I'm in the green all time with Netflix.
It's real. It really is real.
This is the all time. I'm in the green by $667.
Now normally, this isn't something that I would I would
show off or really brag about by being in the green and
accompanied by three and a half percent.
Nothing about that in and of itself is achievement worthy or
even noteworthy. But the reason that I highlight
this with Netflix, the fact that all time, I'm in the green on
this company. Is because this company, this
stock went through a 74% drawdown, 74 percent of its
value wiped away and I held this stock the entire time and that
does have some meaning to me, when a stock drops 75%, that you
own that has an impact that has an emotional toll.
That makes it very difficult to know what to do in that
situation with Netflix. I was able to hold on to this
company. Hang on to this stock and
actually turn it from a 20 thousand dollar loss.
Into a gain. And I want to go through this
crazy story of owning Netflix through this time period and
give you some insight into what I was thinking at different
time. Periods.
Of course, we also have an update on the story fund its
performance against spy. It is a racing back up to catch
the S&P 500, we have more news on Netflix, their password
Crackdown seems to be working. There is people that were
questioning Netflix, that are now admitting defeat saying that
Netflix one. We have Netflix having a
chilling effect on Foreign content, different countries are
now concerned that Netflix is basically taking over the media
world, and then we also have Netflix going in to streamed
Sports. They're going into livestream
Sports and these are a little bit different.
This event seems like it's a Netflix Celebrity Golf event,
that they're actually creating. I'm going to give you my
thoughts on this as well. And then of course, we have the
fomc meeting that's for the FED Meats together and determines
the interest rate, whether they keep it the same raise it or
lower it and they're expected to keep it the same.
So I'll be going over. As well.
Now let's go ahead and Jump Right In and we'll start off
with a portfolio update. We have a lot of new people join
this channel every single, but the couple thousand every month
and welcome, if you're new, but I want to also mention that this
is not my only YouTube channel, I have one that goes under my
name, Joseph Carlson. And in that one, I follow a
different portfolio called the passive income account, passive,
income account, has a little bit different of a strategy and this
is really my main portfolio. It's where I put the majority of
my money, the majority of my, my new money, And this one has been
going great. It's up 85,000.
It continues to make Market beating gains this year and last
year, but today, we're focused on the story fund.
The story fund is a portfolio that I started to talk about a
different type of company, which is more in line with highly
volatile tech companies. So, I created this portfolio
because I wanted to do research and Analysis on these companies,
and I always think it's more interesting to do analysis.
When you have your own money at stake, talk is cheap putting
your own money at stake. In showing the results.
That's where I think it's a little bit more interesting.
Now, in this portfolio, I have it weighted towards a couple
companies. It's heavily weighted towards
Amazon and Netflix. These are two huge companies
that I put a massive waiting towards.
Now, we have a lot in Google, but this wasn't the case for the
majority of this portfolio. This is a very recent thing.
I had most of the money 40% about in Amazon, and this one's
just done terrible along with Netflix.
And then we Have Netflix being about 25 percent last year, both
of these companies were struggling dramatically and
they've all had a Resurgence. This whole portfolio has had a
Resurgence every single company, every single big tech company
has had one incredible year. Now, I don't have all the
percentages on hand but companies like apple are up 40%,
Amazon's up. 45% Tesla's up over 100 percent, even though, I
don't have that one of my portfolio that was doing really
well. Up 40 or 50 percent this year,
Google's up like 30 to 40 percent this year, they're all
doing great, even Microsoft is doing great this year.
So all these tech companies really got hammered in 2022 and
now they're having a big Resurgence.
Since I intentionally overweighted my portfolio into
big Tech not as many smaller companies but mostly into big
Tech. My portfolio has likewise
recovered far faster than both. The S&P 500 and the QQQ if we
look at the recovery. Over the past, year this
illustrates the relative recovery of my portfolio against
the S&P 500. Which I'm benchmarking it
against. So we have the story fund and
blue, we have the S&P 500 in red right now.
The story fund has really caught up, it's in the green a little
bit, a couple percentage and now it's only about 45 percent away
from the S&P 500. That is not a big difference
that can flip very quickly and a day that could flip and this Not
the case a while back. In fact, just a year ago, this
looked pretty bleak right around this time.
