In this podcast, Motley Fool analysts Tim Beyers and Rick Munarriz discuss:
- Oracle‘s AI-fueled earnings.
- Dave & Busters and Chewy: Which had the better earnings?
- The Chime Financial IPO.
- Cava: Is there enough tasty growth to support a spicy valuation?
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A full transcript is below.
This podcast was recorded on June 12, 2025.
Tim Beyers: Is Cava a palate pleaser for today’s investors? We duel, you decide. This is Motley Fool Money. I’m Tim Beyers, and with me today is longtime Fool and Rule Breakers colleague Rick Munarriz. Rick, how are you feeling today? Are you caffeinated?
Rick Munarriz: I am not caffeinated, but I will be by the time people are listening to this. How’s that for a weird promise?
Tim Beyers: I like it. Today, we’re talking about Oracle’s AI-fueled earnings, good reports from Dave & Buster’s, Chewy, and the Chime IPO. You may not have heard of that. We’ll talk about it in a bit. We’ll also duel over CAVA’s prospects and take you down into the wayback machine for a big moment in Rule Breakers’ history. But first, let’s hit some headlines here. President Trump rattling the markets with some mixed messages on tariffs, talking tough while his treasury secretary hints at some delays. The clock’s ticking here, so stay tuned. This will get a little bit interesting. NVIDIA, meanwhile, is going to go big in Europe, announcing its first AI Cloud for industries and plans for 20 AI factories, CEO Jensen Wong saying that quantum computing is nearing liftoff. That should be interesting. Nuclear start-up, Oklo, surged 29% on new Air Force microreactor project. Then probably filed to raise $400 million. There’s a lot going on here. Then, heartbreakingly, Rick, Boeing‘s shares fell over 7% after a 787 Dreamliner crashed in India. It killed more than 200 people.
It’s the first full loss of that model and adds pressure ahead of next week’s Paris airshow. Not great there. Our hearts go out to all of the victims and all of their families. We’re really sorry for your loss. But let’s get into the rundown here. We’ve got three big stories and then a quickie that we’re going to turn around on. Let’s start with Oracle. Rick up over 13% on AI demand. I’m going to ask for a reaction here, but let me give you the impetus behind this triple-digit growth in data center infrastructure. CAPX more than tripled year over year. Here’s the question. Can AI and Oracle’s position as the Switzerland of datacenter infrastructure fuel what really is a hope for a year of outsized demand? Now, for a company of Oracle’s size, outsized demand means revenue growth on an all-in basis of about 15%, which they’re getting. Basic question for you here, Rick. I know you don’t know Oracle super well, but what is your expectation for AI demand? Is this the tailwind that Oracle can surf for a while? Look, Larry Ellison like to compete? He likes regatta. Maybe he’s got the tailwinds at his back.
Rick Munarriz: Yes. It’s good sailing for all these AI stocks. Now Oracle is apparently an AI stock, too, which again, it’s great. Obviously, the generative AI demand is just in its infancy right now, and it’s in its controversy and its infancy. But you’re seeing right now where companies that are benefiting from Oracle, maybe it won’t move the needle much as it would for let’s say an NVIDIA, of course, or CoreWeave, or something like that. But I do think in this case, it’s something to get excited about Oracle with. I think there’s enough demand to feed a lot of players in here, the people that are actually building the infrastructure, handling the software, and, of course, putting out the actual product. The users are not complaining outside of copyright restrictions from some of the major studios out there this week, but it is a kind of thing where I think Oracle will stand to benefit. Again, it’s not going to pick up growth to NVIDIA levels, but it’s definitely something that can pick it up from its current pace.
Tim Beyers: Triple-digit growth in that data center infrastructure business is massive. Number 2, here, let’s get to two that you know very well here from the Rule Breakers scorecard. Dave & Buster’s and Chewy. Two reports, a little bit different. Dave & Buster’s actual results were, I think, we can say, meh. But the outlook was fantastic, and Chewy crushed to the auto ship numbers. Here’s the question, Rick. Who had the better report? Who are you putting on your watch list?
Rick Munarriz: To me, the biggest Chewy’s report obviously was the better report. But Dave & Busters, this is a weird thing about the stock market that Chewy’s had strong growth. You mentioned the autoship numbers. More than 82% of their orders are now autoship on Chewy, which is pretty much the equivalent of annual recurring revenue run rate, even though these contracts are very easy to cancel, obviously. It’s not like it is for the software industry. But it’s steady. It’s growth. More importantly, their customer base is growing again. It was contracting from 2021-2023. 20.7 million customers, active customers to 20.1 million two years ago at the end of 2024. Then we saw it grow to 20.5 million, and now 20.7 million. It’s back to where it was three years ago, right when Pet adoptions were at their post-pandemic peak. That’s great for Chewy. But the stock still took a 10% hit.
