1 00:00:00,000 --> 00:00:01,700 Well, we have a lot to get to today. 2 00:00:01,700 --> 00:00:05,300 First of all, the stock markets in the red slightly, despite a 3 00:00:05,300 --> 00:00:09,700 huge blowout in the jobs number. This is a highly anticipated 4 00:00:09,700 --> 00:00:12,300 number because it shows what the US economy. 5 00:00:12,300 --> 00:00:16,000 Just did in the previous month and in July the u.s. added 6 00:00:16,000 --> 00:00:19,800 528,000 jobs. Now without context, that may 7 00:00:19,800 --> 00:00:23,000 not sound that impressive. But the expectations, the 8 00:00:23,000 --> 00:00:25,900 forecasts were for roughly half this amount. 9 00:00:25,900 --> 00:00:29,400 So this was a massive blowout. I want to go into this number 10 00:00:29,400 --> 00:00:32,500 further, The into the unemployment rate into default 11 00:00:32,500 --> 00:00:35,900 rates to try to paint, what is more of an accurate picture of 12 00:00:35,900 --> 00:00:38,900 how the US economy is doing? We also have news that Amazon 13 00:00:38,900 --> 00:00:42,500 went on an additional shopping, spree Amazon continues to buy 14 00:00:42,500 --> 00:00:45,700 things left and right. They bought a medical company 15 00:00:45,900 --> 00:00:50,200 just like two weeks ago and now they're buying iRobot the maker 16 00:00:50,200 --> 00:00:53,300 of the Roomba the little vacuum that goes around and bumps into 17 00:00:53,300 --> 00:00:56,600 things and your dog plays with it and your kids sit on top of 18 00:00:56,600 --> 00:00:59,300 it. That vacuum Amazon, just bought 19 00:00:59,300 --> 00:01:02,900 it for Point seven billion dollars to expand their 20 00:01:02,900 --> 00:01:05,900 ever-growing profile of In-House items. 21 00:01:05,900 --> 00:01:09,800 And I want to go over this as someone that's a huge Amazon 22 00:01:09,800 --> 00:01:11,500 Bowl. I actually own this company in a 23 00:01:11,508 --> 00:01:15,300 growth portfolio. I have studied this company as 24 00:01:15,300 --> 00:01:18,500 much as any other company that I own and I want to go over how I 25 00:01:18,500 --> 00:01:20,800 think this will fit into their overall strategy. 26 00:01:20,900 --> 00:01:23,700 Now, in addition to that, we also have a company that 27 00:01:23,700 --> 00:01:25,900 struggling right now. It's called Warner Brother 28 00:01:25,900 --> 00:01:29,500 Discovery. It's the combination of HBO and 29 00:01:29,500 --> 00:01:31,900 HBO. No, Max and Discovery with their 30 00:01:31,900 --> 00:01:35,700 reality shows, all trying to be put together into one service. 31 00:01:36,100 --> 00:01:40,600 And this company just posted a horrific earnings report really 32 00:01:40,600 --> 00:01:44,900 bad. It's down 15.8% on the day and 33 00:01:44,900 --> 00:01:48,200 some of the numbers in this report, we're just staggering 34 00:01:48,500 --> 00:01:51,600 like this. Net income looks a little bit 35 00:01:51,600 --> 00:01:53,100 different than the previous month. 36 00:01:53,100 --> 00:01:56,300 So we're going to be going over Warner Brothers, Discovery, and 37 00:01:56,300 --> 00:01:58,300 trying to piece together. What's going on with this 38 00:01:58,300 --> 00:02:00,200 company? So as always, we have a Jump 39 00:02:00,200 --> 00:02:02,800 into in this episode. If you haven't already, make 40 00:02:02,800 --> 00:02:04,900 sure to like the video. Subscribe to the channel That 41 00:02:04,900 --> 00:02:07,400 helps boost it out and show it to other people. 42 00:02:07,400 --> 00:02:10,400 Now, I also do something in addition to going over the news, 43 00:02:10,400 --> 00:02:13,000 I track my own portfolio, it's called the passive income 44 00:02:13,000 --> 00:02:14,600 account. The reason that I track this 45 00:02:14,600 --> 00:02:16,600 publicly is because I feel like there's not a lot of 46 00:02:16,608 --> 00:02:19,600 transparency in finance in general. 47 00:02:19,800 --> 00:02:22,200 And when there's not transparency and people don't 48 00:02:22,200 --> 00:02:24,800 share and discuss things, they become a little bit more 49 00:02:24,800 --> 00:02:26,900 ignorant to it. So by showing what's going on 50 00:02:26,900 --> 00:02:30,900 with my portfolio, how I perform my Ins and my losses. 51 00:02:30,900 --> 00:02:33,200 I feel like that could potentially help out other 52 00:02:33,200 --> 00:02:35,200 people. What I do at this portfolio is 53 00:02:35,200 --> 00:02:37,800 invest in high-quality dividend-paying companies that I 54 00:02:37,800 --> 00:02:39,900 consider to be more than just dividend payers. 55 00:02:39,900 --> 00:02:42,700 I consider them to be Compounders which means they 56 00:02:42,700 --> 00:02:45,500 have resilience. I can rely on them to earn 57 00:02:45,500 --> 00:02:48,600 growing amounts of money in almost any Market environment. 