1 00:00:00,080 --> 00:00:02,800 Welcome back everyone. It's time that another busy 2 00:00:02,800 --> 00:00:04,840 earnings season has officially started. 3 00:00:04,880 --> 00:00:07,400 We're just past halfway through the year, which means companies 4 00:00:07,400 --> 00:00:11,960 are going to start updating us on what happened in Q2 of 2025 5 00:00:12,360 --> 00:00:14,440 and what their plans are of the future. 6 00:00:14,720 --> 00:00:18,480 This is like a ongoing report card for these companies and 7 00:00:18,480 --> 00:00:20,760 this week kicks things off. Now, if we take a look at the 8 00:00:20,760 --> 00:00:23,360 earnings calendar here, this gives us a full overview of the 9 00:00:23,360 --> 00:00:25,400 week. We have the biggest companies, 10 00:00:25,400 --> 00:00:28,760 the most important ones in the market reporting earnings Monday 11 00:00:28,760 --> 00:00:31,240 through Friday. The top group are companies 12 00:00:31,240 --> 00:00:34,480 reporting before market open. The bottom group reports after 13 00:00:34,480 --> 00:00:37,160 market close. Now, Monday, today we don't have 14 00:00:37,160 --> 00:00:39,760 that many interesting companies, basically just Schwab. 15 00:00:40,040 --> 00:00:42,600 It gets a little bit more exciting tomorrow, but we do 16 00:00:42,600 --> 00:00:46,320 have JP Morgan, Wells Fargo, BlackRock and Citibank all 17 00:00:46,320 --> 00:00:49,200 reporting tomorrow morning. Wednesday of this week is where 18 00:00:49,200 --> 00:00:51,800 things get interesting for me because that's when we have a 19 00:00:51,800 --> 00:00:55,120 SMLASML, of course, is that dominant monopolistic company 20 00:00:55,120 --> 00:00:57,680 that many high quality investors have in their portfolio. 21 00:00:58,040 --> 00:01:02,560 Notably Dev Kantasaria owns ASML and it's one that I really like. 22 00:01:02,560 --> 00:01:04,160 I have it in My Portfolio as well. 23 00:01:04,480 --> 00:01:08,760 You can see here that I have $53,000, almost $54,000 of value 24 00:01:09,040 --> 00:01:11,040 in this company. So of course, we're going to be 25 00:01:11,040 --> 00:01:13,000 going over ASML. And then moving into Thursday, 26 00:01:13,000 --> 00:01:14,360 that's the biggest day of the week. 27 00:01:14,360 --> 00:01:17,200 We have TSM, which is one of the most important companies in the 28 00:01:17,200 --> 00:01:20,000 world, not just the markets. They're reporting earnings 29 00:01:20,120 --> 00:01:22,840 Thursday before market open. Thursday after market close. 30 00:01:22,840 --> 00:01:27,160 We have Netflix, the juggernaut itself, the unstoppable stock. 31 00:01:27,160 --> 00:01:29,280 Netflix. I, of course, have Netflix in 32 00:01:29,280 --> 00:01:31,840 the story fund. It is the top position, the best 33 00:01:31,840 --> 00:01:33,880 performing company in My Portfolio. 34 00:01:34,240 --> 00:01:38,080 It's now a $146,000 position. We'll be going over my 35 00:01:38,080 --> 00:01:41,600 expectations going into Netflix this week and American Express 36 00:01:41,640 --> 00:01:43,760 will be reviewing as well. So we have a ton to get to in 37 00:01:43,760 --> 00:01:45,440 this episode. Let's go ahead and get started 38 00:01:45,440 --> 00:01:47,160 starting things off tomorrow morning. 39 00:01:47,160 --> 00:01:50,240 We have a row of banks and investment companies that are 40 00:01:50,240 --> 00:01:53,440 reporting earnings, the biggest of which is JP Morgan Chase. 41 00:01:53,800 --> 00:01:56,640 Now if we look at JP Morgan, let's bring it up here on on 42 00:01:56,640 --> 00:01:59,840 Qualtrum Insights. I look at this company and I 43 00:01:59,840 --> 00:02:02,320 really like it. I've always liked JP Morgan. 44 00:02:02,320 --> 00:02:04,920 In fact, this is one of the banks that I invested in in My 45 00:02:04,920 --> 00:02:07,360 Portfolio. If you go back to around 46 00:02:07,360 --> 00:02:11,480 20/20/2019, I held a lot of JP Morgan Chase. 47 00:02:11,520 --> 00:02:13,200 It was a company that I just really like. 48 00:02:13,640 --> 00:02:16,720 A lot of investors today are focused on fintech companies, so 49 00:02:16,720 --> 00:02:20,880 they invest in things like Sofi, Ally Financial, Robin Hood, All 50 00:02:20,880 --> 00:02:24,480 those are great as well. But many people discount, or at 51 00:02:24,480 --> 00:02:27,640 least they don't give proper credit to JP Morgan as being a 52 00:02:27,640 --> 00:02:30,840 tech first company. This company has thousands of 53 00:02:30,840 --> 00:02:34,080 developers and engineers. Their app is really, really 54 00:02:34,080 --> 00:02:36,080 good. The tool set they have is 55 00:02:36,080 --> 00:02:38,440 incredibly good. They're venturing into fintech 56 00:02:38,440 --> 00:02:40,320 in lots of different spaces and areas. 57 00:02:40,680 --> 00:02:45,200 So Jamie Dimon has LED this bank aggressively to compete with the 58 00:02:45,200 --> 00:02:48,080 likes of Apple, to compete with the likes of different tech 59 00:02:48,080 --> 00:02:50,200 companies. So I would not view JP Morgan as 60 00:02:50,200 --> 00:02:53,080 some old stodgy bank that's not updated with the times. 61 00:02:53,320 --> 00:02:55,800 They are very forward thinking and aggressive with this 62 00:02:55,800 --> 00:02:57,920 company. The performance of it has also 63 00:02:57,920 --> 00:03:00,600 been really, really good. We look at JP Morgan over the 64 00:03:00,600 --> 00:03:06,280 past year up 37%, the past five years up 189%, not counting 65 00:03:06,280 --> 00:03:08,760 dividends, of which they pay pretty hefty dividends. 66 00:03:09,040 --> 00:03:11,440 So this is a by far market beating return. 67 00:03:11,440 --> 00:03:13,880 And when we look at this company on the earnings calendar, we can 68 00:03:13,880 --> 00:03:17,240 bring it up here. JP Morgan is also on track to 69 00:03:17,240 --> 00:03:20,320 continue doing really well. For example, if we look at their 70 00:03:20,320 --> 00:03:22,960 historical performance, they don't miss on earnings that 71 00:03:22,960 --> 00:03:24,840 often. They've done it three times 72 00:03:24,840 --> 00:03:28,960 since 2023, times out of every quarter since 2020. 73 00:03:29,280 --> 00:03:31,080 So they have a very high success rate. 74 00:03:31,080 --> 00:03:33,760 I don't expect them to miss on earnings and they're also 75 00:03:33,760 --> 00:03:36,360 beating estimates by a wide margin on most of these. 