If you've invested well in 2024, your portfolio has done well.
In fact, a lot of our portfolios have done well.
So it's great to know that the market's going up.
Many of us are reaching all new highs with our portfolio and
investing. This is what investing's all
about. It's about the bull markets, the
times where stocks go up, where we make money, where we make
progress. But over this market over the
past 12 months, there have been some companies that have done a
bit better than the rest. There's some that have done
exceptionally well. And today we're going to be
looking at five of them, five of the best performing stocks in
2024. And what made these stocks go so
nuts, what made these stocks just explode in 2024?
And we're going to be going over all five of these stocks that
have gone up hundreds of percentages.
Now, we also have a bunch of other news to get to.
It's been a very busy week. Spotify reported their earnings.
They blew away their expectations.
The stock is up huge this year. We're going to be looking at
this one and why I still think that Spotify is a decent bet.
Apple's next big device, an AI wall tablet.
Will this be successful? We'll be discussing.
Amazon just debuted their new competitive storefront to TAMU
and Sheen. It's called Amazon Hall.
We'll be taking a look at it here.
And tomorrow morning, we have Disney reporting earnings.
I'll be going over my expectation of what I think will
happen with their earnings. Now we start off with
20/24/2024. So far has been an incredible
year for the market. There's been opportunity,
opportunity to make a lot of money.
If you're not making money in this market, you're doing
something wrong. It's not the market's fault.
It's not other investors fault. You're doing something wrong if
you're not making a lot of money because there has been ample
opportunity. The major indices are up mid 20
percentages. That's good in and of itself,
but there's been many even better opportunities with
individual companies. Now.
I've had a great year between both of my portfolios.
I have a list of companies I consider big winners this year.
Holding on to Texas Roadhouse all year long has been a great
decision. It's up around 67%.
Buying more into Netflix at the start of the year has been one
of the better decisions I made. That one's up close to 80% this
year. Buying into Booking Holdings has
also worked out really well. It's surging to all time highs.
Even Salesforce is now surging to all time highs.
So I have a list of companies that I've made big concentrated
bets into and I'm proud of the way that they've turned out.
They've performed really well so far, but they're not the very
best performing in the market and that's rarely the case.
As an individual stock picker, you can't expect to pick the
best stocks in the market every single year.
That's just a bit unrealistic. But the stocks that we're going
to highlight here are five of the best performing stocks in
the entire world. The first one we're going to go
into is CAVA. This is one that has been a
shockingly good performer. Now this is in my wheelhouse.
I cover quick service restaurants.
I invest in quick service restaurants.
I made a bunch of money investing in Chipotle for a
relatively short amount of time. Kava's one that I always looked
at when I was covering Chipotle. It was a company that I saw as a
smaller competitor. But Kava lacks scale.
It's not a highly scaled company.
It's a little bit more of a newer company, but they are
rapidly expanding now. The share price here has
increased by 295% year to date. In 2024, it's gone up nearly
300%. What is CAVA doing?
What is going on here? The CEO of CAVA was asked about
the surging stock price. What do they think of it?
They're watching the stock go up 300%.
What is his thoughts? We tell the team stocks are
going to go up and down every day.
And the the night before the IPO actually said to the team, look,
this is not the destination. It's the next chapter in our
journey. And if we keep our heads down,
focus on our mission to bring heart health and humanity to
food, that over time that stock price will go up and it will
take care of itself. That's a very mature answer.
Don't focus too much on the stock price, focus on the
business and the fundamentals. But secretly he has to be very
happy that the stock is up 300%. That's something to celebrate.
Now, for those of you that may not be aware, Cava is a
Mediterranean food company. They sell the Mediterranean
bowls, so they're like another healthy bowl company.
There's a number of them, and there's questions as to why Cava
demands such a high valuation. The company's currently at an
$18.4 billion valuation, and they're only doing revenues of
around 900 million. So the price to sales is 20 for
COPPA, a price to sales of 20. If we look at this compared to
Chipotle, which is not cheap, Chipotle's not cheap.
I sold the company because it was too expensive.
The price to sales for Chipotle is 7.5 S Consider the fact that
I sold Chipotle believing that it's more on the expensive side
of things and it's trading at a price to sales.