58 00:02:48,600 --> 00:02:52,000 And this has been put through the test over the past six 59 00:02:52,000 --> 00:02:54,300 months. We just had earning season and I 60 00:02:54,308 --> 00:02:57,500 recorded the amount of companies that I had in my portfolio. 61 00:02:57,500 --> 00:03:01,100 And which ones beat their earnings And gave strong 62 00:03:01,100 --> 00:03:04,400 forecast of the future and which ones missed their earnings or 63 00:03:04,400 --> 00:03:09,100 gave week forecast, around 71% of my portfolio, beat their 64 00:03:09,100 --> 00:03:12,900 revenue and their earnings projections and gave very strong 65 00:03:12,900 --> 00:03:15,700 forecast. It would have been around 80% 66 00:03:15,700 --> 00:03:19,000 but Microsoft missed on their earnings and revenue but they 67 00:03:19,000 --> 00:03:21,700 did give strong forecast. So, we're actually doing better 68 00:03:21,700 --> 00:03:24,100 than the rest of the market. In terms of this earnings 69 00:03:24,100 --> 00:03:27,000 season, we still have a couple outliers though, a couple 70 00:03:27,000 --> 00:03:30,100 companies that haven't reported yet Disney and Target So we'll 71 00:03:30,100 --> 00:03:34,300 see how they do August 10th and August 17th but overall, I focus 72 00:03:34,300 --> 00:03:37,400 on Compounders I focus on dividend payers and companies 73 00:03:37,400 --> 00:03:40,200 that can grow their earnings grow, their revenue grow their 74 00:03:40,200 --> 00:03:43,200 dividend over a long period of time and I've been trying to 75 00:03:43,200 --> 00:03:47,300 reshape and reforge my portfolio to be as strong as possible 76 00:03:47,300 --> 00:03:49,600 going forward. There's one tool that I use from 77 00:03:49,600 --> 00:03:52,500 time to time that I developed called the dip finder. 78 00:03:52,500 --> 00:03:55,300 This is part of qual trim. It's available to all Patron 79 00:03:55,300 --> 00:03:58,700 members and it shows you how my companies are trading, or how 80 00:03:58,700 --> 00:04:02,000 any companies that you're And are trading at any given time. 81 00:04:02,100 --> 00:04:04,900 This is a technical way of looking at it called the price 82 00:04:04,900 --> 00:04:07,700 versus the 200-day, simple moving average, which it 83 00:04:07,700 --> 00:04:12,500 technically shows the price momentum of a stock how its 84 00:04:12,500 --> 00:04:15,300 trading compared to the previous two hundred days. 85 00:04:15,600 --> 00:04:18,600 And as you can see, there's some companies at over the past, 200 86 00:04:18,600 --> 00:04:22,500 days are way underneath their average Target, which got 87 00:04:22,500 --> 00:04:26,400 crushed with extra inventory, having to slash the cost of 88 00:04:26,400 --> 00:04:29,200 different items having to make room for the back-to-school 89 00:04:29,200 --> 00:04:31,400 sales. This company's down Big Year to 90 00:04:31,400 --> 00:04:34,500 dates down around 30%. Luckily it's a very small 91 00:04:34,500 --> 00:04:37,500 holding of mine. JP Morgan and tiro price are two 92 00:04:37,500 --> 00:04:41,300 other companies that the price momentum has moved sharply and a 93 00:04:41,308 --> 00:04:43,900 negative Direction and that's a given. 94 00:04:43,900 --> 00:04:46,800 These companies are cyclicals their financials and they're 95 00:04:46,800 --> 00:04:50,400 moving down and preparation for the big recession that we're 96 00:04:50,400 --> 00:04:52,600 having right the big recession coming up. 97 00:04:53,000 --> 00:04:55,700 Then on the other end of the spectrum, we have Vici. 98 00:04:55,800 --> 00:04:58,200 This is one of my largest Holdings right next to Apple and 99 00:04:58,200 --> 00:05:02,700 Microsoft and it's Up, 16 percent above its 200-day. 100 00:05:02,700 --> 00:05:05,600 Moving average VG's performance has been nothing short of 101 00:05:05,600 --> 00:05:07,900 spectacular. The company's up 14 percent 102 00:05:07,900 --> 00:05:10,900 year-to-date not counting the Hefty dividend that it pays 103 00:05:10,900 --> 00:05:13,100 another company that I'll mention that I think is 104 00:05:13,100 --> 00:05:17,000 outperforming expectations to a large extent is Texas Roadhouse. 105 00:05:17,300 --> 00:05:21,200 Who would have thought that a restaurant company in 2022 would 106 00:05:21,200 --> 00:05:24,100 do this? Well, the company is facing all 107 00:05:24,100 --> 00:05:28,200 sorts of problems with inflation commodity prices, high and labor 108 00:05:28,200 --> 00:05:31,300 and were projected to go until Accession, or by many people's 109 00:05:31,300 --> 00:05:33,100 estimates, were already in a recession. 