76 00:03:36,360 --> 00:03:38,400 When we're looking at what to watch for going into this 77 00:03:38,400 --> 00:03:40,280 earnings, we can highlight a couple things here. 78 00:03:40,720 --> 00:03:43,640 We have macro uncertainty and credit quality. 79 00:03:44,080 --> 00:03:46,160 This is the discussion primarily with banks. 80 00:03:46,160 --> 00:03:49,560 The biggest thing is basically their loans and the quality of 81 00:03:49,560 --> 00:03:52,080 their loans. If people are paying them back, 82 00:03:52,320 --> 00:03:53,920 that's the biggest question for banks. 83 00:03:54,160 --> 00:03:56,680 If everybody paid back their loans, banks would be incredibly 84 00:03:56,680 --> 00:03:58,840 wealthy. They lose money when they lend 85 00:03:58,840 --> 00:04:00,480 out money that people aren't paying back. 86 00:04:00,720 --> 00:04:03,960 So Simply put, the quality of their loans, the credit quality 87 00:04:04,280 --> 00:04:07,400 is incredibly important. The previous quarters management 88 00:04:07,400 --> 00:04:11,400 commentary emphasize elevated macroeconomic uncertainty, 89 00:04:11,720 --> 00:04:14,520 particularly due to policy changes like new tariffs and 90 00:04:14,520 --> 00:04:17,640 ongoing global domestic risk. This prompted JP Morgan to 91 00:04:17,640 --> 00:04:20,760 increase the weightings for downside scenarios in its credit 92 00:04:20,760 --> 00:04:25,400 risk modeling, driving a $973 million allowance for credit 93 00:04:25,400 --> 00:04:27,160 losses. So in the last quarter, JP 94 00:04:27,160 --> 00:04:30,160 Morgan decided because of all these uncertainties, to give 95 00:04:30,160 --> 00:04:33,480 themselves a bit more margin of error, to give themselves a 96 00:04:33,480 --> 00:04:36,040 little bit more downside scenario with their credit 97 00:04:36,040 --> 00:04:37,920 losses. That doesn't mean they're going 98 00:04:37,920 --> 00:04:39,960 to lose money. That just means that they're 99 00:04:39,960 --> 00:04:42,200 modeling it in, they're preparing for it. 100 00:04:42,560 --> 00:04:45,520 Investors should closely watch weather actual credit 101 00:04:45,520 --> 00:04:49,560 performance to rates or remains in line with expectations and 102 00:04:49,560 --> 00:04:51,800 how further economic geopolitical developments 103 00:04:51,800 --> 00:04:55,200 influence the bank's reserve and loan portfolio quality. 104 00:04:55,840 --> 00:04:58,960 So this is again the top thing we'll be looking at, at not just 105 00:04:58,960 --> 00:05:00,560 JP Morgan, but every single bank. 106 00:05:00,800 --> 00:05:03,800 If you bring up Bank of America or any of them, it's going to go 107 00:05:03,800 --> 00:05:06,160 over these as well. Now, I don't believe this is 108 00:05:06,160 --> 00:05:08,360 going to be as bad as the downside scenario. 109 00:05:08,360 --> 00:05:10,840 Banks are modeling in their position for the worst. 110 00:05:10,840 --> 00:05:13,480 They're a bank. They always have to be on edge, 111 00:05:13,960 --> 00:05:16,360 they always have to be a little bit anxious, a little bit 112 00:05:16,560 --> 00:05:19,200 terrified. Jamie Dimon is always warning 113 00:05:19,200 --> 00:05:22,680 about hurricanes in the future, about big problems that could 114 00:05:22,680 --> 00:05:24,560 happen. And that's the right type of 115 00:05:24,560 --> 00:05:27,680 attitude you have to have to run the world's biggest bank. 116 00:05:28,080 --> 00:05:29,920 So I think they're doing the right thing, being very 117 00:05:29,920 --> 00:05:33,080 cautious, being conservative, even being a little bit anxious 118 00:05:33,080 --> 00:05:35,120 about the future. But overall, they're likely to 119 00:05:35,120 --> 00:05:37,280 come in more profitable and better than expected. 120 00:05:37,360 --> 00:05:40,920 So Tuesday's all about the banks and the financial institutions, 121 00:05:40,920 --> 00:05:42,760 which I believe, again, they're going to do better than 122 00:05:42,760 --> 00:05:44,760 expected. When we get into Wednesday, we 123 00:05:44,760 --> 00:05:46,640 have another bank, Bank of America. 124 00:05:46,840 --> 00:05:49,720 We'll know how that one's going to do by all the reports on 125 00:05:49,720 --> 00:05:51,280 Tuesday. So there's going to be no 126 00:05:51,280 --> 00:05:54,200 surprises with Bank of America. But then things start to get 127 00:05:54,200 --> 00:05:58,560 interesting when ASML reports. Now ASML is a very interesting 128 00:05:58,560 --> 00:06:02,480 company in and of itself. I'm AUS based investor, so I 129 00:06:02,480 --> 00:06:04,480 invest in a lot of US tech companies. 130 00:06:04,480 --> 00:06:06,120 I really like the companies we have here. 131 00:06:06,320 --> 00:06:08,200 Many of them are right in Silicon Valley. 132 00:06:08,360 --> 00:06:12,040 They're based out of Washington or California or Texas or 133 00:06:12,040 --> 00:06:14,960 different areas around here. So I'm familiar with those 134 00:06:14,960 --> 00:06:17,160 areas. ASML, on the other hand, is from 135 00:06:17,160 --> 00:06:19,280 the Netherlands. When I think of the Netherlands, 136 00:06:19,280 --> 00:06:23,760 I think of, for some reason in my head, I think of cow pastures 137 00:06:23,760 --> 00:06:27,320 and Greenlands and those old homes that are really pointy. 138 00:06:27,400 --> 00:06:28,760 They have the pointy roofs, right? 139 00:06:29,000 --> 00:06:32,600 Windmills, that type of thing. It just seems like an area that 140 00:06:32,800 --> 00:06:35,840 there's not much high tech happening, but in the 141 00:06:35,840 --> 00:06:38,520 Netherlands they have one of the most sophisticated science 142 00:06:38,520 --> 00:06:41,320 experiments ever of humankind going on, and that's the 143 00:06:41,320 --> 00:06:43,920 creation of their ultraviolet lithography machines. 144 00:06:43,960 --> 00:06:46,640 These are incredible machines. They're massive, and they cost 145 00:06:46,640 --> 00:06:49,960 hundreds of millions of dollars. And ASML is the only one that's 146 00:06:49,960 --> 00:06:52,760 capable of doing this. Other people are trying to copy 147 00:06:52,760 --> 00:06:54,960 them, and so far they haven't been able to do it. 148 00:06:55,000 --> 00:06:57,240 ASML is now trading with a bit of momentum. 