Welcome back to the Joseph Carlson show, we have a lot to
get to in this episode. First of all we have Advanced
Autoparts today and you can see it's down 33 percent 33% in a
day after its earnings and they say that it's also cutting its
dividend by 80%. So the dividends is basically
gone. We're going to be looking into
this earnings report Reading what the CEO of the company
actually says about it. And seeing if this has a greater
impact on the overall Auto industry, is this going to hurt
companies like Tesla is It going to hurt to AutoZone, we're going
to be looking at that as well. We also have some other news.
We have some fun news with Netflix, not so fun.
If you're one of the ones who are, who are sharing passwords
Netflix, finally launched their password, Crackdown in the US,
and there's reports that it seems to be working.
So there's some third-party data that's gone in and seen what
this is doing to people, canceling or people signing up.
We're going to be looking at the data there.
As Netflix is one of my largest Holdings, we also have an
interview. I want to get two of Mark
mahaney. He's someone that I follow with
my growth portfolio because he is a longtime growth investor
specifically in Tech. He's almost like the Peter Lynch
of tech companies. He looks for the fast-growing,
fast-moving tech companies and he has his three picks.
So we're going to be going over and doing analysis, on the three
companies that he now says are a bye.
And then finally, we also have to do a portfolio update.
On the story fund will be looking at this.
I'm going to be going over the performance this month.
Comparing it to spy and the Q and we'll be looking at that as
well. So without further Ado, we have
a lot to get to a lot of news to cover.
Let's go ahead and get started. So let's go ahead and start off
with a portfolio update. For those of you new to the
channel and I appreciate you for joining because we have
literally thousands of new people join every single month.
We've gained over 3,000 subscribers and the past 30
days. So, welcome all of you that that
I've joined along, just a reminder, we do things a little
bit differently here. A lot of YouTubers and financial
content creators take stalkers fin.
Twitter's whatever you want to call them.
They don't really show their whole performance for, for lack
of a better term. They're just opaque.
They, they might talk about stocks, they might get excited
about them. They might Heat make huge
Declarations of what a stock is going to do.
But you rarely see one that shows their total performance
over long periods of time. And that is precisely what I do
here with my channels. I don't just show a snapshots or
little slices of my current Holdings.
I show my entire performance with every single stock that
I've ever bought. Bought or sold for the lifetime
of the portfolio, every single week.
And that's what you're seeing here.
This represents my performance in this portfolio since the
beginning. Now, it's in the red right now
but it's actually not that bad because I started this portfolio
right around 20 21 which was one of the worst times that you
could start a portfolio. The market has gone down since
then. So right now I'm down.
Eight thousand. Nine.
Hundred dollars nine percent money waited.
If I look at this, There's the glass half empty glass half-full
way of looking at it. I feel very good about this
performance because just a about a year ago, one year ago I was -
forty thousand dollars in this portfolio.
That was gloomy. That was a little bit depressing
when I'm running a public portfolio and I'm doing this in
front of a lot of people and things aren't going your way.
Netflix is plummeting Amazon's not playing out it's like every
stock that I'm picking is going down.
That's not a fun thing. But I've done the research on
these companies, I still feel the same way I do when I first
bought them and they have been on an absolute streak.
They've been on a tear they've been really having a major
comeback. They went from - 40,000 to now -
9,000 and we're just a bit aways from going back in the green, a
couple more good days. And this portfolio will be in
the green overall. When I compared against the S&P
500, this is what it looks like overall.
So We have the whole timeline here and a lot of people ask,
why don't I compare this against the queue or whatever different
index for me? The S&P 500 has always been the
standard. It's what Warren Buffett
compares to Cathy wood. It's what every major hedge fund
compares to is the S&P 500. That's the reason I chose it.
What I plan on doing is at the end of five years, I plan on
adding in a bunch of different indexes, as well as the QQQ.
So I will be comparing this against other things as well.
When I look at this, we can see that over.
The past couple of months. The story fund has been like a
rocket just rocketing backup, really closing in the Gap.