110 00:05:33,100 --> 00:05:36,400 But yet, despite all of that, a restaurant company, a casual 111 00:05:36,400 --> 00:05:39,600 dining restaurant is moving in a positive territory. 112 00:05:39,600 --> 00:05:42,800 It has positive price momentum. Texas Roadhouse has been 113 00:05:42,800 --> 00:05:46,500 performing really well, both in terms of price and fundamentals. 114 00:05:46,800 --> 00:05:50,300 The company is zero percent year-to-date which doesn't sound 115 00:05:50,300 --> 00:05:54,100 great, unless you compare it to the S&P 500, which is down, 15% 116 00:05:54,200 --> 00:05:56,300 or the Q, which is down even more. 117 00:05:56,300 --> 00:05:59,300 So, overall around half of the companies in my portfolio have 118 00:05:59,300 --> 00:06:00,900 very positive. At a price momentum. 119 00:06:01,100 --> 00:06:04,500 Half are currently in a dip but overall the earnings are very 120 00:06:04,500 --> 00:06:07,600 strong 71% of them. Forecasted. 121 00:06:07,600 --> 00:06:09,400 Very strong quarters next quarter. 122 00:06:09,700 --> 00:06:12,600 So I feel comfortable moving forward in the way that I'm 123 00:06:12,600 --> 00:06:15,100 invested and not paying attention to short-term 124 00:06:15,100 --> 00:06:16,800 fluctuations. Now, if you want to see every 125 00:06:16,800 --> 00:06:19,300 single one of these categories in the companies in them, 126 00:06:19,500 --> 00:06:22,100 there's a link called dividend portfolio in the description 127 00:06:22,100 --> 00:06:23,800 below. Now, moving on, the big news of 128 00:06:23,800 --> 00:06:27,400 the day is the economic news. The u.s. added five hundred and 129 00:06:27,400 --> 00:06:29,300 twenty eight thousand jobs in July. 130 00:06:29,800 --> 00:06:33,000 Payroll returned a pandemic levels, unemployment rate fell 131 00:06:33,000 --> 00:06:35,800 to 3.5%. So this is what this chart looks 132 00:06:35,800 --> 00:06:37,900 like here. With the recovery in the jobs, 133 00:06:38,200 --> 00:06:41,900 this has been a very rapid recovery in job gains over the 134 00:06:41,900 --> 00:06:44,500 past couple of years faster than sense. 135 00:06:44,500 --> 00:06:47,800 Post-world War Two. So it has been an incredibly 136 00:06:47,800 --> 00:06:49,900 fast recovery. They say the unemployment rate 137 00:06:49,900 --> 00:06:51,800 now is down to three point five percent. 138 00:06:52,000 --> 00:06:56,900 We added 500 28,000 jobs which puts us just above pre-pandemic 139 00:06:56,900 --> 00:06:59,100 levels. So, we finally went back to 140 00:06:59,100 --> 00:07:02,400 before Endemic levels. Now, of course this isn't that 141 00:07:02,400 --> 00:07:06,000 Trend but it's much better than expected and if you don't 142 00:07:06,000 --> 00:07:09,500 compare this against the forecasts and the analysis and 143 00:07:09,500 --> 00:07:12,900 expectations, it doesn't give it proper context but this is what 144 00:07:12,900 --> 00:07:15,600 this last month looked like compared to forecast. 145 00:07:15,600 --> 00:07:18,600 The actual estimates going into this month is that we were going 146 00:07:18,600 --> 00:07:22,900 to gain 250,000 jobs. So we roughly doubled that 147 00:07:23,000 --> 00:07:28,300 528,000 verse 250,000. This absolutely blew away the 148 00:07:28,300 --> 00:07:31,200 forecasts and estimates from From the economists and 149 00:07:31,200 --> 00:07:33,300 forecasters. And where did these jobs come 150 00:07:33,300 --> 00:07:36,700 from the jobs gains were widespread last month employers 151 00:07:36,700 --> 00:07:40,500 and Leisure and Hospitality added jobs at a solid clip as 152 00:07:40,500 --> 00:07:43,400 restaurant and bars continue to recover payrolls. 153 00:07:43,400 --> 00:07:45,800 Also grew and health care and professional and business 154 00:07:45,800 --> 00:07:48,700 services, which included. Many white collar jobs. 155 00:07:48,700 --> 00:07:51,600 So I see this shift in where the jobs are at right now. 156 00:07:51,800 --> 00:07:54,600 I'm seeing a lot of tech companies actually do layoffs, 157 00:07:54,600 --> 00:07:58,300 some are still hiring, but many companies like Robin Hood, many 158 00:07:58,300 --> 00:08:00,900 of these big tech companies are Going down, they're hiring or 159 00:08:00,900 --> 00:08:03,000 they're doing a layoffs. Meanwhile, Leisure and 160 00:08:03,000 --> 00:08:06,400 Hospitality Healthcare are doing a lot of hiring right now. 161 00:08:06,500 --> 00:08:09,500 So jobs are being lost in some areas but more hiring is going 162 00:08:09,500 --> 00:08:11,700 on. In most cases, this is by 163 00:08:11,700 --> 00:08:15,400 economic data is so difficult. And this is why economist's 164 00:08:15,400 --> 00:08:19,500 aren't Filthy Rich by being able to easily predict the economy 165 00:08:19,500 --> 00:08:22,900 and the stock market? A lot of this data is incredibly 166 00:08:23,000 --> 00:08:25,900 difficult to piece together. We have a job market where we 167 00:08:25,900 --> 00:08:28,600 gained nearly double what the estimates are. 168 00:08:28,700 --> 00:08:31,800 That's a good thing. We have unemployment to almost 169 00:08:31,800 --> 00:08:35,400 record lows 3.5%. That's also a good thing. 