I think mostly, I didn’t see a lot of negative in the report, but the stock had almost doubled over the past year. It was just like, OK, we expected better. Whereas, Dave & Buster’s, the report was terrible. It wasn’t great. It was a bad report. Comps down 8.3%, sales declining. A lot of things, except what excited investors, why the stock was up 17% on Wednesday, was that they said, hey, so far year-to-date, comps are only down 2.2%. Investors are cheering a much smaller, negative growth in the comps level than the great positive report, but that’s enough. It’s definitely enough to see Dave & Buster’s are possibly turning things around. It’s remodeled a lot of stores or doing a lot of things. The market obviously thought the Dave & Buster’s story was a lot better for investors, because that stock has basically been hit harder over the last couple of years. But I do think the Chewy report was a lot better. But to me as an investor, I think Dave & Buster’s presents possibly a better value because it’s been hit so hard, but it was definitely not the report that merited a 70% increase until we see the fully turnaround.
Tim Beyers: More proof that expectations mean everything. Number 3, quickly, Chime IPO. Tell me about this business, Rick. What excites you about it?
Rick Munarriz: This is a business that it’s a fintech platform, and it’s growing rapidly, especially with young users. There’s 8.6 million members. There was $121 billion transactions on the platform over the past year. They do a little bit of everything. It’s a digital bank, like a Sophie but also a PayPal, Venmo. It’s all that wrapped up a little consumer lending, credit building. It does all these tools. There’s a community feature to it. On the prospectus, and again, this is the funny thing, and I don’t really take it seriously. In the prospectus, one item there says that 75% of members say they will be with Chime for life, and I assure you they will not be there for life because we know things change dramatically. [laughs] But the fact that they put this in the prospectus was almost comical, but it is sticky. Revenue was up 31% last. Accelerating with 27% the year before, doing a lot of cool things. As we’re recording this, the stock is expected to go public at 27, is the price was underwritted. Won’t surprise me if it does better than that, but it’s not open yet, so we and I do not have a clear view on how we’ll close at the end of the day. But this is a company hitting the market 10, 11, $12 billion market cap. Could probably be very different by the time the market closes, and most of you’re listening.
Tim Beyers: Who knew that Chime, ticker CHYM, who knew your account came with a prenup? I didn’t know that, Rick. [laughs] Let’s take a quick break. Up next, Dueling Fools.
We’re back. Tim Beyers, here with Rick Munarriz. We call this segment Dueling Fools. For those of you who have been around for a while, we love this idea where we take both sides of an investing thesis and we debate the merits, and then you decide. We want you to listen to our arguments on CAVA, arts, delicious entrees, and sauces, worth the premium valuation. You can leave us a comment. Let us know whether you’re voting bull or voting bear. But, Rick, we always start with the bear argument, so you’re up first. Give us the bear thesis for CAVA.
Rick Munarriz: Yes. I’m a fan of CAVA. I’m a customer. I’m long-term bullish. However, I don’t think that it’s just that the fast casual chains crazy feta is the only thing that isn’t a little bit loco here right now. Let’s start with the valuation. This might not be the right investment for you if you have a fear of heights. CAVA’s trading for 128 times this year’s earnings and 107 times next year’s profit target. This is after the stock has been cut by more than half since peaking seven months ago. Its revenue and free cash flow multiples are also as wide as its corporate moniker is narrow. With the shares down 55% from their November all-time highs, you’re going to be tempted to buy on the dip. As a fan of their food, I can assure you CAVA has some pretty good dip. But even after the stock getting sliced by more than half, CAVA has still nearly quadrupled since going public two years ago. It’s been a big winner for investors over the long haul. At the time of the IPO, Tim and I were excited about the opportunities. Full disclosure, we still are. But a part of our bullish thesis was that CAVA has been selling its dips, sauces, and dressings through retailers for years. You can go to Whole Foods and pick up some of its spicy hummus or lemon herb tahini. The bullish argument was that as the chain expanded, brand awareness would grow and consumer package goods would explode.
