is the king of artificial intelligence right now. And if we jump into the stock tab, uh, in the Meet Kevin membership, just to find out what Nvidia's valuation is before this earnings report, just so you could see what the setup was like, Nvidia was trading for a discount at 1.68 on a PEG ratio basis.
That's a discount of about 38% to their fair market value. But let's put Nvidia and the hardware play on a shelf for right now because that's really the end of the cycle. Hardware continues to get money until it doesn't. The beginning of the cycle is where we can think about 2007. And 2007 is actually really fun to look back to because if you jump into and this will give you a lot of realism as well.
That's my goal on this channel, by the way. I'm not trying to sell you doom or gloom or bear porn or whatever. It's to sell you realism. So, let's go back to 2008 for a moment and 2007 on the S&P 500 and understand that we had our first bank collapse in 2007 in the first quarter of 2007 over here. So, the S&P 500 was selling for around $1,300.
Well, the S&P 500 ended up moving up to a new all-time high after that first collapse. But not only after that first collapse, also after BNP Paradise restricted redemptions on some of their private credit funds, which is very similar to what Blue Owl Capital is doing now. We've seen bankruptcies. We've seen private credit collapses.
Tririccolor first brands, the Jeffre lawsuits. We've seen a lot of the drama of what's coming out of private credit. But note that if we compare it back to 2007, it doesn't necessarily mean the market's ready to jump off a cliff. Because in 2007, we had similar fears in early 2007, in late 2007, and we continued to hit all-time highs until October 12th, 2007.
So, this isn't to say that you should be blind to the risks. And that's why I'm going to explain the risks that we're facing. It's to say that we want to be level-headed, that we don't want to at the very first sign of a problem run for the exits and sell everything. But we want to be level-headed. Maybe we don't want to be all in on margin.
and we want to be balanced. Now, what happened after October of 2007? Well, after October of 2007, we ended up getting the collapse of bare sterns in the first quarter of 2008, and the S&P 500 was down about 16%. Of course, the S&P 500 didn't completely collapse with an over 50% collapse until Lehman Brothers collapsed and we got all the way down to a price of 666 from a high of 1576.
Now, obviously, if you were on margin, you would have gotten absolutely hosed. You would have lost everything. And if you used emotion, you would have likely panic sold at the bottom and you would have missed out, worried about a double dip recession for the next 15 or more years. Look at that. The S&P 500 now knocking in the door of 7,000.
We actually just hit 7,000 for a hot minute there. Point is, the market over time can get through some of these issues, but you have to know when to prepare for road bumps ahead. And that's where it's useful to understand what are the road bumps we're facing. See, some of the road bumps we're facing right now have to do with collateralized loan obligation equity funds dropping as we're going through this software selloff.
This is really bad because these are some of the early tools that funds like fund managers basically can utilize to help establish private credit funds which really fuel the backbone of the AI infrastructure buildout. And so when these sell off, it's harder to generate new issuance which can ultimately slow the whole cycle down.
Take a look at these funds and then I'm going to explain how this works and why this is all a risk factor. These companies are called Eagle Point Credit, Soundpoint Meridian, Pearl Diver Credit, Oxford Lane Capital, Carile Credit. Notice they all sound like they have really fancy institutional names.
Great. All of them have lost 15 to 35% in less than 90 days. Those are massive plummets for collateralized loan obligation equity funds. Now, those are really big words. And what I'd like to do is just for a moment absolutely simplify what these mean. And so, what I'm going to do is I'm going to create an example that makes this really simple for all of us.
I want you to think about real estate for a moment. Not because I'm a real estate guy, but instead because I want you to think of, let's say you want to build a house. You're going to go to a bank and you're going to say, "Hey, I'd like to borrow money to build a house on this here plot of land." And the bank might say, "Hm, okay, we're willing to lend.7 on the dollar.
So if you end up finding $30 million, we will lend you $70 million. Ah, so you get the bright idea to AI some renderings of a beautiful building. You attach the bank lender letter saying they're going to lend $70 million and then you go look for somebody to be an equity partner at $30 million. Sounds good, right?
Because the equity partner is going to put in 30. You get the bank loan for 70. Now you got $100 million to go develop this house, right? I'm going to go build this house. Here's how the structure looks. Bank debt 70 million, equity partner, 30 million. You, the developer, zero. Sounds good. Now, who loses money first?
