1 00:00:00,040 --> 00:00:02,040 Welcome back everyone. Today on the Joseph Carlson 2 00:00:02,040 --> 00:00:03,920 Show. We are in the midst of earnings 3 00:00:03,920 --> 00:00:05,600 season. We have a lot of companies that 4 00:00:05,600 --> 00:00:08,800 have already reported their earnings and a lot more to go. 5 00:00:09,080 --> 00:00:12,240 This is right in the middle of the busiest part of the week. 6 00:00:12,600 --> 00:00:14,960 And we're going to be taking a look at what's happened and what 7 00:00:14,960 --> 00:00:17,080 we expect to have happen in the future. 8 00:00:17,200 --> 00:00:19,080 Now, of course, we got to look at Microsoft. 9 00:00:19,080 --> 00:00:22,680 The stock is down 5.9% after hours. 10 00:00:23,040 --> 00:00:25,760 And this is mostly due to the cloud number. 11 00:00:25,760 --> 00:00:28,360 Cloud didn't come in as strong. But we're going to take a look 12 00:00:28,360 --> 00:00:31,960 at Microsoft's overall report and try to get a full picture of 13 00:00:31,960 --> 00:00:33,880 what's going on here and what to expect. 14 00:00:33,880 --> 00:00:35,960 We've already had a number of big companies report their 15 00:00:35,960 --> 00:00:38,640 earnings, like Google. This is one that I have as a 16 00:00:38,640 --> 00:00:40,840 core position in my growth portfolio. 17 00:00:40,880 --> 00:00:43,600 We have S&P Global, which just reported earnings this morning. 18 00:00:43,600 --> 00:00:46,800 I have a position worth $100,000 in S&P Global. 19 00:00:47,000 --> 00:00:49,280 This is my largest individual investment. 20 00:00:49,320 --> 00:00:51,840 Moody's is another large position in My Portfolio. 21 00:00:51,840 --> 00:00:55,280 It's currently a $45,000 position and Moody's reported 22 00:00:55,280 --> 00:00:57,440 earnings last week. Now we also have some companies 23 00:00:57,440 --> 00:01:00,040 that I don't own. PayPal reported earnings this 24 00:01:00,040 --> 00:01:02,040 morning and they're up almost 8%. 25 00:01:02,320 --> 00:01:04,000 We'll be looking. At some of the key metrics and 26 00:01:04,000 --> 00:01:05,960 seeing how things are developing for PayPal. 27 00:01:06,480 --> 00:01:09,000 And then of course, we can't forget Texas Roadhouse. 28 00:01:09,120 --> 00:01:12,280 This is a company that I invested into a couple years ago 29 00:01:12,640 --> 00:01:16,200 and it's turned out to be so far my most profitable investment in 30 00:01:16,200 --> 00:01:19,560 both of my portfolios. Texas Roadhouse has performed 31 00:01:19,600 --> 00:01:22,160 phenomenally well. It's now a position in My 32 00:01:22,160 --> 00:01:27,160 Portfolio worth $70,000, forty, $1000 of that being games. 33 00:01:27,400 --> 00:01:29,760 So this has been a massive winner and they continue to 34 00:01:29,760 --> 00:01:32,080 execute. We'll be diving into the numbers 35 00:01:32,080 --> 00:01:35,600 and what's making this company run so well when other 36 00:01:35,600 --> 00:01:37,480 businesses aren't. Now, of course, we have some 37 00:01:37,480 --> 00:01:40,960 other news to get to as well. Open AI announced a Google 38 00:01:40,960 --> 00:01:44,640 competitor called Search GPT. I'll be going over how I view 39 00:01:44,640 --> 00:01:47,920 this as a Google investor Delta Airlines has hired. 40 00:01:48,040 --> 00:01:52,600 David Boies to seek damages from Crowdstrike and Microsoft after 41 00:01:52,600 --> 00:01:54,400 the outage. I'll be going over the reason 42 00:01:54,400 --> 00:01:57,040 that Microsoft's included in this lawsuit, even though they 43 00:01:57,040 --> 00:02:00,520 shouldn't be included at all. And finally we have news that 44 00:02:00,520 --> 00:02:04,240 the Co founder and previous CEO of Netflix, Reed Hastings, 45 00:02:04,640 --> 00:02:08,960 donated a massive $7,000,000 to the Kamala Harris campaign. 46 00:02:09,000 --> 00:02:11,280 Now, of course, this was met with a bit of controversy. 47 00:02:11,400 --> 00:02:13,920 A lot of conservatives and Republicans that don't like 48 00:02:13,920 --> 00:02:17,800 Kamala Harris were upset that Reed Hastings donated this money 49 00:02:18,200 --> 00:02:22,600 and they took to Twitter to X to call for a boycott to show that 50 00:02:22,600 --> 00:02:24,920 they are cancelling their subscription to spread the 51 00:02:24,920 --> 00:02:28,280 hashtag cancel Netflix. I'll be explaining why this 52 00:02:28,280 --> 00:02:31,360 boycott of Netflix will ultimately be ineffective in 53 00:02:31,360 --> 00:02:33,680 impacting the company. I think it's worth mentioning at 54 00:02:33,680 --> 00:02:36,240 the start that a lot of these companies I'm talking about are 55 00:02:36,240 --> 00:02:39,560 ones that I own and I have large concentrated investments in. 56 00:02:39,840 --> 00:02:42,720 I invest in what I term compounding machines, which are 57 00:02:42,720 --> 00:02:44,280 companies that are incredibly strong. 58 00:02:44,320 --> 00:02:46,760 They have wide. D Promotes and they continually 59 00:02:46,760 --> 00:02:50,400 grow their free cash flow per share at a rate above 15%. 60 00:02:50,640 --> 00:02:53,280 That's around double the average of the S&P 500. 61 00:02:53,600 --> 00:02:57,120 So these companies are growing their intrinsic value at roughly 62 00:02:57,120 --> 00:02:59,360 double the speed of the rest of the market. 63 00:02:59,360 --> 00:03:01,440 And that's how this portfolio has had market beating 64 00:03:01,440 --> 00:03:03,160 performance for the past three years. 