149 00:06:57,240 --> 00:07:00,160 It's actually not doing that. In fact, this company continues 150 00:07:00,160 --> 00:07:04,400 to move up 15 now almost 16% year to date, beating out the 151 00:07:04,400 --> 00:07:09,960 indices and IT it got as low as $595 during the April lows 152 00:07:09,960 --> 00:07:12,520 because of the tariff dip. Now one thing I'll note with 153 00:07:12,520 --> 00:07:16,600 this company is that it is a bit more lumpy in its sales than 154 00:07:16,600 --> 00:07:18,800 most other companies. For example, if we look at the 155 00:07:18,800 --> 00:07:21,800 trailing 12 month metrics, you can see that the free cash flow 156 00:07:21,800 --> 00:07:25,440 spiked in 2022. Then it went down to $2.7 157 00:07:25,440 --> 00:07:28,080 billion. It went down like 70% and then 158 00:07:28,080 --> 00:07:30,040 it spiked again. They got a bunch of receipts. 159 00:07:30,040 --> 00:07:32,720 They basically accumulated all the money that they've been 160 00:07:32,720 --> 00:07:36,640 selling these devices for. And this just means that the 161 00:07:36,640 --> 00:07:39,600 cash flow is not a subscription based cash flow. 162 00:07:40,040 --> 00:07:43,160 There is some service oriented cash flow, but most of it is 163 00:07:43,160 --> 00:07:46,320 from selling these devices and then collecting payments and 164 00:07:46,320 --> 00:07:48,760 sometimes more of those payments are collected in one quarter 165 00:07:48,920 --> 00:07:51,000 than the other. But that doesn't mean that the 166 00:07:51,000 --> 00:07:54,320 business is unpredictable because these customers have to 167 00:07:54,320 --> 00:07:57,920 buy these devices. So even though the cash flows 168 00:07:58,200 --> 00:08:02,240 make the company appear highly volatile and unpredictable, the 169 00:08:02,240 --> 00:08:04,680 underlying company is very predictable. 170 00:08:04,880 --> 00:08:06,960 They have a device that people have to buy. 171 00:08:07,320 --> 00:08:10,760 Whether they buy them today or tomorrow is up for debate, but 172 00:08:10,760 --> 00:08:12,760 they do have to buy them on a trailing basis. 173 00:08:12,760 --> 00:08:16,920 It trades at a healthy 3 1/2% free cash flow yield, A25 4PE 174 00:08:16,920 --> 00:08:19,000 ratio. In the meantime, they're growing 175 00:08:19,000 --> 00:08:20,520 their earnings per share rather fast. 176 00:08:20,840 --> 00:08:23,680 You can see the EPS growth here. I like everything I'm seeing 177 00:08:23,680 --> 00:08:26,040 fundamentally with the company going into these earnings. 178 00:08:26,160 --> 00:08:28,400 Now we can bring up ASML hair on the calendar. 179 00:08:28,480 --> 00:08:31,080 We can take a look at how they do historically during earnings. 180 00:08:31,080 --> 00:08:33,120 The blue dots are where they beat their earnings per share 181 00:08:33,120 --> 00:08:37,200 estimates and since Q3 of 2020, they've missed on earnings 2 182 00:08:37,200 --> 00:08:39,640 times. They are highly likely to be 183 00:08:39,640 --> 00:08:41,200 earnings. If we switch over to the 184 00:08:41,200 --> 00:08:43,679 revenue. They have far less control over 185 00:08:43,679 --> 00:08:45,960 their revenue. Again, a lot of this comes down 186 00:08:45,960 --> 00:08:49,640 to the lumpiness of their sales. O, the earnings can be accounted 187 00:08:49,640 --> 00:08:52,320 for with the net income. The top line revenue is far less 188 00:08:52,320 --> 00:08:54,520 predictable. O we could see a situation where 189 00:08:54,520 --> 00:08:56,800 they have a slight miss on revenue and they be on their 190 00:08:56,800 --> 00:08:58,880 earnings per share. When we look at things to watch 191 00:08:58,880 --> 00:09:01,640 for with this one, it highlights a couple of the biggest points 192 00:09:01,640 --> 00:09:05,160 here, the EUV system sales and productivity milestones. 193 00:09:05,320 --> 00:09:08,680 SM LS first quarter showed strong performance in EUV system 194 00:09:08,680 --> 00:09:13,160 sales, contributing to 3.2 billion and 5.7 billion net 195 00:09:13,160 --> 00:09:16,120 system sales. Notably, gross margins exceeded 196 00:09:16,360 --> 00:09:20,560 expectations at 54%, driven by productivity milestones, already 197 00:09:20,560 --> 00:09:22,960 installed EUV systems and favorable mix. 198 00:09:23,280 --> 00:09:25,880 Investors should keep an eye on how these factors affect the 199 00:09:25,880 --> 00:09:28,640 upcoming quarters, margins and overall profitability. 200 00:09:28,960 --> 00:09:31,480 Now we have a metric for how many systems are actually 201 00:09:31,480 --> 00:09:33,560 selling in. We go down. 202 00:09:33,560 --> 00:09:35,640 It's this brown graph right here. 203 00:09:35,720 --> 00:09:38,280 And keep in mind, these systems are dramatically more expensive 204 00:09:38,280 --> 00:09:40,280 today than they were two years ago. 205 00:09:40,360 --> 00:09:42,280 The other thing that they're going to be commenting on in 206 00:09:42,280 --> 00:09:45,360 this earnings report is tariff and macro uncertainty, 207 00:09:45,640 --> 00:09:48,600 especially with just this past week with President Trump 208 00:09:48,600 --> 00:09:52,040 launching a set of new tariffs threatening Europe with a 30% 209 00:09:52,040 --> 00:09:53,720 tariff. They're certainly going to have 210 00:09:53,720 --> 00:09:56,160 some commentary on it. My guess is that they're not 211 00:09:56,160 --> 00:09:58,320 going to be as concerned about it as they once were. 212 00:09:58,600 --> 00:10:01,240 We know how this works. There's a reason that the market 213 00:10:01,240 --> 00:10:03,920 is not concerned about it. There's a reason that ASML 214 00:10:03,920 --> 00:10:06,960 investors are not selling out of the company out of threat of 215 00:10:06,960 --> 00:10:09,040 Trump's tariffs. It's because investors are 216 00:10:09,040 --> 00:10:13,240 realizing how Trump does deals. He does a lot of big, bold 217 00:10:13,240 --> 00:10:16,200 moves. He uses his negotiating tactics. 218 00:10:16,400 --> 00:10:19,200 We know that that's part of his strategy and investors aren't 219 00:10:19,200 --> 00:10:21,640 quite as concerned about it. The other big thing we'll hear 220 00:10:21,640 --> 00:10:25,520 about with ASML in particular is part of the huge growth of this 221 00:10:25,520 --> 00:10:27,960 company is reliant on artificial intelligence. 222 00:10:28,520 --> 00:10:31,960 Now my thoughts are AI is not overstated. 