This is why it's very important to understand this. Who loses money first? Well, the first person to lose money is the equity partner. If this deal loses $29 million, the equity partner loses $29 million and the bank loses zero. The debtors love being in this position because they lose money second.
They're not the first loser. So, if the deal loses $35 million, the equity partner is completely wiped out and the bank has taken less than a 10% haircut. That is the point. Now, let me change these labels. What if instead of bank debt, we call that $70 million bank debt private credit? And then over here, instead of equity partner, we call this private equity.
And then instead of builder or developer, we call this asset manager taking a 2% fee uh and a 20% waterfall. Ah, now all of a sudden it makes a whole lot more sense how private equity and private equity roll up together, doesn't it? In fact, what's a private equity fund that might be coming to the market tomorrow sound like?
Oh, is it the Robin Hood Venture Fund? Yes. Yes. We're also going to talk about the Robin Hood Venture Fund in just a moment. The point is, in order for private equity to lose money, you usually see private uh so when anytime you hear private credit companies lose money, you're usually seeing private equity people lose money somewhere first.
So remember when Blue Owl, they're like, "Oh yeah, we sold a bunch of loans at 99.8% a par." Sure, but your equity funds are down like 30% or more. And we're also not entirely clear what portions of your loans you sold. Did you just sell the best stuff? So that way you can make it seem like everything is fine so you don't end up having sort of a run on your books, if you will.
Is that after all why you stopped redemptions? Probably. But what are you gonna do, right? So today we have another one. What do we have here? Private credit fund is selling $477 million, so almost half a billion dollars of assets at 94% value. Interesting. So, if private credit is so good, because all these private credit bankers keep telling us it's so good, like it's so stable, guys.
There's nothing to worry about in private credit. Yet, I mean, that's after all exactly what they're saying. I mean, here's the Wall Street Journal. You could even see it on TV. Blue Owl fallout sets off retail panic. The advisers are urging calm. Of course, the suits are saying everything is fine. Because remember, much like in that little example I gave you over here, the suits don't have the equity at stake or the debt at stake.
They take a fee. So, their fee is at stake. The last thing they want is money to go out the door. So, of course, they're not worried. Who should be worried is not only the debt holder. So, the private credit holder, but also these equity holders. And when we're seeing selloffs of the debt at 94 cents on the dollar, then that means equity holders are probably also taking a large loss either in the form of lower dividends, cut downs in net asset value, or just straight up equity selloffs via things like CLLO's dumping.
see clo equity funds equity that portion that's usually the hardest portion to get people to buy. So suits decided the easiest way to offload the bag onto individuals or retail people was basically by saying hey um we'll give you a high yield but if it sells off it's on you. People took the risk and look at this.
In 90 days, you've lost a multiplier of your annual dividend. That's Wall Street handing the bag off to retail so Wall Street can continue to collect what is it Wall Street cares about aum fees. We know this at this point. This is old news. The problem is what continues to fund the artificial intelligence buildout is heavily based on this capital stack, private credit and private equity.
And unfortunately, UBS is now saying that private credit right up here, private credit might end up seeing defaults as high as 15%. They saw it as high as 13% just 4 weeks ago. Now they're revising that up even higher to 15% which suggests that the private credit rows are actually worsening in real time.
Now defaults are currently only at 3 to 5%. Which means they expect defaults to five to 3x 3 to 5x. That's not great. So no wonder Jamie Diamond is coming out and saying that this sounds a whole like lot like what we saw in 2005 6 and 7. that it's almost the same thing that a rising tide lifts all boats, everyone's making money, and then people start making really stupid decisions.
None of that sounds good because the reality is none of it is good. And again, it doesn't mean rush for the exits. Just because we started seeing those collapsing signs in 2007 didn't mean it was time to exit. I mean, hey, we're still able to make great calls in the alpha report, and I'm not here to pitch that.
In fact, I actually didn't get because I've been so sick. I didn't raise the price. We just changed the coupon code to bearax. I gave it another two days here because I've been out. I haven't done anything. And so, I didn't catch the bear flu because I took the coupon code bearax. And I know I took coupon code bearax because guess what I said on Tuesday and Wednesday.