65 00:03:03,160 --> 00:03:05,560 It's a combination of having a both high quality and 66 00:03:05,560 --> 00:03:08,280 concentrated portfolio, selecting stocks that are 67 00:03:08,280 --> 00:03:11,520 growing at a reasonable pace and buying into them at reasonable 68 00:03:11,520 --> 00:03:13,440 valuations. Some of these companies I've 69 00:03:13,440 --> 00:03:16,680 owned for years, Costco, I was a company I started buying way 70 00:03:16,680 --> 00:03:19,680 back in 2018. That's when I started to build 71 00:03:19,680 --> 00:03:22,000 my position. Booking holdings on the other 72 00:03:22,000 --> 00:03:24,320 hand, is brand new to the portfolio. 73 00:03:24,640 --> 00:03:27,040 This is one that I'm looking forward to their earnings and I 74 00:03:27,040 --> 00:03:29,960 have currently 1/2 position in. But when I look over my 75 00:03:29,960 --> 00:03:33,080 holdings, I'm always trying to do analysis on whether or not I 76 00:03:33,080 --> 00:03:35,720 have this portfolio position as well as possible. 77 00:03:36,040 --> 00:03:38,800 And so far I've been very happy with the returns. 78 00:03:39,040 --> 00:03:41,280 I feel like the. Positioning the current holdings 79 00:03:41,520 --> 00:03:44,040 and the weighting of them has been good, so as of now, I 80 00:03:44,040 --> 00:03:46,680 continue on this journey. Of holding highly predictable 81 00:03:46,680 --> 00:03:49,520 compounding companies and holding them for as long as I 82 00:03:49,520 --> 00:03:52,040 think they're the best opportunities in the market. 83 00:03:52,320 --> 00:03:54,840 In most cases that is a multi year basis. 84 00:03:55,080 --> 00:03:57,880 So I don't have a lot of turnover in the portfolio. 85 00:03:57,960 --> 00:04:00,720 I consider things smooth sailing for My Portfolio. 86 00:04:01,120 --> 00:04:02,800 I don't hold struggling companies. 87 00:04:03,120 --> 00:04:05,880 None of these are difficult companies that are turn around 88 00:04:05,880 --> 00:04:09,960 plays that I'm crossing my fingers and biting my nails that 89 00:04:09,960 --> 00:04:11,800 these companies will have decent earnings. 90 00:04:12,240 --> 00:04:14,360 These are the most powerful, predictable companies in the 91 00:04:14,360 --> 00:04:17,000 market and so far they've proven to have incredibly good 92 00:04:17,000 --> 00:04:18,800 execution. So I go into this earnings 93 00:04:18,800 --> 00:04:20,440 season sleeping just fine at night. 94 00:04:20,680 --> 00:04:22,200 None of this feels like a gamble. 95 00:04:22,680 --> 00:04:25,560 And I believe if you do feel like you're taking a gamble, if 96 00:04:25,560 --> 00:04:28,440 you're losing sleep over your holdings, if you're really 97 00:04:28,440 --> 00:04:31,440 concerned about how things will turn out, that may be an 98 00:04:31,440 --> 00:04:34,280 indication that you might want to change around your portfolio. 99 00:04:34,560 --> 00:04:36,200 You should be investing in companies. 100 00:04:36,520 --> 00:04:38,560 You have a high degree of predictability. 101 00:04:38,640 --> 00:04:40,280 Things are going to turn out well. 102 00:04:40,480 --> 00:04:42,800 And if you don't have that predictability, I think that's 103 00:04:42,800 --> 00:04:45,240 an indication to change. Now before we look at companies 104 00:04:45,240 --> 00:04:48,000 that are going to report later this week, I think it's good to 105 00:04:48,000 --> 00:04:49,520 look at ones that have already done so. 106 00:04:49,600 --> 00:04:51,760 Now, of course, we have to talk about Microsoft. 107 00:04:51,760 --> 00:04:55,040 It's currently down or around 5% after reporting earnings. 108 00:04:55,280 --> 00:04:57,880 Investors are trying to digest what just happened. 109 00:04:58,320 --> 00:05:01,600 Now, before we even look at the results itself, I want to take a 110 00:05:01,600 --> 00:05:04,320 look at my predictions going into Microsoft's earnings. 111 00:05:04,520 --> 00:05:06,800 This is what I had to say just yesterday. 112 00:05:06,920 --> 00:05:09,760 The company trades at a 34 Ford PE ratio. 113 00:05:10,200 --> 00:05:12,640 It's not really cheap. That's an expensive company. 114 00:05:12,760 --> 00:05:17,160 The free cash flow yield, if you buy $100 worth of Microsoft you 115 00:05:17,160 --> 00:05:20,800 get back $2.23 in free cash flow every year. 116 00:05:21,200 --> 00:05:24,920 Where if you buy $100.00 of a bond you can get back 5.5%. 117 00:05:25,280 --> 00:05:29,280 So Microsoft is over double the price of AUS treasury, meaning 118 00:05:29,280 --> 00:05:32,880 they'd have to double their free cash flow per share to be at the 119 00:05:32,880 --> 00:05:35,560 same free cash flow of a USUS treasury. 120 00:05:35,920 --> 00:05:39,360 So you can see the problem here, relatively speaking, Microsoft 121 00:05:39,360 --> 00:05:43,040 is not at a discount. And going into this earnings, I 122 00:05:43,040 --> 00:05:44,640 think that's going to be the biggest challenge. 123 00:05:44,800 --> 00:05:47,160 I think they'll beat on their earnings per share and their 124 00:05:47,160 --> 00:05:49,120 revenue. I think the cloud will come in 125 00:05:49,200 --> 00:05:51,600 very strong, very strong growth with the cloud. 126 00:05:51,920 --> 00:05:54,720 I think overall it will be a very solid earnings report. 127 00:05:55,120 --> 00:05:58,920 My prediction is even with that, the stock will be mostly flat or 128 00:05:58,920 --> 00:06:00,960 slightly down. That's how I think this one's 129 00:06:00,960 --> 00:06:02,680 going to play out. So I can't say that it's 130 00:06:02,680 --> 00:06:06,240 necessarily shocking that Microsoft both beat on the top 131 00:06:06,280 --> 00:06:08,560 and bottom line. They beat both of their 132 00:06:08,560 --> 00:06:11,840 expectations and the stock is still down after hours. 