170 00:08:35,600 --> 00:08:39,000 We have less people choosing to work, which is arguably a bad 171 00:08:39,000 --> 00:08:40,900 thing. And we have two consecutive 172 00:08:40,900 --> 00:08:44,600 quarters of GDP decline which is objectively a bad thing. 173 00:08:44,900 --> 00:08:46,600 So you can try to make sense of all of this. 174 00:08:46,600 --> 00:08:48,100 But I just don't think it's helpful. 175 00:08:48,300 --> 00:08:52,400 In terms of investing, I would never base my investments off of 176 00:08:52,400 --> 00:08:55,400 what the economy has done, or what, I think it's going to do. 177 00:08:55,700 --> 00:08:58,600 I base it off of individual security analysis with my 178 00:08:58,600 --> 00:09:01,600 companies and how I think their earnings will grow over the next 179 00:09:01,600 --> 00:09:04,400 five years. Predicting the economy, I think 180 00:09:04,400 --> 00:09:06,200 is a losing game. I don't think people are going 181 00:09:06,200 --> 00:09:09,600 to be able to do that accurately and while I think this report is 182 00:09:09,600 --> 00:09:12,700 good, it doesn't really say a lot of whether or not, we're in 183 00:09:12,700 --> 00:09:14,900 a recession, we're going into recession. 184 00:09:15,000 --> 00:09:19,000 If we are how bad it will be. And even if we are, and you can 185 00:09:19,000 --> 00:09:22,500 accurately predict that what it will do to the stock market, 186 00:09:22,600 --> 00:09:25,800 trying to predict all of those variables I think is literally 187 00:09:25,800 --> 00:09:26,700 impossible. Now. 188 00:09:26,700 --> 00:09:30,000 Moving on, we have some big news that Amazon's picking up Yet 189 00:09:30,000 --> 00:09:32,800 another acquisition, they just bought a health care company a 190 00:09:32,800 --> 00:09:35,400 couple weeks ago. Now they're buying iRobot the 191 00:09:35,400 --> 00:09:38,200 maker of Roomba for one point seven billion dollars. 192 00:09:38,700 --> 00:09:41,900 Now this seems like an easy acquisition for Amazon. 193 00:09:41,900 --> 00:09:44,500 I think this will go through just fine but I want to go into 194 00:09:44,500 --> 00:09:46,900 how I think this will play in their overall strategy. 195 00:09:46,900 --> 00:09:50,600 The official statement here from Amazon's Hardware device, Chief 196 00:09:50,600 --> 00:09:54,100 is quote over many years. The iRobot team has proven its 197 00:09:54,100 --> 00:09:56,900 ability to reinvent. How people clean with products 198 00:09:56,900 --> 00:09:59,700 that are incredibly practical and inventive. 199 00:09:59,800 --> 00:10:02,300 Cleaning when and where customers want while avoiding 200 00:10:02,300 --> 00:10:05,800 common obstacles in the home to automatically emptying and 201 00:10:05,800 --> 00:10:09,600 collecting bins? Customers love iRobot products. 202 00:10:09,600 --> 00:10:13,500 And I'm excited to work with the iRobot team to invent in ways 203 00:10:13,500 --> 00:10:16,300 that make customers lives easier and more enjoyable. 204 00:10:16,400 --> 00:10:18,700 Now, if we dive into this, a little deeper, we can see the 205 00:10:18,700 --> 00:10:20,600 type of products that I Robot has. 206 00:10:20,900 --> 00:10:24,500 They have a lot of these little pod robots, that drive around 207 00:10:24,500 --> 00:10:27,700 your home, and try to clean and they've actually gotten better 208 00:10:27,700 --> 00:10:30,100 and better. The first iterations of These 209 00:10:30,100 --> 00:10:33,200 were very dumb and very clumsy. They would go over almost 210 00:10:33,200 --> 00:10:35,300 anything that gets stuck all the time. 211 00:10:35,400 --> 00:10:38,700 They had no way of mapping out locations in your home and now 212 00:10:38,700 --> 00:10:41,800 the most recent iterations of them have become increasingly 213 00:10:41,800 --> 00:10:46,100 complex sophisticated, and overall, a much better tool. 214 00:10:46,100 --> 00:10:48,900 I have one of the newer roombas and they're pretty smart. 