We were major gap between my performance and the S&P 500, and
now it's just a minor Gap. We've almost closed the Gap
completely to put this in perspective in the past. 30
days. This portfolio is up.
Let's take a look here, almost 13%.
So sixteen thousand nine hundred dollars in the past 30 days.
When we look at this, when we compare against the S&P 500, we
can bring it up. Here we go to the past 30 days,
performance spice flat. So, the S&P 500, The Benchmark
is flat. And the story fund is up 13
percent over the past 30 days, that's the Gap.
Being closed. When your portfolio goes up 13
percent over. The index that you're comparing
to Over The Benchmark, that's closing the Gap and even more.
So even if we compare against the QQQ, over the same time,
period, That's only up seven point eight percent.
So we still outperform the QQQ over the past 30 days.
Most of that has been led by a couple companies here, primarily
Amazon and Netflix they have been on a roll Netflix is up
five thousand four hundred dollars.
Twenty percent Amazon is up 13.5% even Google which I went
heavy into. Remember I sold a lot of
Salesforce and I went into Google.
This one's up 13.5% another three thousand dollars.
So these three companies Companies, Amazon Netflix and
Google have really, really done well, but the biggest one that's
really caring. The portfolio right now is
Netflix. This is done phenomenal.
Netflix is up so much over the past year.
A lot of people are talking. They're talking about Nvidia and
how, how great nvidia's done. That's true.
And video has been shockingly. Good.
We look at the performance and videos up, 113 percent over the
past trailing gear. We look at Netflix here.
Netflix hasn't done too bad over the past trailing year, over the
past year. It's up 103 percent.
So this company just hanging on to it and doubling down on.
It really has helped out the performance and it continues to
and I'll be talking more about that one later as we get into
the password. Crackdown.
But this is what the portfolio looks like over the past 30
days. We have the losers right here.
The more value oriented companies Crocs.
That one is down, 10%, but I have a just a watcher position
in it. It same with Berkshire, Hathaway
pool Corpus down, 10% $200 smaller position, but I'm still
very bullish on pool Corp, we have every other company, all
the tech names, make them big gains, big gains.
The biggest winner over the past 30 days of my portfolio, is
Netflix by about double. So this one has really helped
out the portfolio. It's now position size of 35,000
dollars. It's a lot of money to be
invested in this company. I've remained very optimistic
about this company over. Optimistic and I want to go into
that a little bit more later. But that is a performance over
this month. Right now, we're down 9,000, and
I still think we can pull out of this and beat the S&P 500.
That's the goal. And I'll continue to track this
portfolio and share it publicly. Now, let's go ahead and get to
the shocking news here about Advanced Auto Parts to me.
This seems like an AutoZone company is basically the same
type of business model. So if we go to Advanced Auto
Parts, let's see where it's at right now.
Maybe it's recovered a bit. Nope, this company still down.
34%, we have a note here, saying the Advanced Auto Parts Shares
are trading lower after the company reported less worse,
than expected, q1 Financial results, and cut the financial
23 earnings per share on Revenue guidance below estimates.
So reported bad, earnings last quarter and then it cut guidance
and Advanced Auto Parts is an auto parts company.
Simple, simple deduction, here are car companies in trouble.
That's we're going to be looking at this company.
Overall has steady Revenue growth, the free cash flows, not
really growing over the past decade, actually it's pretty
flat. The sheer counts going down.
They're probably trying to follow AutoZone but the share
price has just been pummeled. You're at a date, it's down 49
percent past year, it's down 59%, this is an astonishing.
Just drop in price. In fact, this is the lowest by
far and five years down. 40% in five years, company's, not doing
great. Let's take a look at AutoZone
and see how that one's holding up with this news autosomes down
5%. I thought there'd be some
sympathy trading down, there is a little bit but I thought there
might be a little bit more. Seems like AutoZone may have a
better business model. They may have a more resilient
business to some degree because it's odd to see one of them down
30% and this one only down four percent but we'll see.
What AutoZone does when we look at the actual report here, I
want to bring up the actual earnings report and we have it
right here. This is from the actual CEO of
the company not from CNBC, or their interpretation.