That's 1/3 of COPPA. Cava's not just expensive, it's
extraordinarily expensive when you consider almost any piece of
data. It's expensive on a store basis.
A normal Chipotle store on average is around $12 million.
Cava's are now being valued at around 30 plus $1,000,000.
To justify a 30 + 1,000,000 dollar valuation per each cava
location requires a lot of forward growth assumptions, and
the CEO talks about his growth assumptions here.
Our goal is 1000 restaurants by 2032, which basically implies a
15% plus compound annual unit growth rate.
This year we've been able to exceed that a little bit.
We raised our guidance to 56 to 58 new restaurants, so closer to
1718%. And we gave preliminary guidance
for next year of at least 17% plus given the health and
strength of our real estate pipeline.
He said that his goal is 1000 restaurants, but when did he say
that goal was for? Let me let me rewind there.
By 2032 which basically. 2032 so Cavas ambitious growth goal is
to have 1000 locations by 2032. If we look at Chipotle as just a
reference here again because the companies are very similar with
the products they sell, Chipotle has a total location count of
3600. So by 2032, COV is projecting to
have around 1/4 or a little bit more than 1/4 the locations of
Chipotle, while it's around 1/4 the market cap.
So what investors are doing here is pretty simple.
They're just projecting out Chipotle like growth over the
next six or seven years. Now this may work for COV
investors. I can see the logic here.
They're just projecting that it will have the same success as
Chipotle. Now, keep in mind, Chipotle has
had astronomically good success. So you're benchmarking Cava
today, pricing in the success of a company that's had
astronomically good success. Investors in Cava are convinced
that this is the next Chipotle. Now, whether it turns out to be
one or not, we'll have to wait and see.
Now, moving on to the next one, we get to a stock that has had a
rise that is truly striking. This is one of the most
incredible performances of any stock of any year, and it's
Carvana. Don't be fooled by it being down
1% on the day. Carvana is up 400% year to date.
That's correct, 400% flat. Now this is a stock that I have
to rewind a little bit and give some perspective here.
Carvana has done the EU turn. If we look over the past five
years, you see they had an epic 2021 rise.
It was in a bubble during that time period and then the stock
came cratering down as they had really no cash flows.
A lot of people thought they were going to go bankrupt.
I was amongst one of them that thought that this is a business
model that strikes me as one that very well could go
bankrupt. Not one that I think is
predictable at all, but Carvana pulled it off.
Their team really turned this thing around, which is
incredible to see. It's doing a bit of 1/2 pipe
formation here. I don't know if that's really a
thing. I'm not a technical analyst, but
it's surging back up to the price it was in 2021.
So I look at a company like Carvana.
This is one that almost everyone just a couple years ago thought
was going bankrupt. They thought it was a fake
company. The thing that I saw highlighted
time and time again were the vending machine for cars that
Carvana built. These towers full of cars.
This isn't just a concept. These are real.
Carvana really built these. I have one in a neighboring
city, and some of them, they have more stories than others.
They're taller than others. They're actually kind of cool,
but it looks like a vending machine for cars.
The company was crashing in 2022.
A lot of traders made bets against the company that were
successful. And there's a lot of talk about
Carvana. The company's not even real that
it's a fraud, that it's made-up, that their profits aren't real,
but they are audited. And the company so far seems
like it's making real money. The revenue has halted its
downward trend. It's now trending back upwards.
The free cash flows also went from heavily in the red, losing
billions of dollars per quarter, to now actually being positive
on a free cash flow basis. They really turn this thing
around. So how did Carvana pull this
off? How did they go from being a
company that lost money every single day, every month they're
burning cash to now one that's profitable?
And especially how did they get to a point where their margins
per car sale around double the average car dealership?
And the CEO of Carvana was asked this very question, how are they
so profitable? And he answers it here.
About execution, your profit per vehicle.
Gross profit per vehicle is greater than $7400, well above
what analysts were expecting. $7400.00 of gross profits per
vehicle, the most a car dealership tries to make.
It's like $2000 twenty $500.00. So Carvana is either doing
something fraudulently or they figured something out.
