Welcome back everyone today on the Joseph Carlson show,
Barron's just released their list of their top ten stocks for
2025. These are the different value
companies that they highlight that they believe are set up for
a particularly Goodyear in 2025. Some of those companies include
companies like Alphabet and Uber, but we're going to be
going over all ten of them. I'll be giving you my thoughts
and how I would personally alter and improve this list to make it
have even better performance. Now of course we have some other
news to get to. Netflix had their live NFL games
on Sunday. They put on a pretty big event.
We'll be looking at whether or not this is going to impact
Netflix going forward. We have the robo taxi battle
heating up in 2025. Now this was dominated in the US
by Waymo in 2024. Googles Waymo was the one making
all of the headlines, but now we have some other companies
entering into the market. We have Amazon Zoox, we have
Uber and how they're going to fit into this and of course we
have Tesla. We're going to be doing a bit of
a breakdown of the robo taxi battle and then we have news
that Microsoft is now simply forcing their customers to pay
for their AI assistant, the copilot that Marc Benioff has
been calling Clippy 2 point O Well, Microsoft has a new
strategy for selling it. They're basically just saying,
hey, you have to pay for this. We'll be discussing in this
episode. So we have a lot to get to in
this episode. Let's go ahead and jump in now.
Let's go ahead and start off with the top 10 Baron stock
picks in 2025. Just to preface this, they do
this list every single year. They came out with a list of 10
stocks to buy in 2024 and they didn't do so well in 2024.
They had positive returns. In fact, it went up 11% overall
with an equal weighted portfolio of their picks, but the market
went up nearly 27%. So they did underperform by a an
amount and they go through kind of giving some explanations of
why they underperformed. Some of the companies had poor
execution, they had some issues. So Barons is playing a little
bit of catch up. They're coming off of a bad
year. They want to improve their stock
picking reputation. So they have a whole new list of
stocks here. Now again, having said that, I'm
going to be adding in how I believe this list could be
improved for 2025. So I'll give you my thoughts as
well. When we look at this, we have
first of all, Alibaba. Alibaba may be the cheapest
e-commerce cloud computing company investment in the world.
The stock is at $89.00. It trades for just 10 times
projected current year earnings, well below Amazon's 45 times.
It also sits on $50 billion net of cash, or about 25% of its
market value. So that's actually true.
They sit on a lot of cash compared to their market value.
In fact, right now Alibaba has that $50 billion in cash.
It sound a little bit over the past couple of years as they've
been shoveling it into buybacks, but they still have a lot of
cash compared to the $200 billion market cap.
Now, Baron tries to highlight what they believe the issues
are. They say the problem is China's
economic woes and government's material attitude toward the
homegrown tech companies. I think that's accurate.
China is very harsh towards their own companies.
At least the government there does not give them a lot of
slack. And in some cases, they'll give
them huge penalties for doing anything that they don't want.
Concerns about president-elect Donald Trump's, tough on China's
stances and doubts about the effectiveness of the country's
economic stimulus are also weighing on shares, which I've
pulled back roughly from the $117.00 highs.
So we have all these issues with Alibaba going on currently, and
I agree with them for the most part.
Barrett's highlights that the superstar hedge fund manager
David Tepper has Alibaba as his largest holding.
He trimmed a little bit last quarter, but it's still his
largest holding. And they say that they believe
the company knows that its stock is a bargain because they
repurchased 7% in the 1st 3/4 of 2024.
So they're aggressively buying back their stock, presumably
buying back this big dip. Alibaba is cheap relative to its
own history. It's cheap relative to its
pairs. It's sitting on a ton of cash,
and the headwinds are turning into tailwinds now, right?
To begin with, I have a stock already I would change from this
list. I don't agree with the Barron's
pitch for Alibaba for a couple of reasons.
First of all, it's true that the stock is cheap, but when we look
at the performance of this company over a longer period of
time, it paints a very grim picture.
Look at Alibaba year to date, it's up 15%.
We zoom out one year, it's up 13%.
We zoom out five years, it's down 60%.
And then we even go back an entire decade and we're down
18%, almost 19% in 10 years. Now it's gone through bouts of
decent performance, so we've had some time periods where it
looked like it's doing well, only to get Ushed back down.
And again, this is an entire decade.
When a stock goes through a decade of negative returns, it
means that there's something else going on with the business.
