The Prof G Pod with Scott Galloway – Prof G Markets: Carvana and Corporate Governance, Hollywood vs. Microsoft, and Oddity’s IPO

Intro

In this episode of “The Prof G Pod with Scott Galloway,” Scott discusses various topics, including the need for legislation to prevent elected representatives from trading stocks with insider information, the recent ruling on Ripple’s securities law violation, the financial performance of Goldman Sachs, and the importance of corporate governance highlighted by the Carvana IPO. He also delves into the dynamics between Hollywood and Microsoft, as well as the potential IPO of Yomakiage, an AI beauty company. Stay tuned to gain insights into these intriguing subjects.

Main Takeaways

Corporate Governance and Stock Trading

• A bipartisan bill has been introduced to ban federal government officials from owning and trading individual stocks.
• Elected representatives have access to insider information, which they use to trade stocks and make profits.
• Allowing elected representatives to trade stocks with insider information undermines people’s belief in the markets and the association with the rule of fair play.
• Legislation is needed to prevent elected representatives from trading stocks with insider information.
• Investment bankers are rarely allowed to trade stocks due to insider information, while elected representatives have access to more insider information than anyone in investment banks.

Ripple’s Securities Law Violation

• A US district judge ruled that cryptocurrency company Ripple did not violate securities law when it sold its XRP token on public exchanges.
• The ruling is a faint signal and could be overturned by the court of appeals or even go to the Supreme Court.

Financial Performance of Goldman Sachs

• Goldman Sachs reported a 58% year-over-year profit drop in Q2, as predicted on the show last week, but the shares rose more than 35%.
• The decline in profits was due to exit costs of getting out of the consumer business, while their trading volume and deal making is down.
• Management took a conservative approach and threw a lot of losses to try and get it all out.

Carvana IPO and Corporate Governance

• The recent Carvana IPO highlights the need for strong leadership and oversight in companies.
• Carvana has cut costs faster than revenue declines, moving towards profitability and has been over-punished by the market.
• Carvana’s relationship with DriveTime, controlled by the founder’s father, raises concerns about conflict of interest and fiduciary obligations.
• Good corporate governance matters, and related party transactions are okay as long as they benefit the company and are at market rates.

Hollywood vs. Microsoft

• Netflix is a major beneficiary of the Ryder Strike, with a significant portion of their content production continuing.
• Tightening up password sharing has resulted in Netflix adding 6 million subscribers.
• The WGA and union should partner with studios and Netflix to go after the biggest pile of money, which is tech related to AI, particularly Microsoft.
• Content creators should unite to extract fair value for their work from tech giants like Google and Microsoft.

Yomakiage’s Potential IPO

• Yomakiage, an AI beauty company, recently went public and has the potential to be a $10 billion market cap beauty brand.
• The company’s ability to leverage machine learning to absorb several million photographs and figure out the right treatment is powerful.

Summary

Legislation Needed to Prevent Stock Trading with Insider Information

The podcast highlights the importance of introducing legislation to prevent elected representatives from trading stocks with insider information. Currently, elected officials have access to privileged information that they use to make profitable trades, undermining the belief in fair play and the integrity of the markets. By implementing regulations similar to those that restrict investment bankers from trading stocks due to insider information, the podcast emphasizes the need for a level playing field and restoring trust in the financial system.

Ripple’s Securities Law Ruling and Goldman Sachs’ Performance

The podcast discusses the recent ruling on Ripple’s securities law violation, highlighting that it is a faint signal and could be overturned in higher courts. Additionally, it delves into the financial performance of Goldman Sachs, which reported a significant profit drop in Q2 due to exit costs from the consumer business. Despite the decline, the market responded positively, indicating investors’ confidence in the company’s management and strategy.

Carvana IPO and Corporate Governance

The Carvana IPO serves as a case study for the importance of good corporate governance. While the company has shown progress in cutting costs and moving towards profitability, concerns arise regarding its relationship with DriveTime, controlled by the founder’s father. Such related party transactions raise questions about conflict of interest and fiduciary obligations. The podcast emphasizes that strong leadership and oversight are essential for companies to maintain investor trust and navigate potential conflicts.

Hollywood’s Relationship with Tech Giants and Yomakiage’s Potential IPO

The podcast explores the dynamics between Hollywood and tech giants like Microsoft, particularly in the context of content creation and fair value for creators. It suggests that Hollywood, represented by the WGA and union, should partner with studios and platforms like Netflix to leverage the tech-related AI market, dominated by companies like Microsoft. Additionally, the podcast highlights the potential of Yomakiage, an AI beauty company, which recently went public and has the potential to become a significant player in the beauty industry with its machine learning capabilities.

Conclusion

From the need for legislation to prevent stock trading with insider information to the implications of the Ripple ruling and the importance of corporate governance highlighted by the Carvana IPO, this episode of “The Prof G Pod with Scott Galloway” covers a wide range of topics. It sheds light on the complexities of the financial world, the dynamics between Hollywood and tech giants, and the potential of AI-driven companies. Stay tuned for more engaging discussions and insightful analysis.