1 00:00:00,200 --> 00:00:03,200 I'm in the green all time with Netflix. 2 00:00:03,300 --> 00:00:05,200 It's real. It really is real. 3 00:00:05,200 --> 00:00:09,300 This is the all time. I'm in the green by $667. 4 00:00:10,000 --> 00:00:12,500 Now normally, this isn't something that I would I would 5 00:00:12,500 --> 00:00:15,500 show off or really brag about by being in the green and 6 00:00:15,500 --> 00:00:17,300 accompanied by three and a half percent. 7 00:00:17,500 --> 00:00:22,300 Nothing about that in and of itself is achievement worthy or 8 00:00:22,300 --> 00:00:25,600 even noteworthy. But the reason that I highlight 9 00:00:25,600 --> 00:00:29,000 this with Netflix, the fact that all time, I'm in the green on 10 00:00:29,000 --> 00:00:32,500 this company. Is because this company, this 11 00:00:32,500 --> 00:00:37,600 stock went through a 74% drawdown, 74 percent of its 12 00:00:37,600 --> 00:00:42,000 value wiped away and I held this stock the entire time and that 13 00:00:42,000 --> 00:00:46,500 does have some meaning to me, when a stock drops 75%, that you 14 00:00:46,500 --> 00:00:49,800 own that has an impact that has an emotional toll. 15 00:00:50,000 --> 00:00:52,200 That makes it very difficult to know what to do in that 16 00:00:52,200 --> 00:00:55,400 situation with Netflix. I was able to hold on to this 17 00:00:55,400 --> 00:00:57,800 company. Hang on to this stock and 18 00:00:57,800 --> 00:00:59,800 actually turn it from a 20 thousand dollar loss. 19 00:01:00,100 --> 00:01:02,300 Into a gain. And I want to go through this 20 00:01:02,300 --> 00:01:05,400 crazy story of owning Netflix through this time period and 21 00:01:05,400 --> 00:01:07,700 give you some insight into what I was thinking at different 22 00:01:07,700 --> 00:01:08,300 time. Periods. 23 00:01:08,700 --> 00:01:10,900 Of course, we also have an update on the story fund its 24 00:01:10,900 --> 00:01:14,600 performance against spy. It is a racing back up to catch 25 00:01:14,600 --> 00:01:19,000 the S&P 500, we have more news on Netflix, their password 26 00:01:19,000 --> 00:01:22,400 Crackdown seems to be working. There is people that were 27 00:01:22,400 --> 00:01:25,600 questioning Netflix, that are now admitting defeat saying that 28 00:01:25,600 --> 00:01:28,300 Netflix one. We have Netflix having a 29 00:01:28,300 --> 00:01:32,200 chilling effect on Foreign content, different countries are 30 00:01:32,200 --> 00:01:35,600 now concerned that Netflix is basically taking over the media 31 00:01:35,600 --> 00:01:39,400 world, and then we also have Netflix going in to streamed 32 00:01:39,400 --> 00:01:41,500 Sports. They're going into livestream 33 00:01:41,500 --> 00:01:43,300 Sports and these are a little bit different. 34 00:01:43,400 --> 00:01:46,600 This event seems like it's a Netflix Celebrity Golf event, 35 00:01:46,600 --> 00:01:48,600 that they're actually creating. I'm going to give you my 36 00:01:48,600 --> 00:01:50,800 thoughts on this as well. And then of course, we have the 37 00:01:50,800 --> 00:01:53,600 fomc meeting that's for the FED Meats together and determines 38 00:01:53,600 --> 00:01:56,000 the interest rate, whether they keep it the same raise it or 39 00:01:56,000 --> 00:01:58,900 lower it and they're expected to keep it the same. 40 00:01:59,100 --> 00:02:00,600 So I'll be going over. As well. 41 00:02:00,600 --> 00:02:02,400 Now let's go ahead and Jump Right In and we'll start off 42 00:02:02,400 --> 00:02:05,700 with a portfolio update. We have a lot of new people join 43 00:02:05,800 --> 00:02:08,900 this channel every single, but the couple thousand every month 44 00:02:09,100 --> 00:02:12,000 and welcome, if you're new, but I want to also mention that this 45 00:02:12,000 --> 00:02:14,900 is not my only YouTube channel, I have one that goes under my 46 00:02:14,900 --> 00:02:18,100 name, Joseph Carlson. And in that one, I follow a 47 00:02:18,100 --> 00:02:21,200 different portfolio called the passive income account, passive, 48 00:02:21,200 --> 00:02:24,200 income account, has a little bit different of a strategy and this 49 00:02:24,200 --> 00:02:26,900 is really my main portfolio. It's where I put the majority of 50 00:02:26,908 --> 00:02:30,700 my money, the majority of my, my new money, And this one has been 51 00:02:30,700 --> 00:02:32,600 going great. It's up 85,000. 52 00:02:32,600 --> 00:02:35,600 It continues to make Market beating gains this year and last 53 00:02:35,600 --> 00:02:38,900 year, but today, we're focused on the story fund. 54 00:02:39,200 --> 00:02:42,300 The story fund is a portfolio that I started to talk about a 55 00:02:42,300 --> 00:02:46,200 different type of company, which is more in line with highly 56 00:02:46,200 --> 00:02:49,600 volatile tech companies. So, I created this portfolio 57 00:02:50,000 --> 00:02:52,700 because I wanted to do research and Analysis on these companies, 58 00:02:52,700 --> 00:02:55,100 and I always think it's more interesting to do analysis. 59 00:02:55,100 --> 00:02:59,000 When you have your own money at stake, talk is cheap putting 60 00:02:59,000 --> 00:03:01,000 your own money at stake. In showing the results. 61 00:03:01,000 --> 00:03:04,000 That's where I think it's a little bit more interesting. 62 00:03:04,500 --> 00:03:08,600 Now, in this portfolio, I have it weighted towards a couple 63 00:03:08,600 --> 00:03:11,100 companies. It's heavily weighted towards 64 00:03:11,400 --> 00:03:15,200 Amazon and Netflix. These are two huge companies 65 00:03:15,200 --> 00:03:16,800 that I put a massive waiting towards. 66 00:03:17,200 --> 00:03:19,500 Now, we have a lot in Google, but this wasn't the case for the 67 00:03:19,508 --> 00:03:22,000 majority of this portfolio. This is a very recent thing. 68 00:03:22,900 --> 00:03:27,400 I had most of the money 40% about in Amazon, and this one's 69 00:03:27,400 --> 00:03:29,200 just done terrible along with Netflix. 70 00:03:29,500 --> 00:03:33,700 And then we Have Netflix being about 25 percent last year, both 71 00:03:33,700 --> 00:03:36,900 of these companies were struggling dramatically and 72 00:03:36,900 --> 00:03:40,400 they've all had a Resurgence. This whole portfolio has had a 73 00:03:40,400 --> 00:03:44,900 Resurgence every single company, every single big tech company 74 00:03:45,100 --> 00:03:48,500 has had one incredible year. Now, I don't have all the 75 00:03:48,500 --> 00:03:52,400 percentages on hand but companies like apple are up 40%, 76 00:03:52,400 --> 00:03:56,200 Amazon's up. 45% Tesla's up over 100 percent, even though, I 77 00:03:56,200 --> 00:03:58,700 don't have that one of my portfolio that was doing really 78 00:03:58,700 --> 00:04:02,100 well. Up 40 or 50 percent this year, 79 00:04:02,300 --> 00:04:05,100 Google's up like 30 to 40 percent this year, they're all 80 00:04:05,100 --> 00:04:07,900 doing great, even Microsoft is doing great this year. 81 00:04:08,100 --> 00:04:12,500 So all these tech companies really got hammered in 2022 and 82 00:04:12,500 --> 00:04:14,200 now they're having a big Resurgence. 