Either it was so incredibly overvalued to begin with, or the
business is not executing. When we look at Alibaba and any
of the fundamentals, I see a business that's actually slowing
down and growing very slowly. Right now, the revenue is
growing 5% year over year. So not only does Alibaba have
all the uncertainties that exist with operating out of China, but
it also is simply just not performing that well when we
compare it to the likes of Amazon.
Amazon is a stock that, yes, it trades at a higher starting
valuation. It has a much higher PE ratio,
but Amazon is a much better company.
We zoom out over anytime period. Amazon has had superior
performance the entire time. And although past performance is
not an indicator of future performance, it does help gauge
this company is growing, and the growth is much faster.
Amazon's growing its revenue at over double the rate of Alibaba.
Amazon has a much bigger cloud business that's growing much
faster that has higher margins. So #1 Barron's has Alibaba.
I would choose Amazon. Now, let's go ahead and take a
look at #2 and #2 they have Google.
They say here the Alphabet operates the world's dominant
search engine, but the company is under a cloud due to the
artificial intelligence driven competitive challenges and the
government's efforts to break it up.
I think those are the two biggest things.
The search engine is under a lot of stress right now.
There's a lot of people concerned about it.
And of course, the government breakup doesn't help.
As Barron's argued in a recent cover story, Alphabet should be
able to fend off competitive and regulatory challenges.
The stock's around $195. It's the cheapest of the mag 7
trading at 21 times projected 2025 earnings.
They also go into detail and argue the sum of the parts
valuation here. That's something that they did
in their outline. The company also looks
inexpensive based on these sum of the parts, which includes
search, YouTube, cloud computing, and the Android
operating system. It also has its other bets,
mainly Waymo, a leader in autonomous driving that has robo
taxis operating in four cities. We think of it as a high
multiple tech stock that isn't priced like 1.
So stock #2 is Google, and this is one that I would keep.
It's a company that I've been buying recently.
I bought it at around 170 just a month or two ago.
Now I have a lot of exposure to Google, around $100,000 of this
stock combined. But I'm OK keeping it there
because the companies at such a low evaluation and it's a high
quality company. This does happen from time to
time when this quality of a company can become disconnected.
So #2 is Google. I would keep and #3 barons picks
ASML. Few companies are more critical
to the semiconductor industry than ASML.
The Netherlands based company makes specialized lithography
machines that allow production of high performance chips used
in smartphones, PCs, data centers and which cost around
$200 million or more. Now Barron's may be using a
little bit of old information here.
The machines are now costing around $400 million or more,
more like $450 million or more in 20-30.
The pricing also looks absurd. They're going to be $500 million
plus, so they have a lot of pricing power with these
machines because nobody else has accomplished what they've
accomplished. ASML has virtually no
competition with its high end EUV machines, which uses extreme
ultraviolet light. And that's made Europe's number
two big tech company behind only Germany's SAP.
So this is one of the biggest companies in Europe.
They make this incredible expensive machine that plays
this small but critical role in the creation of semiconductors
and chips. Not the current price of
$715.00. That trades at 28 times the
estimates for 2025, which are currently $25 a share.
They say that it looks appealing after the stock has dropped 20%
in October following its cut to its 2025 revenue guidance.
Now importantly, ASML cut revenue guidance in 2025 S the
stock sold off because we're not going to earn as much revenue
next year. But in 20-30, they have
forecasts going all the way out to the end of the decade.
They didn't cut revenue estimates.
A way to think about ASML is it's like they're a toll booth
on a toll bridge and everyone needs to pay when they cross
that bridge. Some cars are just waiting to
cross the bridge a little bit later in the day than earlier.
So although they're not making as much revenue in 2025, they
should more than make up for that in 2026 or 2027.
The demand over short time cycles is cyclical, but in the
long run, they'll earn that revenue one way or another.
Now again, ASML is a company that provides a lot of guidance
on their future outlook going all the way out to 20-30 with
both revenue and margins. The company sees lithography
spending rising 10 to 20% annual rate through 2030, hitting about
55 billion at the midpoint of a recent forecast, up from 32
billion this year. So they're growing from 32
billion this year to 50 billion, 55 billion in 20-30.
Another analyst points out that ultimately, ASML's monopolistic
position and alignment with powerful secular trends
positions it as a cornerstone investment in these
semiconductor conductor supply chain.