Period, 721 2022. That was a tough time for the
story fund. It was really getting crushed
and the relative difference between it and the S&P 500 was
over, twenty five percent. So a huge difference in
performance and this continued on it was really a pretty big
difference for a long period of time for about a full year
there. I showed continual updates, I
showed See, even though I was trailing the S&P 500 by a pretty
huge extent. And here we have that Gap being
closed and that was my goal, the close, the gap, and that's what
we're doing right now. So right now we have the S&P
500, still a little bit ahead of the story fund, but that Gap is
closing quickly. And every single day, were
inching more and more towards it, which I think that
eventually we're going to be able to beat it.
My goal is by the end of 2020 52 outperformed the S&P 500 to have
Be so that at the same time period that I put my cash in, it
would have performed better in my portfolio than had.
I put that cash in the S&P 500. So that's the goal.
It's a little friendly competition in the end.
I hope I make money and I hope it goes well but we'll have to
see how it turns out. I can't see the future.
So the only way to find out is to follow along for free, and
I'll continue to show these updates transparently now that
we've taken a look at the entire portfolios performance and the
huge recovery of the story fund one point down, Forty thousand
dollars. Now into the green, I want to
focus specifically on Netflix. The first thing that I think is
important to point out here because there's still a lot of
confusion about this. A lot of people that are still
debating this which streaming companies going to win the
streaming Wars, you're still seeing articles like that.
It's been decided, this has been decided for a long period of
Time. Netflix has one, they have
already won the streaming Wars. They've defeated their
opponents. So a sound.
In streaming, even with the Monumental efforts of Disney and
Warner media, and Apple, TV, and Amazon.
All of those companies competing and streaming have not come
close to Netflix. This company is internationally,
Diversified highly profitable even adjusted for stock-based
compensation and has way more subscribers at a way higher
monthly price than any other streaming company.
They are so far ahead of other streaming companies, it's not
even close. A lot of streaming companies are
on Lifeline, a lot of them like Paramount plus lose.
Hundreds of Ian's of dollars every quarter and only have a
couple of key shows. In fact, streaming companies,
like HBO streaming companies like Paramount, most of them
have two or three shows that make up 90% of their viewing.
That's highly concentrated into a couple shows.
On their service Netflix has thousands of shows they recycle
their shows every single day. There's new shows, fresh to
their contents late every single week, blockbuster movies
multiple times a year, their content.
It is heavily Diversified, it's satisfying, a huge range of
audiences all across the globe, their content, their subscriber
count, and their profitability show a very different picture
for Netflix than every other streaming competitor.
So the race is over, Netflix has won and now they're in the mode
of being a highly profitable, free cash, flow generative
company that I think is going to generate huge profits for
investors. So how did we get to this point?
Let me go into a timeline. In here, will bring up Netflix
here on qual trim, and this software.
By the way, that shows you all the fundamentals of a company,
it's available. As part of patreon, ten bucks a
month cancel anytime I think you'll love it.
Let me just bring up a simple price graph.
Here we have the year to date but I want to go back a little
bit further. This is my story of me being
involved in Netflix's stock. I want to go over the timeline
here. So again, we're looking at the
five-year time Horizon. This goes back to 2018, I
started buying a Netflix, right? When I The story fund portfolio.
So it was about 20 20 into 2021. This is really when I was buying
the company and on this chart, looking back in hindsight.
This looks like I was buying it at an expensive point, right?
It's not up to where it was when I was initially buying the
company that's true. But keep in mind during this
time period of twenty, twenty two twenty Twenty-One,
everything was expensive. If you bought anything in the
stock market, it was likely pretty expensive.
In fact, the entire Entire S&P 500 was much higher than it is
today. So, it's easy to look back and
say, oh, you're buying High. Yeah, everything was buying High
during that time period. If investors had a crystal ball,
no, investor would have bought then they would have waited
until 2022 and 2023. So this was a time period that I
initially started buying the company right around here.
I wasn't buying the company when it spiked up to its peak here.
I was mostly buying it right around this range of around.
$500 per share. And at this point in time,
Netflix had been a long-term, compounder a company that have
given incredible gains in fact looking at the all-time chart it
is insane. Netflix had just continually
gone up, especially over the past 10 years.
One thousand two hundred sixty percent gains from where it is
today. So this point it was like
fifteen hundred percent gains. It's been a marvelous stock to
own for those investors. But the reason that I was buying
into the company is because I thought strongly that Netflix
was getting to a point where it was finally getting to free cash
flow positive generation. The company was finally going to
generate a lot of free cash flow and it would have a lot of
operating leverage so I'm buying right there.