83 00:04:14,500 --> 00:04:17,899 Since I intentionally overweighted my portfolio into 84 00:04:17,899 --> 00:04:21,300 big Tech not as many smaller companies but mostly into big 85 00:04:21,300 --> 00:04:23,900 Tech. My portfolio has likewise 86 00:04:24,000 --> 00:04:28,900 recovered far faster than both. The S&P 500 and the QQQ if we 87 00:04:28,907 --> 00:04:31,300 look at the recovery. Over the past, year this 88 00:04:31,300 --> 00:04:34,900 illustrates the relative recovery of my portfolio against 89 00:04:34,900 --> 00:04:37,400 the S&P 500. Which I'm benchmarking it 90 00:04:37,400 --> 00:04:39,200 against. So we have the story fund and 91 00:04:39,200 --> 00:04:42,800 blue, we have the S&P 500 in red right now. 92 00:04:43,100 --> 00:04:46,800 The story fund has really caught up, it's in the green a little 93 00:04:46,800 --> 00:04:51,600 bit, a couple percentage and now it's only about 45 percent away 94 00:04:51,800 --> 00:04:55,400 from the S&P 500. That is not a big difference 95 00:04:55,400 --> 00:05:00,200 that can flip very quickly and a day that could flip and this Not 96 00:05:00,200 --> 00:05:03,200 the case a while back. In fact, just a year ago, this 97 00:05:03,200 --> 00:05:05,400 looked pretty bleak right around this time. 98 00:05:05,400 --> 00:05:09,800 Period, 721 2022. That was a tough time for the 99 00:05:09,808 --> 00:05:11,900 story fund. It was really getting crushed 100 00:05:11,900 --> 00:05:16,200 and the relative difference between it and the S&P 500 was 101 00:05:16,200 --> 00:05:19,300 over, twenty five percent. So a huge difference in 102 00:05:19,300 --> 00:05:23,300 performance and this continued on it was really a pretty big 103 00:05:23,300 --> 00:05:26,100 difference for a long period of time for about a full year 104 00:05:26,100 --> 00:05:28,600 there. I showed continual updates, I 105 00:05:28,600 --> 00:05:33,500 showed See, even though I was trailing the S&P 500 by a pretty 106 00:05:33,500 --> 00:05:36,700 huge extent. And here we have that Gap being 107 00:05:36,700 --> 00:05:40,600 closed and that was my goal, the close, the gap, and that's what 108 00:05:40,600 --> 00:05:43,100 we're doing right now. So right now we have the S&P 109 00:05:43,100 --> 00:05:47,000 500, still a little bit ahead of the story fund, but that Gap is 110 00:05:47,000 --> 00:05:49,600 closing quickly. And every single day, were 111 00:05:49,600 --> 00:05:52,700 inching more and more towards it, which I think that 112 00:05:52,700 --> 00:05:54,700 eventually we're going to be able to beat it. 113 00:05:54,700 --> 00:05:59,800 My goal is by the end of 2020 52 outperformed the S&P 500 to have 114 00:05:59,900 --> 00:06:03,600 Be so that at the same time period that I put my cash in, it 115 00:06:03,600 --> 00:06:06,200 would have performed better in my portfolio than had. 116 00:06:06,200 --> 00:06:09,600 I put that cash in the S&P 500. So that's the goal. 117 00:06:09,600 --> 00:06:12,400 It's a little friendly competition in the end. 118 00:06:12,400 --> 00:06:15,700 I hope I make money and I hope it goes well but we'll have to 119 00:06:15,700 --> 00:06:17,500 see how it turns out. I can't see the future. 120 00:06:17,700 --> 00:06:20,400 So the only way to find out is to follow along for free, and 121 00:06:20,400 --> 00:06:23,100 I'll continue to show these updates transparently now that 122 00:06:23,100 --> 00:06:25,900 we've taken a look at the entire portfolios performance and the 123 00:06:25,900 --> 00:06:30,600 huge recovery of the story fund one point down, Forty thousand 124 00:06:30,600 --> 00:06:33,200 dollars. Now into the green, I want to 125 00:06:33,200 --> 00:06:36,800 focus specifically on Netflix. The first thing that I think is 126 00:06:36,800 --> 00:06:39,800 important to point out here because there's still a lot of 127 00:06:39,808 --> 00:06:42,300 confusion about this. A lot of people that are still 128 00:06:42,300 --> 00:06:45,100 debating this which streaming companies going to win the 129 00:06:45,108 --> 00:06:48,300 streaming Wars, you're still seeing articles like that. 130 00:06:48,900 --> 00:06:51,600 It's been decided, this has been decided for a long period of 131 00:06:51,600 --> 00:06:54,800 Time. Netflix has one, they have 132 00:06:54,800 --> 00:06:58,000 already won the streaming Wars. They've defeated their 133 00:06:58,000 --> 00:06:59,700 opponents. So a sound. 134 00:06:59,900 --> 00:07:03,300 In streaming, even with the Monumental efforts of Disney and 135 00:07:03,300 --> 00:07:05,700 Warner media, and Apple, TV, and Amazon. 136 00:07:06,000 --> 00:07:08,900 All of those companies competing and streaming have not come 137 00:07:08,900 --> 00:07:11,500 close to Netflix. This company is internationally, 138 00:07:11,500 --> 00:07:14,800 Diversified highly profitable even adjusted for stock-based 139 00:07:14,800 --> 00:07:18,500 compensation and has way more subscribers at a way higher 140 00:07:18,500 --> 00:07:20,700 monthly price than any other streaming company. 141 00:07:21,000 --> 00:07:23,800 They are so far ahead of other streaming companies, it's not 142 00:07:23,800 --> 00:07:25,900 even close. A lot of streaming companies are 143 00:07:25,900 --> 00:07:29,000 on Lifeline, a lot of them like Paramount plus lose. 144 00:07:29,000 --> 00:07:32,200 Hundreds of Ian's of dollars every quarter and only have a 145 00:07:32,200 --> 00:07:35,400 couple of key shows. In fact, streaming companies, 146 00:07:35,400 --> 00:07:39,000 like HBO streaming companies like Paramount, most of them 147 00:07:39,000 --> 00:07:42,500 have two or three shows that make up 90% of their viewing. 148 00:07:42,900 --> 00:07:45,700 That's highly concentrated into a couple shows. 149 00:07:45,700 --> 00:07:50,400 On their service Netflix has thousands of shows they recycle 150 00:07:50,400 --> 00:07:54,100 their shows every single day. There's new shows, fresh to 151 00:07:54,100 --> 00:07:57,500 their contents late every single week, blockbuster movies 152 00:07:57,500 --> 00:07:59,700 multiple times a year, their content. 153 00:07:59,900 --> 00:08:04,000 It is heavily Diversified, it's satisfying, a huge range of 154 00:08:04,000 --> 00:08:08,500 audiences all across the globe, their content, their subscriber 155 00:08:08,500 --> 00:08:11,900 count, and their profitability show a very different picture 156 00:08:11,900 --> 00:08:14,400 for Netflix than every other streaming competitor. 157 00:08:14,800 --> 00:08:19,600 So the race is over, Netflix has won and now they're in the mode 158 00:08:19,600 --> 00:08:22,700 of being a highly profitable, free cash, flow generative 159 00:08:22,700 --> 00:08:25,600 company that I think is going to generate huge profits for 160 00:08:25,600 --> 00:08:28,200 investors. So how did we get to this point? 161 00:08:28,400 --> 00:08:31,100 Let me go into a timeline. In here, will bring up Netflix 162 00:08:31,100 --> 00:08:32,799 here on qual trim, and this software. 163 00:08:32,799 --> 00:08:35,200 By the way, that shows you all the fundamentals of a company, 164 00:08:35,500 --> 00:08:37,900 it's available. As part of patreon, ten bucks a 165 00:08:37,900 --> 00:08:40,400 month cancel anytime I think you'll love it. 166 00:08:40,600 --> 00:08:42,299 Let me just bring up a simple price graph. 167 00:08:42,299 --> 00:08:44,900 Here we have the year to date but I want to go back a little 168 00:08:44,900 --> 00:08:48,700 bit further. This is my story of me being 169 00:08:48,700 --> 00:08:52,000 involved in Netflix's stock. I want to go over the timeline 170 00:08:52,000 --> 00:08:53,600 here. So again, we're looking at the 171 00:08:53,600 --> 00:08:57,500 five-year time Horizon. This goes back to 2018, I 172 00:08:57,500 --> 00:09:01,600 started buying a Netflix, right? When I The story fund portfolio. 173 00:09:02,000 --> 00:09:07,600 So it was about 20 20 into 2021. This is really when I was buying 174 00:09:07,600 --> 00:09:12,600 the company and on this chart, looking back in hindsight. 175 00:09:12,800 --> 00:09:15,400 This looks like I was buying it at an expensive point, right? 