215 00:10:48,900 --> 00:10:51,900 At this point, they actually do a very good job of cleaning 216 00:10:51,900 --> 00:10:54,800 where they should clean sticking to certain parts of the house 217 00:10:54,800 --> 00:10:58,500 with no physical barriers, and they avoid most of the obstacles 218 00:10:58,500 --> 00:11:01,000 of toys and things left. The floor in terms of 219 00:11:01,000 --> 00:11:05,300 capability, market, share and brand name, iRobot is by far. 220 00:11:05,300 --> 00:11:07,400 The biggest player in this industry. 221 00:11:07,500 --> 00:11:10,600 They own the robot cleaning category. 222 00:11:10,700 --> 00:11:14,000 So, Amazon just went for the biggest the most well-known. 223 00:11:14,100 --> 00:11:17,800 And by far the best in the category, I Robot is the leader 224 00:11:17,800 --> 00:11:19,400 here. The latest iterations of these 225 00:11:19,400 --> 00:11:22,700 robots actually, do a physical map of your home, you don't have 226 00:11:22,700 --> 00:11:24,600 to map it out. The robot, does it for you? 227 00:11:24,800 --> 00:11:27,500 The first time, it goes around at bumps around to the outside 228 00:11:27,500 --> 00:11:31,200 of the walls and then it knows. Typically where it is relative 229 00:11:31,200 --> 00:11:33,900 to the rest of your home. So you can command the robot to 230 00:11:33,900 --> 00:11:37,500 go to a specific room, down a hallway or two different parts 231 00:11:37,500 --> 00:11:41,300 of your home and it will find its way there and only work in 232 00:11:41,300 --> 00:11:44,300 that specific room. So Amazon is now going to have 233 00:11:44,300 --> 00:11:48,200 maps of literally, millions of people's homes which is an 234 00:11:48,200 --> 00:11:50,600 interesting thought. They're going to be able to map 235 00:11:50,600 --> 00:11:53,700 out people's houses and their floor plans, Amazon will be able 236 00:11:53,700 --> 00:11:56,700 to gather a lot of data from this company and help integrate 237 00:11:56,700 --> 00:11:59,900 that into their other offerings and further integrate it To 238 00:11:59,900 --> 00:12:02,900 their ecosystem. And I think overall that is the 239 00:12:02,900 --> 00:12:05,200 endgame here. It's the ecosystem. 240 00:12:05,500 --> 00:12:08,500 Big tech companies, love their ecosystem. 241 00:12:08,700 --> 00:12:09,900 All of them. Have one. 242 00:12:10,000 --> 00:12:13,700 Apple has, I believe the strongest ecosystem, but Amazon 243 00:12:13,700 --> 00:12:16,400 has a pretty strong one as well. And it's part of their Alexa 244 00:12:16,400 --> 00:12:19,300 smart home ecosystem. We all know the speakers but 245 00:12:19,300 --> 00:12:22,700 they also are doing this with TVs with the fire TVs and the 246 00:12:22,700 --> 00:12:25,800 fire sticks with their cameras, with their lighting with the 247 00:12:25,800 --> 00:12:28,600 smart thermostats. And now with your vacuum 248 00:12:28,600 --> 00:12:31,400 products that's going to be, A part of this ecosystem. 249 00:12:31,400 --> 00:12:34,000 So I think this is one more move of Amazon to expand their 250 00:12:34,000 --> 00:12:37,400 ecosystem and smart products and make all of these work together. 251 00:12:37,600 --> 00:12:40,100 They can make all of this stuff work unified. 252 00:12:40,100 --> 00:12:43,100 It gives people more incentive to buy something already in this 253 00:12:43,100 --> 00:12:45,400 ecosystem, then something outside of it. 254 00:12:45,500 --> 00:12:47,700 Now, looking at the fundamentals of this company, as an 255 00:12:47,700 --> 00:12:50,800 individual company or individual stock, because I Robot is a 256 00:12:50,800 --> 00:12:53,700 publicly traded company, it doesn't look very strong. 257 00:12:53,700 --> 00:12:56,900 It's a week company overall because it's a newer one, and 258 00:12:56,900 --> 00:12:59,600 its goal is to grow Revenue, which is what they've done. 259 00:12:59,800 --> 00:13:03,300 They've grown their revenue around triple since 2014, the 260 00:13:03,300 --> 00:13:06,400 other metrics are so, so not the strongest company, but that's 261 00:13:06,400 --> 00:13:08,100 not. Why, Amazon's purchasing it. 262 00:13:08,200 --> 00:13:11,000 They're doing it for strategic reasons to include it as part of 263 00:13:11,000 --> 00:13:14,500 their vast ecosystem offering. So I think this is a great 264 00:13:14,500 --> 00:13:17,500 acquisition for Amazon. It's not an overly expensive 265 00:13:17,500 --> 00:13:19,600 company. It's one that's growing quickly. 266 00:13:19,700 --> 00:13:21,800 They have high quality products that I think people will 267 00:13:21,800 --> 00:13:25,600 continue to purchase and it will expand Amazon's ecosystem 268 00:13:25,900 --> 00:13:28,100 because, you know, you're gonna be able to control these robots 269 00:13:28,100 --> 00:13:31,200 with your Alexa device. And Amazon's going to iterate 270 00:13:31,200 --> 00:13:33,800 and incorporate different integrated features. 