Then the stock price ticks up pretty high investors get very
enthusiastic and then something happens the stock drops like
30%, huge drop. And the reason why it dropped
this 30%, is it The first time that Netflix lost subscribers
year-over-year. This was the news that Netflix.
They went out of Russia so they lost some subscribers there and
then they actually had a little bit of a pullback.
It was an interesting thing, the management Stone really changed
from being super confident to now talking about a lot of
different issues but they're still at this point.
Pretty confident management had an optimistic view, they said
that they had Russia affect them a lot, there are some shakiness
with the covid poll for Board type of thing, and they lost
400,000 subscribers. So investors become very
concerned there. Now losing subscribers not
gaining subscribers and the analysis up to this point was
that Netflix was going to continue gaining subscribers.
So I thought that this was not really concerning.
I looked at it as Netflix, having 220 million subscribers
and them only losing 400,000, Which is less than half a
million. So, 220 million subscribers,
they lose half a million and they're down 30%.
That didn't make sense to me, but right then it was the first
sign of concern. Now, at this point in time, we
had another investor step in. We had Bill, Bill Ackman decided
to step in and buy the stock, and he bought pretty heavily.
He bought it as a large concentrated position as he does
with all of his Holdings. And then bill came out with a
huge research analysis, saying that he had actually been
following Netflix for a Ang period of time that the company
is expertly manage that. The company has global scale and
he highlighted many of the exact same points that I've been
saying for a long period of time and the seem like expert timing
from Bill Ackman, Netflix was a high quality stock that had some
weakness and that weakness caused the stock to sell off,
30% offering an attractive entry point for a big-name investor
like himself to make this a concentrated position at this
time, I bought more as well. In fact, I bought A bit more.
I think I put in like another five to seven thousand at that
point, which was bumping up my position even further.
So I bought hair a little high. This is 2020 2021.
And then the stock fell 30% because a subscriber weakness,
Bill Ackman enters the stock. He buys more of it.
That's a little bit of a confidence, boost, I'm going.
Wow, bill ackman's in the stock, I respect bill as an investor, I
respect that detailed level of analysis and research he does.
So I'm feeling a little bit better knowing knowing that I
have I have someone else that's bullish on this stock, that's a
respectable investor. That's putting his reputation on
the line. So I'm buying more as well
thinking Netflix is eventually going to recover even though
they lost 400,000 subscribers, the overall thesis of the
company I still think is intact. Then the next quarter, Netflix
loses, more subscribers, and projects 2 million subscriber
losses. They say that they're going to
lose two million the next quarter after that.
This is when the stock really crashed move, Down another 30%.
Now from the high to the low. This is now around a 74% and a
half drop. So, a 75 percent drop in stock
price from the high to the low. This bounce right here, or this
drop right here, rather was extremely distressing to
investors. We had just gone through a 30%
drop. And here we have another 25 to
30% drop right afterwards. Extremely, extremely disruptive,
Pressing to investors and the company, all of a sudden change
their tone, they went from being a company that was super
confident in their growth and they have a little air of
arrogance to them. You know, they control the world
and streaming and everything and now they're saying yes
competition is impacting us. Yes we did have some pull
forward through covid. Yes.
We're still trying to figure this out.
There are also implementing a bunch of different plans now
saying that they're going to start charging people that were
normally sharing passwords. Which we don't know how that was
going to turn out. That was a big question mark and
there's a lot of people saying that that's going to turn out
poorly. Now also said during this time
period that they're going to implement an ad tear.
So now Netflix is changing from this nicely.
Branded premium subscriber content to now ad-supported.
So the Management's changing lots of Direction.
The company seems like it's faltering, it's no longer
growing, but it's shrinking and investors are bailing re-rating.
The company way down from a 42 P/E ratio down to an 18, and
this was an extremely distressing time.
I did a portfolio update at this time, and I want to show what,
what I showed at the time. So here I am.
This is back. Let's see, May 4th of 2022.
So this was in the midst of it. I didn't turtle in and not show
you what happened. I show right on the screen.
My Netflix holding down seventeen thousand two hundred
dollars. This was way over half, I was
down around 60% in this company. So that takes, I link it takes
something to show on your down, this much in a company, a lot of
content creators are not willing to do that, but that's what you
get with this channel. I'm not going to just show when
things go, well, for me, I'll show when they go bad as well.