176 00:09:15,400 --> 00:09:17,700 It's not up to where it was when I was initially buying the 177 00:09:17,700 --> 00:09:21,100 company that's true. But keep in mind during this 178 00:09:21,100 --> 00:09:23,300 time period of twenty, twenty two twenty Twenty-One, 179 00:09:23,700 --> 00:09:26,100 everything was expensive. If you bought anything in the 180 00:09:26,100 --> 00:09:29,100 stock market, it was likely pretty expensive. 181 00:09:29,200 --> 00:09:32,500 In fact, the entire Entire S&P 500 was much higher than it is 182 00:09:32,500 --> 00:09:34,400 today. So, it's easy to look back and 183 00:09:34,400 --> 00:09:38,300 say, oh, you're buying High. Yeah, everything was buying High 184 00:09:38,300 --> 00:09:41,500 during that time period. If investors had a crystal ball, 185 00:09:41,600 --> 00:09:44,000 no, investor would have bought then they would have waited 186 00:09:44,000 --> 00:09:49,100 until 2022 and 2023. So this was a time period that I 187 00:09:49,100 --> 00:09:52,200 initially started buying the company right around here. 188 00:09:52,400 --> 00:09:55,200 I wasn't buying the company when it spiked up to its peak here. 189 00:09:55,500 --> 00:09:57,900 I was mostly buying it right around this range of around. 190 00:09:57,900 --> 00:10:02,000 $500 per share. And at this point in time, 191 00:10:02,300 --> 00:10:06,500 Netflix had been a long-term, compounder a company that have 192 00:10:06,500 --> 00:10:10,800 given incredible gains in fact looking at the all-time chart it 193 00:10:10,800 --> 00:10:13,600 is insane. Netflix had just continually 194 00:10:13,600 --> 00:10:15,700 gone up, especially over the past 10 years. 195 00:10:16,100 --> 00:10:18,700 One thousand two hundred sixty percent gains from where it is 196 00:10:18,700 --> 00:10:20,900 today. So this point it was like 197 00:10:20,900 --> 00:10:24,600 fifteen hundred percent gains. It's been a marvelous stock to 198 00:10:24,600 --> 00:10:28,300 own for those investors. But the reason that I was buying 199 00:10:28,300 --> 00:10:32,200 into the company is because I thought strongly that Netflix 200 00:10:32,200 --> 00:10:35,300 was getting to a point where it was finally getting to free cash 201 00:10:35,300 --> 00:10:38,800 flow positive generation. The company was finally going to 202 00:10:38,800 --> 00:10:42,100 generate a lot of free cash flow and it would have a lot of 203 00:10:42,100 --> 00:10:44,700 operating leverage so I'm buying right there. 204 00:10:45,000 --> 00:10:48,600 Then the stock price ticks up pretty high investors get very 205 00:10:48,600 --> 00:10:53,600 enthusiastic and then something happens the stock drops like 206 00:10:53,600 --> 00:10:58,000 30%, huge drop. And the reason why it dropped 207 00:10:58,000 --> 00:11:02,600 this 30%, is it The first time that Netflix lost subscribers 208 00:11:02,600 --> 00:11:04,900 year-over-year. This was the news that Netflix. 209 00:11:05,000 --> 00:11:09,000 They went out of Russia so they lost some subscribers there and 210 00:11:09,000 --> 00:11:11,200 then they actually had a little bit of a pullback. 211 00:11:11,600 --> 00:11:15,000 It was an interesting thing, the management Stone really changed 212 00:11:15,000 --> 00:11:17,900 from being super confident to now talking about a lot of 213 00:11:17,908 --> 00:11:21,400 different issues but they're still at this point. 214 00:11:21,400 --> 00:11:24,800 Pretty confident management had an optimistic view, they said 215 00:11:24,800 --> 00:11:28,400 that they had Russia affect them a lot, there are some shakiness 216 00:11:28,400 --> 00:11:31,700 with the covid poll for Board type of thing, and they lost 217 00:11:31,700 --> 00:11:34,500 400,000 subscribers. So investors become very 218 00:11:34,500 --> 00:11:36,900 concerned there. Now losing subscribers not 219 00:11:36,900 --> 00:11:39,800 gaining subscribers and the analysis up to this point was 220 00:11:39,800 --> 00:11:42,300 that Netflix was going to continue gaining subscribers. 221 00:11:42,900 --> 00:11:46,200 So I thought that this was not really concerning. 222 00:11:46,200 --> 00:11:49,700 I looked at it as Netflix, having 220 million subscribers 223 00:11:50,100 --> 00:11:53,900 and them only losing 400,000, Which is less than half a 224 00:11:53,908 --> 00:11:56,600 million. So, 220 million subscribers, 225 00:11:56,900 --> 00:11:59,600 they lose half a million and they're down 30%. 226 00:11:59,700 --> 00:12:03,600 That didn't make sense to me, but right then it was the first 227 00:12:03,600 --> 00:12:08,000 sign of concern. Now, at this point in time, we 228 00:12:08,000 --> 00:12:14,900 had another investor step in. We had Bill, Bill Ackman decided 229 00:12:14,900 --> 00:12:19,700 to step in and buy the stock, and he bought pretty heavily. 230 00:12:19,700 --> 00:12:22,800 He bought it as a large concentrated position as he does 231 00:12:22,800 --> 00:12:25,400 with all of his Holdings. And then bill came out with a 232 00:12:25,408 --> 00:12:28,300 huge research analysis, saying that he had actually been 233 00:12:28,300 --> 00:12:31,600 following Netflix for a Ang period of time that the company 234 00:12:31,600 --> 00:12:35,400 is expertly manage that. The company has global scale and 235 00:12:35,400 --> 00:12:38,500 he highlighted many of the exact same points that I've been 236 00:12:38,500 --> 00:12:41,900 saying for a long period of time and the seem like expert timing 237 00:12:41,900 --> 00:12:45,400 from Bill Ackman, Netflix was a high quality stock that had some 238 00:12:45,400 --> 00:12:48,100 weakness and that weakness caused the stock to sell off, 239 00:12:48,100 --> 00:12:52,400 30% offering an attractive entry point for a big-name investor 240 00:12:52,400 --> 00:12:56,000 like himself to make this a concentrated position at this 241 00:12:56,000 --> 00:13:00,200 time, I bought more as well. In fact, I bought A bit more. 242 00:13:00,200 --> 00:13:02,900 I think I put in like another five to seven thousand at that 243 00:13:02,900 --> 00:13:05,900 point, which was bumping up my position even further. 244 00:13:06,600 --> 00:13:11,500 So I bought hair a little high. This is 2020 2021. 245 00:13:12,100 --> 00:13:15,400 And then the stock fell 30% because a subscriber weakness, 246 00:13:15,600 --> 00:13:18,500 Bill Ackman enters the stock. He buys more of it. 247 00:13:18,700 --> 00:13:20,700 That's a little bit of a confidence, boost, I'm going. 248 00:13:20,700 --> 00:13:24,600 Wow, bill ackman's in the stock, I respect bill as an investor, I 249 00:13:24,600 --> 00:13:27,500 respect that detailed level of analysis and research he does. 250 00:13:27,800 --> 00:13:30,100 So I'm feeling a little bit better knowing knowing that I 251 00:13:30,100 --> 00:13:32,900 have I have someone else that's bullish on this stock, that's a 252 00:13:32,908 --> 00:13:35,200 respectable investor. That's putting his reputation on 253 00:13:35,200 --> 00:13:37,300 the line. So I'm buying more as well 254 00:13:37,300 --> 00:13:40,900 thinking Netflix is eventually going to recover even though 255 00:13:40,900 --> 00:13:44,300 they lost 400,000 subscribers, the overall thesis of the 256 00:13:44,300 --> 00:13:47,900 company I still think is intact. Then the next quarter, Netflix 257 00:13:47,900 --> 00:13:51,700 loses, more subscribers, and projects 2 million subscriber 258 00:13:51,700 --> 00:13:53,700 losses. They say that they're going to 259 00:13:53,700 --> 00:13:56,500 lose two million the next quarter after that. 260 00:13:56,800 --> 00:14:02,500 This is when the stock really crashed move, Down another 30%. 