133 00:06:12,080 --> 00:06:16,360 This was the expected outcome. Microsoft had to do so well that 134 00:06:16,360 --> 00:06:19,080 not only did they beat on the top and bottom line, but they 135 00:06:19,080 --> 00:06:22,520 also had a show incredibly good numbers with the cloud and there 136 00:06:22,520 --> 00:06:24,640 was some slight weakness with the cloud. 137 00:06:24,880 --> 00:06:27,560 The big one here is Azure. This is the primary thing that 138 00:06:27,560 --> 00:06:29,160 people are looking at with Microsoft. 139 00:06:29,160 --> 00:06:32,360 They're comparing Microsoft Azure with Google Cloud. 140 00:06:32,440 --> 00:06:34,520 We know that Google Cloud is growing really strong. 141 00:06:34,520 --> 00:06:36,760 It's growing around 29% year over year. 142 00:06:37,120 --> 00:06:41,400 And Microsoft Azure was expected to just grow slightly more than 143 00:06:41,400 --> 00:06:44,040 Google Cloud, but it came in around the same. 144 00:06:44,080 --> 00:06:48,320 So investors were expecting around 31% growth, at least 30% 145 00:06:48,320 --> 00:06:53,040 growth, and Microsoft reported Azure growth of 29%, so slightly 146 00:06:53,040 --> 00:06:54,800 below. And this is the silliness of 147 00:06:54,800 --> 00:06:56,720 Wall Street. This is what it really comes 148 00:06:56,720 --> 00:07:00,160 down to owning these stocks, Having these slight changes in 149 00:07:00,160 --> 00:07:05,160 growth rates from 31% to 29% causes the stock to move 150 00:07:05,160 --> 00:07:07,200 hundreds of billions of dollars in market cap. 151 00:07:07,480 --> 00:07:10,960 It's really incredible to see the little things that investors 152 00:07:10,960 --> 00:07:13,040 get hung up on. If we actually take a look at 153 00:07:13,040 --> 00:07:16,200 the numbers here and see the overall picture of how this 154 00:07:16,200 --> 00:07:20,440 company's doing, it is growing intrinsic value like clockwork 155 00:07:20,520 --> 00:07:24,400 every single quarter. This quarter, revenue was up 16% 156 00:07:24,440 --> 00:07:29,200 on a constant currency basis. Operating income was up 16%, Net 157 00:07:29,200 --> 00:07:32,880 income was up 11%, EPS was up 11%. 158 00:07:33,000 --> 00:07:35,760 All of these numbers look great. And even the cloud growth that 159 00:07:35,760 --> 00:07:39,240 was disappointing by investors, I didn't think was so bad. 160 00:07:39,320 --> 00:07:42,120 So we can look at the overall picture of Microsoft and I think 161 00:07:42,120 --> 00:07:45,720 it looks very positive. The personal computing I believe 162 00:07:45,720 --> 00:07:49,360 is the least important, but this still grew 14%. 163 00:07:49,640 --> 00:07:51,880 People are buying Windows devices. 164 00:07:52,240 --> 00:07:55,160 Then we look at the intelligent cloud, this includes Azure and 165 00:07:55,160 --> 00:07:59,480 it grew 18.85% overall. Azure itself is growing much 166 00:07:59,480 --> 00:08:03,160 faster, but you can see solid trends of long term growth here, 167 00:08:03,360 --> 00:08:05,360 ebbing and flowing quarter over quarter. 168 00:08:05,920 --> 00:08:08,160 Then we get into the productivity and business 169 00:08:08,160 --> 00:08:10,240 processes. These are things like Excel that 170 00:08:10,240 --> 00:08:12,640 every Fortune 500 companies using together. 171 00:08:12,640 --> 00:08:15,720 It paints a nice picture of a company growing 15%. 172 00:08:15,720 --> 00:08:18,680 Overall, I like what I see here with Microsoft. 173 00:08:19,120 --> 00:08:22,360 We can even look at the amount of subscribers they have. 365 174 00:08:22,360 --> 00:08:24,680 consumer subscribers gaining around 2,000,000. 175 00:08:24,680 --> 00:08:27,680 New subscribers growing 23%. Year over year. 176 00:08:27,680 --> 00:08:30,600 And in terms of their cash flow, we can do a quick calculation to 177 00:08:30,600 --> 00:08:33,000 find their free cash flow. They posted net cash from 178 00:08:33,000 --> 00:08:36,760 operations of $37 billion and then they did additions to 179 00:08:36,760 --> 00:08:40,720 property and equipment. This is CapEx of $13.8 billion. 180 00:08:40,760 --> 00:08:45,040 You net that out and you get $23,322,000,000. 181 00:08:45,120 --> 00:08:48,800 So we have a $23 billion quarter and if you want you can take out 182 00:08:48,800 --> 00:08:51,160 stock based comp of $2.6 billion. 183 00:08:51,400 --> 00:08:55,080 It's still a very impressive quarter posting over $20 billion 184 00:08:55,080 --> 00:08:56,960 even adjusting for stock based comp. 185 00:08:56,960 --> 00:08:59,560 So what I see here is the most predictable outcome from 186 00:08:59,560 --> 00:09:02,080 Microsoft. They posted all around decent 187 00:09:02,080 --> 00:09:04,520 numbers. The stock is down slightly after 188 00:09:04,520 --> 00:09:07,520 hours because of companies trading at a relatively high 189 00:09:07,520 --> 00:09:10,040 valuation. There was a lot expected of this 190 00:09:10,040 --> 00:09:12,280 company. It needed to perform slightly 191 00:09:12,280 --> 00:09:15,680 better with the cloud. I think if they hit the 32% 192 00:09:15,680 --> 00:09:19,080 growth mark, the stock would be up, but as we have it right now, 193 00:09:19,080 --> 00:09:20,640 we're down a few percentage points. 194 00:09:20,720 --> 00:09:23,680 In the overall long term story, investors won't remember the 195 00:09:23,680 --> 00:09:26,400 growth rate from this quarter in 2024. 196 00:09:26,600 --> 00:09:29,080 What they'll look at is the growing free cash flows of this 197 00:09:29,080 --> 00:09:31,440 company. The intrinsic value with organic 198 00:09:31,440 --> 00:09:34,160 revenue growth, free cash flow per share growth and the 199 00:09:34,160 --> 00:09:36,040 predictability are all improving. 