223 00:10:32,240 --> 00:10:35,360 It's not reaching an end. We are just getting started with 224 00:10:35,400 --> 00:10:36,920 AI. I believe that we're literally 225 00:10:36,920 --> 00:10:39,800 just getting ramped up with it. We're in the first or second 226 00:10:39,800 --> 00:10:41,800 ending with it. I think that this is going to be 227 00:10:41,800 --> 00:10:44,800 a massive long term trend. It's like the beginning of the 228 00:10:44,800 --> 00:10:46,480 Internet. If you didn't get through the 229 00:10:46,480 --> 00:10:48,960 Internet after year 2, that's just getting started. 230 00:10:48,960 --> 00:10:52,000 ASML realizes that growth in artificial intelligence is one 231 00:10:52,000 --> 00:10:54,640 of their key drivers of revenue, they say, with memory and 232 00:10:54,640 --> 00:10:56,640 manufacturing playing substantial roles. 233 00:10:56,800 --> 00:11:00,000 ASML forecasted install base management revenue to exceed 234 00:11:00,240 --> 00:11:03,440 2024 levels due to its increase in service demand. 235 00:11:03,440 --> 00:11:07,000 So ASML is going to install more devices this year than last 236 00:11:07,000 --> 00:11:08,440 year. So if you think things are 237 00:11:08,440 --> 00:11:10,520 slowing down, it's just not the case. 238 00:11:10,960 --> 00:11:13,880 Another thing I'll highlight about ASML is their financial 239 00:11:13,880 --> 00:11:15,480 position in cash flow management. 240 00:11:15,840 --> 00:11:18,360 This is a company that's incredibly profitable. 241 00:11:18,640 --> 00:11:21,000 They generate far more money than they know what to do. 242 00:11:21,280 --> 00:11:23,640 So it's not a CapEx heavy business where they're 243 00:11:23,640 --> 00:11:26,320 constantly making money, throwing it all back in capital 244 00:11:26,320 --> 00:11:29,000 expenditures. Although CapEx and R&D is a 245 00:11:29,000 --> 00:11:32,840 significant expense, they have more than enough money, so much 246 00:11:32,840 --> 00:11:37,560 so that they do buy backs and boy, does ASML love buybacks. 247 00:11:37,560 --> 00:11:38,960 Let's take a look at the balance sheet here. 248 00:11:38,960 --> 00:11:41,880 We'll look at it over the past five years and we can look at 249 00:11:41,880 --> 00:11:44,600 the cash balance. Again, this is in USD, so we 250 00:11:44,600 --> 00:11:48,440 have $10.62 billion USD. If we convert that, we can look 251 00:11:48,440 --> 00:11:51,040 at it. It's $9.1 billion in euros. 252 00:11:51,480 --> 00:11:55,200 Now this is going to go down for a third quarter in a row. 253 00:11:55,520 --> 00:11:59,120 So you'll see the cash balance step down and step down every 254 00:11:59,120 --> 00:12:02,080 quarter, and that's intentional. That's a good thing. 255 00:12:02,360 --> 00:12:05,640 The reason why is what they're doing is buying back shares 256 00:12:05,680 --> 00:12:08,520 every single day. The share count decline should 257 00:12:08,520 --> 00:12:11,840 speed up, not slow down. Overall, looking at ASML this 258 00:12:11,840 --> 00:12:14,400 week, I believe it's a good week to be a shareholder. 259 00:12:14,720 --> 00:12:17,200 The company could trade up or down a little bit with some 260 00:12:17,200 --> 00:12:20,800 headline news of a slight miss or a slight beat on earnings per 261 00:12:20,800 --> 00:12:23,000 share. But the longer story, the bigger 262 00:12:23,000 --> 00:12:26,800 picture here, is that ASML is incredibly well positioned to be 263 00:12:26,800 --> 00:12:29,880 a key component in the overall AI sphere. 264 00:12:30,120 --> 00:12:32,320 It's a company that will continue to grow, gain market 265 00:12:32,320 --> 00:12:35,880 share, and even, as would be competitors, China working on 266 00:12:35,880 --> 00:12:38,960 their EUV machines. Even if they do catch up to some 267 00:12:38,960 --> 00:12:41,760 degree, FML has massive distribution. 268 00:12:42,240 --> 00:12:45,960 Technological superiority is only one part of their overall 269 00:12:46,000 --> 00:12:48,240 dominance. There's other aspects to it. 270 00:12:48,360 --> 00:12:51,200 So I'm still invested in ASML. I'm not selling a single share. 271 00:12:51,360 --> 00:12:53,760 Moving further down the week, we get into Thursday, which is the 272 00:12:53,760 --> 00:12:56,880 biggest day of the week, and we have TSM to kick things off. 273 00:12:56,880 --> 00:12:58,360 Let's go ahead and take a look at this one. 274 00:12:58,920 --> 00:13:01,600 TSM is a company that's had incredible performance over the 275 00:13:01,600 --> 00:13:03,520 past five years. In the past five years, they've 276 00:13:03,520 --> 00:13:07,800 returned 246%. So massive outperformance by 277 00:13:07,800 --> 00:13:10,320 holding this one. And investors may be asking if 278 00:13:10,320 --> 00:13:13,400 the ride is over for TSM, if the best days are behind it. 279 00:13:13,800 --> 00:13:16,800 I don't believe so. I believe that TSM is well 280 00:13:16,800 --> 00:13:20,440 prepared for the future. TSM is again similar to ASML, 281 00:13:20,440 --> 00:13:22,800 one of the most fundamentally strong companies in the world. 282 00:13:23,120 --> 00:13:25,240 If we look at some of the metrics here, for example, the 283 00:13:25,240 --> 00:13:28,360 past year, they've grown revenue by 40%. 284 00:13:28,800 --> 00:13:30,680 So massive growth in overall revenue. 285 00:13:30,680 --> 00:13:33,920 Just incredible to see the EBITDA and the financial metrics 286 00:13:33,920 --> 00:13:35,480 follow. They even have faster growth 287 00:13:35,480 --> 00:13:40,040 here, 42% EBITDA growth, net income growing 52%. 288 00:13:40,320 --> 00:13:42,440 We have free cash flow. This has also grown 289 00:13:42,440 --> 00:13:46,840 substantially, 72%, so it's a bit more lumpy, but again, over 290 00:13:46,840 --> 00:13:48,560 the long term it's highly predictable. 291 00:13:48,680 --> 00:13:52,760 TS Ms. earnings per share growth are growing at 52% over the past 292 00:13:52,760 --> 00:13:55,560 five years. It's a bit slower at 26%, but 293 00:13:55,560 --> 00:13:58,360 you can see the trends. In a lot of ways, ASML and TSM 294 00:13:58,360 --> 00:14:00,000 are similar in their investment thesis. 295 00:14:00,320 --> 00:14:02,800 They both are uniquely positioned to manufacture the 296 00:14:02,800 --> 00:14:05,640 hardware required for AI to do its thing. 