On Tuesday and Wednesday, I made bullish calls on Tesla and the NASDAQ and we did our deep dive fundamental analyses on Axon. We've also previously done them on Circle and into it and talked about the value of into it and these stocks have absolutely skyrocketed in the last days here. Now, some of you just this morning on just the alpha reports from the last two days mentioned you were up tens of thousands of dollars.
Some of you mentioning you were up 100 to 150% on your trades in just the last 24 hours. So, congratulations to you on the bullish calls. In case you're wondering, Kevin, why did you go bullish? Why are you saying coupon bear vax? Cuz you're not a bear and you were bullish over the last few days. Why?
Well, part of it had to do with the fact that Monday we had a big citriny bear porn selloff, which came right before we ended up having really good ADP data. But most people didn't pay attention to the ADP weekly data. I did because that's what I do. The ADP data, in case you missed it on Tuesday morning, told us that we continue to have a rebound in jobs data.
We're now at over 12,000 per week or 51,000 on a monthly pace to be more exact, which boost was a boost above expectation and a sign that the economy isn't falling off a cliff. So that is really exciting. And to me, along with where we were technically bouncing on the NASDAQ, Tuesday and Wednesday were setting up for almost certain green days.
And both of the days were 607 to 617 easy back. If you want these calls and the fundamental analysis that we do, make sure you go to meet me.com, use that coupon bearax. I hope I recover fully soon. Then we can actually raise the price here and move on to the next content releases. Now, even though I'm sick, I've still been releasing content for my course members and those alpha reports.
But what we really have to understand now is what was inside of that Catrini report and the Citadel response. And also, we got to understand, is it worth investing in that Robin Hood venture fund? Because wait a minute, if Robin Hood is basically just private equity, are they just trying to sell to retail at the top?
Is it potentially the worst time to buy the Robin Hood venture fund? We'll talk about that after we talk about the Citrini and Citadel response. So, obviously the Citrini paper, if you haven't seen it, was all about the 2008 scenario. Now, to be clear, this is just a scenario. This does not mean they actually think this is what's going to happen, but they've come through this verbalized scenario where they say, "Hey, what happens if AI is so good that it basically lays off a bunch of people?" Now, in my opinion, what they really uh don't cover a lot of is they really don't cover a lot of that bluecollar worker, that electrician, the plumber, the nurse.
And they really assume that the vast majority of the economy is driven by white collar workers who end up spending on leisure and entertainment and they completely ignore all of those hardworking people, the police, the firefighters, you name it, who also make money and who also contribute to our economy.
And so I think that makes this report relatively narrowminded, but their points still have some merit. They do say that as companies use more artificial intelligence and a Gentic AI continues to explode, which is exactly what Jensen just said in the Nvidia earnings report that a Gentic AI is taking off.
Companies lay off workers and as they lay off workers, what happens? Their margins go up and you could actually see the stock market rise to new highs first. In fact, they say potentially the NASDAQ breaking above 30,000 and the S&P 500 breaking 8,000 by October 2026. So they actually start bullish on this margin expansion.
Then though they get into this concern over hey ghost GDP. GDP says that our economy is strong, but is it? Or is it just artificial intelligence capex driven by private credit, which we've just broken down what private credit is looking like? And if private credit is mostly funding deals that are assuming annual recurring revenue will frankly keep recurring because white collar workers will keep having seats.
Then what happens when they get fired? that ARR slows down and all that PE capital winds down. Well, frankly, you end up in a deflationary spiral. It is a little bit doomer gloomer. So, I'll scroll through it quickly, but basically, here's what they say. Deflationary cycle is what you end up with. That ends up being bad for debt, of course, until the money printer turns on again.
We also end up hearing that companies like Monday, Zapier, Asana end up having it much worse because these are all companies that rely on seats, user seats, and they end up getting squeezed to their death. They come up with these uh examples where companies like Service Now end up announcing a workforce reduction which just accelerates the doom loop of if they're letting go or laying off workers then others will lay off workers and the cycle will just keep going on and on forever.
AI in other words or agentic AI will eventually become so good that it will do a lot of things for us without software platforms. For example, what do you need Door Dash for if agents can just remove the friction of you using an app at all? Basically, every worker out there can just spin up their own Door Dash platform and AI agents can just talk to each other about who's got the best deal and then your AI agent will just pick the best deal for you.