200 00:09:36,040 --> 00:09:38,720 So as far as I'm concerned, Microsoft is still a hold. 201 00:09:38,880 --> 00:09:40,960 Google just reported earnings last week. 202 00:09:41,520 --> 00:09:44,560 I thought that Google would do well, and Google did do well. 203 00:09:44,560 --> 00:09:46,160 They beat on the top and bottom line. 204 00:09:46,200 --> 00:09:49,400 Google grew their overall revenue by 13.45%. 205 00:09:49,600 --> 00:09:51,280 That's a nice growth rate for the company. 206 00:09:51,440 --> 00:09:54,120 A lot of people are concerned about the potential for 207 00:09:54,120 --> 00:09:57,640 disruption with Google Search, in particular with Open AI 208 00:09:57,640 --> 00:10:01,720 announcing Search GPT. When I look at this news and I 209 00:10:01,720 --> 00:10:04,560 see what Open AI is doing, I think it's impressive. 210 00:10:04,720 --> 00:10:08,240 I have a deep respect for their technology, for how advanced it 211 00:10:08,240 --> 00:10:11,200 is and how cool it is to use. I still think it's going to have 212 00:10:11,200 --> 00:10:14,960 minimal impact on Google. People are glued to Google 213 00:10:14,960 --> 00:10:17,800 search, and they're used to using what they're used to. 214 00:10:17,800 --> 00:10:21,000 Using Google Search is also highly advanced. 215 00:10:21,320 --> 00:10:24,760 When you search specific things like movies, theaters, maps, 216 00:10:24,960 --> 00:10:27,320 when you search different products, they have unique 217 00:10:27,320 --> 00:10:31,240 landing pages for each one that have been specifically designed. 218 00:10:31,240 --> 00:10:35,200 For that search quarry, this takes a lot of time to do and I 219 00:10:35,200 --> 00:10:37,280 think it's going to be difficult for people to want to move away 220 00:10:37,280 --> 00:10:40,240 from that to an entirely new LLM search engine. 221 00:10:40,440 --> 00:10:43,400 I think it's caused the stock to go down and that's the reason 222 00:10:43,400 --> 00:10:45,560 why it's trading down after great earnings. 223 00:10:46,000 --> 00:10:47,640 But this is nothing new for Google. 224 00:10:48,000 --> 00:10:51,280 Google routinely trades down after posting good earnings. 225 00:10:51,480 --> 00:10:54,560 A couple years ago, the big thing everyone was worried about 226 00:10:54,640 --> 00:10:58,400 was Bing and being AI. Remember that was the big 227 00:10:58,400 --> 00:11:01,480 concern for Google search. It turned out to be a big 228 00:11:01,480 --> 00:11:03,760 nothing. Nothing changed with Google 229 00:11:03,760 --> 00:11:05,560 search. They gained no market share. 230 00:11:06,040 --> 00:11:08,120 So search continues to press forward. 231 00:11:08,200 --> 00:11:10,600 Now if we move on from Google Search, we can filter and look 232 00:11:10,600 --> 00:11:13,760 specifically at Google Cloud. And this is the best growth 233 00:11:13,760 --> 00:11:17,040 story in Google. It grew just under 30% year over 234 00:11:17,040 --> 00:11:19,880 year last quarter. Google Cloud has slowly moved 235 00:11:19,880 --> 00:11:23,200 from a money losing portion of the business to now a profitable 236 00:11:23,200 --> 00:11:25,600 portion of Google and the operating margins of. 237 00:11:25,600 --> 00:11:28,600 Google Cloud specifically steadily climb higher and 238 00:11:28,600 --> 00:11:30,920 higher. You can see this basic trend 239 00:11:30,920 --> 00:11:35,960 line overtime going from -60% to now in the most recent quarter. 240 00:11:36,360 --> 00:11:40,200 11%, the previous two quarters to that it was 9%. 241 00:11:40,640 --> 00:11:44,280 Google has incredible control over the profitability of cloud. 242 00:11:44,680 --> 00:11:47,920 They can make this more and more profitable every single year. 243 00:11:48,160 --> 00:11:51,360 It's really incredible to see this much control over the 244 00:11:51,360 --> 00:11:53,800 profitability of their fastest growing segment. 245 00:11:54,120 --> 00:11:57,640 And this is going to continue. Google Cloud will climb up from 246 00:11:57,640 --> 00:12:03,040 11% operating margins up to 15 and 20 all the way up to 30 from 247 00:12:03,040 --> 00:12:04,680 there. It could even go higher in the 248 00:12:04,680 --> 00:12:06,320 future. I thought Google Google's 249 00:12:06,320 --> 00:12:08,080 earnings were great. I don't think the stock should 250 00:12:08,080 --> 00:12:09,880 be trading down over the past week. 251 00:12:10,240 --> 00:12:13,800 I think the reason it is, is by unfounded concerns over Search 252 00:12:13,800 --> 00:12:16,280 GPT. Once investors realize that 253 00:12:16,280 --> 00:12:19,640 Search GPT is not going to steal any meaningful market share from 254 00:12:19,640 --> 00:12:23,080 Google, I think investors will see this stock as more valuable. 255 00:12:23,080 --> 00:12:25,720 Now, two other companies in My Portfolio that have recently 256 00:12:25,720 --> 00:12:28,400 reported earnings are in the financial category. 257 00:12:28,760 --> 00:12:30,960 And even though I don't talk about these companies a lot 258 00:12:30,960 --> 00:12:34,000 because they're rather boring, they're not the most exciting 259 00:12:34,000 --> 00:12:35,680 companies. They're two of my largest 260 00:12:35,680 --> 00:12:37,080 holdings. Because they're two incredibly 261 00:12:37,080 --> 00:12:38,560 high quality, dominant companies. 262 00:12:38,920 --> 00:12:41,440 They have a knack for growing their earnings and free cash 263 00:12:41,440 --> 00:12:45,000 flow every single year. The companies are S&P Global and 264 00:12:45,000 --> 00:12:47,280 Moody's, the two credit rating businesses. 