So here we are another 30% drop the management.
Seems like they're scrambling. They're trying to change the
narrative and change the tone around it but we know that
Netflix is struggling. Now this is also difficult
because right here, right there at the very beginning of this
drop bills. Sold.
So now we have Bill Ackman selling the stock 30 percent
lower than he just recently. Bought it going from bullish to
now, just unknown selling out at a huge loss.
In fact, Bill ackman's, lost with 300 million dollars in just
three months. So we've lost a hundred million
dollars per month in this company.
And the reason that he said he sold the stock was a respectable
reason in terms of his thoughts and Analysis.
He basically just said, look, I came in with one thesis.
I thought that Netflix would be able to recover Now, it's an
unknown. It's too unpredictable to have
as a concentrated position, I disagreed with Bill Ackman.
I do not think that Netflix is all that unpredictable.
After all the company only lost just over 1 million subscribers
and they have 220 plus million subscribers.
So it was still less than a half.
A percent of their total subscriber base.
Not really something that I thought was too dramatic.
But regardless, this is another thing that was a little bit of a
bummer to investors in Netflix, you Has had this big brilliant
investor in the stock with you and he just ran for the hills,
he just exited, he put doubt into the stock.
So the stock continues to fall another 20% after Bill, Ackman
sold, if you can actually believe it.
This Mark right here is 20% above that.
One, the stock was down so much that just the slightest change,
makes it another 20 percent drop.
So at this time, period. I'm thinking, well Bill Ackman
sold out of the stock. Everybody seems to be selling
out of the stock. People are dunking on me, on
Reddit, and on Seeking Alpha and on YouTube comments.
And even other channels are mocking me for owning the
company and overpaying for it. And I thought, you know, I
didn't buy into this stock because Bill Ackman bought the
stock, I was buying into it long before he had anything to do
with this company. And I've been studying Netflix
for a long period of time. I have real belief that Are
going to be the winner and streaming that they will have
good economics. They even with this hiccup,
which I think is understandable, given that they gained like 20
million subscribers in a month during covid.
I think that they're going to be able to recover and at the time
at this time, period. It was tough.
This was what I would admit the most difficult time period.
It was tough to go on and share my performance.
Share that I took a massive hit with this company, share that I
had weakness in mind. Analysis.
Not forecasting. That they're going to have such
a mess of subscriber loss. That's something that caught me
off guard and so I had to go on Dat admit that I have a problem
here with Netflix but I did not believe the company was in as
significant trouble as the market was pricing in Netflix.
Had traded down below a PE ratio of the S&P 500 as if the
company's market position and strengths and future
profitability was worse than the overall Market average.
And I thought, overall the company will recover.
So, during this time period, I decided to start buying the
stock. Again, I had bought it right
here, I'd bought more of it right here and I bought more of
it at the Lowe's. This was difficult to do much
easier said than done, but I did continue to buy the company.
Here's my recent trading activity with Netflix and I'm
not filtering out cells here. I have not done any cells,
that's why they're all buys. I continue to buy this company
through thick and thin and especially after Dropped in
price. I was trying to buy as much of
it as I could. That's why you're seeing these
purchases here and here and here you know, these are Big
purchases and a lot of people say, oh, that's easy.
When you can throw more money at it, but a lot of this was my
savings. I was not expecting to put this
much money on Netflix, but I believe so strongly that if I
could get my cost average down, if I could buy more of the
company and get the cost down that when the recovery does
happen, I could get in the green a lot faster.
I want to have to wait until the company gets back up to Five
hundred dollars per share. If I could get my cost basis
down, I wouldn't have to wait that long.
So I lowered my cost basis from 500 to around 4:20.
So the actual cost basis came down dramatically as I continue
to buy the company. Now, during this time, period,
it was really confusing and again, looking back.
It seems so simple. But you have Bill ackman's
selling out during this time period.
So, even good investors have lost faith and they've, they've
given up on the company at the time.
I came out with an analysis. That was a patron exclusive
analysis. So I posted this on my Discord
for patreon members and it was called, Netflix updated,
thoughts, December 1st, 2022. And I go over the state of
Netflix, this was what was happening with the company.
Here's a few things that have happened over the past year.
Netflix reported subscriber lost two quarters in a row.
Netflix is subscriber lost resulted in destroying investor
confidence causing the stock to drop.