297 00:14:05,960 --> 00:14:09,160 For companies to build lots of AI devices, they have to go 298 00:14:09,160 --> 00:14:11,120 through TSM. It is the bottleneck to creating 299 00:14:11,120 --> 00:14:14,160 the hardware to run it. Now TSM has a couple 300 00:14:14,160 --> 00:14:16,880 competitors. So ASML actually has fewer 301 00:14:16,880 --> 00:14:20,280 competitors than even TSM. But TSM is not in a highly 302 00:14:20,280 --> 00:14:23,320 competitive market. It is very concentrated, leading 303 00:14:23,320 --> 00:14:25,520 TSM to have incredible financials. 304 00:14:26,000 --> 00:14:28,480 When we look at the company again, many of the things that 305 00:14:28,480 --> 00:14:30,960 we look at are very similar to ASML. 306 00:14:31,480 --> 00:14:34,320 TSM almost never misses on their earnings per share. 307 00:14:34,480 --> 00:14:37,480 They've missed one time since Q3 of 2020. 308 00:14:37,800 --> 00:14:39,680 You'll see that they miss a little bit more frequently on 309 00:14:39,680 --> 00:14:41,440 the revenue. So again, we could see a 310 00:14:41,440 --> 00:14:44,240 situation where they beat on their earnings per share, they 311 00:14:44,240 --> 00:14:46,840 miss slightly on the revenue. That's not a problem. 312 00:14:47,080 --> 00:14:49,360 If you see that headline, there is nothing wrong. 313 00:14:49,560 --> 00:14:51,680 They've done so in the past and they still have incredible 314 00:14:51,680 --> 00:14:53,600 gains. We look over the biggest things 315 00:14:53,600 --> 00:14:56,000 to watch for going into this earnings and it's a lot of the 316 00:14:56,000 --> 00:14:58,320 same points. We'll look at the AI related 317 00:14:58,320 --> 00:15:00,600 demand projections. We've already heard a lot of 318 00:15:00,600 --> 00:15:04,080 commentary from ASML, but we'll get a second opinion on it with 319 00:15:04,080 --> 00:15:06,000 TSM. We'll look at their capital 320 00:15:06,000 --> 00:15:08,520 expenditure plans. We'll look at the geopolitical 321 00:15:08,520 --> 00:15:10,880 risks and tariff impacts. They're, of course, going to 322 00:15:10,880 --> 00:15:13,800 have commentary on that as well. But overall, my thoughts are the 323 00:15:13,800 --> 00:15:17,000 same on TSM as they are on ASML. These companies are 324 00:15:17,000 --> 00:15:19,640 indispensable. There is an AI wave that's 325 00:15:19,640 --> 00:15:22,040 continuing to happen, and I don't think you should bet 326 00:15:22,040 --> 00:15:23,720 against it. These companies will continue to 327 00:15:23,720 --> 00:15:25,720 live up to the hype. Now moving throughout the week, 328 00:15:25,720 --> 00:15:29,680 we have GE reporting earnings. This is one that I I was never 329 00:15:29,680 --> 00:15:32,280 going to invest in this company. It's so far out of my 330 00:15:32,280 --> 00:15:34,440 wheelhouse. It's so far out of what I focus 331 00:15:34,440 --> 00:15:37,960 on, what I know. GE seems like a company that 332 00:15:37,960 --> 00:15:41,600 would have lots of struggles and operational complexity, lots of 333 00:15:41,600 --> 00:15:44,240 issues, and they're proving just the opposite. 334 00:15:44,440 --> 00:15:46,680 This company has done incredibly well. 335 00:15:46,960 --> 00:15:49,560 Look at their actual performance compared to their estimates. 336 00:15:49,840 --> 00:15:52,240 They're beating almost every single time and they're beating 337 00:15:52,240 --> 00:15:54,400 by a wide margin. When we look at the performance 338 00:15:54,400 --> 00:15:57,480 of this company's stock price, it's also just astounding. 339 00:15:57,880 --> 00:16:00,920 GE has been an astounding investment over the past five 340 00:16:00,920 --> 00:16:02,240 years. One of the investors to 341 00:16:02,240 --> 00:16:05,200 highlight this is Chris Hohn, one of my favorites. 342 00:16:05,200 --> 00:16:07,240 He is an incredible super investor. 343 00:16:07,240 --> 00:16:10,200 I've done a lot of content on Chris Hohn, but he invested in 344 00:16:10,200 --> 00:16:14,600 GE knowing that they're creating these engines that in many cases 345 00:16:14,600 --> 00:16:17,680 no other companies doing. So it's the same type of thing, 346 00:16:17,680 --> 00:16:20,920 a little bit like ASML. They have this unique, very 347 00:16:20,920 --> 00:16:24,080 advanced manufacturing process that no other company has the 348 00:16:24,080 --> 00:16:27,600 time or wherewithal to even invest in or create themselves. 349 00:16:27,960 --> 00:16:31,080 When we look at the performance of GE over the past five years, 350 00:16:31,080 --> 00:16:36,920 it's up 631%, just remarkable. Year to date, it's up 54%. 351 00:16:37,000 --> 00:16:39,880 And congratulations, every GE investor that realized this is 352 00:16:39,880 --> 00:16:41,840 going to happen before the market did. 353 00:16:41,840 --> 00:16:44,360 But I don't feel bad for missing this one because it was really 354 00:16:44,360 --> 00:16:47,160 one I was never going to get. This is one that I could never 355 00:16:47,160 --> 00:16:50,760 see myself investing in. Now moving on to Thursday after 356 00:16:50,760 --> 00:16:53,640 market close, we get to a company that I have invested in 357 00:16:53,640 --> 00:16:56,360 that's also done incredibly well, Netflix. 358 00:16:56,360 --> 00:17:00,520 Netflix's stock price today is $1269. 359 00:17:00,800 --> 00:17:04,119 It's up 1.9% on the day. If we look at the performance of 360 00:17:04,119 --> 00:17:07,480 this company year to date, it's up 42.6%. 361 00:17:08,079 --> 00:17:11,599 The past one year it's up 92%. So it's one of the the best 362 00:17:11,599 --> 00:17:13,640 performing, outperforming basically all the big tech 363 00:17:13,640 --> 00:17:16,640 companies over the past year. And then in the past five years, 364 00:17:16,640 --> 00:17:19,760 if we look at Netflix, at the Lowe's, it got below $200 per 365 00:17:19,760 --> 00:17:22,480 share. And again, today it's near $1300 366 00:17:22,480 --> 00:17:27,200 per share, making Netflix A6 X from the Lowe's. 367 00:17:27,599 --> 00:17:31,760 So an incredible performer buying it during almost any time 368 00:17:31,760 --> 00:17:33,280 period. You don't have to time the 369 00:17:33,280 --> 00:17:34,880 actual dip. You could have bought it all 370 00:17:34,880 --> 00:17:37,400 along the way, which is precisely what I did. 371 00:17:37,760 --> 00:17:41,400 It is true that I did some buys during the very lowest point of 372 00:17:41,400 --> 00:17:43,720 Netflix. I was still optimistic during 373 00:17:43,720 --> 00:17:47,400 that time period, but I also bought it all the way up when 374 00:17:47,400 --> 00:17:49,480 investors said, oh, I missed the dip in the recovery. 