261 00:14:02,500 --> 00:14:07,300 Now from the high to the low. This is now around a 74% and a 262 00:14:07,300 --> 00:14:11,000 half drop. So, a 75 percent drop in stock 263 00:14:11,000 --> 00:14:15,600 price from the high to the low. This bounce right here, or this 264 00:14:15,600 --> 00:14:19,000 drop right here, rather was extremely distressing to 265 00:14:19,008 --> 00:14:22,300 investors. We had just gone through a 30% 266 00:14:22,300 --> 00:14:25,000 drop. And here we have another 25 to 267 00:14:25,000 --> 00:14:29,600 30% drop right afterwards. Extremely, extremely disruptive, 268 00:14:29,700 --> 00:14:33,900 Pressing to investors and the company, all of a sudden change 269 00:14:33,900 --> 00:14:36,700 their tone, they went from being a company that was super 270 00:14:36,700 --> 00:14:39,600 confident in their growth and they have a little air of 271 00:14:39,600 --> 00:14:41,800 arrogance to them. You know, they control the world 272 00:14:41,800 --> 00:14:44,700 and streaming and everything and now they're saying yes 273 00:14:44,700 --> 00:14:48,100 competition is impacting us. Yes we did have some pull 274 00:14:48,100 --> 00:14:49,500 forward through covid. Yes. 275 00:14:49,500 --> 00:14:50,700 We're still trying to figure this out. 276 00:14:50,700 --> 00:14:54,000 There are also implementing a bunch of different plans now 277 00:14:54,000 --> 00:14:58,000 saying that they're going to start charging people that were 278 00:14:58,000 --> 00:15:00,700 normally sharing passwords. Which we don't know how that was 279 00:15:00,700 --> 00:15:02,700 going to turn out. That was a big question mark and 280 00:15:02,708 --> 00:15:04,400 there's a lot of people saying that that's going to turn out 281 00:15:04,400 --> 00:15:06,200 poorly. Now also said during this time 282 00:15:06,200 --> 00:15:08,900 period that they're going to implement an ad tear. 283 00:15:09,200 --> 00:15:11,500 So now Netflix is changing from this nicely. 284 00:15:11,500 --> 00:15:16,300 Branded premium subscriber content to now ad-supported. 285 00:15:16,400 --> 00:15:18,600 So the Management's changing lots of Direction. 286 00:15:19,000 --> 00:15:21,500 The company seems like it's faltering, it's no longer 287 00:15:21,500 --> 00:15:24,700 growing, but it's shrinking and investors are bailing re-rating. 288 00:15:24,700 --> 00:15:29,800 The company way down from a 42 P/E ratio down to an 18, and 289 00:15:30,200 --> 00:15:32,300 this was an extremely distressing time. 290 00:15:33,100 --> 00:15:37,700 I did a portfolio update at this time, and I want to show what, 291 00:15:37,800 --> 00:15:39,900 what I showed at the time. So here I am. 292 00:15:39,900 --> 00:15:43,500 This is back. Let's see, May 4th of 2022. 293 00:15:43,900 --> 00:15:48,300 So this was in the midst of it. I didn't turtle in and not show 294 00:15:48,300 --> 00:15:51,200 you what happened. I show right on the screen. 295 00:15:51,200 --> 00:15:55,000 My Netflix holding down seventeen thousand two hundred 296 00:15:55,000 --> 00:15:57,400 dollars. This was way over half, I was 297 00:15:57,400 --> 00:16:02,400 down around 60% in this company. So that takes, I link it takes 298 00:16:02,400 --> 00:16:05,200 something to show on your down, this much in a company, a lot of 299 00:16:05,200 --> 00:16:07,600 content creators are not willing to do that, but that's what you 300 00:16:07,608 --> 00:16:09,400 get with this channel. I'm not going to just show when 301 00:16:09,400 --> 00:16:12,000 things go, well, for me, I'll show when they go bad as well. 302 00:16:12,100 --> 00:16:15,200 So here we are another 30% drop the management. 303 00:16:15,200 --> 00:16:17,800 Seems like they're scrambling. They're trying to change the 304 00:16:17,800 --> 00:16:20,400 narrative and change the tone around it but we know that 305 00:16:20,400 --> 00:16:23,700 Netflix is struggling. Now this is also difficult 306 00:16:23,700 --> 00:16:28,300 because right here, right there at the very beginning of this 307 00:16:28,300 --> 00:16:30,200 drop bills. Sold. 308 00:16:30,500 --> 00:16:33,700 So now we have Bill Ackman selling the stock 30 percent 309 00:16:33,700 --> 00:16:37,300 lower than he just recently. Bought it going from bullish to 310 00:16:37,300 --> 00:16:40,700 now, just unknown selling out at a huge loss. 311 00:16:40,700 --> 00:16:44,200 In fact, Bill ackman's, lost with 300 million dollars in just 312 00:16:44,200 --> 00:16:46,000 three months. So we've lost a hundred million 313 00:16:46,000 --> 00:16:48,000 dollars per month in this company. 314 00:16:48,300 --> 00:16:51,400 And the reason that he said he sold the stock was a respectable 315 00:16:51,400 --> 00:16:53,600 reason in terms of his thoughts and Analysis. 316 00:16:53,600 --> 00:16:57,400 He basically just said, look, I came in with one thesis. 317 00:16:57,400 --> 00:17:00,300 I thought that Netflix would be able to recover Now, it's an 318 00:17:00,300 --> 00:17:02,300 unknown. It's too unpredictable to have 319 00:17:02,300 --> 00:17:05,400 as a concentrated position, I disagreed with Bill Ackman. 320 00:17:05,400 --> 00:17:08,300 I do not think that Netflix is all that unpredictable. 321 00:17:08,599 --> 00:17:12,700 After all the company only lost just over 1 million subscribers 322 00:17:12,700 --> 00:17:15,500 and they have 220 plus million subscribers. 323 00:17:15,800 --> 00:17:17,800 So it was still less than a half. 324 00:17:17,800 --> 00:17:20,099 A percent of their total subscriber base. 325 00:17:20,500 --> 00:17:23,200 Not really something that I thought was too dramatic. 326 00:17:23,400 --> 00:17:27,000 But regardless, this is another thing that was a little bit of a 327 00:17:27,000 --> 00:17:30,900 bummer to investors in Netflix, you Has had this big brilliant 328 00:17:30,900 --> 00:17:34,300 investor in the stock with you and he just ran for the hills, 329 00:17:34,400 --> 00:17:37,600 he just exited, he put doubt into the stock. 330 00:17:38,100 --> 00:17:43,200 So the stock continues to fall another 20% after Bill, Ackman 331 00:17:43,300 --> 00:17:45,400 sold, if you can actually believe it. 332 00:17:45,700 --> 00:17:48,500 This Mark right here is 20% above that. 333 00:17:48,500 --> 00:17:52,200 One, the stock was down so much that just the slightest change, 334 00:17:52,200 --> 00:17:53,900 makes it another 20 percent drop. 335 00:17:54,400 --> 00:17:58,300 So at this time, period. I'm thinking, well Bill Ackman 336 00:17:58,300 --> 00:18:00,500 sold out of the stock. Everybody seems to be selling 337 00:18:00,500 --> 00:18:02,900 out of the stock. People are dunking on me, on 338 00:18:02,900 --> 00:18:06,400 Reddit, and on Seeking Alpha and on YouTube comments. 339 00:18:06,400 --> 00:18:09,000 And even other channels are mocking me for owning the 340 00:18:09,000 --> 00:18:13,500 company and overpaying for it. And I thought, you know, I 341 00:18:13,500 --> 00:18:16,300 didn't buy into this stock because Bill Ackman bought the 342 00:18:16,308 --> 00:18:20,000 stock, I was buying into it long before he had anything to do 343 00:18:20,000 --> 00:18:23,300 with this company. And I've been studying Netflix 344 00:18:23,300 --> 00:18:26,800 for a long period of time. I have real belief that Are 345 00:18:26,800 --> 00:18:29,200 going to be the winner and streaming that they will have 346 00:18:29,200 --> 00:18:31,800 good economics. They even with this hiccup, 347 00:18:31,900 --> 00:18:35,000 which I think is understandable, given that they gained like 20 348 00:18:35,000 --> 00:18:37,700 million subscribers in a month during covid. 349 00:18:37,700 --> 00:18:41,400 I think that they're going to be able to recover and at the time 350 00:18:41,400 --> 00:18:44,500 at this time, period. It was tough. 351 00:18:44,800 --> 00:18:48,000 This was what I would admit the most difficult time period. 352 00:18:48,000 --> 00:18:51,300 It was tough to go on and share my performance. 