So, let's just go ahead and read what the company themselves are
saying about the situation. I want to thank our Advanced
team members and independent partners for their continued
hard work and focus on serving our customers while we
anticipate, the first quarter would be challenging our results
were below. Patient's, net sales grew one
point, one point, three percent in the quarter, our operating
margin rate of 2.6% in the quarter was well below
expectations due to higher than planned Investments to narrow
competitive price gaps in the professional sales Channel, as
well as unfavorable product mixes usually unfavorable
product mixes. When I look at what that
actually means, that's a fancy. Corporate way of saying, that
people are trading down when they come by the really hired.
Name brand stuff, the more expensive stuff, the premium
stuff. They don't pick that they pick
the generics. So it's like if you go, you go
into Walmart and you have the normal brand of Oreos and then
you have the good value. Walmart brand of knockoff Oreos,
unfavorable product mix would be people choosing the lower end
breads. That's what that means.
Typically, now he continues on here and it actually gets worse.
He says that we remain focused on improving inventory,
availability, while sustaining competitive price targets to
improve. Top Line Sales, we expect the
competitive Dynamics, we face in the first quarter to continue
resulting in a shortfall to our 2023 expectations.
I don't know if this is a good thing or a bad thing for Auto
Zone in the other companies. This may be an admission that
they're gaining market share. They're really, they're
competing really well, it might be that the entire industry is
doing poorly. He says that we have reduced our
full-year guidance, and the board of directors made the
difficult decision to reduce our quarterly.
Early dividend, when you have a company and let's take a look at
this. Let's see how long that they've
paid the dividend. We don't even have a dividend
ago. This is Auto Sound.
Let's go back to AP. Let's take a look at the
dividend of this company so they've been paying the dividend
from 2006-2008 10, 11, 12, 13, 14, 15, every single year.
They've been paying a dividend since 2006.
They grew it tremendously over the past couple of years.
The dividend growth rate is 40%, so they grew as fast as they
could, and now they're backtracking and cutting the
dividend Warren Buffett has said when a long-term dividend pair.
What's their dividend? It's a terrible.
Terrible indicator for the company horrible fundamental
indicator. Anytime that happens, it spells,
bad news. He does not like seeing that
happen in addition, in connection with my pending
retirement. You goes on explaining that
there's going to be other people taking his role.
So he's also retiring as a CEO but that's it.
We have customers trading down from premium Brands to lower end
Brands. We have competition way.
Weighing on them, that's not good.
We have a dividend cut and then we have them also having
margins. Well, below their expectations
just in the first paragraphs here.
I think the 30% sell-off is probably warranted.
This company had nothing but bad news to share for investors.
So how does this affect the rest of the Auto industry companies?
Like AutoZone car companies, popular Investments like Tesla.
I'm not sure the ongoing impact. This is going to be on the rest
of the industry. When I look at any company.
That's exposed to Auto. We can look at Ally Financial
here. If I can type it in correctly,
Ally, financials heavily exposed to Auto and the loans that they
give out. This company is also done pretty
horrible over the past year. This has been one that I've
avoided specifically because I didn't like their balance sheet,
so exposed to Auto industry. And it's the same thing with
really any company that has this level of exposure to a highly
cyclical capital-intensive recession, non-resistant Astri,
like the Auto industry. I think it's very dangerous.
The games that investors play investing in these companies and
I think you really have to know what you're doing.
So weather effects companies like Tesla.
I think the effects will be very minor.
I don't see this as a big thing but I still believe that Tesla
is going to be susceptible to The Wider Auto industry.
So I think there's going to be some volatility there.
It's still not a company that I'm looking at unless I can get
it at a much more attractive valuation than what it's trading
at. So, I'm not going to be buying
the dip in these Auto Parts companies or Type of auto
company to begin with, for me, it's not the most attractive
industry to be in. Now, moving on from that, we
have other news here that Netflix has finally done their
password sharing Crackdown in the US, the time has finally
arrived. Now, let me just say this when I
talk about Netflix stock and my investment in it, I have a
fairly large investment in it now as its recovered 100%, but
this has been a company that I've been incredibly bullish on,
for a long period of time. I've explained the thesis on it,
And from what I can tell, the way that I fill, as a Netflix
investor is I feel like I'm stranded on an island by myself.