265 00:12:47,640 --> 00:12:50,120 They do have some different parts of their business, We'll 266 00:12:50,120 --> 00:12:53,760 go into that a little, but both of these companies posted very 267 00:12:53,760 --> 00:12:55,560 strong earnings. Let's first go ahead and take a 268 00:12:55,560 --> 00:12:57,440 look at Moody's. This company has done really 269 00:12:57,440 --> 00:13:01,000 well this year. It's up 18.56% and it's actually 270 00:13:01,000 --> 00:13:02,640 gone up a lot over the past three months. 271 00:13:02,640 --> 00:13:05,040 So the past quarter it's gone up 21%. 272 00:13:05,480 --> 00:13:07,560 So we're seeing good momentum in Moody's. 273 00:13:07,600 --> 00:13:10,080 Investors are re enthused by this company. 274 00:13:10,080 --> 00:13:13,200 If we dive into some of the KPI charts here, we have the revenue 275 00:13:13,200 --> 00:13:16,040 by segment. Moody's is unique in that it's 276 00:13:16,040 --> 00:13:19,160 divided into two halves. So Moody's is the parent 277 00:13:19,160 --> 00:13:22,520 business that owns Moody's Analytics and Moody's Investor 278 00:13:22,520 --> 00:13:25,800 Services. Moody's Investor Services is the 279 00:13:25,800 --> 00:13:28,240 credit rating business. This is the one where other 280 00:13:28,240 --> 00:13:31,440 funds and businesses have to get a credit rating on their debt. 281 00:13:31,520 --> 00:13:34,440 So as a credit rating business, we can see how important the 282 00:13:34,440 --> 00:13:39,640 recovery of the debt market is. Debt went down during 2021. 283 00:13:40,000 --> 00:13:42,480 A lot of companies were concerned about issuing more 284 00:13:42,480 --> 00:13:44,080 debt. They didn't want to do it. 285 00:13:44,320 --> 00:13:47,600 So the amount of issued debt started to go down and so did 286 00:13:47,600 --> 00:13:49,720 Moody's Investor Services earnings. 287 00:13:50,200 --> 00:13:54,400 They earned less revenue over the quarters from 2020 to 2022. 288 00:13:54,880 --> 00:13:57,600 Now that the economy seems like it's fine and businesses are 289 00:13:57,600 --> 00:14:00,160 doing OK, they're starting to issue more debt. 290 00:14:00,400 --> 00:14:03,320 So you can see the rapid increase in their investor 291 00:14:03,320 --> 00:14:06,520 services revenue. That is the debt renewal wall. 292 00:14:06,760 --> 00:14:09,560 And this is going to continue over the long term. 293 00:14:09,600 --> 00:14:12,520 The secular trend is clear. The amount of debt that 294 00:14:12,520 --> 00:14:16,320 corporations issue worldwide is going up, and that's likely 295 00:14:16,320 --> 00:14:19,480 going to continue in the future. If you believe the amount of 296 00:14:19,480 --> 00:14:22,640 corporate debt worldwide is going up in the future, this is 297 00:14:22,640 --> 00:14:25,080 going to be a good business to be in Now. 298 00:14:25,120 --> 00:14:28,400 The other half of their revenue is Moody's Analytics, which is 299 00:14:28,400 --> 00:14:31,560 far more stable and consistent. This is a subscription company. 300 00:14:31,640 --> 00:14:34,200 We can look at this overall, but we can also break this down 301 00:14:34,200 --> 00:14:36,200 further. We have another KPI chart here 302 00:14:36,200 --> 00:14:39,520 showing specifically this Moody's Analytics breakdown. 303 00:14:39,560 --> 00:14:42,600 The breakdown is in decisions and solution, research and 304 00:14:42,600 --> 00:14:45,960 insights, data and information. Moody's offers a lot of 305 00:14:45,960 --> 00:14:49,160 different credit services where they offer risk solutions to 306 00:14:49,160 --> 00:14:51,680 different companies. They offer data and analytics 307 00:14:51,680 --> 00:14:53,960 platforms. They offer all sorts of 308 00:14:53,960 --> 00:14:56,720 different services that are considered consulting, but they 309 00:14:56,720 --> 00:14:58,600 sell them in a subscription format. 310 00:14:58,880 --> 00:15:01,520 So this Moodys Analytics portion of the business continues to 311 00:15:01,520 --> 00:15:03,920 grow around 7%. Overall. 312 00:15:03,920 --> 00:15:07,440 The combination of the more volatile Moodys Investor service 313 00:15:07,440 --> 00:15:10,960 credit rating and the consistent Moodys Analytics business 314 00:15:11,440 --> 00:15:14,320 equates to an overall incredibly high quality company. 315 00:15:14,480 --> 00:15:16,080 We can take a look at the free cash flow. 316 00:15:16,080 --> 00:15:20,440 Last quarter it was 593,000,000. Moody's beat on their top and 317 00:15:20,440 --> 00:15:23,360 bottom line and they're raising the estimates of their free cash 318 00:15:23,360 --> 00:15:25,080 flow. Overall, there's not much else 319 00:15:25,080 --> 00:15:26,720 to say. I think Moody's is going to 320 00:15:26,720 --> 00:15:29,600 continue to do well as there's more and more debt in the future 321 00:15:29,880 --> 00:15:32,520 and data becomes more valuable. Now we also have the larger 322 00:15:32,520 --> 00:15:36,160 holding the other significant bet, S&P Global, which is a 323 00:15:36,160 --> 00:15:39,400 somewhat similar company to Moody's, but not entirely 324 00:15:39,400 --> 00:15:42,400 identical, S&P Global posted. Their earnings today and it was 325 00:15:42,400 --> 00:15:45,080 fantastic. The stock should not be down. 326 00:15:45,080 --> 00:15:48,760 Currently it's down .62% after earnings and I believe that's 327 00:15:48,760 --> 00:15:52,040 mostly due to the NASDAQ being down 1.6%. 328 00:15:52,200 --> 00:15:54,360 But don't let that convince you that these earnings weren't 329 00:15:54,360 --> 00:15:56,520 good. These were fantastic earnings by 330 00:15:56,520 --> 00:15:58,360 S&P Global. Their market intelligence 331 00:15:58,360 --> 00:16:00,720 portion of the business, which is around half of it, grew at 332 00:16:00,720 --> 00:16:02,680 7%. The credit rating portion of the 333 00:16:02,680 --> 00:16:08,800 business grew 33%, Commodity Insights grew 11%, Mobility grew 334 00:16:08,800 --> 00:16:13,560 8.4%, and the indices grew 11. .78% The best part of S&P 335 00:16:13,560 --> 00:16:16,440 Global's earnings report was that they raised the guidance 336 00:16:16,440 --> 00:16:18,480 for the amount of free cash flow they're generating. 