353 00:18:51,300 --> 00:18:55,200 Share that I took a massive hit with this company, share that I 354 00:18:55,200 --> 00:18:56,800 had weakness in mind. Analysis. 355 00:18:57,000 --> 00:18:59,200 Not forecasting. That they're going to have such 356 00:18:59,200 --> 00:19:02,200 a mess of subscriber loss. That's something that caught me 357 00:19:02,200 --> 00:19:06,900 off guard and so I had to go on Dat admit that I have a problem 358 00:19:06,900 --> 00:19:12,300 here with Netflix but I did not believe the company was in as 359 00:19:12,300 --> 00:19:15,900 significant trouble as the market was pricing in Netflix. 360 00:19:15,900 --> 00:19:20,600 Had traded down below a PE ratio of the S&P 500 as if the 361 00:19:20,600 --> 00:19:23,200 company's market position and strengths and future 362 00:19:23,200 --> 00:19:26,200 profitability was worse than the overall Market average. 363 00:19:26,400 --> 00:19:28,900 And I thought, overall the company will recover. 364 00:19:29,400 --> 00:19:32,300 So, during this time period, I decided to start buying the 365 00:19:32,300 --> 00:19:34,400 stock. Again, I had bought it right 366 00:19:34,400 --> 00:19:37,400 here, I'd bought more of it right here and I bought more of 367 00:19:37,408 --> 00:19:40,900 it at the Lowe's. This was difficult to do much 368 00:19:40,900 --> 00:19:43,900 easier said than done, but I did continue to buy the company. 369 00:19:44,000 --> 00:19:46,900 Here's my recent trading activity with Netflix and I'm 370 00:19:46,900 --> 00:19:50,100 not filtering out cells here. I have not done any cells, 371 00:19:50,100 --> 00:19:53,500 that's why they're all buys. I continue to buy this company 372 00:19:53,700 --> 00:19:56,700 through thick and thin and especially after Dropped in 373 00:19:56,700 --> 00:19:58,200 price. I was trying to buy as much of 374 00:19:58,200 --> 00:20:00,100 it as I could. That's why you're seeing these 375 00:20:00,100 --> 00:20:03,900 purchases here and here and here you know, these are Big 376 00:20:03,900 --> 00:20:07,000 purchases and a lot of people say, oh, that's easy. 377 00:20:07,000 --> 00:20:09,600 When you can throw more money at it, but a lot of this was my 378 00:20:09,600 --> 00:20:11,500 savings. I was not expecting to put this 379 00:20:11,500 --> 00:20:14,500 much money on Netflix, but I believe so strongly that if I 380 00:20:14,500 --> 00:20:17,800 could get my cost average down, if I could buy more of the 381 00:20:17,800 --> 00:20:21,200 company and get the cost down that when the recovery does 382 00:20:21,200 --> 00:20:23,900 happen, I could get in the green a lot faster. 383 00:20:24,100 --> 00:20:26,500 I want to have to wait until the company gets back up to Five 384 00:20:26,500 --> 00:20:29,000 hundred dollars per share. If I could get my cost basis 385 00:20:29,000 --> 00:20:30,900 down, I wouldn't have to wait that long. 386 00:20:31,100 --> 00:20:35,600 So I lowered my cost basis from 500 to around 4:20. 387 00:20:35,900 --> 00:20:39,500 So the actual cost basis came down dramatically as I continue 388 00:20:39,500 --> 00:20:43,200 to buy the company. Now, during this time, period, 389 00:20:43,400 --> 00:20:46,000 it was really confusing and again, looking back. 390 00:20:46,000 --> 00:20:48,700 It seems so simple. But you have Bill ackman's 391 00:20:48,700 --> 00:20:50,600 selling out during this time period. 392 00:20:50,700 --> 00:20:53,900 So, even good investors have lost faith and they've, they've 393 00:20:54,100 --> 00:20:56,100 given up on the company at the time. 394 00:20:56,200 --> 00:20:58,900 I came out with an analysis. That was a patron exclusive 395 00:20:58,900 --> 00:21:01,400 analysis. So I posted this on my Discord 396 00:21:01,400 --> 00:21:04,700 for patreon members and it was called, Netflix updated, 397 00:21:04,700 --> 00:21:08,600 thoughts, December 1st, 2022. And I go over the state of 398 00:21:08,600 --> 00:21:11,000 Netflix, this was what was happening with the company. 399 00:21:11,300 --> 00:21:13,700 Here's a few things that have happened over the past year. 400 00:21:14,000 --> 00:21:17,000 Netflix reported subscriber lost two quarters in a row. 401 00:21:17,400 --> 00:21:20,100 Netflix is subscriber lost resulted in destroying investor 402 00:21:20,100 --> 00:21:21,700 confidence causing the stock to drop. 403 00:21:21,700 --> 00:21:26,000 Over 70%, Netflix has changed their mind on having no ads and 404 00:21:26,000 --> 00:21:29,700 is Reduced a new seven dollar per month, add Terror, Netflix 405 00:21:29,700 --> 00:21:32,500 has decided they will monetize password sharing accounts, 406 00:21:32,800 --> 00:21:35,700 Netflix admitted that they face real competition and streaming 407 00:21:35,900 --> 00:21:38,100 Netflix made a pivot into gaming. 408 00:21:38,300 --> 00:21:40,400 Netflix has done layoffs and budget cuts. 409 00:21:40,900 --> 00:21:44,300 That was a summary of all the facts, get rid of all the noise, 410 00:21:44,400 --> 00:21:46,600 this is exactly what happened with the company. 411 00:21:46,900 --> 00:21:50,100 Now I go on sing that the damage to Netflix story over the past 412 00:21:50,100 --> 00:21:51,900 year is real. Investor confidence has been 413 00:21:51,900 --> 00:21:54,100 shaken. Even Bill Ackman purchased into 414 00:21:54,100 --> 00:21:56,100 Netflix to buy the dip and it's quick. 415 00:21:56,200 --> 00:21:58,700 We sold out only three months later when Netflix had another 416 00:21:58,700 --> 00:22:01,400 disappointing quarter. He's now stated that the stock 417 00:22:01,400 --> 00:22:03,800 is too unpredictable for his concentrated portfolio. 418 00:22:04,500 --> 00:22:08,300 This is where I continue to strongly disagree with both the 419 00:22:08,300 --> 00:22:11,700 market and Bill Ackman. I don't think the things are so 420 00:22:11,700 --> 00:22:14,200 bad for Netflix, and I don't think that the company is 421 00:22:14,200 --> 00:22:17,100 unpredictable. In fact, I think Netflix is one 422 00:22:17,100 --> 00:22:18,900 of the most predictable companies in the market. 423 00:22:18,900 --> 00:22:22,200 I believe Netflix remains one of the most clear and predictable 424 00:22:22,200 --> 00:22:26,200 long-term winners in the equity markets, while many, if not, 425 00:22:26,400 --> 00:22:29,900 Most investors continue to focus on the facts above. 426 00:22:30,100 --> 00:22:33,500 Let's take a look at a few facts that they fail to consider. 427 00:22:34,200 --> 00:22:37,500 Here's where Netflix stood right now, this was again, December 428 00:22:37,500 --> 00:22:40,100 twenty. First twenty twenty-two Netflix 429 00:22:40,100 --> 00:22:43,200 subscriber count is two hundred and twenty three point zero nine 430 00:22:43,200 --> 00:22:44,900 million. The highest it's ever been 431 00:22:45,100 --> 00:22:49,300 Netflix forecast a subscriber gained a 4.5 million in Q4 of 432 00:22:49,300 --> 00:22:52,100 2022. Netflix is growing subscribers. 433 00:22:52,100 --> 00:22:55,900 After just recently increasing prices, Netflix has the highest 434 00:22:55,900 --> 00:22:58,600 average Virge Revenue per user by far and streaming. 435 00:22:59,000 --> 00:23:02,300 Netflix is a free cash flow. Positive even while considering 436 00:23:02,300 --> 00:23:06,000 stock-based compensation, Netflix long-term debt has been 437 00:23:06,000 --> 00:23:08,000 reduced for seven, quarters in a row. 438 00:23:08,200 --> 00:23:11,500 Netflix continues to dominate streaming engagement, routinely 439 00:23:11,500 --> 00:23:14,100 topping the list of the most watched and loved shows on the 440 00:23:14,100 --> 00:23:15,600 internet. In the past week. 441 00:23:15,600 --> 00:23:18,400 For example, Netflix had nine out of the ten. 442 00:23:18,500 --> 00:23:23,700 Most watched shows on TV HBO had 1 out of 10, even without big 443 00:23:23,700 --> 00:23:27,600 Brands like Star Wars, Marvel, Netflix continues to produce 444 00:23:27,600 --> 00:23:30,000 breakout hits like Dahmer Wednesday. 