Over 70%, Netflix has changed their mind on having no ads and
is Reduced a new seven dollar per month, add Terror, Netflix
has decided they will monetize password sharing accounts,
Netflix admitted that they face real competition and streaming
Netflix made a pivot into gaming.
Netflix has done layoffs and budget cuts.
That was a summary of all the facts, get rid of all the noise,
this is exactly what happened with the company.
Now I go on sing that the damage to Netflix story over the past
year is real. Investor confidence has been
shaken. Even Bill Ackman purchased into
Netflix to buy the dip and it's quick.
We sold out only three months later when Netflix had another
disappointing quarter. He's now stated that the stock
is too unpredictable for his concentrated portfolio.
This is where I continue to strongly disagree with both the
market and Bill Ackman. I don't think the things are so
bad for Netflix, and I don't think that the company is
unpredictable. In fact, I think Netflix is one
of the most predictable companies in the market.
I believe Netflix remains one of the most clear and predictable
long-term winners in the equity markets, while many, if not,
Most investors continue to focus on the facts above.
Let's take a look at a few facts that they fail to consider.
Here's where Netflix stood right now, this was again, December
twenty. First twenty twenty-two Netflix
subscriber count is two hundred and twenty three point zero nine
million. The highest it's ever been
Netflix forecast a subscriber gained a 4.5 million in Q4 of
2022. Netflix is growing subscribers.
After just recently increasing prices, Netflix has the highest
average Virge Revenue per user by far and streaming.
Netflix is a free cash flow. Positive even while considering
stock-based compensation, Netflix long-term debt has been
reduced for seven, quarters in a row.
Netflix continues to dominate streaming engagement, routinely
topping the list of the most watched and loved shows on the
internet. In the past week.
For example, Netflix had nine out of the ten.
Most watched shows on TV HBO had 1 out of 10, even without big
Brands like Star Wars, Marvel, Netflix continues to produce
breakout hits like Dahmer Wednesday.
Which just broke the record of the most streamed
English-speaking show in a one-week period.
Netflix is producing better Blockbuster content over time,
the Glass Onion knifes out sequel.
Had a pre-release in the theaters to produce buzz and it
was rated an 8 out of 10 on. IMDb 93 percent on Rotten
Tomatoes, by both audiences and critics.
This will be released in December, 23rd to everyone on
Netflix, when I consider all All the facts surrounding Netflix.
I don't see a distressed and struggling company.
I see a company that is dominant and thriving.
Netflix is the only streaming company at scale and generating
positive free cash flow with their streaming business.
Netflix is still profitable and growing despite all their
competitors spending tens of billions of dollars on streaming
to chase Netflix. Now Netflix stock is up around
50 percent from this research released and up around 150
percent just over the past year. The stock has been on a A
decline. Now, look, what's happened since
this time period. Netflix stock is obviously
recovered to a great deal. The buys that I did here really
helped out my cost basis, they lowered it down.
So now I'm in the green at a much lower price than what I was
buying in originally at the same time.
Now. Netflix, boasts, a market cap of
193 billion dollars we can look at Disney's.
For example, the next biggest entertainment company in the
world at 171 billion dollars. Netflix is a A bigger media
streaming Entertainment Company than Disney a bigger one by
Twenty, Thirty billion dollars in market cap.
And if you actually took out the park resorts, as part of Disney,
which would cut their market cap in half Netflix is not even
close to Disney. It's massively bigger.
If you're just segmenting the media properties.
So that brings us to where we are.
Now, Netflix has one, they're the biggest media company in the
world and they're the most profitable and they're growing
profits at the highest speed. The stock has recovered.
From being an embarrassing, twenty thousand dollar loss to
now, a four hundred and twenty dollar gained in and of itself,
that's nothing to brag about $420 is not great.
I have companies that have done much better.
I have companies like apple and Microsoft and Texas Roadhouse
that had been much better Investments.
But I think there's something to be learned here.
I think there's some analysis we can do on this.
First of all, I think a big thing in investing is the talk
of I'm not concerned. Has earned a volatility.
I'm not worried about volatility, let me tell you,
firsthand. Volatility is not that fun, and
if you can avoid it, then avoid it.
Because being down, 75% on a stock being down, twenty
thousand dollars, it plays games with your mind, it makes you
become overall, bearish on the company.
All you're getting is negative news, the story's dead Netflix
has competition, they have no room to grow HBO and Disney are
now charging in. Taking their market and you
overpaid. You're stupid for overpaying.