Sure. Well, I think you know, the
fancy word we use for that is vertical integration.
But I think you and most consumers go to a dealership and
buy a car. You know, probably the car
they're buying was was traded in at a different dealership.
It was transported to an auction.
There was an auction that made money.
It was transported to a dealer. It sat there for a while.
The dealer made money. It was financed with a third
party finance company. There's maybe 10 to 30 different
software providers that are making money in the transit
transaction. So there's a lot of, you know,
hands in the transaction. I think what we've built over
the last 11 years, a totally new system.
Generally we're buying cars directly from our customers.
We're doing all the work ourselves.
We're selling it to our customers.
We're the finance company. It's all our own systems.
And that means, you know, simpler experiences for our
customers, It means a great deal for them and it means we have
the opportunity to make more money.
So it's a, it's a true win win. But it's it's been a lot of work
to get to this spot and we're proud to see it showing up in
the numbers. He doesn't duck this question,
he just gave a very thorough answer as to why their margins
are higher than the average car dealership.
Now even with that answer, people are not so convinced.
A lot of people still stating that it's a fraud in the YouTube
comments. The only comments that exist are
accusing Carvana of being a fraud.
But when I listen to the CEO's answer, to me that passes the
smell test, I don't sense anything fraudulent about his
answer. And in fact, I think it's just
the most sensible answer. He explains that normal car
dealerships are completely ineffective.
They're not efficient. There's lots of software,
they're paying for different vendors, different lenders, all
with different terms. The slowness of the entire
process makes the whole ordeal more expensive, so car
dealerships in the end aren't earning as much money as they
could be otherwise. With Carvana, what they've done
is they've basically removed a ton of middle men, making it so
that they have more margins in the process.
And this is the blueprint that many great companies follow.
They don't reinvent the wheel, they just do something in a more
efficient manner. O When I look at Carvana, I
think a lot of people are complaining that they missed out
on the gains or the complaining that their short thesis isn't
working so they just reverted to calling the company fraudulent
with no evidence to back it up. But so far, what I see is a
great recovery from a company that's finally proving its
business model. And as a result, they're now up
400% year to date. An incredible thing to see.
Now the next one is one that has gone up even more than Cava,
even more than Carvana. Yes, more than 400% year to
date. It's in fact gone up 600% year
to date. It's called App Lovin.
App Lovin is a company that I haven't heard too much about.
I don't hear it discussed all that often, and I think part of
the reason why is because the product they sell is rather
vague. Basically what they do is they
help developers, specifically mobile developers, connect to
customers. They basically just help them
find customers and advertise. Now this is a market that was
clearly underserved because app 11 went into this category and
they helped game developers and specifically gaming apps make a
bunch more money by finding different customers through AI.
Now again, this stock is up 642% year to date.
Just just incredible. When we zoom out five years,
this is also one that hasn't gone through a a big U-shaped
recovery. It's had a little bit of one,
but no, it's just up a lot this year.
The company's simply growing and compounding almost in orders of
magnitude. Now, when I was trying to search
what App 11 actually does, I went to the website, I read
about the products, and everything was described very
vague and simple marketing terms.
We help you connect the customers, but what does that
actually mean? Where I found the actual best
description of what this company does is from the CEO himself in
the earnings transcript. This is on an earnings call.
If you're not aware, on Qualtrim, we have all the
earnings calls of different companies.
You just type in the ticker symbol, it brings up the
quarters, and then you have the text format of what happened
here. When I read through the CEO here
responding to a question, the question was basically, how are
you guys different than The Trade Desk?
The Trade Desk is a company that helps you sell advertisements,
helps you set up advertisements and optimize them.
App 11 seems like it does the same thing, but the CEO here
outlines that they really don't, they're not doing the same thing
because of key differences in their strategy, he says.
Yeah. I guess more specifically you're
referencing Trade Desk versus our business models.
Like it's just two different approaches to the market.
They've targeted big agencies and taken a very smart software
as a service type of approach and we've targeted brands and
direct to consumer and e-commerce gaming game
developers. And what these companies care
about is not media dollars or percentage markups.