445 00:23:30,000 --> 00:23:32,400 Which just broke the record of the most streamed 446 00:23:32,400 --> 00:23:35,100 English-speaking show in a one-week period. 447 00:23:35,300 --> 00:23:39,300 Netflix is producing better Blockbuster content over time, 448 00:23:39,500 --> 00:23:41,700 the Glass Onion knifes out sequel. 449 00:23:41,700 --> 00:23:44,300 Had a pre-release in the theaters to produce buzz and it 450 00:23:44,300 --> 00:23:47,800 was rated an 8 out of 10 on. IMDb 93 percent on Rotten 451 00:23:47,800 --> 00:23:50,200 Tomatoes, by both audiences and critics. 452 00:23:50,700 --> 00:23:54,000 This will be released in December, 23rd to everyone on 453 00:23:54,000 --> 00:23:57,800 Netflix, when I consider all All the facts surrounding Netflix. 454 00:23:57,900 --> 00:24:00,300 I don't see a distressed and struggling company. 455 00:24:00,600 --> 00:24:02,900 I see a company that is dominant and thriving. 456 00:24:03,000 --> 00:24:06,100 Netflix is the only streaming company at scale and generating 457 00:24:06,100 --> 00:24:08,900 positive free cash flow with their streaming business. 458 00:24:09,200 --> 00:24:12,800 Netflix is still profitable and growing despite all their 459 00:24:12,800 --> 00:24:16,700 competitors spending tens of billions of dollars on streaming 460 00:24:16,900 --> 00:24:19,700 to chase Netflix. Now Netflix stock is up around 461 00:24:19,700 --> 00:24:23,300 50 percent from this research released and up around 150 462 00:24:23,300 --> 00:24:26,300 percent just over the past year. The stock has been on a A 463 00:24:26,308 --> 00:24:29,400 decline. Now, look, what's happened since 464 00:24:29,400 --> 00:24:32,100 this time period. Netflix stock is obviously 465 00:24:32,100 --> 00:24:35,900 recovered to a great deal. The buys that I did here really 466 00:24:35,900 --> 00:24:38,100 helped out my cost basis, they lowered it down. 467 00:24:38,300 --> 00:24:41,600 So now I'm in the green at a much lower price than what I was 468 00:24:41,600 --> 00:24:43,900 buying in originally at the same time. 469 00:24:44,000 --> 00:24:46,100 Now. Netflix, boasts, a market cap of 470 00:24:46,100 --> 00:24:49,100 193 billion dollars we can look at Disney's. 471 00:24:49,100 --> 00:24:51,700 For example, the next biggest entertainment company in the 472 00:24:51,700 --> 00:24:57,400 world at 171 billion dollars. Netflix is a A bigger media 473 00:24:57,400 --> 00:25:01,300 streaming Entertainment Company than Disney a bigger one by 474 00:25:01,300 --> 00:25:04,000 Twenty, Thirty billion dollars in market cap. 475 00:25:04,200 --> 00:25:07,200 And if you actually took out the park resorts, as part of Disney, 476 00:25:07,500 --> 00:25:10,600 which would cut their market cap in half Netflix is not even 477 00:25:10,600 --> 00:25:13,000 close to Disney. It's massively bigger. 478 00:25:13,100 --> 00:25:16,000 If you're just segmenting the media properties. 479 00:25:16,000 --> 00:25:17,500 So that brings us to where we are. 480 00:25:17,500 --> 00:25:20,800 Now, Netflix has one, they're the biggest media company in the 481 00:25:20,800 --> 00:25:23,400 world and they're the most profitable and they're growing 482 00:25:23,400 --> 00:25:26,100 profits at the highest speed. The stock has recovered. 483 00:25:26,600 --> 00:25:30,700 From being an embarrassing, twenty thousand dollar loss to 484 00:25:30,700 --> 00:25:33,900 now, a four hundred and twenty dollar gained in and of itself, 485 00:25:33,900 --> 00:25:37,500 that's nothing to brag about $420 is not great. 486 00:25:37,800 --> 00:25:39,600 I have companies that have done much better. 487 00:25:39,600 --> 00:25:42,400 I have companies like apple and Microsoft and Texas Roadhouse 488 00:25:42,700 --> 00:25:44,400 that had been much better Investments. 489 00:25:44,700 --> 00:25:46,700 But I think there's something to be learned here. 490 00:25:46,800 --> 00:25:49,400 I think there's some analysis we can do on this. 491 00:25:49,900 --> 00:25:54,700 First of all, I think a big thing in investing is the talk 492 00:25:54,700 --> 00:25:57,500 of I'm not concerned. Has earned a volatility. 493 00:25:57,600 --> 00:26:00,200 I'm not worried about volatility, let me tell you, 494 00:26:00,200 --> 00:26:03,600 firsthand. Volatility is not that fun, and 495 00:26:03,600 --> 00:26:05,800 if you can avoid it, then avoid it. 496 00:26:06,000 --> 00:26:10,500 Because being down, 75% on a stock being down, twenty 497 00:26:10,500 --> 00:26:14,200 thousand dollars, it plays games with your mind, it makes you 498 00:26:14,200 --> 00:26:16,600 become overall, bearish on the company. 499 00:26:16,900 --> 00:26:21,200 All you're getting is negative news, the story's dead Netflix 500 00:26:21,200 --> 00:26:24,900 has competition, they have no room to grow HBO and Disney are 501 00:26:24,900 --> 00:26:28,200 now charging in. Taking their market and you 502 00:26:28,200 --> 00:26:30,300 overpaid. You're stupid for overpaying. 503 00:26:30,600 --> 00:26:33,800 You should just sell the loss, get rid of it, get rid of that, 504 00:26:33,800 --> 00:26:37,800 ugly red out of your portfolio, just sell it off and move on. 505 00:26:38,300 --> 00:26:40,300 That is all the types of pressures. 506 00:26:40,300 --> 00:26:43,400 You're getting when you're down that much in a company and that 507 00:26:43,400 --> 00:26:47,200 is volatility. So it's easy to say I don't mind 508 00:26:47,200 --> 00:26:50,800 a little volatility, I can handle it but can you really do 509 00:26:50,800 --> 00:26:52,500 you really want to go through that? 510 00:26:52,600 --> 00:26:54,900 I've gone through companies that aren't that, volatile, like 511 00:26:54,900 --> 00:26:56,700 Costco. And I Gone through companies 512 00:26:56,700 --> 00:26:58,400 that are very volatile, like Netflix. 513 00:26:58,800 --> 00:27:01,500 And let me tell you, I prefer the non-volatile ones, I like 514 00:27:01,500 --> 00:27:04,600 companies that just trudged along upwards steadily over 515 00:27:04,600 --> 00:27:06,300 time. I don't like going through 516 00:27:06,300 --> 00:27:10,600 companies that have 60% drops. If I can, I'll try to avoid 517 00:27:10,600 --> 00:27:14,300 that, that's the first thing. So don't try to understate the 518 00:27:14,300 --> 00:27:17,500 impact of volatility. It can trick you into making, 519 00:27:17,500 --> 00:27:20,400 very poor decisions. In the case of Netflix, it 520 00:27:20,400 --> 00:27:23,300 worked out in my ultimate benefit because I was able to 521 00:27:23,300 --> 00:27:26,000 ultimately lower my cost basis in the company. 522 00:27:26,200 --> 00:27:29,700 Which is mathematically better, but I had to go through a great 523 00:27:29,700 --> 00:27:35,000 deal of just kind of, you know, concerns and problems. 524 00:27:35,000 --> 00:27:38,800 And a lot of derision and things in the process. 525 00:27:38,800 --> 00:27:41,100 This wasn't a fun process to go through. 526 00:27:41,600 --> 00:27:45,000 So if you can avoid it, I think the better, the better route to 527 00:27:45,000 --> 00:27:47,500 go is to avoid volatility. Not try to seek it out 528 00:27:47,500 --> 00:27:50,400 intentionally. The next thing, I think you can 529 00:27:50,400 --> 00:27:52,800 learn is to stick with your guns. 530 00:27:53,100 --> 00:27:57,000 If you've done the research on a company and you Ali feel bright 531 00:27:57,000 --> 00:28:00,100 about its future, don't get talked out of it because of 532 00:28:00,100 --> 00:28:03,200 someone else, even if that, someone else is someone that you 533 00:28:03,200 --> 00:28:07,400 respect people that you respect can make bad decisions from time 534 00:28:07,400 --> 00:28:10,300 to time. In this case, someone that I 535 00:28:10,300 --> 00:28:13,500 have said I respect as an investor is Bill Ackman. 