337 00:16:18,840 --> 00:16:22,800 Previous to this quarter, the guidance was for $4.5 billion in 338 00:16:22,800 --> 00:16:26,960 free cash flow and they just raised it by $200 million. 339 00:16:27,240 --> 00:16:30,920 So it's now $4.7 billion for 2024. 340 00:16:31,200 --> 00:16:34,680 This is what they are expecting and they're very, very good at 341 00:16:34,680 --> 00:16:36,760 meeting these targets and surpassing them. 342 00:16:36,800 --> 00:16:40,400 There's a chance they could raise it again, but even at this 343 00:16:40,400 --> 00:16:43,000 expected free cash. Flow, with their current market 344 00:16:43,000 --> 00:16:46,280 cap, they're trading at a 3% free cash flow yield, which I 345 00:16:46,280 --> 00:16:49,200 don't think is too bad. So even right now as the 346 00:16:49,200 --> 00:16:52,120 company's doing well this year, I think it still trades at a 347 00:16:52,120 --> 00:16:54,000 reasonable valuation I'm happy with. 348 00:16:54,120 --> 00:16:56,040 SMP Global and Moody's. I'm keeping both of these 349 00:16:56,040 --> 00:16:58,320 companies now. Finally we get to one of the 350 00:16:58,320 --> 00:17:02,080 best reports of this earnings season so far, Texas Roadhouse. 351 00:17:02,160 --> 00:17:05,040 Once it became clear to me that this was a compounding machine 352 00:17:05,319 --> 00:17:08,319 and I was able to buy it during a time where a lot of investors 353 00:17:08,319 --> 00:17:11,400 were concerned about the future and it was trading for around 354 00:17:11,560 --> 00:17:15,680 $70.00 per share, I thought that was one of the best risk rewards 355 00:17:15,680 --> 00:17:18,520 in My Portfolio and it's turned out to be the case. 356 00:17:18,760 --> 00:17:22,400 The company is currently the. Largest winner in My Portfolio. 357 00:17:22,640 --> 00:17:24,960 This is the most profitable holding I I've ever had, given 358 00:17:24,960 --> 00:17:27,880 the timeline going up over double in less than two years. 359 00:17:27,960 --> 00:17:30,680 The problem with a company like Texas Roadhouse is anytime a 360 00:17:30,680 --> 00:17:34,920 stock does this well, the big temptation is to want to lock in 361 00:17:34,920 --> 00:17:35,520 the. Gains. 362 00:17:35,800 --> 00:17:38,760 You don't want this excellent performance to be taken away 363 00:17:38,760 --> 00:17:41,160 from you. You want to keep what you have. 364 00:17:41,440 --> 00:17:45,240 The last thing I want to do is celebrate that I have $40,000 in 365 00:17:45,240 --> 00:17:47,800 gains. And then slowly watch it dwindle 366 00:17:47,800 --> 00:17:51,760 away to 30,020 thousand and then back to square one. 367 00:17:52,080 --> 00:17:54,360 That is the worst feeling as an investor. 368 00:17:54,560 --> 00:17:57,600 So a lot of us rush to sell great companies because they've 369 00:17:57,600 --> 00:18:01,080 gone up too far too fast. With Texas Roadhouse, it's up 370 00:18:01,080 --> 00:18:04,520 45% year to date. So it becomes incredibly 371 00:18:04,520 --> 00:18:07,600 tempting to want to cash out on this company, but I've refused 372 00:18:07,600 --> 00:18:10,720 to do that in this case and I'm glad that I have because Texas 373 00:18:10,720 --> 00:18:13,480 Roadhouse continues to execute. Texas Roadhouse's earnings 374 00:18:13,480 --> 00:18:16,560 report was fantastic. They grew their revenue almost 375 00:18:16,560 --> 00:18:19,680 15%. They grew their net income and 376 00:18:19,680 --> 00:18:22,720 earnings per share by 46% year over year. 377 00:18:23,120 --> 00:18:27,320 Now there's some cyclicality with input costs, but Even so, 378 00:18:27,320 --> 00:18:30,800 even factoring that in, this is very strong growth of this 379 00:18:30,800 --> 00:18:32,760 company. The most important metrics that 380 00:18:32,760 --> 00:18:35,680 I look at for this company are the amount of new restaurants 381 00:18:35,680 --> 00:18:38,800 they're opening. They open up around 25 new 382 00:18:38,800 --> 00:18:41,200 restaurants across their different concepts. 383 00:18:41,440 --> 00:18:43,360 They have the company Texas Roadhouses. 384 00:18:43,640 --> 00:18:45,760 They have the company's Bubba 30 Threes. 385 00:18:46,040 --> 00:18:48,600 They have Jaggers, which is a fast food concept. 386 00:18:48,920 --> 00:18:51,080 And then they have. The franchise Texas Roadhouse 387 00:18:51,160 --> 00:18:52,840 and franchise Jaggers. So we have a. 388 00:18:52,840 --> 00:18:55,600 Group of different concepts here and different means, but they're 389 00:18:55,600 --> 00:18:59,800 still opening up around 7% new restaurants year over year. 390 00:19:00,040 --> 00:19:04,000 Their goal is to open up around 8% growth per year, and as of 391 00:19:04,000 --> 00:19:06,880 right now, their current pipeline of new openings goes 392 00:19:06,880 --> 00:19:10,480 out around three years. So they already have 90 new 393 00:19:10,480 --> 00:19:13,120 restaurants already outlined that they're going to be opening 394 00:19:13,120 --> 00:19:15,840 up over the next three years. Opening up new restaurants is 395 00:19:15,840 --> 00:19:19,040 one thing, but making them all perform well is the biggest 396 00:19:19,040 --> 00:19:20,960 challenge. And we can see the performance 397 00:19:20,960 --> 00:19:23,360 of Texas Roadhouse by their weekly sales. 