271 00:13:33,800 --> 00:13:36,400 Now, moving on I have to talk about Warner Bros Discovery. 272 00:13:36,600 --> 00:13:39,800 This is a stock I'm asked about frequently and they just 273 00:13:39,800 --> 00:13:43,600 reported their Q2 earnings which were a bit messy to say, the 274 00:13:43,600 --> 00:13:47,500 least it's down 15% after the earnings report because a big 275 00:13:47,500 --> 00:13:50,400 problems they're facing. So before we jump into this, I 276 00:13:50,400 --> 00:13:53,300 just have to go quick shout-out to today's sponsor of this 277 00:13:53,300 --> 00:13:56,800 video, which is FDX. U.s., there's a link in the pin 278 00:13:56,800 --> 00:13:59,600 comment of this video, you can sign up now. 279 00:13:59,800 --> 00:14:03,600 And if you do use a refer code Carlson because when you create 280 00:14:03,600 --> 00:14:07,100 your brokerage account and use a referral code Carlson, when you 281 00:14:07,100 --> 00:14:10,600 do your first 100 dollar trade, it will credit you $10. 282 00:14:10,900 --> 00:14:14,100 Now with this, you can trade any time, the markets open, you can 283 00:14:14,100 --> 00:14:15,800 buy and sell using fractional shares. 284 00:14:15,900 --> 00:14:19,700 Its part of finra and Si P c-- insured and they are adding more 285 00:14:19,700 --> 00:14:21,400 and more features to it every single day. 286 00:14:21,400 --> 00:14:23,900 So try it out now and let me know what you think. 287 00:14:24,000 --> 00:14:26,500 Warner Brothers Discovery. They just reported their 288 00:14:26,500 --> 00:14:30,400 earnings and it was very messy. They say that they are Row a big 289 00:14:30,400 --> 00:14:33,800 loss on content and merger costs and zest. 290 00:14:33,800 --> 00:14:36,000 Laughs here he was the guy that was supposed to make this 291 00:14:36,000 --> 00:14:40,400 business great and so far what he's done on this most recent 292 00:14:40,400 --> 00:14:43,600 earnings, call is blame the previous management and the 293 00:14:43,600 --> 00:14:46,600 previous estimates. He threw all of the blame onto 294 00:14:46,600 --> 00:14:50,600 everyone else and what they did setting, this whole thing up, he 295 00:14:50,600 --> 00:14:53,000 sang, this isn't my fault. This is a problem with the 296 00:14:53,000 --> 00:14:55,500 estimates beforehand. Now, I have the actual earnings 297 00:14:55,500 --> 00:14:58,600 report here and I just want to highlight a couple things on it. 298 00:14:58,600 --> 00:15:03,300 First of all, they're Revenue decreased by 1 percent taking 299 00:15:03,300 --> 00:15:06,500 out foreign exchange so they had a revenue decline. 300 00:15:06,800 --> 00:15:12,700 The net loss available to Warner Brothers Discovery was 3.4 18 301 00:15:12,800 --> 00:15:17,600 billion 3 billion 418 million dollars of a net loss that 302 00:15:17,600 --> 00:15:21,300 includes a 2 billion dollar amortization of intangibles, a 1 303 00:15:21,300 --> 00:15:26,200 billion dollar restructuring and other charges and 983 million of 304 00:15:26,200 --> 00:15:30,500 transaction and integration expenses lat It's of expenses 305 00:15:30,500 --> 00:15:33,400 added in a single quarter, causing this company, to have a 306 00:15:33,400 --> 00:15:37,500 massive net loss to give this a visual of how bad this actually 307 00:15:37,500 --> 00:15:39,000 looks. We can take a look at this on 308 00:15:39,000 --> 00:15:41,800 the chart here, by pull this up, just take a look at how bad this 309 00:15:41,800 --> 00:15:46,000 loss, is this quarter 3.4 billion dollars of net income 310 00:15:46,000 --> 00:15:49,100 loss in a single quarter. And the biggest problem, they're 311 00:15:49,100 --> 00:15:51,200 finding now. Which seems to be a surprise for 312 00:15:51,200 --> 00:15:53,800 this company is free. Cash flow problems. 313 00:15:53,800 --> 00:15:56,900 The cash provided by operating activities increased to 1 314 00:15:56,900 --> 00:15:59,500 billion and reported free cash flow increased. 315 00:15:59,700 --> 00:16:03,500 You 789 million. So they're saying look we have 316 00:16:03,500 --> 00:16:07,500 free cash flow, 789 million and the impression this type of 317 00:16:07,500 --> 00:16:10,700 writing leaves to investors is that they're highly free cash 318 00:16:10,700 --> 00:16:13,700 flow productive. And that's not really the case 319 00:16:13,900 --> 00:16:16,200 because when you're looking at free cash flow, you have to 320 00:16:16,200 --> 00:16:18,000 consider what is creating those free. 321 00:16:18,000 --> 00:16:21,600 Cash flows, is it actual money being taken in from the company? 