In this podcast, Motley Fool host Anand Chokkavelu and contributors Lou Whiteman and Rick Munarriz discuss:
- Chewy earnings
- CoreWeave on the hype meter
- Sezzle vs. Shopify
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A full transcript is below.
This podcast was recorded on June 11, 2025.
Anand Chokkavelu: Are we talking about the hottest stock in the market? Motley Fool Money starts now. I'm Anand Chokkavelu, and I'm joined by two of my favorite fools, Lou Whiteman and Rick Munarriz. Today, we're talking about a Shopify lawsuit lodged by another Fool's favorite. We'll bring out the hype meter on an NVIDIA-related stock, and we'll pick today's most interesting earnings. Before we dive into the rest of today's show, here are a few headlines on our radar. Inflation is still in check. The latest CPI reading has inflation at 2.4% with help from items like lower gas prices. In inflation adjacent news, the details are always morphing, but the China and US trade talks are trending with a green arrow, we'll say. Open AI is adding Google Cloud to help power ChatGPT, a shift from exclusively using Microsoft Azure and a win for Google's Cloud business. Upgrade ChatGPT from an enemy to a frenemy. The ChatGPT still threatens Google's search business. This week, Starbucks is hosting its annual leadership conference in Vegas as it keeps its back to Starbucks' aim of getting me my tall decaf Americano in four minutes or less. On earnings, we had a few notable ones from the Fool Universe. GitLab, Stitch Fix, and Chewy are all down sizably today. Lou, I'll give you the choice, which is the most interesting.
Lou Whiteman: We have a dog in our life, so my gaze naturally falls on Chewy. You're right, Chewy's down big. They're down about 10% right now. It was actually a really solid quarter. Earnings per share were just above expectations. Revenue is up 8% from last year and a little better than what Wall Street had expected. Active customers grew by almost 4% from a year ago, and those customers are spending more. They're spending about $583 annually, which is up 3.7% from a year ago. The issue, if there is an issue, well, guidance. Chewy is forecasting revenue growth to slow slightly in the current quarter to about 7.5% at the midpoint and full year sales of about 12.3 billion to 12.45 billion. That is at the midpoint. It's a bit of a downside to the $12.4 billion consensus. But, Rick, it feels to me like this is a lot more to do with macro uncertainty and what's going on with the consumer than it does anything specific to Chewy. Stocks are not cheap. Trying to get 33 times future earnings, but the growth story at Chewy appears to be intact, and that's what investors are looking for.
Rick Munarriz: One of the more frustrating things about watching Chewy in recent years was seeing its active customer base slide from 2021 all the way to 2023. It closed down 2021 with 20.7 million active customers, only default to 20.4 million active shoppers in 2022, and 20.1 million in 2023. It bounced back to 20.5 million by the end of last year, and now it's back above 20.7. That's great. Chewy played dead, and then it rolled over out of stock. But I think it has a much better report than the market's response is suggesting. The shares, they were on a tear heading into the Fresh Financials. They almost doubled over the past year. Sometimes that stock can be priced for perfection. See what I did there?
Anand Chokkavelu: I saw it, Rick. Every time we talk Chewy, I think about pets.com, maybe being 20 years too soon in the hype cycle, which brings us to our next segment, the hype meter, right after this break.
It's time for the hype meter. Rick, you've spent a career trying to separate the future MAG 7s from the Pretenders. We've got an AI hyperscalar that's backed by NVIDIA. Core Weave IPOed in late March, and as you might guess, when you mix words like AI and NVIDIA seal of approval, its stock has quadrupled in less than three months. The hypemeter goes from a 1990s era Amazon at a 1 to a pandemic era celebrity back SPAC at 10. A one is believed the hype and gets some money in now, and a 10, this is all hype. Run away. What are you ranking Core weave?