This is one that I agree with. I would not change this for a
different company. ASML is in a position to do
really well over the next 5 or 6 years.
Investors are quick to get bored with stocks.
If they don't think it's going to have performance for one
year, they'll dump the stock. That's what a lot of investors
in Wall Street are doing right now.
But once they get back on board with this stock, it could jump
up 50%. And #4 we have Berkshire
Hathaway Co. Warren Buffett has made a few
mistakes this year. He slashed Berkshire's Apple
stake by 2/3 and left some $30 billion on the table while
incurring a big tax bill. Now, they phrase that in a very
negative way. I actually don't think that was
such a big mistake. Everything you can analyze in
hindsight. But all the gains this year,
virtually all of them came from Apple simply having multiple
expansion. So it went from A29 4PE ratio to
a 35. Warren Buffett likes holding
assets that create intrinsic value growth through revenue
margins, free cash flow. They can return that cash back
through buybacks and dividends. Now, as you can see over the
past 10 years, Apple's revenue in just the past couple of years
has been completely flat. So it makes sense to me why he's
selling it. You can say that's a mistake
because the stock has gone up. But even in hindsight, when I
judge that decision, I don't think it was such a big mistake.
I think the bigger mistake that Warren Buffett made is simply
selling Apple and then putting that money in cash.
There has to be some better place to put that money, but
he's holding it in Treasuries. He also invested little into
stocks in the past two years. The key man risk of Warren
Buffett is growing with Buffett having turned 94 years old.
They mentioned that with 310 billion dollars of cash than
most of any U.S. company, Berkshire may be the most
defensive mega cap stock. If stocks tumble, Buffett might
even put up a big chunk of that cash to work in the stock market
and potentially land an elephant size acquisition that he has
long sought for. So he has a massive amount of
cash at Berkshire right now as well.
Now this might be a surprise because I'm a big fan of Warren
Buffett's investing philosophy. I've modeled a lot of my
philosophy after it, but this is not one that I agree with.
I would swap Berkshire for a different company.
And there's a couple reasons why.
They do highlight the risk that Warren Buffett is 94 years old.
Knowing his own age, he's hired multiple lieutenants to work
underneath him. They bought stocks like
Paramount Global. That was a value trap.
Warren Buffett had to defend the purchase, and he basically said
it didn't make sense to him. And with that, you have these
lieutenants that may have to take over with $310 billion of
cash. That's a lot of money that
they're going to put to work. So this would have been better
done if Warren Buffett picked out a purchase, bought another
stock like Apple. Another thing that this points
out is that there is the potential to land an elephant
size acquisition, but I don't really buy that because that
potential has always existed throughout 2021 and 2022.
Berkshire also had a lot of cash during those time periods.
They didn't buy anything during those dips.
They didn't buy Amazon when it was $80.00 per share.
They didn't buy Netflix when it was $200 per share.
They didn't buy Meta or any company on these dips.
They could have. They have more cash now, but
they had a lot of cash then and they also didn't buy anything
during the March sell off in 2020.
So there's two huge sell offs in the market over the past five
years and Berkshire has leaned into neither one of them.
They haven't bought any significant stake in any company
during either of those sell offs.
Those are opportunities for them to exercise value investing to
buy the dip. And I didn't see it happen with
Berkshire. And #4 I would swap this company
for Netflix. I think the Netflix has more
predictable performance in the future for a couple of reasons.
It trades at a higher valuation, but it's growing its earnings at
a much faster pace. So even though it's at a 38 Ford
PE ratio, Netflix has been growing its earnings at 20 to
30% per year. Their free cash flow has seen
explosive growth over the past couple of years.
They still trade at a decent valuation and overall Netflix I
believe is set up really good for 2025.
I believe they're likely gaining a lot of subscribers this month
with Squid Game, NFL games, live events, the Jake Paul event.
I think the Q4 of 2024 is going to be a really good quarter for
Netflix. So I could see Netflix even
having incredible performance in 2024 going up nearly double.
I think it could have another great year in 2025.
Even the argument that Berkshire would be a great company in a
downturn if the market went down, I believe that Netflix
would also be a very defensive stock.
The subscriber count is very sticky in recessions or
downturns. Netflix continues to grow its
market share. So for number 4, I'd swap
Berkshire Hathaway for Netflix and #5 Barron's picks Citigroup.