322 00:16:21,800 --> 00:16:24,300 Or is it just dilution? And the problem was saying that 323 00:16:24,300 --> 00:16:25,800 they made all of this free cash flow. 324 00:16:25,800 --> 00:16:28,800 Last quarter is, it doesn't incorporate the amount of shares 325 00:16:28,800 --> 00:16:31,100 outstanding. If the shares outstanding went 326 00:16:31,100 --> 00:16:37,700 from in 2021, 589 million to two point two eight six billion. 327 00:16:37,900 --> 00:16:41,100 So they for x amount of shares outstanding, this is where the 328 00:16:41,100 --> 00:16:43,700 free cash flow came from. We can even see this more clear 329 00:16:43,700 --> 00:16:45,400 on qual trim. For example, if we pull up the 330 00:16:45,408 --> 00:16:48,800 shares outstanding graph, you can see the dramatic increase in 331 00:16:48,800 --> 00:16:52,300 shares, it going up by roughly four times the amount and then 332 00:16:52,300 --> 00:16:55,100 if we pull up the free cash flow graph here, this is what they're 333 00:16:55,100 --> 00:16:57,400 saying they're doing so great. Look, everyone. 334 00:16:57,500 --> 00:16:59,500 We made a lot of free cash flow last quarter. 335 00:16:59,800 --> 00:17:02,100 It's right there in line with previous quarters. 336 00:17:02,600 --> 00:17:05,900 That's not really accurate because if we filter this by the 337 00:17:05,900 --> 00:17:10,599 amount of free cash flow on a per share basis, it's down to 35 338 00:17:10,599 --> 00:17:13,900 cents which is much lower than previous quarters. 339 00:17:13,900 --> 00:17:17,300 It was a decline from the most recent quarter and a comparative 340 00:17:17,300 --> 00:17:20,300 to the history of the company. It's nothing spectacular. 341 00:17:20,599 --> 00:17:23,400 So that's the biggest problem. I see this companies facing cash 342 00:17:23,400 --> 00:17:25,400 flow problems. And in the meantime, they have 343 00:17:25,400 --> 00:17:28,400 large outstanding amounts of debt and people like to talk 344 00:17:28,400 --> 00:17:32,300 about how much debt Netflix has take a look at Warner Brothers, 345 00:17:32,300 --> 00:17:35,700 discoveries debt chart. It went from thirteen point six 346 00:17:35,700 --> 00:17:40,900 billion two quarters ago to the most recent quarter being 51.3 9 347 00:17:40,900 --> 00:17:42,400 billion. Let's go ahead and compare this 348 00:17:42,400 --> 00:17:44,800 to Netflix. Netflix has talked about as a 349 00:17:44,800 --> 00:17:49,300 company that's highly indebted. Netflix has way more cash with 350 00:17:49,300 --> 00:17:52,600 5.8 billion dollars in cash. And they only have fourteen 351 00:17:52,600 --> 00:17:55,600 point two three billion dollars in debt, so they have roughly a 352 00:17:55,600 --> 00:17:58,400 third to a fourth, the amount of debt that Warner Brothers, 353 00:17:58,400 --> 00:18:02,000 Discovery has These discoveries facing worse, cash flow issues, 354 00:18:02,000 --> 00:18:05,100 and projected on top of very high fixed costs with their 355 00:18:05,100 --> 00:18:09,000 large amounts of debt and Rich Green Field tries to explain how 356 00:18:09,000 --> 00:18:12,000 this is working out for them. I think, in this case, a little 357 00:18:12,000 --> 00:18:14,700 bit of this is sort of like that movie Apollo 13, right? 358 00:18:14,700 --> 00:18:17,400 We're like, you know, Houston, we've had a problem and I think 359 00:18:17,400 --> 00:18:20,600 if you're zsasz love right now, you're going, you know, you're 360 00:18:20,600 --> 00:18:24,500 looking at AT&T and you sort of have like, oh my God, I can't 361 00:18:24,500 --> 00:18:27,600 believe I bought based on these projections. 362 00:18:27,600 --> 00:18:30,100 I mean John Stanky D, 18 T looks like a Genius. 363 00:18:30,100 --> 00:18:32,300 Because discoveries now, Warner Brothers. 364 00:18:32,300 --> 00:18:36,400 Discovery is now blaming sort of the AT&T projections as 365 00:18:36,500 --> 00:18:38,700 unreliable. Not to mention the overall 366 00:18:38,700 --> 00:18:41,800 macroeconomic environment. And so what they're effectively 367 00:18:41,800 --> 00:18:45,300 doing Joe is there scrambling to figure out because cash flow is 368 00:18:45,300 --> 00:18:47,300 coming in Far Below expectations. 369 00:18:47,300 --> 00:18:50,800 They've got a lot of debt so they're sort of finding new ways 370 00:18:50,800 --> 00:18:53,800 to generate dollars. You mentioned and ad-supported 371 00:18:53,800 --> 00:18:57,100 streaming service something maybe like a Pluto or a to be 372 00:18:57,100 --> 00:18:59,300 TV. They're probably looking at 373 00:18:59,300 --> 00:19:01,100 doing. Very big licensing deal with 374 00:19:01,100 --> 00:19:03,200 Amazon and going back into Amazon Channel. 