They care about optimization and automated advertising to a
revenue goal. And that's really like what our
systems predicated on is that we take all the risk on the media
side. We have to deliver really
compelling performance on the technology side.
I guess like what's most exciting for me on what we've
built and where we are in terms of, like you said, market cap on
the scale of the Business Today is we're on top of 1.4 billion
daily actives. We've got the largest mediation
solution in the sector and our teams have built maybe the most
innovative advertising technology that the world's yet
seen. And we're now scaling it out.
And so if you're sort of just fast forwarding over the
quarters and years from here, we're going to be able to offer
services to 10s of thousands to hundreds of thousands to
millions of advertisers on our platform to access this audience
that they've never accessed before.
And now mobile devices, you think about four hours to five
hours a day of time spent. This is a 45 minute component of
that, four hours that is untapped for most of these
advertisers. Our technology can now unlock it
for them. There's the sales pitch for App
Lovin. That's the reason that these
companies are using them. If you spent a bunch of time
developing a game and you want to get exposure to it, you want
to get people signed up to it and connect to customers,
they're using artificial intelligence and using models
that nobody else has access to, and they claim that their models
are way more advanced than other companies.
Other companies aren't even close, and that's the reason
that they can offer these different type of payment plans
that are based purely on performance.
So App Lovin has quickly raced up to a $100 billion company,
now up 642% on the year. So I think this is one that
deserves a bit more attention. Now.
Next up, we have a stock that hasn't had quite the year that
App Lovin has, but it's been a great year for Reddit.
Reddit's a company that's rather new to the market and they're
already up 160%. So Reddit investors are doing
great this year. When I look at Reddit overall,
it feels like one of these companies that's been around
forever but somehow is still not mature.
For example, Reddit has been around for for at least a
decade, maybe 1520 years, and it has a $23 billion market cap,
making you believe that it's probably a mature company,
probably generating steady cash flows.
That's not really the case. the PE ratio is 224 because they
don't generate really any earnings.
The free cash flow yield is negative because of course,
they're, they're losing cash flow over the trailing 12
months. Now if we look at this, the cash
flows are starting to head back up in the positive.
It is $104 million. When we look at the free cash
flow compared against the stock based comp.
To generate this free cash flow, they have to dilute the
investors like crazy. And this is something a lot of
these companies try to pretend they're not doing.
They try to say that free cash flow isn't really cash.
So you don't have to worry about that.
Just put it out of your mind, don't worry about it.
But that stock based compensation is a real expense
to the shareholder. So the company is headed in a
right direction, but it still feels like it has a long ways to
go before it gets to that mature cash flow position.
Now in terms of Reddit, qualitatively, I can see why The
company's valued at $20 billion. It is a staple of the Internet.
It's always there in the Google search results.
People look at Reddit as an authentic place to go amidst a
bunch of AI results, so I can see it being leveraged and
monetized over time. It doesn't sound crazy to me
that investors are paying mid $20 billion for this stock.
Maybe they'll be wrong, but if Reddit doesn't figure out how to
make a lot of money, that's on Reddit's management.
Now finally we get to a stock that has rocketed up this year,
especially with the news of a Trump victory.
This one's really taken off in line with the price of Bitcoin.
But even more, we have micro strategy.
Michael Saylor pulled it off. He has pulled it off.
He's really done it. Microstrategy's up 423% year to
date. This company doesn't really make
any revenue. I mean, it makes $100 million,
but that's been flat for years and years.
It's not being valued off of the revenue it makes or the cash
flows it makes. This is being valued off of
their ownership of crypto. Basically, all that Michael
Saylor has done is strategically taken out debt to leverage up on
Bitcoin, and Bitcoin is the only thing that he buys.
So whether or not he makes a fortune or whether or not he
loses a fortune is simply based off the price of Bitcoin.
Now I was warned about this. Michael Saylor did give us a
heads up after all. Here is a video of him
explaining that this is going to happen which.
One's the best crypto asset. Well, Bitcoin's the best crypto
asset. OK, What's the second best?
There is no second best. There's no second best crypto
asset. There's a crypto asset.
It's called Bitcoin, right? Right.
There's no second best. OK.
But take all your money, buy Bitcoin, then take all your
time, figure out how to borrow more money to buy more Bitcoin.