398 00:19:23,720 --> 00:19:26,600 This is the metric they give every single time, and it's 399 00:19:26,600 --> 00:19:30,920 really an incredible metric. Back in 2012, 2013, they're 400 00:19:30,920 --> 00:19:34,600 making on a weekly basis $78,000 in total revenue. 401 00:19:35,120 --> 00:19:39,840 Now their most recent quarters, they're making $158,000. 402 00:19:39,920 --> 00:19:44,520 Texas Roadhouse just grew their weekly sales 8% year over year. 403 00:19:44,960 --> 00:19:48,600 McDonald's had their weekly sales go down by 1%. 404 00:19:48,640 --> 00:19:52,080 So other very strong concepts, very strong brands like 405 00:19:52,080 --> 00:19:56,360 McDonald's are having shrinking sales while Texas Roadhouse is 406 00:19:56,360 --> 00:19:59,640 gaining total market share, growing their sales weekly. 407 00:19:59,680 --> 00:20:02,600 Now Texas Roadhouse also has a very important to go order 408 00:20:02,600 --> 00:20:06,520 business last year. Quarter over quarter it grew 8%, 409 00:20:06,800 --> 00:20:10,480 which is really good growth. Now this is a tricky 1 because 410 00:20:10,600 --> 00:20:13,520 during COVID this spiked up dramatically. 411 00:20:13,800 --> 00:20:16,160 That's an unnatural spike because the only way people 412 00:20:16,160 --> 00:20:19,240 could get their Texas Roadhouse is by ordering it to go. 413 00:20:19,720 --> 00:20:22,840 And then after that, the to Go business did really well, but it 414 00:20:22,840 --> 00:20:26,960 started to go down a little bit. Now we're seeing a regrowth of 415 00:20:26,960 --> 00:20:31,600 the to Go business and right now it's around a $20,000 a week 416 00:20:31,600 --> 00:20:34,600 business in and of itself. One thing that Texas Roadhouse 417 00:20:34,600 --> 00:20:37,640 said they're doing with their To Go Order business is they're 418 00:20:37,640 --> 00:20:40,520 making cloud kitchens. Which is a digital kitchen 419 00:20:40,520 --> 00:20:44,080 specifically for the to go orders to make everything more 420 00:20:44,080 --> 00:20:46,760 orderly, to make everything easier for the chefs. 421 00:20:46,760 --> 00:20:49,680 They also made a new update with digital tickets on all their 422 00:20:49,680 --> 00:20:52,040 orders. So instead of the cooks having 423 00:20:52,360 --> 00:20:55,920 twenty different receipts on a big iron board, now they have to 424 00:20:55,920 --> 00:20:59,120 go orders on a digital receipt that shows them specifically 425 00:20:59,120 --> 00:21:01,840 what they should be working on. The biggest benefit for this is 426 00:21:01,840 --> 00:21:03,840 it just makes the job easier for the cooks. 427 00:21:03,840 --> 00:21:05,720 They're less stressed, they don't have as much to worry 428 00:21:05,720 --> 00:21:07,520 about. They're more organized, so 429 00:21:07,520 --> 00:21:10,560 they're improving things in the kitchen for the cooks to make 430 00:21:10,560 --> 00:21:13,160 their life easier. I'm obviously happy about Texas 431 00:21:13,160 --> 00:21:15,280 Roadhouse's report. It's been such a wonderful 432 00:21:15,280 --> 00:21:18,320 company to own, and I'm not at a point now where I'm too 433 00:21:18,320 --> 00:21:20,920 concerned about the valuation. Given the qualities of the 434 00:21:20,920 --> 00:21:24,320 company, I think the valuation is still reasonable and I expect 435 00:21:24,320 --> 00:21:27,760 Texas Roadhouse to continue to outperform the market from here. 436 00:21:27,760 --> 00:21:30,120 There's some other companies that I've recently reported that 437 00:21:30,120 --> 00:21:32,480 are not in My Portfolio. These are ones that I have so 438 00:21:32,480 --> 00:21:35,320 far avoided, one of them being PayPal. 439 00:21:35,320 --> 00:21:39,240 Paypal's having a nice bump after earnings, it's up 8.78%. 440 00:21:39,400 --> 00:21:42,600 And I want to go into the reasons that Paypal's trading up 441 00:21:42,600 --> 00:21:46,240 reason #1 is the valuation. Paypal's valuation is very low, 442 00:21:46,280 --> 00:21:49,920 leaving a lot of potential upside if they have any positive 443 00:21:49,920 --> 00:21:52,920 news to share to investors. So with that type of pricing, 444 00:21:52,920 --> 00:21:56,840 what PayPal needed to do was just show that things are headed 445 00:21:56,840 --> 00:21:59,520 in the right direction. And they did that kind of. 446 00:21:59,520 --> 00:22:01,800 Let's go ahead and take a look at two of the key metrics here. 447 00:22:02,160 --> 00:22:05,240 The first one is the amount of active accounts on PayPal. 448 00:22:05,480 --> 00:22:07,720 This is with the most recent quarter entered in. 449 00:22:07,720 --> 00:22:11,480 The most recent quarter was actually down year over year. 450 00:22:11,840 --> 00:22:15,280 So it was down just slightly from one year ago, but that's 451 00:22:15,280 --> 00:22:19,320 not too big of a problem because it was up consecutively from the 452 00:22:19,320 --> 00:22:22,000 most recent quarter. So even though it was down a 453 00:22:22,000 --> 00:22:25,560 little bit year over year, it was up quarter over quarter. 454 00:22:26,040 --> 00:22:29,040 And on these type of charts, investors are looking more on a 455 00:22:29,040 --> 00:22:32,200 consecutive quarterly basis. They like seeing that the prior 456 00:22:32,200 --> 00:22:37,240 quarter it was at 427 million and it bumped up to 429,000,000. 457 00:22:37,560 --> 00:22:40,800 So they gained plus 2 million active accounts. 458 00:22:40,880 --> 00:22:43,440 The other thing that's even more impressive and I like this chart 459 00:22:43,440 --> 00:22:46,800 more for PayPal is the amount of transactions per account. 460 00:22:47,080 --> 00:22:50,400 So we know that we have that 400 million users, but how many 461 00:22:50,400 --> 00:22:53,040 transactions are they doing? How much are they using the app? 462 00:22:53,360 --> 00:22:58,720 Well, year over year it was an increase 1133 O the people using 463 00:22:58,720 --> 00:23:01,400 PayPal are actually using the A more frequently. 