Catching a Falling Knife: The Truth About Software Stocks Today | The Real Eisman Playbook Ep 54

**Steve Eisman** (0:00)
Hi, Steve Eisman here. On my weekly wrap, I try to both teach and convey information as objectively as possible. I try to make clear what are the facts and what are my opinions. But in today's media, it's increasingly hard to figure out what are the facts and where the facts are being shaded by opinion. That's why when I look into news events, I first go to ground news. Ground news is my solution for getting to the facts of important stories but also to see how left, right, and center are seeking to convey the same exact story. Take for example the recent headline, Trump Tells Allies Facing High Fuel Prices to Buy US Oil or Get Your Own Oil from Straight Off a Moose. That's a pretty provocative headline, ripe for reporters and commentators to shade the truth. I went to groundnews.com and clicked on that story headline. There I immediately saw four tabs, left, center, right, and bias comparison. When I clicked on left, a series of headlines appeared, all from left-leaning media sources. One headline said, Trump Warns UK., US. Won't Be There to Help You Anymore in Tyrade Over Iran War. When I clicked on the right tab, I saw headlines with a different tone. One such headline said, Trump Reproached His Allies for Lack of Support in the War. The bias comparison tab showed groundnews' own analysis of how all three political leanings, left, right and center, conveyed the same exact story. I find the groundnews system enormously helpful because it allows me to easily separate the facts from opinions. I use groundnews and I recommend you try it out. Go to groundnews.com/real for a better way to stay informed. Subscribe through my link for 40% off their unlimited access to worldwide coverage. That's groundnews.com/real, groundnews.com/real.
Hey, this is Steve Eisman. Welcome to another episode of The Real Eisman Playbook. And today we're going to talk all things software with a new guest, Rob Oliver, who is a software analyst at Baird. This is a group that has just been obliterated in the last year because of fears about AI, which we're going to get into. Investors are trying to understand what has happened to this group, why, and is there any light at the end of the tunnel. It's going to be a great conversation, really informative, and I'm really looking forward to it. And afterwards, I'll come back and discuss lessons learned. Hi, this is Steve Eisman. Welcome to another episode of The Real Eisman Playbook. So today, we're going to talk about software. And I said to my guest before he walked in that if there wasn't a war on, he'd be the most important person you could talk to. But now, maybe he's only the second most important person to talk to. So today, we have Rob Oliver, who's a software analyst at Baird. Welcome, Rob.

**Rob Oliver** (3:08)
Great, Steve. Thanks so much for having me. It's a pleasure to be here.

**Steve Eisman** (3:11)
So, you cover a group. I mean, I've never seen a group go through such tumultuous change in such a short period of time, other than the financial companies during the financial crisis. And nothing bad has really happened yet to your group. It's all supposedly coming. So, let's take a step back. Let's do a little history. Why has software been a great group to own for years? And what's happened to the group in the last six months? Let's bring everybody up to the same level, to start.

**Rob Oliver** (3:40)
Sure. Yeah, thanks. I think it's important to kind of step back. I totally agree. If you think about software, like the problems that software solves historically, doing things that companies themselves don't want to do. I mean, big companies like Disney, Netflix, Goldman Sachs, they could hire people to develop Salesforce automation or contact management software on their own. But they've decided over the years that it's better to go to the merchant market to do that.
And software companies have innovated around that. And there's been tremendous innovations from Oracle with the database to Salesforce with a cloud-based Salesforce automation solution, and many, many others. And those systems have become systems of record for these businesses. And systems of record for businesses are incredibly sticky. And change management is very hard within organizations. So the companies have traditionally had pricing power. They've been very sticky. And for the most part, they've had pretty good relationships with their customers. And they've been able, many of the successful companies, to get through a lot of the transitions in the industry, from, say, client-server days up to web-based, from perpetual license and maintenance, meaning I'm selling you a piece of software that you install in a box in your basement to something that's managed up in the cloud. Those transitions are a lot of good companies that execute well and innovate have handled, really, really well. Enter AI, and the market is extremely concerned.