It doesn't really matter what app it is. Now, they make the argument that this is ultimately going to lead to a lot lower consumption because white collar workers are going to lose their jobs. They're going to end up becoming delivery drivers until autonomous vehicles end up replacing them and then they literally have no work.
Now, I personally do use AI to shop because I think it's very useful if I need to find a particular skiing product or a greenhouse product or whatever. And I also like to use artificial intelligence to help suggest tools that maybe I hadn't considered before. The benefit of that to me is I find I get more done faster and I do find that as I'm productive, I'm also spending a little bit more money, but I'm willing to do that because I find myself to be more productive.
Now, on the flip side, the article here makes the argument that this is going to lead to lower consumption, not more consumption. And there's probably a duality here. If they're right, there's probably a wedge that's being driven. You're probably going to find some people who end up making more money and some people who end up making less money.
And obviously, that's where you're going to see more spending and lower spending. They seem to think that pretty much 70% of the economy driving consumption is pretty much entirely driven by white collar workers. And when they lose their jobs, the whole thing spirals into a depression. I think this is a little hyperbolic and too extreme.
For example, they go as far as saying that Microsoft or Mastercard and Visa end up selling off because of stable coin positioning, but frankly, they only give a slight little note here to how both of them are already working stable coins into their systems. So, I personally think it's more likely that Visa and Mastercard are going to profit off of stable coins before they pass on some of those benefits to us.
But no problem. They have a good story, a good narrative that they end up putting together here. And they do acknowledge that in 2026, the labor market is not yet in freefall. So far, things are still okay. And hey, we do end up seeing that technology often generates more jobs. ATMs made having bank branches cheaper and therefore we had more banks which ended up leading to more teller jobs.
Same thing happened by the way in radiology. As AI started sneaking into radiology, people thought radiologists would all go bankrupt. We actually ended up hiring even more of them. So technology usually does end up leading to more jobs, not fewer jobs. So I'm not so terribly worried about this doom piece.
I do think it's a little aggressive. However, they do make an interesting note that if you are worried about this sort of great depression style doom piece, some of the best countries to live in might be Taiwan and Korea as they would benefit from the continued capital expenditures by hyperscalers like Meta, Google and otherwise.
Obviously, Nvidia is still posting record revenues as is Taiwan Semiconductor running at 95% plus utilization. Uh however, every other engine of the economy they believe would essentially be in a great depression and the worst housing markets would end up being areas like Seattle, Austin, San Francisco, and I believe there was one more.
Uh we're going to find it here really quickly. And the reason they mentioned that was because Yeah, here it was those three. Yep. San Francisco, Seattle, and Austin. as they found that those areas were the largest uh or had the largest proponent of those white collar workers that would be laid off through a gentic AI whether it was because of software programmers getting laid off or whatever.
And again, this was all if if you didn't read the whole thing, I I think I can just sort of save you the whole thing there. Uh oh, Manhattan. That was the fourth one. Yeah, here it is. Seattle, Manhattan, and San Francisco. Uh they also talk about home equity lines of credit likely spiking as white collar workers end up getting a little tighter uh as they lose their jobs.
They try to borrow to hold on to their spending and their sense of normaly for a little bit longer for as long as they can until they eventually end up getting fired and become Door Dash workers to eventually get replaced by autonomous vehicles. Right? It's doom and gloomy. Got it. But what does it tell us?
In my opinion, it actually leads and then we're going to look at some of the responses on Robin Hood. It actually gives us a little bit of a heads up as to what we could think as a potential outcome that is not even that extreme. I actually think an easy takeaway that you can take from this article without being so extremely pessimistic is I think you could make this argument very easily.
the continued wealth gap. I hate to say it, but I believe the wealth gap will continue to grow. Even if this article if this article is right, the rich will get ultra rich and the poor will get ultra poor. But even if the article is wrong, I think the rich are still going to get richer and the poor are still going to get poorer.
That's because as soon as hoop hits the fan, the Federal Reserve will drive interest rates to zero. And guess who's going to benefit off that first? Rich or people who own assets. And this is why it's very very important and we talk about this when we do our fundamental analysis in my courses on a daily basis.
I I always say this when we do fundamental analysis. I say if you're going to buy, make sure that you're buying when you're buying long-term stocks. that is you're not trying to like six month swing trade or one day day trade. If you're buying something for the long term, let that long term be 10 years.