536 00:28:13,600 --> 00:28:17,200 He bought into the company hair Bill bot right there. 537 00:28:17,300 --> 00:28:21,300 And then he sold three months later at a thirty percent loss. 538 00:28:21,800 --> 00:28:25,300 He's a respectable investor, he has good returns overall, I 539 00:28:25,300 --> 00:28:28,500 respected him. But I did not follow his trades. 540 00:28:28,700 --> 00:28:32,200 I didn't buy in and sell out which now is that a substantial 541 00:28:32,200 --> 00:28:35,200 low? Netflix is up 200 percent from 542 00:28:35,200 --> 00:28:38,800 where he sold. So he sold at a low point and 543 00:28:38,800 --> 00:28:42,200 Netflix from where he sold has be every single one of his 544 00:28:42,200 --> 00:28:43,600 Investments that he's invested in. 545 00:28:43,900 --> 00:28:46,500 It was the worst decision he's made over the past two years. 546 00:28:46,900 --> 00:28:49,200 Now, he'll say that it was a fine decision because it was 547 00:28:49,200 --> 00:28:51,100 unpredictable. I disagree. 548 00:28:51,300 --> 00:28:52,900 I think that he bought into the company. 549 00:28:53,300 --> 00:28:56,500 It got a little scary when it traded down, and he saw Sold out 550 00:28:56,500 --> 00:28:59,200 very quickly. So even though I respect people 551 00:28:59,200 --> 00:29:02,900 like Bill Ackman, if you follow their trades, if you follow him 552 00:29:02,900 --> 00:29:06,200 into the stock, you're going to be more inclined to sell out. 553 00:29:06,200 --> 00:29:08,900 If they sell out or if they make mistakes because you don't have 554 00:29:08,900 --> 00:29:12,000 conviction by yourself. I had done a lot of research on 555 00:29:12,000 --> 00:29:15,200 Netflix, I felt very strongly about the company that allowed 556 00:29:15,200 --> 00:29:17,300 me to stick with my guns with this company. 557 00:29:17,700 --> 00:29:19,600 So that's the second thing I'd point out. 558 00:29:20,000 --> 00:29:24,600 The third thing is to just not listen to haters and the noise 559 00:29:24,600 --> 00:29:27,700 and people that criticize You, if you bought into a company and 560 00:29:27,700 --> 00:29:29,900 people try to make you feel dumb for it because it went down, 561 00:29:30,400 --> 00:29:33,700 they are just trying to point out specific periods and time. 562 00:29:33,800 --> 00:29:36,100 A lot of them are doing that just because they're completely 563 00:29:36,100 --> 00:29:39,600 - if I had listened to all the haters during this time, period, 564 00:29:39,600 --> 00:29:44,200 I would have sold at Lowe's, but it didn't affect me, just 565 00:29:44,200 --> 00:29:46,400 ignoring them as something that's part of YouTube and doing 566 00:29:46,400 --> 00:29:48,600 this. So sticking to my guns. 567 00:29:48,600 --> 00:29:52,100 Not paying attention to haters and not having my conviction 568 00:29:52,100 --> 00:29:54,900 based on Bill Ackman. I think was a big part of it. 569 00:29:55,100 --> 00:29:57,300 Long term. I I continue to believe the 570 00:29:57,300 --> 00:30:00,900 entire time that Netflix will generate a lot of free cash 571 00:30:00,900 --> 00:30:03,500 flow. So, that's some some just 572 00:30:03,500 --> 00:30:05,900 reflection on this. I think it's been a learning 573 00:30:05,900 --> 00:30:07,600 experience. It's been an interesting company 574 00:30:07,600 --> 00:30:09,600 to hold. That brings us to where we are 575 00:30:09,600 --> 00:30:11,900 now. The company has a much bigger 576 00:30:11,900 --> 00:30:15,200 market cap. The valuation has gone up from 577 00:30:15,200 --> 00:30:18,200 what was Dirt Cheap to now, a more expensive company. 578 00:30:18,200 --> 00:30:22,300 Once again, it went from an 18-4 PE can now a 29. 579 00:30:22,500 --> 00:30:25,600 So a lot of people are saying right now, Netflix is expensive. 580 00:30:26,300 --> 00:30:28,700 The PE Ratio is a little odd, with Netflix, the way they 581 00:30:28,700 --> 00:30:31,700 amortize things. What I look at is the free cash 582 00:30:31,700 --> 00:30:33,900 flow yield adjusted for stock-based compensation. 583 00:30:34,000 --> 00:30:36,300 That is my ultimate metric of what I think is the true 584 00:30:36,300 --> 00:30:39,400 profitability of a company. When I look at the yield of that 585 00:30:39,700 --> 00:30:44,000 Netflix right now is trading at a trailing 12-month yield of 1.2 586 00:30:44,000 --> 00:30:50,300 1% and that is a little bit more expensive but Netflix has guided 587 00:30:50,400 --> 00:30:54,100 for 3.5 billion dollars in free cash flow this year. 588 00:30:54,400 --> 00:30:55,800 They raised their guidance from three. 589 00:30:56,000 --> 00:31:03,200 Alien to 3.5 3.5 out of 193 is a free cash flow, yield of around 590 00:31:03,200 --> 00:31:06,600 one point eight percent. So they're free cash flow yield 591 00:31:06,600 --> 00:31:11,400 right now on 2023. Estimated cash flows is around 592 00:31:11,400 --> 00:31:15,100 1.8% just under two percent even adjusting for stock-based 593 00:31:15,100 --> 00:31:17,800 compensation. I don't think that's so bad, 594 00:31:17,800 --> 00:31:19,600 it's a little bit on the higher end. 595 00:31:19,700 --> 00:31:22,700 It could trade down a bit but I don't think it's so bad for a 596 00:31:22,700 --> 00:31:25,700 company that's showing the strength that it has like a 597 00:31:25,700 --> 00:31:27,600 Netflix. As shown and by the strength 598 00:31:27,600 --> 00:31:29,600 that it has. I mean a company that is 599 00:31:29,600 --> 00:31:32,600 increasing prices, that is gaining subscribers and now 600 00:31:32,600 --> 00:31:34,800 they're making grounds on password. 601 00:31:34,800 --> 00:31:37,300 Crackdown we can look at the news hair. 602 00:31:37,600 --> 00:31:41,400 This is another thing that I vocally and publicly said that I 603 00:31:41,408 --> 00:31:44,100 disagree with all the people saying, this is not going to 604 00:31:44,100 --> 00:31:47,300 work, many people saying that Netflix is password, Crackdown 605 00:31:47,300 --> 00:31:51,100 is going to destroy the company. We have analytics here showing 606 00:31:51,200 --> 00:31:54,600 that the password crack down as far as they can see, so far, 607 00:31:54,600 --> 00:31:58,400 which isn't confirmed. And so we you know Netflix can't 608 00:31:58,400 --> 00:32:01,700 take a Victory lap yet but as far as they can tell by 609 00:32:01,700 --> 00:32:05,900 third-party analysis, it seems to be working while some of the 610 00:32:05,900 --> 00:32:08,400 users have cancelled their accounts after the Crackdown on 611 00:32:08,400 --> 00:32:10,700 password sharing. I'm sure many of you have, 612 00:32:10,700 --> 00:32:12,400 there's some people very upset about it. 613 00:32:12,600 --> 00:32:16,300 According to the data from analytic firm antenna, Netflix 614 00:32:16,300 --> 00:32:19,700 saw a sharp rise in account sign ups after the rule came into 615 00:32:19,700 --> 00:32:23,500 force in the US, Aunt Anna says that Netflix had for single 616 00:32:23,500 --> 00:32:27,500 biggest days of u.s. signups in Four and a half years since it 617 00:32:27,500 --> 00:32:30,700 track the data. So the for single biggest days 618 00:32:30,700 --> 00:32:34,300 of sign, ups, were after the password crack down, there are 619 00:32:34,300 --> 00:32:38,100 almost 100,000 signups each day during each of the four days. 620 00:32:38,100 --> 00:32:41,100 The company saw an average of 73 thousand new memberships, 621 00:32:41,100 --> 00:32:43,900 according to antenna. So that's net, new memberships. 