Then take all your time and figure out what you can sell to
buy Bitcoin. And if you absolutely love the
thing that you're that you don't want to sell it, go mortgage
your house and buy Bitcoin with it.
And if you've got a business that you love because your
family works for the business that's in your family for 37
years, and you can't bear to sell it, mortgage it, finance
it, and convert the proceeds into the hardest money on earth,
which is Bitcoin. That was his advice years ago
and I don't know why I didn't listen to him.
Seems like a very trustworthy, not crazy person.
But either way, he did warn us ahead of time.
If you followed his advice to just sell everything, everything
that's important to you, just sell it and buy Bitcoin like a
year ago, you'd probably have a lot more money than you do right
now with your investing strategy.
So just think about that. If you just only bought Bitcoin,
you'd be doing better. Every time I look at this
company with MicroStrategy and Bitcoin, I'm happy it's doing
well. I have nothing against Bitcoin,
but I still feel better about buying productive assets.
I don't like the asset that I hold, the value being determined
by other people's ability to pay for it or not.
In the case of crypto or Bitcoin, really any of them,
that's most of the use case is simply a trading item, something
that people buy. If they think it's going to go
up, they think they're going to make money, they sell.
If they think it's going to go down, they're going to lose
money. None of it's based off of cash
flows. There's no business model,
there's no product they're selling, they don't have
employees, they're not generating net income.
And I like that side of things. I like doing analysis on actual
businesses, not on speculation on whether something is going to
go up or down in value, but that's just a personal
preference either way. Michael Saylor right now is
making a. Fortune with Bitcoin and his
stock micro strategy, which is leveraged Bitcoin of course, is
up 400% this year. So that wraps up five of the
most explosive stocks of the year.
Let's go ahead and move on to some news.
Now the first bit of news we have is that Spotify just
reported their earnings and the stock is up big, up 12% after
earnings. They beat on their subscribers.
This one's also one that's doing fantastic this year, up 145%
when we look at Spotify and what I see is a great company.
I continue to see a great company.
This is actually one that I held in My Portfolio for a short
time. It's one that I, I really had a,
a thought that this is going to be a great asset in the future.
It's going to be worth so much money because they have such a
sticky product that it appeals to so many users, 600 million
plus users, and they're continuing on.
They just had another subscriber beat and the stock continues to
compound. Mark Mahaney lays out what he
sees as the biggest factors this quarter.
Well, the six subscriber beat was, was nice.
It was solid. It was somewhat modest though.
I, John, I think the real outlier here and why the stock's
up 7% is we just got record high gross margins and the guidance
it's 31%. This is a low gross margin
business to begin with, but 31% gross margins, that's a record
high and the guidance implies that it's sustainable, IE the
next quarters gross margin guidance is kind of roughly in
line with this quarter. Like that's been the overhang
issue on Spotify shares since their second area of this since
their offering, since their, since their listing, you know,
whatever five years ago, the business doubled in revenue, but
gross margins never moved. The stock didn't work.
Then when the gross margins moved the stock work.
He got more evidence of it today.
So I we continue to like the stock.
So he continues to like the stock.
It's still one of his top picks even after the huge surge this
year. And that is someone that doesn't
have increasing bias. He's not concerned about taking
gains. He's concerned about looking at
the current valuation and what's going to drive the stock further
in the future. Like I said, at one point I did
have Spotify in My Portfolio, but I decided to move out of
Spotify and put everything into Netflix because my opinion was
that Netflix and Spotify are very similar, but Netflix will
have higher margins. They're a company that has more
control over their margins because they make so much.
Netflix made content. Most of the content on Spotify
is owned by other people. It's owned by the music labels.
So their margins have continual pressure.
Now Spotify continues to overcome these challenges of the
lower margins by growing organically and doing things to
adjust their margins upward even though they don't own their
music, for example, they moved into podcast and they
immediately begin to grow their podcast substantially.
They brought on Joe Rogan, they brought on a lot of top podcast
creators, but now there's such a big podcast platform.
They don't need Joe Rogan. They don't really need these top
creators. They're just big in and of
themselves without the draw of these top creators.