I feel completely alone and isolated it's like nobody else
is invested in Netflix. I'm the only one.
So if you're invested in Netflix, let me know.
Because so far, I have trouble finding anyone else.
That likes this investment regardless, I'm going to stick
with it. I think a Netflix will prove out
to be a very profitable. Free, cash flow, positive
dominant. Benny.
And I think that things are working out that way the thesis
largely is working out over time and this is one more step that
Netflix pivoted, which they frequently do that.
I think will be a net benefit. Now a lot of you in the u.s.
probably just received emails saying that now is the time you
can't keep sharing mom and dad's password.
You got to get your own. And for a lot of people that's
frustrating, when you've previously gotten something for
free and now you have to pay for it.
That's never a fun thing. So, A lot of the, the gut
reactions, the impulsive reactions of people having to
pay for Netflix. Now, after sharing it for free,
for 10 years is one of total anger, resentment people saying
that they're going to pirate pirate shows, right?
They're going to go online and torrent all the shows or they're
going to, you know, never use Netflix again and they hope the
company is torpedoed and does terrible.
That's the reaction, I see online as an investor.
I look past that because I think that Netflix With the price tag
associated with the passwords, it offers tremendous ongoing
value to its customers and its customers love it.
When I compare it against other streaming services, most
streaming services have two or three shows on it Paramount you
basically have Yellowstone with peacock.
You basically have the office and Parks and Rec with HBO Max
or just max. Now that's the only other one
that I think has a decent offering.
Netflix is the one that has all the shows on it has so much.
Content for both children and adults, adults, and it
continually refreshes the content at a much faster rate.
So when I compare the actual price tag with the offering, I
still think it has by far the best value proposition even when
you're not able to share passwords, I've also maintained
that this password sharing Crackdown is going to be a
beneficial thing in the end for Netflix.
It'll go through a short term pain, but I think that Netflix
is going to absolutely come out. On top because of this.
And I want to explain the math behind that very, very quickly.
This is so simple. Very simple.
Very simple logic to follow. We have the password owner,
right? This is the person paying for
the account. So, with a password owner and
then, we have a couple people will call them PS4 password.
Share. So we have, let's say three
people and these three are all PS, their password shares.
So right here, we have the owner paying for the account maybe
fifteen Seventeen dollars a month.
And then we have three people that have the same logins that
they've been using and enjoying the account.
Let's say that this person is really unhappy with the prospect
of paying an extra seven dollars per month.
For each one of these shares. So this person out of resentment
and anger and impulse, cancels their password, they canceled
it. Netflix account, it's no longer
active and they say take that Netflix.
I want to send you a message that this isn't right?
What happens in this situation, it's not just them, that loses
their Netflix account. It's everyone all four people in
this situation, no longer have access to Netflix.
Now, in my opinion for people individuals, all living in
different places that have all been enjoying Netflix for years,
suddenly not having access to it, do I Leave that at no point
in the future, none of them will ever sign up for Netflix again.
No, I don't, I think at some point in the future, one of them
is going to sign up. In fact, I'm willing to bet that
at least two of them will and if just two of them sign up, then
the amount of Netflix subscribers has doubled.
So ultimately, I don't see how this can't be a net benefit for
Netflix because as password owners canceled their accounts,
it leaves so many more people that now no longer have access
to Netflix that are Now, prospective customers of the
company. So looking at the password,
Crackdown the simple math, the simple logic shows that this is
going to be a success. Moreover, we have Netflix, which
is a data driven company that has tested this in multiple
countries in South America, and in Canada.
So they've already ran extensive testing on this and have proven
out the thesis that this is going to be a net benefit.
They're not dummies that are going to torpedo their business
with this move. So I think Overwhelmingly.
Even though it does feel a little risky and a little scary
because it might cause some bad blood with some customers.