Citigroup looks ready for a revival after a series of
restructuring actions taken by the CEO Jane Frazier.
They focused the bank on five divisions while exiting consumer
markets in 14 countries. City's returns remain anemic,
but Wells Fargo banking analyst Mike Mayo sees the company
hitting its financial targets and boosting its return on
tangible equity to 11% to 12% in 2026 from 7% currently.
And they have it as their top financial pick for 2025.
They say no other bank comes close.
Citi now gets 80% of its revenue from three top tier businesses,
a global service operation which includes #1 international
payment business for a corporation and a top three
credit card company. The knock on Citi is that it's a
perpetual underperformer. Mayo says that things are
changing, changing. He sees $10 a share in earnings
in 2026, up from a projected $7.00 in 2025, and he believes
the stock can double over the next three years.
This is another one that I would change for a different company.
I wouldn't be putting my money in Citibank hoping for a turn
around. It's true that they highlight
some of the upside here, and most of it has to do with
valuation. But if you get in the habit of
buying stocks purely out of valuation without considering
the greater landscape, then I think you're going to have a lot
of underperformance. Now, again, the valuation is
intriguing. It trades set a .65 price to
book, which is cheap. Even if it went to A1, you'd see
a lot of upside. It's a lot of multiple
expansion. The downside is, is that
companies like Citibank I think are being competed with with
many other fintech companies that didn't exist 10 years ago.
Now you have companies like Sofi, you have companies like
Ally Financial, and that creates more pressure for growth for
this company. So even though there could be
the potential for a big swing, another Goodyear from this
company, I would rather swap this for one that I think is far
more predictable, like one that I own, which is Salesforce.
Salesforce trades at a higher valuation, so you don't have the
potential for just massive multiple expansion, but you
don't need to have multiple expansion for this company to
grow. They're growing their revenue so
quickly and consistently, and they're growing their margins so
quickly that the company's free cash flow is exploding to the
upside. So for #5 with Citigroup, I
would change that one for Salesforce.
And number six, we have another value company.
This one's called Everest Group. At just 6 * 2025 earnings,
Everest Group is one of the cheapest stocks in the S&P 500.
That kind of valuation is often associated with troubled
companies, but Everest is the 4th largest global reinsurer
with high returns and impressive growth in recent years.
The company aims to generate 17% annual shareholder returns
through 2026. If it can achieve that, the
stock could be up 50% over the next two years.
If shares continue to languish, Everest could get taken over
given its low valuation. This is another attempt for
barons to buy a company that has potential upside through
multiple expansion. That can happen.
If the outlook changes for a company, you can get that
multiple expansion. Oi see what they're trying to do
here, but the industries they're doing it in, I think are very
risky. This is one of those situations
where I think it's basically a coin flip.
And although they highlight some of the risks, they don't
highlight nearly all of them. This is a company that, when you
look at what it's actually dealing with, it has an
extensive list of challenges it's facing.
We highlight this in Qualtrim with the AI investment risks.
The recent natural catastrophes, including Hurricane Milton and
Helen, resulted in substantial losses that are likely to impact
the company's financial results, with losses from Milton alone
projected to be between 300 and 400 million.
So on this assessment, they picked the low side, 300
million, but it could be upwards to $400 million.
It highlights here that the cost of legal claims and frequency of
legal claims is increasing. That's an added expense for the
company. They have high expenses right
now amid their reinvestment phase, competitive pressures and
casualty and property markets. They go through listing off
that. They're not the only game in
town for this industry. And then of course, there's
regulatory and geopolitical risk.
When I look at this one, I think it's really risky.
You're counting on investors to get back on board this company
that faces numerous challenges. And I'd rather swap this one for
a company that has a very clear and bright future with a very
predictable path going forward. I would swap number six for S&P
Global. It's another company that I
hold. It's one of my largest holdings.
It trades at a reasonable valuation, especially paired
against the market above a 3% free cash flow yield, and it's
growing. It's free cash flow per share
and should grow it even further in the future as more and more
debt is being renewed. The free cash flow per share
over the trailing 12 months was $16.00 for a company that's $500
per share. So that's what you're buying
when you get this company $16.00 of cash flow for $500 a share.
And then it's also going up over time.