622 00:32:44,300 --> 00:32:47,500 They say, while account cancellations also Rose in that 623 00:32:47,500 --> 00:32:50,000 period. And Hannah said signups far 624 00:32:50,000 --> 00:32:53,500 outpaced those figures. So turn was probably elevated. 625 00:32:53,500 --> 00:32:55,800 Which mean, people signed at an elevated. 626 00:32:56,100 --> 00:33:00,100 They canceled at an elevated rate but also sign ups were 627 00:33:00,100 --> 00:33:03,800 elevated even beyond that. So the net gain is in Netflix's 628 00:33:03,800 --> 00:33:06,600 favor and I've gone over the math of this, it works out in 629 00:33:06,600 --> 00:33:11,000 Netflix's favor ultimately so in terms of the password Crackdown 630 00:33:11,200 --> 00:33:12,700 this has been a success for Netflix. 631 00:33:12,700 --> 00:33:17,200 So far from what we know other things that seem to be happening 632 00:33:17,200 --> 00:33:21,900 with Netflix, other countries are seeing how dominant Netflix 633 00:33:21,900 --> 00:33:25,300 is South Korea. For example, they have such a 634 00:33:25,300 --> 00:33:29,700 huge Of Netflix produced content taking over there are ways that 635 00:33:29,700 --> 00:33:32,500 they're actually concerned about Netflix, becoming too powerful 636 00:33:32,500 --> 00:33:35,300 as some people in South Korea's entertainment industry. 637 00:33:35,300 --> 00:33:38,600 See it is that overwhelming importance of a single channel 638 00:33:38,600 --> 00:33:41,400 to distribute their content, quote, as a studio. 639 00:33:41,400 --> 00:33:44,500 And as a producer, I'm a little concerned that Netflix has been 640 00:33:44,500 --> 00:33:48,100 the only Channel Global audiences can watch Korean 641 00:33:48,100 --> 00:33:52,700 series on Netflix, is it? It's the one player producing 642 00:33:52,700 --> 00:33:55,600 Global entertainment and that's making it a little bit. 643 00:33:56,000 --> 00:33:58,800 Concerning for Crea there. Also mentioning that many TV 644 00:33:58,800 --> 00:34:02,000 producers and Regulators are long worried that US based 645 00:34:02,000 --> 00:34:06,200 companies such as Netflix and Amazon would decimate, local TV 646 00:34:06,200 --> 00:34:08,400 networks. So, they're basically saying in 647 00:34:08,400 --> 00:34:10,699 South Korea that they're concerned, Netflix, as well as 648 00:34:10,699 --> 00:34:13,699 other streaming companies, but mostly Netflix, at this point 649 00:34:13,800 --> 00:34:15,500 are simply becoming too powerful. 650 00:34:15,699 --> 00:34:18,199 And I agree with that. I think that Netflix is becoming 651 00:34:18,199 --> 00:34:21,699 powerful enough to look at in a regulatory weighed in South 652 00:34:21,699 --> 00:34:23,800 Korea. There having massive gains there 653 00:34:23,800 --> 00:34:26,900 in subscribers. Now, there's also News and this 654 00:34:26,900 --> 00:34:29,100 is something a little bit different, but I think it's a 655 00:34:29,107 --> 00:34:32,400 great growth path for Netflix now, they're getting more into 656 00:34:32,400 --> 00:34:35,000 Live Events. They're not just broadcasting 657 00:34:35,000 --> 00:34:37,699 NBA finals or live events that we know of. 658 00:34:37,800 --> 00:34:40,800 But Netflix is doing more experimentation with Live 659 00:34:40,800 --> 00:34:42,800 Events. Like the Chris Rock comedy 660 00:34:42,800 --> 00:34:44,900 special. That was a live event that was 661 00:34:44,900 --> 00:34:48,600 hugely popular and now they're trying to do that with sports 662 00:34:48,600 --> 00:34:51,900 creating their own golf tournaments Netflix to enter 663 00:34:51,900 --> 00:34:54,400 live stream sports with Celebrity Golf event. 664 00:34:54,600 --> 00:34:55,900 This one looks pretty interesting. 665 00:34:56,000 --> 00:34:59,100 Ting golf is becoming more popular over the past year. 666 00:34:59,100 --> 00:35:02,000 I think that's largely driven by Netflix documentaries, like full 667 00:35:02,000 --> 00:35:04,600 swing but they say that the company is in the early 668 00:35:04,600 --> 00:35:06,700 discussions about a golf tournament. 669 00:35:06,900 --> 00:35:11,500 Some of the people said set in Las Vegas long Vici, we love Las 670 00:35:11,500 --> 00:35:13,700 Vegas here. The event would feature 671 00:35:13,700 --> 00:35:17,000 celebrities from drive to survive a docu-series about a 672 00:35:17,000 --> 00:35:20,600 Formula One auto racing and full swing, which followed 673 00:35:20,600 --> 00:35:23,300 professional golfers during the 2022 season. 674 00:35:23,800 --> 00:35:28,300 So, here's Netflix building. Their own ecosystem, their own 675 00:35:28,300 --> 00:35:31,000 franchises. People say that Disney has all 676 00:35:31,000 --> 00:35:34,400 the franchises and all the IP. I would argue they don't Netflix 677 00:35:34,400 --> 00:35:36,900 is built out their own and now they have docu-series like 678 00:35:36,900 --> 00:35:40,200 Formula One and full swing, which they're now intermingling 679 00:35:40,200 --> 00:35:42,500 with Live Events alive golf event. 680 00:35:42,500 --> 00:35:45,800 So you get to see these stars now play golf together which I 681 00:35:45,800 --> 00:35:47,600 assume will be a very popular event. 682 00:35:47,600 --> 00:35:50,700 What Netflix is doing here, I think is genius they're finding 683 00:35:50,700 --> 00:35:54,300 ways to monetize Sports to have people view their content 684 00:35:54,300 --> 00:35:55,800 because they're interested in sports. 685 00:35:56,100 --> 00:35:58,400 Without the expense of a licensing Sports. 686 00:35:58,600 --> 00:36:02,200 The reason that Netflix doesn't license the NFL or the NBA is, 687 00:36:02,200 --> 00:36:04,400 it's just too expensive, they don't want to pay for it. 688 00:36:04,700 --> 00:36:07,900 So they're able to monetize Sports audiences without the 689 00:36:07,900 --> 00:36:11,500 expense associated with sports. I think it's a very clever 690 00:36:11,500 --> 00:36:13,400 strategy that they're doing right now. 691 00:36:13,400 --> 00:36:16,200 I remain bullish. On Netflix, the price has gone 692 00:36:16,200 --> 00:36:17,800 up. The margin of safety has gone 693 00:36:17,800 --> 00:36:19,600 down. Once again, the stock could 694 00:36:19,600 --> 00:36:22,400 trade further down to the red. I could see it trading down 695 00:36:22,400 --> 00:36:25,700 after a bad report or if investors lose confidence, or if 696 00:36:25,700 --> 00:36:28,400 the Does something again. I could see the company going 697 00:36:28,400 --> 00:36:31,900 down but again I'm looking at this very long term, I think 698 00:36:31,900 --> 00:36:35,200 Netflix will grow past 3.5 billion dollars in free cash 699 00:36:35,200 --> 00:36:37,600 flow to 5 billion and a 10 billion. 700 00:36:37,800 --> 00:36:40,600 And I think they are going to show continued operating 701 00:36:40,600 --> 00:36:43,500 leverage far above most analysts expectations. 702 00:36:43,800 --> 00:36:47,800 So, as of right now, even though the stock could trade back down 703 00:36:47,800 --> 00:36:50,800 and we could be in the red again, right now, I'm holding on 704 00:36:50,800 --> 00:36:53,700 to it because I just look at it too long term, I think the 705 00:36:53,700 --> 00:36:55,500 company is going to continue to do great. 706 00:36:55,600 --> 00:36:57,800 That's All for this episode. I hope you enjoyed. 707 00:36:57,800 --> 00:37:00,300 If you want more content make sure to join the patreon and 708 00:37:00,300 --> 00:37:01,200 I'll see you in the next one.