Rick Munarriz: I'm going with a three, and I wish I could go higher. This company has one of the most punchable face origin stories you'll ever hear. It started eight years ago with a couple of hedge fund Bros who bought GPUs to mine Ethereum as a hobby. They're cryptodude, and then Core Weave was initially called the Atlantic Crypto Corporation. When the crypto market crashed a couple of years later, Atlanta Crypto, they shifted gears and became Core Weave. It took advantage of the pullback and digital currencies to snap up GPUs from failed crypto mining companies like they were doing, and then refreshing its business model to use its growing arsenal of graphic chips and an infrastructure playground catering to special effects companies and generative AI start-ups. Getting in on the ground floor of an emerging industry can be pretty sweet, and Core Weave's business, it's booming. It generated 1.9 billion in revenue last year. It's on track to top 5 billion this year. Analysts see Core Weave's top line clocking in more than 11 billion next year, 16 billion in 2027, and more than 21 billion in 2028. Put another way, Core Weave's annual revenue is expected to soar tenfold in the next four years. Talk about putting the hyper or the hype in hyperscaling. But it's losing money, and the deficits do keep widening. However, analysts see Core Weave turning profitable on an adjusted basis next year and on a reported basis the following year.
There are two things I think that can trip Core Weave up at this point. The first Microsoft accounted for 62% of its business last year, and I don't think that's a big deal. Clearly, Core Weave's client base is going to grow beyond Microsoft Copilot and ChatGPT as the AI boom tosses out a bigger net. The other potential trip up does bear watching. Offering up a cloud based infrastructure platform, and it's building out data centers while also leasing capacity elsewhere is going to attract a lot of new competitors in the coming years. Is Core Weave differentiated enough to stand out, or is it just another commodity market in the making, something that the founders know all too well from their energy trading days? The amazing thing here is that Core Weave went public at 40 in late March, as you said, and for the first few weeks, you could have bought the shares in the mid 30s. In less than three months on the market, it has gone from a broken IPO to a four bagger only in New Jersey. Lou, any thoughts on Core weave or, like, a lot of us a few months ago, did you just think this was the name of a Pilates workout?
Lou Whiteman: It's a legs day for me. It's not a Core weave day. Look, I'll say this. I love equipment leasing businesses. I love the economics of these businesses. I have a lot of net worth tied up in aircraft lessers, but it works with aircrafts because airplanes, they have 50 year lives. I'm concerned about this model like loading up on debt to buy GPUs, which become outdated basically the second they're installed. That would be my big caution. Just watch the debt, watch the growth and hopefully this can keep running, but there is some risk with just taking on all these GPUs, they get old quick.
Anand Chokkavelu: Either be buying Core Weave?
Lou Whiteman: Not me.
Rick Munarriz: Not yet. Unfortunately, I didn't buy it back in March when I could have gotten it as the broken IPO, so watching sadly from the sidelines, but interested, intrigued.
Anand Chokkavelu: Right on. But you rated at three, so that's very low hype, so something [inaudible 00:08:01] .
Rick Munarriz: I think it's living up to the hype. Yes, a low score.
Anand Chokkavelu: Lou, have I heard right that two full favorites are fighting?
Lou Whiteman: You did hear right. Sezzle, who is a really interesting player in the buy now later space. They filed a lawsuit, antitrust lawsuit against Shopify, alleging that Shopify is engaging in monopolistic and anti-competitive practices to limit buy now pay later competition on its platform. Got to read into that to limit Sezzle. Look, I have a lot of respect for Sezzle, but I read this suit, and my reaction was, Come on, man. I don't get it. Sezzle isn't being excluded from Shopify. In fact, about 5% of Sezzle's revenue comes from Shopify. The complaint seems to be that someone other than Sezzle is the preferred by now pay later option on Shopify. Look, we'll see how it plays out. I'm not a lawyer. I'm not playing one on a podcast, but I don't think the courts should care that Shopify is a preferred vendor. Feels like this is a Sezzle's problem. For years, retailers have chosen not to take Amex cards or to charge fees if you pay in certain ways. It feels like the same thing to me here, guys. I don't see why Shopify should be stopped from basically doing what others have done, which is working with a preferred partner. You know what? I think the market agrees. The day this was announced, Shopify's stock was up, and Sezzle fell. I don't know. That's not the jury, but it is a jury, I think.
Rick Munarriz: If Shopify feels that it's about to lose the legal as the legal process plays out, it can always turn to Sezzle to settle now pay later, SNPL.
Lou Whiteman: There you go.
Anand Chokkavelu: Here are Motley Fool Money. We live on feedback and peanut M&Ms. To be part of that feedback or to ask a question, email us @[email protected]. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. See our fool advertising disclosure. Please check out our show notes. For Lou Whiteman, Rick Munarriz and the entire Motley Fool Money team, I'm Anand Chokkavelu. We'll see you tomorrow.