So Spotify has moved into a category that's a lot higher
margin with podcast. They also have some audiobook
stuff they're doing, and they're pushing more advertisements to
have a little bit better deals with the music labels.
And I think this is going to continue now.
Even though right now the company still has margins that
are less than half of Netflix, they're still moving them
upwards, which is positive movement for Spotify.
I still view this company positively as well.
It has traded up a lot. The market cap has grown a lot,
but I still think Spotify has more to go now.
Next up, we have news of Apple's next big device.
This is the AI wall tablet. And Mark Gurman goes over this
new device here. So Apple's next big device is a
smart home command center, a smart home panel, something you
might stick on your wall like a security system from ADT,
something you may put on your desk, something that you can use
to control your locks, your lights, your your sprinklers,
anything that's in your home that's connected to home Kit or
Matter. That's the new smart home system
that works across Apple, Amazon, and Google devices.
It'll have FaceTime, it'll have audio and video intercoms for
use across your home. If you have multiple things like
this, you'll be able to tap into Apple Music to control the music
playback on your speakers throughout the home.
So it's basically a command Center for everything you might
want to do in your house. Anything you might want to
control in your house, there's going to be a home security
element to it, a content consumption element to it.
And this is something that can drive Apple hardware sales, but
also Apple services sales and sets the stage for further
entrance from Apple into the home.
So we have the description there a command Center for your home
and apparently Apple's looking to launch this as early as May
of next year. Now when I when I hear this, I
think it's cool. I think that this might be used
by a handful of people, control their devices, have a nice
little tablet on your wall that has, you know, you can turn on
your your lights and your lock your doors, sprinklers, all
that. That could be cool.
But this isn't going to be a game changer.
It's just not something that's going to game change Apple.
And the unfortunate truth is, if you're an Apple investor at this
point, there's nothing they're ever going to do that's better
than the iPhone. And really starting to believe
that there's just nothing that will beat the iPhone as a
standalone device. Apple's moving into different
categories where they know they're never going to make as
much money as they did with the iPhone.
Now, hopefully this could enhance their services business
a little, but even then, I think it's going to have minimal
impact. Now, we've heard stories over
the past couple of years that Temu and Sheen are both
competitors to Amazon and Amazon is very threatened because of
these companies. When I looked at the numbers, I
didn't see that threat showing up in the US.
But regardless, at least Amazon considers them a threat and
they're they're adjusting to them.
Amazon has debuted a discount store with everything under $20
to take on TAMU and Sheen, the Amazon Hall storefront.
So it's called Amazon Hall, is accessible through the company's
mobile app and promises crazy low prices on a plethora of
goods. Shoppers can buy $1.00 eyelash
curlers and oven gloves or a $3 nail dryer.
The company is offering free shipping on orders over $25 or
$4.00 on shipping for orders below that threshold.
So this is basically the opposite of what Amazon normally
does. Normally you have their Prime
membership, you have free shipping, but you don't have
this super cheap Chinese prices for these low quality, low
priced items. That's something that Tamu and
Qin really came into the US and they shipped directly from China
over to the US. It took weeks to get your items,
but it appealed to people that wanted the cheapest prices
possible. Now, this article from CNBC says
that Amazon is betting shoppers will wait longer for products in
exchange for rock bottom prices. This isn't something that
they're betting on. There's no gamble here.
Amazon has simply looked at what Tamu's done.
Tamu's already proven that there is a big group of customers that
are willing to wait a lot longer, a couple weeks for
product if they can get it at a lower price.
So Amazon's not betting on anything.
This isn't a gamble. This business model has already
been proven by Chinese competitors.
What Amazon's doing here is copying them.
They're copying Chinese competitors like Tamu, they're
copying the business strategy, and they're using their massive
distribution and network to put it in their app that everyone
already has downloaded and they already have all your
information. So the transition from shopping
on Amazon.com, their normal website, shopping for normal
products, or shopping on Amazon Hall is virtually seamless.
There's no different flipping from app to app.
It's right in your Amazon app. In this development further
follows the blueprint of Amazon where they compete with everyone
from every part of the world. They try attack every business
everywhere. It is the most capitalistic
competitive business I think that exists on earth.