If we look at the free cash flow per share, that's what it looks
like. This should step up at at least
15% per year. So number six, Barons chooses
Everest Group. I would swap that for S&P Global
and #7 they pick Louis Vuitton. The world's richest have never
been wealthier. But Louis Vuitton, the top
luxury goods company, hasn't been able to capitalize.
Its sales were flat in the first nine months of the year, hurt by
weakness in China, its most important market.
Louis Vuitton has more than six dozen brands or mansions.
They operate all these different incredibly valuable brands.
They really do have a good collection of them.
Fashion and leather goods dominate the company, which
doesn't skimp on quality and rarely discounts.
I do agree with this pick. I think that Louis Vuitton is a
great pick. It's a great company, very high
quality. It's trading at a reasonable
valuation. They have high margins, They
have diversified brands, and I believe they take great efforts
to protect the quality of their brand.
They never sacrifice on brand value.
So this is one that I can get behind and #8 Baron chooses
Moderna. Moderna stock down 50% this year
to $43 per share. It's one of the worst performers
in the market. So this is another one where
they're buying the dip. They're going into the very
cheap value stocks, looking for a rebound.
Shares have been hammered by disappointing code vaccine
sales, the company's heavy losses and estimated $9 a share
for 2024, and management's move to push out the year a projected
profitability until 2028 from 2026.
So far, they're not selling this pic that well.
They're highlighting all the issues and these seem like
significant issues. But unlike most biotechs,
Moderna has sizeable revenue of around $3 billion annually.
It also has a diverse pipeline, including cancer treatments in
conjunction with Merck and respiratory vaccines like flu,
COVID combinations. It also is expected to be
sitting on $9 billion of net cash by the end of the year,
equal to just over half the company's market value of 16
billion. So this is another similar to
Alibaba, where the company has so much money in cash and makes
up like half their market cap. That's a really odd situation to
be in. I believe this is one of the
weaker picks from Barons. There's a chance it could surge
up 50% or double. But this is again, a situation
where I believe Barons is basically rolling the dice.
They're just flipping a coin hoping that the stock will have
an epic recovery When Moderna faces a number of challenges and
won't even be profitable for another couple of years.
I'd rather buy another stock that's already profitable, has
its business figured out, has great growth prospects with
little disruption company like Texas Roadhouse.
This is one that I've owned in My Portfolio for a number of
years. It's done phenomenal in 2024, up
53%, not counting the dividends it pays.
I think it's positioned well to go up another 2030% in 2025.
I'd not be shocked if that's the outcome.
So #8 with Moderna, I don't agree with Barron's.
I think it's a really risky pick.
I'd rather pick something like Texas Roadhouse that I think is
more predictable. And #9 we have SLB.
The oil and gas industry is likely to supply a big chunk of
the world's energy needs for the remainder of the century, and
SLB will be there to service it. SLB is the leader in the field
with operations in more than 100 countries and it's depressed
shares don't reflect it's profitability.
The century old SLB has a strong corporate culture and it's
viewed as the Exxon Mobil of the service industry.
SLB has a fast growing high margin digital business that
uses cloud computing to help energy companies gain
operational efficiencies. Even though I think it's a
little bit risky, probably riskier than what I would
personally buy, I think there's enough upside in this stock and
I like the fact that they're diversifying into this high
margin stream of revenue. Anytime you see a stock that's
raising margins year after year, it's almost impossible to see
the price go down. You never see prices going down
on a stock as the margins are getting higher and higher.
So this one, I do believe has a very solid catalyst going into
2025 in #10 Barron's picks Uber. Uber stock has fallen 30% from
its October peak to a recent $62.00 per share as investors
worry about the robo taxis that may bypass the Uber network
after Alphabet unit Waymo, a leader in autonomous driving,
said it would launch its autonomous vehicles in Miami in
2026 without a mobility partner. So that was something that
really took the stock down was Waymo had an agreement with
Uber. They're working with them, but
then they said they're launching in a new city and they didn't
mention Uber at all. So they say that they're going
it alone and it brings into question the future of Uber.
Now the concerns seem overblown. Uber remains the dominant ride
hailing and food delivery service with over 150 million
users. I'll put a caveat in that, or at
least a correction here. Baron says that they are the
dominant food delivery service. That's not correct.
DoorDash has a much bigger market share of food delivery
than Uber, but they are the dominant overall.
If you're to group them together, they're the dominant
service where you can get anything done, whether it's food
delivery, grocery or ride hailing.
