What signals warn of empire building?

You can find more resources and tools at einvestingforbeginners.com.

In this episode, Andrew and Dave break down the recent volatility in the stock market, focusing on why certain stocks are crashing after earnings releases.

They dig into the stories behind big drops at companies like Fiserv, Chipotle, and Duolingo, exploring whether these moves are justified and what investors can learn from them.

They also debate the impact of AI on business models, the importance of understanding a company’s core strengths, and why sometimes the market’s harsh reaction is warranted.

Topics Covered:

• Why stocks are crashing after earnings releases
• The story behind Fiserv’s 40% drop
• How to spot “empire building” and why it’s risky
• Lessons from PayPal’s struggles and turnaround attempts
• Chipotle’s earnings miss and the restaurant industry landscape
• What’s really happening with consumer spending at restaurants
• Duolingo’s growth, profitability, and AI “threat”
• How to evaluate young, high-growth companies (and their management)
• The role of “moat” and competitive advantage in long-term investing
• Is the AI narrative overblown for some businesses?
• How to keep your cool when stocks drop 20%–40%

Timestamps: 00:00 Introduction: Why are stocks crashing?
01:39 Fiserv’s 40% drop and business breakdown
04:10 What Fiserv actually does (banking tech & payments)
09:00 Empire building, PayPal parallels, and management mistakes
12:00 Key metrics: revenue, margins, ROIC
17:00 Excuses vs. reality: beef prices, consumer spending
24:00 Broader economic signals: layoffs, Visa/Mastercard data
30:00 Duolingo: growth, profitability, and AI worries
33:00 Capital allocation and management track record
36:00 AI: threat or opportunity for niche apps?
42:00 How to evaluate conviction, moats, and long-term outlook
45:00 Wrapping up: learning from market reactions and avoiding panic

Resources Mentioned: Visit einvestingforbeginners.com⁠ (for calculators, tools, and more)

Have questions or want your story featured? Email the show or comment below. Your feedback shapes the podcast!

Remember, invest with a margin of safety—emphasis on the safety. Have a great week, and we’ll talk to you next time.

Timestamps are generated by artificial intelligence, and are not 100% accurate depending on the platform used for listening.

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