So it'll be interesting to see how Amazon Hull does.
I'm guessing that even if Amazon Hull negates or slows down the
growth of TAMU, they'll consider it a success.
Now finally, tomorrow morning we have Disney reporting their
earnings. If we look at the weekly
calendar here, we can see a number of familiar companies.
This is the earnings calendar on Qualtrim.
If you haven't tried it out, it's a new feature released to
everyone right now, but if we click on Disney right here,
click on the logo, it brings up their history of their earnings
and their revenue. The red is when they've missed,
the blue is when they've beat their earnings estimates by
analysts. And we can see that on the
earnings per share, most of the time they beat.
In fact, they're on a win streak here.
We have around 7 different earnings reports, around 2 years
of constantly beating on their earnings per share estimate.
If I had a guess, I think that streak is going to continue.
We've seen strength from Netflix.
We see strength internationally. I think Disney's going to do
well on their subscriber count. They lost subscribers
internationally on Disney Plus last quarter.
So that's something to watch. We'll see if they can reverse
that. But overall, I really think
they're going to be on their earnings per share.
Now when we flip over to the revenue here, this is where it
can get a little bit dicey. They're projecting or at least
the analysts estimates right now are for $22.44 billion.
So it's going to be right around last quarter, 1/4 before.
But we look at their history with their revenue and they miss
around half the time. So this one is a toss up.
Statistically, Disney has around a 50% chance of missing the
revenue. Tom Rogers is someone that has
been overall correct on the streaming world.
He's predicted that Netflix has won this battle a long time
period ago. But he also says that Disney's
not out of this fight yet. Disney still may turn out to be
a winner in this category. Well, just to set the table a
little bit, Disney is number one in terms of viewership overall
when you aggregate it streaming and it's traditional DTV
services. So in a position to show some
leadership here in terms of engagement.
Having said that, it's hard to talk about Disney without
talking about Netflix, and Netflix enterprise value now is
actually bigger than Disney, Warner, Paramount and Fox
combined just to show what the traditional TV world is up
against in terms of Netflix growth.
That's just incredible. Netflix is bigger than basically
all of their competitors combined.
In fact, all of their top competitors combined.
I've been saying this for a while as well.
Netflix is no longer really competing with Paramount or Max
or even Disney. I think their true competitor is
now Amazon. I really think that they look at
Amazon and YouTube as their primary competitors.
I think they've kind of looked past Disney.
I think they've really, they've fought that battle.
They beat them. They're on to Amazon and YouTube
looking at them as the primary threats.
Netflix free cash flow is presumably going to surpass
Disney's next year. But the thing that I'm impressed
with with Disney is they've gotten their streaming revenues
up to about 2/3 of Netflix. And last quarter their streaming
revenue was about equivalent to what their traditional linear
television revenues are. No one else among the
traditional media companies have have done that.
So they're getting some revenue scale.
The big question that everybody's going to be focused
on is, yes, they've established their streaming, yes, it's
scaling, but the big question is, can it be as profitable as
their traditional television business was?
That's a question of margins and the margins on the streaming
business have a long way to go. So Disney has a lot of
engagement, but a lot of their engagement still on cable TV,
which is thinking overtime. Some of it's on the streaming,
which is growing overtime. And they're in that battle where
they have to grow the streaming to be more profitable than their
legacy cable business, which is very difficult to do.
Ultimately, I think that Disney's an OK bet.
I think they will become a big streaming player.
I think streaming is a very profitable thing if you're at
scale, Scale's the most important thing.
And I think that Disney's one of the companies that can reach
scale on this specific earnings report tomorrow.
My guess is that they'll be on their earnings per share
estimate. And I think there's around a 60%
chance they'll beat on their revenue as well.
But I'd say the revenue's a bit more shaky.
I think they're going to show good subscriber gain growth
internationally and in the US. That's a question.
So that one's a little bit of a toss up, but we saw what Netflix
did and Disney is following the same blueprint.
Now, of course, I think Netflix is still a better bet.
It's still the one that I have all my money in, but I won't
count Disney out just yet. That's all for this episode.
Hope you enjoyed. See you in the next one.