The market in the short term is really really noisy. But in the long term, if you don't have margin debt and you're holding stocks, capital ownership of businesses, you're going to be part of this arrow right here. this side, the side that moves up, the side that continues to get poor is the side that does not have ownership.
And that could be real estate ownership like Taylor Swift owning $150 million of real estate, or that could be stock ownership. It could be a combination of both. It could be ownership in private companies. Whatever it is that floats your boat, ownership in something, your own business, that is what makes you stay on this side of the wealth gap.
You don't want to be over here. This is the nogo zone. Now, Citadel Securities did end up responding to the Citrini piece, which I find is very interesting. They actually mentioned that job postings for software engineers right now are actually rapidly rising, up 11% year-over-year. I wrote that I think this is plausible.
Houseac or Reinvest, my real estate startup, we just hired two additional software engineers as well. And so this is the chart that they refer to where they're seeing this upward trend. I added this red arrow over here just to make it a little bit more obvious. They're seeing this upward trend in Indeed job postings for software engineers.
This doesn't surprise me. And I actually think that you'll also see more Upwork hiring for software engineers as well as our economy recovers. Hopefully, knock on wood. Nobody wants a recession. But this was the interesting counterpiece that Citadel used. They use this which we've used before in the past as well to argue that hey artificial intelligence adoption and usage right now is relatively flat and then they go on to talk about the scurves of adoption and yeah the scurve of an adoption cycle is indeed a beautiful counterargument.
The scurve is basically saying hey we grow slowly then we grow fast and then we grow slowly again. That's an S-curve of growth. And a lot of people believe we're somewhere here on the artificial intelligence cycle right now. And the slowdown in private credit is exactly what's going to push us down down this road.
But in addition to that, usage slowing down. Open AAI is seeing their user numbers slow down as well. Part of that is thanks to Gemini and Anthropics buttkicking work. But could also be because people who use the AI use it and the people who don't don't. That doesn't necessarily create total addressable market.
That creates a barrier. That means the easy gains have been had and this barrier is now slower and harder and takes more energy to get through. It's kind of like getting more people to trust full self-driving. The 20-year-old dudes are ready to try it and hop on because it's pretty damn cool. And we're going to be those people riding on a laptop going 70 m an hour cuz the car is driving itself.
Don't do that. On the flip side, there are going to be people who are 70 years old and they're going to be like, "I ain't trusting no computer for a long time, and I might not be around here in that long time." It's kind of like what the boomers usually say. There are old pilots, there are bold pilots, but there are no old bold pilots.
Anyway, the point of this piece here is pretty obvious. Citadel thinks that artificial intelligence isn't booming in such a way that it's going to replace everyone's jobs. Which again then creates the question of okay well why are we over capital spending then at this point it seems like we're spending way too freaking much money on artificial intelligence and it's all being driven by private credit or private equity where it really shouldn't be especially with now the defaults that we're seeing forecast from UBS and now all of a sudden Robin Hood is trying to well dare I say rush for the exits.
Okay, maybe rush for the exits isn't the right word. Uh, dare I say try to uh pick up the cash where they can because a lot of companies might be struggling to IPO or don't want to IPO in this market. Let's explain this a little bit more clearly. So, Robin Hood uh you know Vlad, you all know Vlad, right?
Vlad the Impaler. This is Vlad the Impaler. Okay, it's not actually that Vlad, but if you've ever heard of Vlad the Impaler, it's actually kind of creepy. Vlad the Impaler. Um, he was known for literally staking people on like rounded stakes. So, the stake would like slowly work its way through their body over days and it would take days to kill people as as a form of advertising how brutal he was.
And uh apparently there was a rumor that you could leave a gold cup out on the city fountain, pure gold cup on the city fountain and nobody would steal it cuz he was that violent. And people are like, I will do anything not to get staked. There was no crime. Yeah. Oh, sorry. We aren't actually talking about that Vlad.
We're supposed to be talking about this Vlad. And this Vlad is releasing a new venture fund uh that apparently will be publicly traded potentially starting Thursday, February 26th. Uh which is interesting because we'll see how this thing trades. But this is going to be interesting. So Robin Hood RVI is a private equity fund.