375 00:17:49,720 --> 00:17:53,520 Netflix kept recovering. Now it's at nearly $1300 per 376 00:17:53,520 --> 00:17:55,600 share. Netflix is the largest position 377 00:17:55,600 --> 00:17:58,120 in My Portfolio. Overall, it's around a 12% 378 00:17:58,120 --> 00:18:00,760 position, and it's the biggest gain in My Portfolio. 379 00:18:01,080 --> 00:18:03,320 And I felt strongly about this company for a long period of 380 00:18:03,320 --> 00:18:05,720 time. I've made so many videos 381 00:18:05,800 --> 00:18:09,040 outlining Netflix, trying to get investors interested in this 382 00:18:09,040 --> 00:18:11,560 company, and there's always been a bit of resistance. 383 00:18:11,880 --> 00:18:14,160 People always seem to underestimate the Moat the 384 00:18:14,160 --> 00:18:18,000 company has, how powerful the earnings could be, and even 385 00:18:18,000 --> 00:18:20,560 professional investors, some of the biggest ones in the world, 386 00:18:20,760 --> 00:18:23,960 are very skeptical of it. In December of 2022, I authored 387 00:18:23,960 --> 00:18:26,840 a paper on Netflix and went through the overall state of 388 00:18:26,840 --> 00:18:28,160 Netflix. At this time. 389 00:18:28,160 --> 00:18:31,640 Netflix traded at $316.00 per share, so it was still at a 390 00:18:31,640 --> 00:18:34,600 remarkable deal. Looking back, and this is right 391 00:18:34,600 --> 00:18:37,440 after Bill Ackman had sold out of the company, stating that it 392 00:18:37,440 --> 00:18:40,520 was too unpredictable for his concentrated portfolio. 393 00:18:40,520 --> 00:18:42,920 I stated that I strongly disagree with both the market 394 00:18:42,920 --> 00:18:45,000 and Bill Ackman. I don't think things are so bad 395 00:18:45,000 --> 00:18:46,880 for Netflix and I don't think that the company is 396 00:18:46,880 --> 00:18:49,240 unpredictable. In fact, I believe Netflix is 397 00:18:49,240 --> 00:18:51,200 one of the most predictable companies in the market. 398 00:18:51,240 --> 00:18:54,720 I ended this note by saying that the business is more stable and 399 00:18:54,720 --> 00:18:56,840 predictable than it's ever been before. 400 00:18:57,080 --> 00:19:00,320 That was at $300 per share. Over the course of a year or so, 401 00:19:00,320 --> 00:19:05,160 Netflix stock price doubled from $300 per share up to $718. 402 00:19:05,440 --> 00:19:08,720 This was in August of 2024. I wrote another note. 403 00:19:09,040 --> 00:19:11,840 This one is another five page summary going over my ongoing 404 00:19:11,840 --> 00:19:14,440 thesis of Netflix. And at the end of all of this, I 405 00:19:14,440 --> 00:19:17,720 summarized it by saying that I believe Netflix stock would 406 00:19:17,720 --> 00:19:21,720 still need to rise significantly to make the long term future 407 00:19:21,720 --> 00:19:24,360 expected returns in line with the market. 408 00:19:24,680 --> 00:19:28,440 IEI believe it's undervalued. After doubling from the lows, 409 00:19:28,440 --> 00:19:30,880 this company is still dramatically undervalued. 410 00:19:31,000 --> 00:19:34,560 Since August of 2024, Netflix stock has almost doubled again, 411 00:19:34,560 --> 00:19:38,280 going from 718 to now $1300 per share. 412 00:19:38,360 --> 00:19:41,000 And it might be time for me to write my third note on Netflix 413 00:19:41,000 --> 00:19:44,600 because once again, I believe the stock is not fully valued. 414 00:19:44,640 --> 00:19:47,200 In fact, I believe there's still more upside for this company. 415 00:19:47,600 --> 00:19:50,480 The overall thesis on Netflix relies on some simple 416 00:19:50,480 --> 00:19:52,760 assumptions. When we look at Netflix, it's 417 00:19:52,800 --> 00:19:54,800 really easy. As humans, one of the the 418 00:19:54,800 --> 00:19:57,960 biggest mistakes we make is anchoring bias. 419 00:19:58,240 --> 00:20:02,160 It's a killer of returns. Anchoring bias is where you will 420 00:20:02,160 --> 00:20:04,680 not buy a stock because you could have previously bought it 421 00:20:04,680 --> 00:20:08,160 for a cheaper price. Why would you buy it today when 422 00:20:08,160 --> 00:20:11,280 you could have bought it then, or then, or then or then? 423 00:20:11,760 --> 00:20:14,960 It stings to know you could have gotten a better deal and you're 424 00:20:14,960 --> 00:20:16,720 not getting the best deal possible. 425 00:20:17,120 --> 00:20:19,640 That bias is not present in ETFs. 426 00:20:19,760 --> 00:20:23,520 It's not present in disciplined or sophisticated investors, and 427 00:20:23,520 --> 00:20:26,440 in many cases, that's why ETFs outperform humans. 428 00:20:26,600 --> 00:20:29,240 ETFs have a total lack of anchoring bias. 429 00:20:29,680 --> 00:20:31,400 Investors should behave the same way. 430 00:20:31,720 --> 00:20:34,560 We shouldn't judge Netflix based off of how far it's come. 431 00:20:34,840 --> 00:20:36,360 We should judge it where it's going. 432 00:20:36,800 --> 00:20:40,240 Netflix today trades at roughly $1300 per share, let's say. 433 00:20:40,640 --> 00:20:43,440 Well, if we look at the company, where is it going to be in five 434 00:20:43,440 --> 00:20:46,000 years? My thesis remains that the 435 00:20:46,000 --> 00:20:48,920 management team of Netflix is mostly correct in saying that 436 00:20:48,920 --> 00:20:52,080 the company will roughly double in revenue over the next five 437 00:20:52,080 --> 00:20:53,560 years. Management stated that their 438 00:20:53,560 --> 00:20:56,720 internal goals are to double the revenue, triple the operating 439 00:20:56,720 --> 00:20:59,840 profits of the company, and gain an extra 100 million paying 440 00:20:59,840 --> 00:21:02,800 subscribers in the process, all in a five year period. 441 00:21:02,960 --> 00:21:05,040 And I believe that that's practical and achievable. 442 00:21:05,080 --> 00:21:08,080 They also stated that if they accomplish those goals, the 443 00:21:08,080 --> 00:21:11,320 company could be worth around a trillion dollar market cap in 444 00:21:11,320 --> 00:21:15,960 2030 or 2031 around that time period, which right now it's at 445 00:21:15,960 --> 00:21:20,240 $540 billion market cap, meaning that Netflix could roughly 446 00:21:20,240 --> 00:21:24,560 double in returns over the next five years if the management 447 00:21:24,560 --> 00:21:27,600 team executes well. Doubling the market cap in five 448 00:21:27,600 --> 00:21:30,320 years is also not the only way you get returns. 