I really think that this is over all going to benefit Netflix as
a company. Now let's go ahead and read the
news because we actually have some data here from third-party
analysis. It says that according to this
third party analysis, so this is not official data.
This is third party data analysis websites that try to
gain insights on this. They say that fewer Netflix
subscribers in the US and you Okay, are churning or leaving
Netflix compared with subscribers in Canada.
So u.s. people are canceling at a lesser rate than in Canada
where the password Sharon Crackdown rolled out earlier.
According to Market Research. Yep.
It data where the they've been tracking the launch, this Trends
suggest that Netflix is management.
Quote, has been able to successfully improve the user
experience and communication relative to their initial
rollout. Remember Netflix wanted to
delay? The release Out in the u.s. so
they can improve it. It seems like those minor
changes made a big difference because people in the US are
canceling at a much slower rate. Another interesting trend is
that new plan signups have increased in the US, as a result
of the clamp down. On account sharing, Netflix is
giving account holders. The option to pay to add
additional users to their existing plans, but it appears
that more us users instead are opting to set up new accounts of
their own at least compared with the Nadine users who quote maybe
most generous with their plans. In terms of adding other paid
users. This is really funny to me, the
Canadian users are more generous with sharing their accounts,
then the u.s. users. So we actually have official
certified data here from third-party analyst data
aggregators that are saying that literally Canadians are nicer
than u.s. when the US citizens have to pay more to share their
account. They say, you know what?
Go get your own. I'm not paying an extra seven
dollars per month. For you go, get your own account
and Canada. They just add on the extra,
seven dollars a month and pay for the person using the
account. So we have actual data there,
that Canadians are nicer than US, citizens signs of the
initial success. With the broader password
sharing Crackdown seem to have helped Netflix talk recently
with shares up 9.5 percent in the past two full trading
sessions. So this data is come out.
It's helped out the stock and Netflix still is headed in the
green even today. It's up a little Bit it's up to
almost 400 dollars per share and where I believe Netflix will be
over the next couple of years. I think the stocks going to be
at 700 to 800 dollars per share. So I think we're going to see it
double again because of the cash flows that it has.
I think the company will exercise much more operating
leverage than we have priced into the stock.
But that's a little bit of a, an outsider thesis time will only
tell how good the company actually does for right now.
I'm still holding my shares. Now, moving on, we have Mark
mahaney with his three Tech stock picks.
That evening star the best investments for this year.
Let's go ahead and dive into what he has to say that it's
going through first is this reals monetization they
successfully. This first one is meta borrowed
from or stole from Tick-Tock second is.
They've got this, click to message product that's out in
the market that's doing well, 10 billion Avenue Revenue, run rate
and third is I think they've just been able to recapture a
lot of the advertising signal that they lost when Apple went
through its privacy changes. So, you're going to have a nice
recovery in a revenue growth as You go through the year.
It's already started to accelerate actually faster than
any of the other AD platforms because of these products like
those changing their name to Metta the wrong move.
Yes. I actually think it was and I
think there is one of those things that they're going to
regret. I think they already do regret
it. But yes, it will.
If you were to talk to employees of meta or Mark Zuckerberg, I
don't think you'd say that it was the wrong move because
Facebook had it had a drag. It just drag down other brands
if they tried making Oculus and it was tied to Facebook.
A lot of people, their image of Facebook is that it's kind of
old and outdated. So they felt like it was this
brand name a drag and they needed to get away from that and
meta. Resembled a fresh start.
Something new. And the focus on the metaverse
was just part of that, but they would say the bigger more
important thing was moving away from the Facebook name.
They actually had a term for it internally.
I think it was called the Facebook brand tax write, it was
a tax on everything they did. Did it just slowed it down a
little bit? Was I Thinkin also investors,
kind of told them that too because the lot of the market
cap was taken out yet. A lot of people sold the stock
last year for good reasons, but one was this excess focus on the
metaverse, they should be investing in a metaverse but
maybe more to the tune of five billion rather than 15 billion
investors would love to see them cut back on that.