Well, CPG sales are less than 1% of the revenue mix right now, so that really hasn’t happened. CAVA has some decent tailwinds. Its target audience reaches a young and somewhat affluent audience that will have several decades of wolfing down spicy lamb meatball bowls and crispy falafel pitas. Companies calling employees back to the office is another positive catalyst. This chain thrives during the workplace lunch hour. There are also some headwinds, and the stock, a meal at CAVA isn’t cheap compared to most quick service concepts. It’s definitely vulnerable to a softening economy. Let’s talk about cannibalization, an admittedly unappetizing term when talking about food. But when CAVA opened in Indiana earlier this year, it marked the first time that the concept has more stores in more than half of the states right now. Eventually, expansion will come to the point that opening a new location will come at the expense of CAVA’s older nearby locations. The chain’s success is inspiring other concepts to cash in on the growing interest in the healthy but flavorful merits of Mediterranean cuisine. Imitation can often be the sincerest form of battery. Now, CAVA, the company, like its menu, is certainly worth a packet premium. Comps rose an impressive 10.8% in its latest fiscal quarter. This was a period when many of the other restaurant operators, including some that are in our Rule Breakers universe, proved mortal. This is a great restaurant chain. I love culinary spelunking as a CAVA dweller, but there are other quality concepts trading at cheaper valuations. In the paraphrase, lyrical genius of The Who: You Feta, You Feta, You Bet.
Tim Beyers: I love it. Don’t get me wrong, Rick. I’m always here for a little wordplay. You never know what you’re going to get, and so I do love that. I love some CAVA. Let’s talk about the bull argument here. Here’s just a few reasons why you should be bullish on CAVA today. I’m going to give you a number here, Rick. Actually, I’m going to give you two numbers. Net income rose 10X from fiscal 2023-2024. Thirteen million to 130 million. Let me say that again. That’s 10X, Rick, 10X. Those are the heights that I love. You said this is a company that has earned its premium valuation, or that it has a premium valuation. I say it’s fully earned that premium valuation. This is also a company that does it right when it comes to expanding its menu and maximizing every square foot. Like you said, comps were up 10.8% in the most recent quarter. I think part of that, Rick, has to do with how CAVA thinks about maximizing its square footage in each of the stores. For example, in some stores, they have set aside catering business. They also have it set aside for maximizing delivery. They also do some work, putting their sauces and crazy feta and other things into grocery stores. Every CAVA is doing much more than serving you when you walk through the door. But let’s also talk team. Co-founders Ted Xenohristos and Brett Schulman still run this business day to day, and they are dreaming up new concepts.
Ted is still the chief concept officer. They dream up new concepts, new expansions, including these purpose-built kitchens that we’re talking about, almost ghost kitchens, for improving the delivery and catering business. While it might not seem like much, Rick, the roughly 36 million in free cash flow CAVA generated over the trailing 12 months. Now, that is after everything. You strip out all the stock-based compensation. You also strip out some pretty heavy capital expenditures, and you still get that 36 million in cash left over. Got a good balance sheet. They’ve got plenty of money to keep reinvesting in this business, and there’s less than 400 CAVA restaurants, 400 locations today. I don’t think it would be at all surprising, Rick, to see that location total 5X or more over the next 10-15 years. If that’s right, the price you see in CAVA today, you’re going to long for 10 years from now. There’s my bull argument. Please go ahead and leave us a comment here at Motley Fool Money to let us know what you think. We would love to hear whether or not, and if you have a bear argument or you have a bull argument, join us on the discussion boards, leave a comment here to the podcast, and let us know what you think. Our last and final section today, we’re going to go back into the wayback machine for a moment in Rule Breakers’ history and the origin of the spiffy pop. Who knows what a spiffy pop is? A spiffy pop is when a stock rises, as much or more in a single day than the value of its cost basis. The first spiffy pop in the Rule Breakers universe, the stock that actually gave rise to the term spiffy pop, was aQuantive. Rick, do you remember when we sold this stock?
Rick Munarriz: Yes, and I remember it was your recommendation to David, and you got it on the scorecard. Yeah, it was the kind of thing where we found early on that when you’re picking these disruptive growth stocks, other companies are going to want them. In this case, Microsoft, which has shown no lack of appetite in buying a potential threat or a potential opportunity. I remember vividly when it happened, and it was disappointing to us because I think aQuantive on its own could have probably still continued to be a market beater today, given the way trends and everything happened with everything. But, yeah, I remember vividly.
Tim Beyers: David recommended this in June 20th of 2007, 18 years ago, I can’t believe it’s been 18 years, Rick. Microsoft made a bid to buy out aQuantive on a spiffy pop, and in six months, we had a 151% return. That’s not bad. It doesn’t happen often, Fools. But in Rule Breakers, it does happen, and it will happen again. That’s it.
Thank you for being here on Motley Fool Money. We appreciate you here. As always, people on the program may have interest in the stocks they talk about. Motley Fool may have formal recommendations for or against. Don’t buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisers’ sponsored content provided for informational purposes only. See our Fool advertising disclosure. Please check out our show, Fools. For Rick Munarriz, I’m Tim Beyers. We’ll see you again tomorrow. Rick, thanks for being here.