You should just sell the loss, get rid of it, get rid of that,
ugly red out of your portfolio, just sell it off and move on.
That is all the types of pressures.
You're getting when you're down that much in a company and that
is volatility. So it's easy to say I don't mind
a little volatility, I can handle it but can you really do
you really want to go through that?
I've gone through companies that aren't that, volatile, like
Costco. And I Gone through companies
that are very volatile, like Netflix.
And let me tell you, I prefer the non-volatile ones, I like
companies that just trudged along upwards steadily over
time. I don't like going through
companies that have 60% drops. If I can, I'll try to avoid
that, that's the first thing. So don't try to understate the
impact of volatility. It can trick you into making,
very poor decisions. In the case of Netflix, it
worked out in my ultimate benefit because I was able to
ultimately lower my cost basis in the company.
Which is mathematically better, but I had to go through a great
deal of just kind of, you know, concerns and problems.
And a lot of derision and things in the process.
This wasn't a fun process to go through.
So if you can avoid it, I think the better, the better route to
go is to avoid volatility. Not try to seek it out
intentionally. The next thing, I think you can
learn is to stick with your guns.
If you've done the research on a company and you Ali feel bright
about its future, don't get talked out of it because of
someone else, even if that, someone else is someone that you
respect people that you respect can make bad decisions from time
to time. In this case, someone that I
have said I respect as an investor is Bill Ackman.
He bought into the company hair Bill bot right there.
And then he sold three months later at a thirty percent loss.
He's a respectable investor, he has good returns overall, I
respected him. But I did not follow his trades.
I didn't buy in and sell out which now is that a substantial
low? Netflix is up 200 percent from
where he sold. So he sold at a low point and
Netflix from where he sold has be every single one of his
Investments that he's invested in.
It was the worst decision he's made over the past two years.
Now, he'll say that it was a fine decision because it was
unpredictable. I disagree.
I think that he bought into the company.
It got a little scary when it traded down, and he saw Sold out
very quickly. So even though I respect people
like Bill Ackman, if you follow their trades, if you follow him
into the stock, you're going to be more inclined to sell out.
If they sell out or if they make mistakes because you don't have
conviction by yourself. I had done a lot of research on
Netflix, I felt very strongly about the company that allowed
me to stick with my guns with this company.
So that's the second thing I'd point out.
The third thing is to just not listen to haters and the noise
and people that criticize You, if you bought into a company and
people try to make you feel dumb for it because it went down,
they are just trying to point out specific periods and time.
A lot of them are doing that just because they're completely
- if I had listened to all the haters during this time, period,
I would have sold at Lowe's, but it didn't affect me, just
ignoring them as something that's part of YouTube and doing
this. So sticking to my guns.
Not paying attention to haters and not having my conviction
based on Bill Ackman. I think was a big part of it.
Long term. I I continue to believe the
entire time that Netflix will generate a lot of free cash
flow. So, that's some some just
reflection on this. I think it's been a learning
experience. It's been an interesting company
to hold. That brings us to where we are
now. The company has a much bigger
market cap. The valuation has gone up from
what was Dirt Cheap to now, a more expensive company.
Once again, it went from an 18-4 PE can now a 29.
So a lot of people are saying right now, Netflix is expensive.
The PE Ratio is a little odd, with Netflix, the way they
amortize things. What I look at is the free cash
flow yield adjusted for stock-based compensation.
That is my ultimate metric of what I think is the true
profitability of a company. When I look at the yield of that
Netflix right now is trading at a trailing 12-month yield of 1.2
1% and that is a little bit more expensive but Netflix has guided
for 3.5 billion dollars in free cash flow this year.
They raised their guidance from three.
Alien to 3.5 3.5 out of 193 is a free cash flow, yield of around
one point eight percent. So they're free cash flow yield
right now on 2023. Estimated cash flows is around
1.8% just under two percent even adjusting for stock-based
compensation. I don't think that's so bad,
it's a little bit on the higher end.
It could trade down a bit but I don't think it's so bad for a
company that's showing the strength that it has like a
Netflix. As shown and by the strength
that it has. I mean a company that is
increasing prices, that is gaining subscribers and now
they're making grounds on password.
Crackdown we can look at the news hair.