375 00:19:03,200 --> 00:19:05,600 Something we talked about why they left Amazon channels on 376 00:19:05,600 --> 00:19:09,600 CNBC, probably nine months ago, all of this is true. 377 00:19:09,700 --> 00:19:12,300 They're looking at potentially having an ad-supported Terror. 378 00:19:12,300 --> 00:19:14,400 They're also looking at partnering with Amazon to have 379 00:19:14,400 --> 00:19:17,500 it included with Amazon because Amazon can get customers and 380 00:19:17,508 --> 00:19:21,000 drive, traffic to HBO, another word I would exchange from 381 00:19:21,000 --> 00:19:23,500 looking is scrambling, Warner Brothers. 382 00:19:23,500 --> 00:19:25,800 Discovery is scrambling right now. 383 00:19:25,800 --> 00:19:28,700 They're scrambling for options to solve a big problem. 384 00:19:28,700 --> 00:19:31,800 They have Which is no clear Direction and strategy. 385 00:19:31,800 --> 00:19:35,100 They're looking at licensing catalog to Netflix and Amazon 386 00:19:35,100 --> 00:19:38,800 like they're just looking at how do they find dollars anyway 387 00:19:38,800 --> 00:19:41,100 possible right now? Because they're coming in with a 388 00:19:41,108 --> 00:19:45,200 2 billion dollar shortfall in 2023 ebitda versus what they 389 00:19:45,200 --> 00:19:48,700 thought back in February. So I think that's driving a lot 390 00:19:48,700 --> 00:19:51,800 of the changes that you heard about last night, hbm, Max and 391 00:19:51,800 --> 00:19:56,000 Discovery, plus create a massive combined library and the 392 00:19:56,000 --> 00:19:59,200 strategy right now is to somehow combine. 393 00:19:59,200 --> 00:20:03,500 These Companies together into one service which would require 394 00:20:03,500 --> 00:20:06,300 a rebranding. Their people talking about them 395 00:20:06,300 --> 00:20:10,300 potentially losing the HBO Max branding, which I think would be 396 00:20:10,300 --> 00:20:13,400 a mistake given how much they've tried to work to create this 397 00:20:13,400 --> 00:20:15,300 brand. If I was going to combined 398 00:20:15,400 --> 00:20:19,700 Discovery, plus with HBO Max, I would just make it HBL Max and 399 00:20:19,700 --> 00:20:22,200 have discovered be part of it. I think people would learn that 400 00:20:22,200 --> 00:20:26,100 over time because I think that HBO Max brand is more powerful 401 00:20:26,100 --> 00:20:28,100 than Discovery has more subscribers. 402 00:20:28,100 --> 00:20:31,000 It's a bigger known brand. They spent an enormous amount 403 00:20:31,000 --> 00:20:33,500 marketing and growing that brand, and I think it would be a 404 00:20:33,500 --> 00:20:36,400 mistake to ditch it. So, right now, their official 405 00:20:36,400 --> 00:20:40,100 plan is to combine these Services together to Rebrand it. 406 00:20:40,100 --> 00:20:43,200 Somehow we don't have Clarity into what that's going to mean, 407 00:20:43,200 --> 00:20:46,900 and then to try to grow it to 130 million paying subscribers 408 00:20:46,900 --> 00:20:50,300 by 2025 in this highly competitive market. 409 00:20:50,300 --> 00:20:53,000 So, my opinion, when I compare Warner Brothers Discovery to 410 00:20:53,000 --> 00:20:57,100 Disney and Netflix, I like Disney and Netflix more, and for 411 00:20:57,100 --> 00:20:59,700 a couple reasons, one of them. As I think that Her. 412 00:20:59,700 --> 00:21:02,100 Brother's Discovery is in a state of panic. 413 00:21:02,100 --> 00:21:05,100 They're in a state of disarray, they're trying to piece together 414 00:21:05,100 --> 00:21:08,000 a strategy on the Fly. And I don't like investing in 415 00:21:08,000 --> 00:21:11,600 companies that don't have a very clear strategy that's been 416 00:21:11,600 --> 00:21:14,300 thawed out in a highly competitive market. 417 00:21:14,300 --> 00:21:17,200 Like this one, I think they're in a very dangerous situation to 418 00:21:17,200 --> 00:21:19,700 be in. And as good as their content is 419 00:21:19,900 --> 00:21:23,100 with all of these great assets, like Discovery Plus in the 420 00:21:23,100 --> 00:21:26,800 Warner media assets, it still has a cost to it. 421 00:21:26,800 --> 00:21:29,400 Those assets cost a lot, they have an enormous amount. 422 00:21:29,500 --> 00:21:31,500 Out of debt. That's not a great thing to have 423 00:21:31,500 --> 00:21:34,200 on the balance sheet when you don't have a very clean strategy 424 00:21:34,200 --> 00:21:37,500 going forward right now. I'd rather own Disney or Netflix 425 00:21:37,700 --> 00:21:40,000 or even Paramount plus that's all the news for now. 426 00:21:40,000 --> 00:21:42,400 I hope you enjoyed the episode. If you did, make sure to 427 00:21:42,408 --> 00:21:45,700 subscribe to the Channel with the Bell notification on, and 428 00:21:45,700 --> 00:21:47,300 I'll see you in the next one.