Matt Frankel

They granted Shopify warrants as part of the deal at a $0.01 exercise price.

It was really a deal sweetener to be, we want exclusivity on your new product and we'll give you some equity in our company.

A similar situation occurred when Global Eve formed a cross-border logistics partnership with Shopify in 2021.

They got equity as part of the deal.

Shopify's management has specifically said several times that these investments aren't relative to the fundamentals of its business.

They're not what management's focused on.

They're smartly negotiated perks in exchange for partnerships, not a core part of their strategy.

After all, like I said, a firm literally costs next to nothing.

I don't dislike this part of the strategy.

I don't think it's a distraction from management.

Yeah, Lou kind of alluded to this, but commercial freight, which is what he's talking about there with the Honda parts and things like that, that's the highest margin part of FedEx and UPS's business, period.

Amazon, it specifically names some lucrative customers.

Honda wasn't one of them, but Procter & Gamble and 3M were, and those are major, major shippers.

even if Amazon doesn't completely disrupt the businesses of FedEx and UPS, the emergence of a major player like Amazon does create pricing pressure, especially because Amazon, with excess capacity, like Lou mentioned, has at least at the start a favorable pricing structure.

There's a solid argument to be made that if there was a real threat of disruption, we would have seen these stocks down more than 10%.

If Amazon took a 10% share of the market,

the hit to FedEx and UPS on the bottom line would probably be significantly more than 10%, especially when you think long-term.

So I'm not that worried.

I think it's really just a knee-jerk reaction.

This move might not require as much capex at first as you might think.