449 00:21:30,360 --> 00:21:33,800 They're doing share buybacks as well, meaning the total return 450 00:21:33,800 --> 00:21:37,280 would likely be higher. So even as we see the aggressive 451 00:21:37,280 --> 00:21:39,960 share price moves, we see Netflix move up like crazy. 452 00:21:40,200 --> 00:21:43,040 We see investors get a little wary that it's gone up so fast, 453 00:21:43,040 --> 00:21:45,360 so quick. So while it's true that Netflix 454 00:21:45,400 --> 00:21:49,360 trades at a high PE ratio based on next year's earnings, it's 455 00:21:49,360 --> 00:21:52,040 also true that investors should not be valuing companies just 456 00:21:52,040 --> 00:21:54,840 based on one year out. We're investing in them based on 457 00:21:54,840 --> 00:21:58,320 the next 20 years, the next 30 years and Netflix is uniquely 458 00:21:58,320 --> 00:22:01,080 positioned to make a lot of money over a long period of 459 00:22:01,080 --> 00:22:03,160 time. So when I look at this company, 460 00:22:03,440 --> 00:22:05,360 it's one of these ones that stuck in this difficult 461 00:22:05,360 --> 00:22:08,160 situation where today it looks expensive. 462 00:22:08,520 --> 00:22:11,080 And I could certainly see some short term volatility. 463 00:22:11,440 --> 00:22:15,280 If Netflix has any weakness in this report, if they say the ad 464 00:22:15,280 --> 00:22:18,520 tears growing slower than expected, if revenue estimates 465 00:22:18,520 --> 00:22:21,520 are a little bit below expectations, they give any 466 00:22:21,520 --> 00:22:23,560 semblance of weakness whatsoever. 467 00:22:23,840 --> 00:22:28,920 The stock is down 7 to 10%. So we have a 7% drop with any 468 00:22:28,920 --> 00:22:31,400 weakness in this report and I think that's fine. 469 00:22:31,680 --> 00:22:34,640 Again, I look at the long term potential of the company, not 470 00:22:34,640 --> 00:22:37,560 this quarter or the next quarter, but even looking at the 471 00:22:37,560 --> 00:22:40,400 long term potential, it's good to be prepared for different 472 00:22:40,400 --> 00:22:42,720 outcomes. This is a highly volatile stock. 473 00:22:43,120 --> 00:22:46,960 The move will likely be 7% up or 7% down. 474 00:22:47,360 --> 00:22:50,960 They show any weakness in revenue in the ad care, in any 475 00:22:50,960 --> 00:22:53,480 part of their business. That's a core part and the 476 00:22:53,480 --> 00:22:56,600 stocks down 7%. And if things go really well, if 477 00:22:56,600 --> 00:22:59,440 Netflix continues to show more strength, which I believe is a 478 00:22:59,440 --> 00:23:01,920 high likelihood, we could see another day where this thing is 479 00:23:01,920 --> 00:23:04,240 up 7%. Now it is true that Netflix 480 00:23:04,240 --> 00:23:07,560 previously dropped 75% when they lost subscribers. 481 00:23:07,560 --> 00:23:10,200 They lost the confidence of Wall Street and investors. 482 00:23:10,680 --> 00:23:13,600 And I think that that's very unlikely to ever happen again 483 00:23:13,880 --> 00:23:16,280 for a couple of reasons. One reason is that Netflix 484 00:23:16,280 --> 00:23:19,440 transitioned from a company that was valued based on subscriber 485 00:23:19,440 --> 00:23:22,840 editions now to a company that's valued based on revenue growth 486 00:23:23,120 --> 00:23:26,960 and free cash flow, operating margins, their actual financial 487 00:23:26,960 --> 00:23:28,920 metrics of which they have a lot more control. 488 00:23:29,280 --> 00:23:33,000 The subscriber numbers have stopped being reported since Q4 489 00:23:33,000 --> 00:23:36,280 of 2024. So we don't know them Q1 of 2025 490 00:23:36,280 --> 00:23:38,120 or Q2. They're not going to report them 491 00:23:38,120 --> 00:23:40,240 this quarter either. They'll probably give us an 492 00:23:40,240 --> 00:23:43,560 update when they reach 350 million, which I don't believe 493 00:23:43,560 --> 00:23:44,920 they're going to get to this quarter. 494 00:23:45,160 --> 00:23:48,280 So my prediction is no updates on the subscriber metrics. 495 00:23:48,280 --> 00:23:51,280 The thing that I believe gives a lot of downside protection is 496 00:23:51,280 --> 00:23:53,560 the free cash flow. We look at the free cash flow 497 00:23:53,560 --> 00:23:57,000 over the trailing 12 months. It's nearly $8 billion and it's 498 00:23:57,000 --> 00:24:00,280 also remarkably consistent. I believe this is going to be 499 00:24:00,280 --> 00:24:03,400 the case going forward. Netflix is not going to go down 500 00:24:03,400 --> 00:24:05,720 in free cash flow. They'll continue to generate 501 00:24:05,720 --> 00:24:09,000 more and more money, more cash flow for investors every 502 00:24:09,000 --> 00:24:10,640 quarter. Now, top of mind for every 503 00:24:10,640 --> 00:24:14,080 Netflix investor is the ad tier. And this is important because 504 00:24:14,080 --> 00:24:16,480 Netflix found out a way to basically double dip. 505 00:24:16,840 --> 00:24:18,640 They get you to pay a small amount. 506 00:24:18,680 --> 00:24:21,360 So you're paying 7-8 dollars a month, right? 507 00:24:21,360 --> 00:24:24,440 It's the cheapest amount. But then you're also seeing ads, 508 00:24:24,440 --> 00:24:26,960 which if you watch a lot of Netflix, if you watch a couple 509 00:24:26,960 --> 00:24:30,400 hours a day, those ads throughout the day, every day 510 00:24:30,400 --> 00:24:34,320 throughout a month add up to around an extra $10 per month. 511 00:24:34,720 --> 00:24:38,640 So you're paying $8 in just money, and then you're paying 512 00:24:38,640 --> 00:24:41,120 another $10 in your time for watching ads. 513 00:24:41,480 --> 00:24:45,240 Netflix earns a total of $18.00 from you as a user, which is 514 00:24:45,240 --> 00:24:46,880 more than many of their paid tears. 