This is another thing that I vocally and publicly said that I
disagree with all the people saying, this is not going to
work, many people saying that Netflix is password, Crackdown
is going to destroy the company. We have analytics here showing
that the password crack down as far as they can see, so far,
which isn't confirmed. And so we you know Netflix can't
take a Victory lap yet but as far as they can tell by
third-party analysis, it seems to be working while some of the
users have cancelled their accounts after the Crackdown on
password sharing. I'm sure many of you have,
there's some people very upset about it.
According to the data from analytic firm antenna, Netflix
saw a sharp rise in account sign ups after the rule came into
force in the US, Aunt Anna says that Netflix had for single
biggest days of u.s. signups in Four and a half years since it
track the data. So the for single biggest days
of sign, ups, were after the password crack down, there are
almost 100,000 signups each day during each of the four days.
The company saw an average of 73 thousand new memberships,
according to antenna. So that's net, new memberships.
They say, while account cancellations also Rose in that
period. And Hannah said signups far
outpaced those figures. So turn was probably elevated.
Which mean, people signed at an elevated.
They canceled at an elevated rate but also sign ups were
elevated even beyond that. So the net gain is in Netflix's
favor and I've gone over the math of this, it works out in
Netflix's favor ultimately so in terms of the password Crackdown
this has been a success for Netflix.
So far from what we know other things that seem to be happening
with Netflix, other countries are seeing how dominant Netflix
is South Korea. For example, they have such a
huge Of Netflix produced content taking over there are ways that
they're actually concerned about Netflix, becoming too powerful
as some people in South Korea's entertainment industry.
See it is that overwhelming importance of a single channel
to distribute their content, quote, as a studio.
And as a producer, I'm a little concerned that Netflix has been
the only Channel Global audiences can watch Korean
series on Netflix, is it? It's the one player producing
Global entertainment and that's making it a little bit.
Concerning for Crea there. Also mentioning that many TV
producers and Regulators are long worried that US based
companies such as Netflix and Amazon would decimate, local TV
networks. So, they're basically saying in
South Korea that they're concerned, Netflix, as well as
other streaming companies, but mostly Netflix, at this point
are simply becoming too powerful.
And I agree with that. I think that Netflix is becoming
powerful enough to look at in a regulatory weighed in South
Korea. There having massive gains there
in subscribers. Now, there's also News and this
is something a little bit different, but I think it's a
great growth path for Netflix now, they're getting more into
Live Events. They're not just broadcasting
NBA finals or live events that we know of.
But Netflix is doing more experimentation with Live
Events. Like the Chris Rock comedy
special. That was a live event that was
hugely popular and now they're trying to do that with sports
creating their own golf tournaments Netflix to enter
live stream sports with Celebrity Golf event.
This one looks pretty interesting.
Ting golf is becoming more popular over the past year.
I think that's largely driven by Netflix documentaries, like full
swing but they say that the company is in the early
discussions about a golf tournament.
Some of the people said set in Las Vegas long Vici, we love Las
Vegas here. The event would feature
celebrities from drive to survive a docu-series about a
Formula One auto racing and full swing, which followed
professional golfers during the 2022 season.
So, here's Netflix building. Their own ecosystem, their own
franchises. People say that Disney has all
the franchises and all the IP. I would argue they don't Netflix
is built out their own and now they have docu-series like
Formula One and full swing, which they're now intermingling
with Live Events alive golf event.
So you get to see these stars now play golf together which I
assume will be a very popular event.
What Netflix is doing here, I think is genius they're finding
ways to monetize Sports to have people view their content
because they're interested in sports.
Without the expense of a licensing Sports.
The reason that Netflix doesn't license the NFL or the NBA is,
it's just too expensive, they don't want to pay for it.
So they're able to monetize Sports audiences without the
expense associated with sports. I think it's a very clever
strategy that they're doing right now.
I remain bullish. On Netflix, the price has gone
up. The margin of safety has gone
down. Once again, the stock could
trade further down to the red. I could see it trading down
after a bad report or if investors lose confidence, or if
the Does something again. I could see the company going
down but again I'm looking at this very long term, I think
Netflix will grow past 3.5 billion dollars in free cash
flow to 5 billion and a 10 billion.
And I think they are going to show continued operating
leverage far above most analysts expectations.
So, as of right now, even though the stock could trade back down
and we could be in the red again, right now, I'm holding on
to it because I just look at it too long term, I think the
company is going to continue to do great.
That's All for this episode. I hope you enjoyed.
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I'll see you in the next one.