In the back and forth below, Gerardo and I discuss who had the better week last week. Sean Carter, otherwise known as Jay-Z... who has three Wall Street deals going on? Or Porter Stansberry, who is taking his research group public via a SPAC at a $3 billion valuation?
Read on for a lively discussion that includes streaming, tech stocks and NFTs.
Editor, Daily Profit Cycle
Gerardo Del Real: Who had a better week... Sean Carter, otherwise known as Jay-Z? Or Stansberry Research, otherwise known as the Beacon Street Group?
Nick Hodge: It sounds like Stansberry Research is going public via a SPAC under the name of a broader parent group, or umbrella organization, called the Beacon Street Group.
And so that's a big, big deal. I mean, it's been one of the largest newsletter brands in the country. The Motley Fool, of course, is the one we all know, but this puts a big valuation on it. This is going to be like a $3 billion deal, enterprise value. And it reveals some of the numbers, right? So revenue last year of $377 million for Beacon Street. And we all knew that it was a big group. If you follow the industry, Agora is about a $900 million, or $1 billion, company and he's a big chunk of that.
There were some other companies involved in the Beacon Street Group, but you have to believe that Porter is the big driver there. And you got to think that he's quite excited about cashing out. Interested to see what the larger implications are for the rest of the industry. But good to see a little bit of a newsletter hype there.
I'm sure Jay-Z had the better week, Gerardo. He's... goodness. Like you said, I think it was you. Somebody said this week... He's a business, man.
And so, what did he do? He had the champagne deal. He sold Tidal to Jack Dorsey’s Square (NYSE: SQ). And he's still got The Parent Company (OTC: GRAMF), a cannabis company, going on, which launched a national campaign against federal drug policies. So I'm going to call it for Jay-Z, but the Stansberry IPO or SPAC listing is exciting as well.
Gerardo Del Real: Mr. Carter had himself a hell of a week. He sold half — just half — of his Ace of Spades ownership to LVMH (OTC: LVMUY). That's the champagne. That netted him $315 million. He’s still got half.
And in a deal that I'm actually watching because it signals to me that the way that we absorb and listen to content, whether it's music or whether it's a platform like Clubhouse, where instead of chat rooms where people type, these are actual chat rooms with audio. But it signals to me that there is a shift happening.
Square announced, as you mentioned, that it's acquiring the majority of Tidal. So if you're familiar with Tidal, it's a Swedish based streaming group that Mr. Carter purchased five years ago for approximately $57 million. He is now selling a majority interest for $297 million in stock and cash.
He will join Square’s board. That's a power move for those of you who aren't paying attention out there to be on the Square board. And I am incredibly interested in seeing what Square does next, because I don't see the value-add, as it currently exists.
I don't do the fancy stuff. So maybe somebody much smarter than me could explain it? Maybe you, Mr. Hodge, can explain it. For those of you that aren't familiar with Square, it's just a little thing where you swipe your credit card and it's a financial payment service, right? What are your thoughts on that, Nick? What does that signal to you? Is there something in your mind where you can see a natural fit there?
Nick Hodge: You're going to put me on the spot. I haven't really thought about it. When I first read the headlines, I immediately thought what you thought, “What the hell does that have to do with each other?”
But as you were posing the question and I started to think about it more, and as I feel older and older, here’s my answer... The Dallas Mavericks recently announced that you can buy a ticket with Dogecoin. So the way that we pay for things, and frankly, the way the younger generation pays for things, is different. (And so are the things they're willing to pay for, which is a whole nother discussion).
And so obviously the way we're consuming media is changing, right? We've had this whole streaming revolution — the whole cord cutting trend, right?
Now instead of one bill to Comcast or DirecTV, you pay seven bills to different companies that end up totalling the same thing you were paying before. You pay your Netflix and your Disney+ and your HBO Go and this and that and your Peacock, and whatever else it is. You're Paramount plus, which was announced last week. And it's all sort of fractured and you're paying all these different bills.
Obviously everybody consumes content. But they’re now doing it on all these different platforms. So it’s how you tie them all together that becomes valuable.
Amazon has made a little bit of inroads, but one of the big winners in all of this has been Roku (NASDAQ: ROKU), for example, because it's a decentralized box that lets consume content on these different platforms.
It doesn't matter what the service is, right? Being decentralized is a big part of the future. And so if Square could become sort of like a Roku of audio things where it's collecting the payments through its payment facilities that it's already got to sell albums or access to MP3s, or streaming, or podcasts, or whatever it is, then that would be, I think, where the value is.
Gerardo Del Real: I'll add to that. Because I had some thoughts as you were pontificating. What about nonfungible tokens (NFTs)? We can now use Square and Tidal to buy NFTs, which I don't know if that's going to last.
And then that led to my next thought, well, of course it makes sense if Tidal has a concert branch, which it does because Jay-Z also owns Roc Nation, which manages a lot of the top artists, including names like Rihanna... You now have a platform, or you can pay for your weed that you're smoking while looking at Rihanna’s beautiful self and singing your heart out. You can buy some merch, use Square to pay. You can be a whole lot more transparent with the artist and cut out the middleman as Jay-Z has been known to do in his pre-music days.
And you basically control the whole distribution chain, right?
It's the farm-to-table kind of approach to anything that requires a payment. And I think it's brilliant. I think it's forward-looking. Let me read the statement by Jack Dorsey. I won't read the whole thing, but he did say the tie up comes down to one simple idea, finding new ways for artists to support their work.” And so they're going to work on new listening experiences to bring fans closer together, integrate merchandise sales and financial tools for artists.
This is a big, big move. And I suspect that the old guard — as with everything Fourth Turning — is going to have a hard time keeping up and competing. Companies better start to adapt because you're not just going to be able to unlock promotions from a vault that you've had for two years and keep selling that same model to the new generation — whether it's speculators or concert goers or subscribers to content.
I think this is a space to watch.
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.