Combined with over 150 million users providing robotaxi
operations access to huge customer base, Uber argues that
aggregating autonomous and human drivers on its platform offers a
powerful combination that will benefit users by boosting
reliability. With Uber being the number 10th
pick. This is one that I also agree
with Barron's. I wouldn't swap this for a
different company. I think that Uber has a very
strong case to be made, and I say that being invested with
Google, knowing that Waymo's doing a great job rolling out to
more cities, as well as there's Tesla that has full self
driving. That's incredibly impressive.
And those do present potential threats to Uber.
But I think that most likely Uber will survive and even
thrive. They make the argument that Uber
is more strong together with human drivers and robo taxis
combined, it has a more complete offering because robo taxis are
good for most things. They can drive on on cities and
known areas, but they're not great for every situation, like
picking people up at certain airport terminals and different
things like that. They have to have specific
training for that, and it's easier said than done.
Humans can figure out those niche situations very easily.
And this leads us off to this entire debate of the robotaxi
battle. Right now, we have Waymo pulling
ahead, launching more and more cities.
And then we have Tesla, which unveiled its robotaxi concept.
So far it's still a concept, but they have immediate plans within
2025 to have their first robotaxi cars on the road.
There's other companies like Amazon that have Zooks that's
this interesting looking vehicle.
Amazon will invest through very thick and thin circumstances to
make something work. So if they believe there is a
growth path for Zooks, they'll continue to invest at a loss for
any amount of time necessary. And in fact, Zooks should be on
the road in Vegas in 2025. So we have all of these robotaxi
companies coming after Uber's market share.
Now, there's a lot of different opinions on this.
I'd say different cohorts of lines of thought.
One of them is in the Tesla camp.
If you're a hardened Tesla investor, with that as the
majority of your portfolio, you're probably under the
impression that Tesla will launch their full self driving
robotaxi network and within a year they'll have them
everywhere. They'll just be cruising across
the roads. Everyone will be using the
robotaxi network from Tesla. While that seems good in theory,
there's certain challenges. Robo taxis are actually very
localized. Getting licensing in every
single state is an issue. And then within every single
state there's local licenses. That's very difficult to operate
in every single municipality. the US is a collection of cities
that all have different rules and regulations, like how to
deal with airports and freeways, different specific local
geographic restrictions. Tesla's going to have to figure
out and map out every single one of those little novel localities
and restrictions and rules, and that's very difficult.
That's the same challenge that Zillow tried to face when they
tried to roll their business out to a home flipping business
across the US. They found out that this
business is highly localized, that real estate in one state is
very different than another. And with robo taxis, it's very
much the same. It is very different from one
state to another, one city to another.
So Uber already has all of that figured out.
Tesla's going to have to expand and figure that out as well.
And they have other limiting factors as well.
Creating a robo taxi network requires immense CapEx
investment in building the vehicles.
Tesla is going to have to manufacture each and everyone of
these vehicles, scaling them U building all of them, launching
them, maintaining all of them, doing all the repairs, finding
parking for all of them to charge at night.
Doing all of this is going to require a lot of capax.
That's going to be another big limiting factor.
So while all of this is happening, figuring out all of
these rules, scaling up, creating a network, Uber's
already off to the races. They're making money every
single month that this is happening, and they can still
remain highly competitive with their service.
If they partner a little bit with Waymo, a little bit with
Zooks, maybe some other car company comes into play, they'll
be able to partner with multiple companies to complete their
service. So while there's a lot of
different thought processes here, I think the most likely is
that Uber is going to turn out fine.
And I like this pick. Now, going on, we have the news
that Netflix had a rough time with the Jake Paul Mike Tyson
fight. The numbers that viewed that
fight were around three times their highest estimate.
So they grossly underestimated how many viewers the Mike Tyson
fight was going to get. And it seemed like Netflix
learned their lesson. They had a high confidence going
into the double NFL game on Sunday, and it seemed like they
figured it out. Netflix got through the day
without any major blunders or glitches.
And that's exactly what Netflix had to do.
This was a critical day for Netflix.
If they screwed up streaming two NFL games on Christmas Day, that
would be almost unforgivable. The NFL would have a serious
problem with Netflix. They would question their
partnership with them in the future.