515 00:24:47,240 --> 00:24:51,280 So Netflix would rather have you on an $8 ad tear than a $12.00 516 00:24:51,280 --> 00:24:53,760 non ad tear. It's just far better for them 517 00:24:54,160 --> 00:24:56,280 and they're doing a lot of things to make their ad tear 518 00:24:56,280 --> 00:24:58,960 even better for the user, more targeted ads. 519 00:24:58,960 --> 00:25:01,880 They're building out proprietary ad tech suite and we're going to 520 00:25:01,880 --> 00:25:04,120 see if this boosts their capabilities and their 521 00:25:04,120 --> 00:25:06,240 commentary around it. But this is going to be one of 522 00:25:06,240 --> 00:25:07,600 the biggest things that we look at. 523 00:25:07,880 --> 00:25:11,080 The other thing is content slate and engagement and retention 524 00:25:11,080 --> 00:25:14,000 trends. Simply put, Netflix has to 525 00:25:14,000 --> 00:25:16,840 continue making great content all the time. 526 00:25:17,200 --> 00:25:18,520 Not everything's going to be a hit. 527 00:25:18,680 --> 00:25:21,280 Netflix will certainly miss with a lot of content, and with any 528 00:25:21,280 --> 00:25:24,160 type of content, there is some risk to it. 529 00:25:24,160 --> 00:25:27,200 The Osama bin Laden documentary from Netflix was incredibly well 530 00:25:27,200 --> 00:25:28,360 done. It was one of the best 531 00:25:28,360 --> 00:25:31,440 documentaries I've seen. Then you have Squid Game season 532 00:25:31,440 --> 00:25:34,400 3, which wasn't so good. I don't believe it was their 533 00:25:34,400 --> 00:25:37,080 strongest piece of content. O With Netflix, you're going to 534 00:25:37,080 --> 00:25:39,440 have some stuff that does really well, some stuff that's really 535 00:25:39,440 --> 00:25:42,840 highrated and lowrated, some that just doesn't hit quite as 536 00:25:42,840 --> 00:25:45,400 well. That is the inherent risk of 537 00:25:45,400 --> 00:25:49,080 creating creative content and that's not a problem for the 538 00:25:49,080 --> 00:25:51,440 company. I believe that going forward, 539 00:25:51,440 --> 00:25:53,960 they're going to have so much content that they will have 540 00:25:53,960 --> 00:25:56,480 enough things that hit and that's really what matters. 541 00:25:56,480 --> 00:25:58,480 Now. We do want to see commentary on 542 00:25:58,480 --> 00:26:00,320 what they plan on doing throughout the year. 543 00:26:00,320 --> 00:26:02,800 Their content slate. The upcoming quarters will see a 544 00:26:02,800 --> 00:26:06,960 return of major titles and heavier film slate in Q4, an 545 00:26:06,960 --> 00:26:09,880 additional live events such as high profile sports broadcast 546 00:26:10,160 --> 00:26:12,200 all expected to bolster engagement. 547 00:26:12,520 --> 00:26:15,200 Investors should monitor whether these content investments Dr. 548 00:26:15,200 --> 00:26:18,640 sustained growth in members and other Netflix continues to 549 00:26:18,640 --> 00:26:22,120 outpace competitors and securing and retaining audience share. 550 00:26:22,160 --> 00:26:24,520 On the operating margins, I believe they just need to grow 551 00:26:24,520 --> 00:26:27,400 their operating margin. Simply put, we need to see year 552 00:26:27,400 --> 00:26:30,000 over year growth 2 to 3% at least. 553 00:26:30,120 --> 00:26:33,000 If Netflix is able to continue growing their operating margin 554 00:26:33,000 --> 00:26:36,080 becoming more profitable, I do not see the stock price moving 555 00:26:36,080 --> 00:26:37,760 down for long. So while the short term 556 00:26:37,760 --> 00:26:41,360 valuation leaves Netflix in a bit more risky of a position on 557 00:26:41,360 --> 00:26:44,560 a day-to-day basis, I believe the long term price for 558 00:26:44,560 --> 00:26:47,200 investors willing to wait is still massive. 559 00:26:47,600 --> 00:26:50,400 Netflix represents again, one of the most unique investments in 560 00:26:50,400 --> 00:26:54,760 the market, a fully subscription based company with a huge total 561 00:26:54,760 --> 00:26:58,160 addressable market that is one in the streaming war and created 562 00:26:58,160 --> 00:27:00,480 a business that's nearly impossible for anybody else to 563 00:27:00,480 --> 00:27:02,680 replicate. So it's one-of-a-kind and I'm 564 00:27:02,680 --> 00:27:05,600 still holding every share. Now to cap off the week, we move 565 00:27:05,600 --> 00:27:08,400 to Friday before market open. We have American Express 566 00:27:08,400 --> 00:27:10,720 reporting earnings. I went for the more pureplay 567 00:27:10,720 --> 00:27:13,120 with MasterCard. The difference here is if you 568 00:27:13,120 --> 00:27:16,480 want to have more of an ecosystem, we have a bank and 569 00:27:16,480 --> 00:27:19,520 you have a network. It has seamless integration with 570 00:27:19,520 --> 00:27:22,000 each other. It caters to high end clients. 571 00:27:22,320 --> 00:27:25,120 It's really remarkable business. It's kind of like the Apple of a 572 00:27:25,120 --> 00:27:27,200 credit card that's American Express. 573 00:27:27,200 --> 00:27:30,160 So it's a really good company. But then you have the other end 574 00:27:30,160 --> 00:27:33,120 of the spectrum where you have Visa MasterCard, which have the 575 00:27:33,120 --> 00:27:35,560 bigger share of the dominant network effect. 576 00:27:35,880 --> 00:27:39,640 MasterCard is a more pureplay tech company and I went for that 577 00:27:39,640 --> 00:27:41,920 network effect. Now, either way, American 578 00:27:41,920 --> 00:27:43,200 Express is still a great company. 579 00:27:43,400 --> 00:27:46,200 We're going to get more insight into how this one performs based 580 00:27:46,200 --> 00:27:49,000 on JP Morgan and Wells Fargo. So they'll kind of give us a 581 00:27:49,000 --> 00:27:51,040 little bit of a heads up of what's going to happen with 582 00:27:51,040 --> 00:27:54,040 American Express, but just to give some general thoughts. 583 00:27:54,160 --> 00:27:56,880 I think it's going to be good. You have consumers on the high 584 00:27:56,880 --> 00:27:58,680 end and you have consumers on the low end. 585 00:27:59,000 --> 00:28:01,240 If you're investing with consumers on the low end, I 586 00:28:01,240 --> 00:28:03,480 think you have more reason to be concerned than the ones on the 587 00:28:03,480 --> 00:28:05,400 high end. I would tell you if I could find 588 00:28:05,440 --> 00:28:08,400 any real reason to be concerned about this one, but I just 589 00:28:08,400 --> 00:28:10,400 don't. I would be shocked if they show 590 00:28:10,400 --> 00:28:12,720 any huge weakness. And that's an overview of the 591 00:28:12,720 --> 00:28:14,600 entire week. And make sure you subscribe to 592 00:28:14,600 --> 00:28:17,280 the channel because next week it gets even crazier. 593 00:28:17,320 --> 00:28:20,120 We have companies like Google and Tesla reporting earnings. 594 00:28:20,360 --> 00:28:22,120 I'll be going over those in depth as well. 595 00:28:22,120 --> 00:28:23,360 That's gonna be it for this episode. 596 00:28:23,480 --> 00:28:24,240 See you in the next one.