It is not credit. It is the equity part. Remember equity is the riskier part. credit was that less risky part, right? The equity takes the damage first. Robin Hood is going to take a 2% management fee with no carry, so it's two and zero. Uh but, uh, you know, whatever you're buying from them, you're potentially buying at peak valuations.
You're not getting any kind of like discount. Uh, they will be waving 1% of their management fee for the first 6 months. That's probably because they realize the first swipe up is the hardest. So, you know, the first cut is the deepest. Anyway, once they get you in, they can feed you later. But apparently, they're going to get you access to stocks like Data Bricks at $134 billion valuation.
Stripe likely around $140 billion. This is a closedended fund, so they'll be 40 million shares at 25 bucks a share and that's it. And here's the really interesting problem that comes with this. Robin Hood is going to be dumping their own shares of this in this offering and the price action afterwards is going to be really interesting.
Robin Hood invested about $155 million into these venture equity positions. On day one, they're going to take about $125 million back. So, I guess they're not dumping all of it. They're going to be dumping about 80% of the shares that they had. They're going to be dumping. And the first people who buy RVI are going to be getting those shares that Robin Hood is basically dumping of those private equity companies.
Great. So now you hold shares of illquid, you know, data bricks or whatever, but it's technically liquid because you could just sell RVI, right? You just buy it, sell that. problem with RVI is going to be price discovery because there's a limited number of shares. They're just going to be 40 million shares.
If it gets a lot of hype and euphoria, those $25 shares could actually skyrocket in value. But remember, let's say that $25 share goes up to $50 a share. The underlying valuation of Stripe didn't go up. You know, you still paid $140 billion for Stripe over here. You still paid $140 billion for Stripe.
So really, the only way this value should actually be moving is if Stripe goes up or down in value. And at $140 billion, it's kind of questionable how much it's actually going to go up or down in value. Now, you might be wondering, is this just sort of a liquidity play? is, you know, Robin Hood, do they need the cash or something?
And my guess is, yeah. In fact, if you look at another sort of um, you know, old school private credit favorite that went public, you could look at the buy now pay later play CLA. This is what happened after they went public. They went public at $56 and they collapsed down to $15. That means they evaporated about $30 billion of market cap or in their case they evaporated about 74% of their market cap.
Poof gone. So we don't actually know that you paying $140 billion for Stripe is a good price. So 25 could already be overblown and Robin Hood is selling it to you at that valuation plus whatever the other companies, you know, Aura, Datab Bricks, or whatever are selling for. We don't have all of the details.
We just know that Robin Hood's going to be one of the selling shareholders dumping about 5 million shares to get this IPO going on day one. And so if this goes up because there's a limited number of shares or there's a lot of demand, the underlying value isn't changing. It's trading like a meme. This creates real liquidity risks and or real liquidity risk and in my opinion is really a liquidity grab because the problem is if a lot of people want it going in, great.
when a lot of people don't want it on the way out, it's gonna really suck because the underlying valuations haven't gone anywhere near where that share price is. I don't even think the underlying valuations of those companies align with $25 where they're going to open up at. So, if the price starts going down and all of a sudden, this would be the worst case scenario, price starts going down and all of a sudden people start wondering, uhoh, are the underlying values of Stripe and Datab Bricks way lower than what Robin Hood paid?
Could end up creating a cascade downward in the market. So, to me, this is not a very clean bet. Anything could happen here. I think this Robin Hood venture fund will really trade like a meme token. rapid ups and downs with no fundamental trajection or trajectory at all. I am staying away from it because you can't fundamentally analyze it.
The very companies they're trying to get liquidity for don't have a market of their own. So there's nothing for you to actually compare their value to. So for me, that's a hard pass. It's a sign that once again Wall Street is looking for buyers for the riskiest part of private equity, the equity part.
Remember the private credit side, which is where we're having a lot of issues in markets now. That's the part that has issues after private equity. So that makes it all nasty in my opinion. So, if you want more of my insights and more of my fundamental analysis, and I've been posting alpha reports even though I've been sick, make sure you join the meet Kevin membership over at meet.com.
Use that coupon code bearax. That'll expire Friday at 11:59 p.m. Finally get those prices raised and we've got some really cool new updates coming out. So, stay tuned. Thanks so much for being a part of the channel as well. Consider subscrib.
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