They would wonder if they're going to be a good partner to
represent their brand. The NFL would be concerned about
hemorrhaging viewers from Netflix's NFL stream to the NBA.
So the fact that Netflix pulled this off, they got the errors
corrected for the vast majority of people, 99%, they had a very
high definition crispy stream. It looked great overall.
Now, there's other implications for what this means for Netflix
stock. We have Tom Rogers commenting on
how this could lead to a lot of subscriber growth.
He thinks that might be the biggest take away.
While Netflix presumably entered into this deal to help its
nascent advertising business business, and it looks like they
did a hell of a job selling advertising here, it was chock
full of of ads. Less emphasized was would this
be a big sign up day for new Netflix subscribers as the Paul
Tyson fight ended up being. I think it will be a banner day
for for signups there. Now Mike Tyson and Jake Paul had
global international appeal with Mike Tyson being such a huge
figure across the world. The NFL is mostly within the US,
but most people that watch the NFL are used to paying a little
bit of money to watch some games.
In fact, they usually pay for big packages and cable TV
services. So the proposition of just
signing up for a $7.00 a month Netflix account to watch 2 games
on Christmas Day seems easy. Seems like something easily
doable. And then during the game Netflix
use that as an opportunity to say hey, if you're a new sign
up, stick around. They showed off their massive
library and catalogue of shows. So Netflix should not only gain
a lot of subscribers on Christmas Day, but many of them
are going to stick around because Netflix has a massive
library of content. I think in the next earnings
report, Netflix will say that this was a massive success.
They fix the technical issues, they prove that they can be a
major sports streamer, offer great displays, great
transitions, a great halftime show.
They had around double the normal cameras of an NFL game to
get different on the field angles and make the viewing
experience a little bit enhanced.
It seems like Netflix is really pivoting to have these type of
major events become a more frequent thing.
This is just rumors, but across the MMA forms, there's a lot of
buzz that Netflix is now going to be at the bidding table for
UFC. Now, if I had a guess, I don't
think that Netflix would go for all of UFC to have exclusive
rights, but I think they will try to get a couple of the
biggest matches to have as live events on certain promotional
days. They'll just sprinkle in all
these big live events on top of their normal library.
And I think that's an excellent strategy going forward.
Now we finally get to this article, which the headline of
it just it just made me laugh. I, I look at this and Microsoft
is forcing its AI assistant on people and making them pay.
It's, it seems a a little out there as a headline, but when
you read about it, this is actually kind of what Microsoft
is doing. Microsoft is trying a new
approach to build excitement for its artificial intelligence
assistant, Copilot. Give it to customers whether
they want it or not. The tech company recently had a
copilot to its consumer subscription service for
software including Word, Excel and PowerPoint in Australia and
several other South Asian countries.
Along with the AI feature, it raised prices for everyone who
uses the service. So it's not like Microsoft had a
separate product called Copilot, which they somehow forced
customers to pay with. They can't legally do that.
So what they did instead was they just bundled it along with
their other products, and then they raised the prices.
They're not directly saying that they're forcing you to pay for
Copilot, but that's the assumption here.
And a lot of users don't like Copilot.
Marc Benioff, the CEO of Salesforce, has referred to
Copilot as Clippy 2 Point O, an annoying assistant that doesn't
really help you. It's something that Microsoft
had in their products a long time ago.
He's saying that that has resurfaced in the form of
Copilot. Now he's a big competitor, so
he's kind of bashing one of his competitors, but it seems like
he may be on to something here. Users are saying that this is
irritating to me as a user. Other people, they say, are
mentioning that it it reminds them of Clippy.
Now, I don't know if they've watched the interviews with Marc
Benioff or if they're independently coming to the same
conclusion, but literal customers of Microsoft are
comparing Copilot to Clippy, which is not something I want to
see as an investor in Microsoft. Now, even though Microsoft can
do this, I don't think it's right strategy.
They're forcing their customers to pay for this additional
product and in some cases annoying the customer.
It also invites regulation. I know the EU is going to be
looking at this and the abuse of the bundling that's going on
here. So it has multiple issues and I
like the strategy that Salesforce is doing where they
have their current set of customers and they try to sell
them these new additional services as Ala carte
independent additional add-ons. They're not just forcing their
customers to use agent force. So we'll see how this turns out,
but I think they're going to get a lot of pushback.
That's going to be it for this episode.
See you in the next one.