If they announce that at the shareholder meeting today would
be a positive. If when I looked at this in
2021, Facebook was much higher than it was today or it is
today. They were going headfirst into
the metaverse and the metaverse was Thing, incredibly unproven
and I don't like it. When companies spend an enormous
amount of their cash flows in something with an unknown return
on Capital, you're basically throwing tens of billions of
dollars into something. The return you're going to get,
who knows? Maybe it will be good.
Maybe not in most cases, these type of trendy things, like the
metaverse do not good, they don't give good returns, they
usually don't. So I saw that as a pet project
of Mark Zuckerberg. Something, he personally liked
that he was using an enormous amount of The funds of the
company to fund at the expense of the shareholders because they
had no control in voting rights. Now, Zuckerberg has said that,
he's he's cooling down on that a little bit, he's focusing on
costs. He's doing more things to appeal
to Wall Street because his company got in trouble.
The stock price going down, 70% investors, being Furious.
That was a wake-up call. So he pivoted hard.
The stock has recovered a bit but I agree.
I think that he focused way to much on the metaverse, he should
have done that gradually. Not made it all of a sudden, the
biggest Focus ever for Facebook announced that and change their
name back. Yes.
But I don't think that's going to happen.
I don't think so. Either, that would be too much
of an admission. Yes.
No new Coke for them. Yes.
That's right. What's number?
Two to Uber? You got three value cabalists
here so we like it $75 price Target.
First catalyst is they're going to reach finally Gap.
Earnings status. Going to start actually
generating positive Gap. Earnings.
Secondly, as we think they'll start buying back stock and
third is Is that we think they'll finally reach the
metrics needed to be included in the S&P 500.
And so I think sometime in 2024, you can have a new addition,
it's going to be Uber normally, that's a good Catalyst for
stocks. Well, that's an interesting
pick. I have not looked at Uber for
some time. Let me bring it up on qual term
here. Let's go.
Take a look. I want to see what, who buries
up to in the financials. So we look at over here, the
company's Revenue has flattened out a little bit, that's fine.
We look at the cash flows and it is headed.
Profitability. I like seeing this trend line,
we see years of it being - they're competing, they're going
for market share right there. A company that's trying to grow
into cash, flow positive and then right around here.
Remember the CEO of uber saying we have to focus solely on
profits, right? They did the profitability
earnings call similar to Salesforce.
When that happened, investors pay attention.
When a company says, the leaders say, they are solely focused on
generating real profits. Now that changes the perspective
for the investor and you can see that they're having quarters
with positive, cash flow. We factor in stock based
competent. Look quite as pretty as I still
have some of that. But even adjusting for
stock-based compensation, they're still leaking into
profitability, even adjusting for stock-based complex quarter.
They did eighty million dollars of stock based compost.
Now, I haven't done any Research into how much operating
leverage. This business has how much
profitability that you can really grow, but at a 76 billion
dollar market cap, Company. That's barely becoming
profitable for me. This is a long shot bed, but
that is the type of companies that Mark mahaney goes into, he
does ones that sometimes they fail, sometimes they do poorly
but in many cases, they can double or triple.
That's number three, Amazon, Triple trough thesis.
We think the stock right here is at a trough multiple trough
margins and trough Revenue growth.
If we're right on that, you could have a material re-rating
in a stock gets really underperform for almost three
years. Let me ask Amazon number 3 and
the triple trough thesis is his thesis on it.
He thinks it's the slowest Revenue.
Growth is going to be Revenue will re-accelerate.
He thinks it's the lowest margins.
It's going to be the margins will improve and he thinks that
it's the the lowest profitability.
The free cash flows will improve as well.
So I agree with them on Amazon. Of course, I'm very bullish on
this company. Outside of Netflix.
This is my largest holding in the story fund if Amazon.
On has a couple good quarters. If this company goes up, 20, 30
%. I'll be back in the green.
In this portfolio. I'll be doing well.
So that's a three pics, Uber meta, and Amazon.
I agree with them on Amazon. Certainly, Uber, I think is an
interesting one and meta overalls, a safer bet, but not a
company, I'm looking at getting back into, I don't love social
media companies. So that's all for this episode.
I hope you enjoyed and I'll see you in the next one.