464 00:23:01,400 --> 00:23:04,440 So we have those two critical KPIs, both moving in the right 465 00:23:04,440 --> 00:23:07,600 direction on a consecutive quarterly basis, which is a good 466 00:23:07,600 --> 00:23:10,760 thing to see for the company. Then we also have them say on 467 00:23:10,760 --> 00:23:13,600 the earnings call that they have dedicated a lot of money to 468 00:23:13,600 --> 00:23:16,200 doing buybacks and this is one of the growth stories for the 469 00:23:16,200 --> 00:23:18,240 company. They do have a high free cash 470 00:23:18,240 --> 00:23:20,920 flow yield which allows them to eliminate their shares 471 00:23:20,920 --> 00:23:24,800 outstanding. It's gone down 5.47% year over 472 00:23:24,800 --> 00:23:27,360 year, which is a positive thing for the investors. 473 00:23:27,600 --> 00:23:30,560 As these shares go down, the earnings per share grows and the 474 00:23:30,560 --> 00:23:32,000 free. Cash flow per share grows. 475 00:23:32,440 --> 00:23:34,840 So I like seeing PayPal do these buybacks. 476 00:23:35,000 --> 00:23:37,120 I think this earnings report was OK. 477 00:23:37,280 --> 00:23:40,720 It wasn't amazing, it didn't blow me away, but at least it's 478 00:23:40,720 --> 00:23:43,800 enough to keep the stock moving in a positive direction. 479 00:23:44,160 --> 00:23:48,600 Now, even though it's up 8.7% today, it's still up 4% year to 480 00:23:48,600 --> 00:23:50,240 date. So it's trailing the market. 481 00:23:50,320 --> 00:23:53,520 PayPal needs to continue posting quarters like this for the stock 482 00:23:53,520 --> 00:23:56,160 to gain a resurgence. So, so far, so good with 483 00:23:56,160 --> 00:23:58,240 earnings. Now later this week, we have 484 00:23:58,240 --> 00:24:01,360 more big tech important companies reporting earnings 485 00:24:01,720 --> 00:24:05,520 like Apple, Meta and Amazon. If you want to see my thoughts 486 00:24:05,520 --> 00:24:08,440 on those earnings and post analysis, just make sure you 487 00:24:08,440 --> 00:24:11,200 subscribe to my other YouTube channel, Joseph Carlson. 488 00:24:11,200 --> 00:24:14,440 After hours I'll have in depth videos going over those 489 00:24:14,440 --> 00:24:17,280 companies and those reports. So check out that Channel if you 490 00:24:17,280 --> 00:24:19,080 haven't already. Now moving on, we have the 491 00:24:19,080 --> 00:24:21,280 continued downfall of crowd strike. 492 00:24:21,560 --> 00:24:26,000 This company's stock is down 11% today after a new report came 493 00:24:26,000 --> 00:24:29,560 out that Delta Airlines, well, they're not happy about what 494 00:24:29,560 --> 00:24:32,320 happened. If we recall, Crowdstrike 495 00:24:32,320 --> 00:24:36,120 released an update that was specific to Microsoft devices 496 00:24:36,520 --> 00:24:38,560 where the update had a critical error. 497 00:24:38,560 --> 00:24:40,760 Now, this is just a simple content update. 498 00:24:41,080 --> 00:24:44,160 And in terms of Crowdstrike's risk, they consider this update 499 00:24:44,160 --> 00:24:47,360 to be very low risk. So they distributed this update 500 00:24:47,440 --> 00:24:51,280 to all of their customer base, but they didn't know that once 501 00:24:51,320 --> 00:24:54,760 their customer started using it, it would brick all of their 502 00:24:54,760 --> 00:24:57,000 computers. It would give them the blue 503 00:24:57,000 --> 00:24:59,600 screen of death. Now, this is only applicable to 504 00:24:59,600 --> 00:25:02,320 Microsoft. It was only Microsoft devices 505 00:25:02,320 --> 00:25:05,040 where this had the problem. And this wasn't something where 506 00:25:05,040 --> 00:25:07,760 they could easily push an update to fix all of it. 507 00:25:08,040 --> 00:25:11,520 In fact, every single one of the hundreds of thousands of 508 00:25:11,520 --> 00:25:15,960 computers that went down had to be manually reset by an IT 509 00:25:16,080 --> 00:25:19,280 person. So one by 1:00, every single 510 00:25:19,280 --> 00:25:22,920 computer needed to be fixed. This was the largest IT outage 511 00:25:22,920 --> 00:25:26,240 that we've experienced in this country for years, and some 512 00:25:26,240 --> 00:25:28,520 companies got hit far worse than others. 513 00:25:28,880 --> 00:25:31,560 The ones that had the most reliance on using crowd strike 514 00:25:31,560 --> 00:25:34,360 for their cybersecurity were the ones hit the hardest. 515 00:25:34,680 --> 00:25:37,760 And in particular, the companies that had the longest outages, 516 00:25:38,040 --> 00:25:40,480 which were the most costly, were the airlines. 517 00:25:40,880 --> 00:25:43,760 The worst airline to get hit was Delta Airlines. 518 00:25:43,840 --> 00:25:47,560 The damage that crowd strikes problematic update did to Delta 519 00:25:47,560 --> 00:25:50,680 Airlines alone. It's still unknown, but it's 520 00:25:50,680 --> 00:25:53,360 currently being tabulated and calculated by Delta. 521 00:25:53,600 --> 00:25:56,920 They estimate right now that the damage could be up to $500 522 00:25:56,920 --> 00:25:58,920 million. And they're calculating this 523 00:25:58,920 --> 00:26:01,640 very mathematically. They're adding up the amount of 524 00:26:01,640 --> 00:26:04,280 cancellations. They've had hundreds of 525 00:26:04,280 --> 00:26:07,360 thousands of cancellations due to this one outage. 526 00:26:07,480 --> 00:26:10,160 Delta lost hundreds of millions of dollars worth of business, 527 00:26:10,440 --> 00:26:13,280 and they're still having to make up for those cancellations and 528 00:26:13,280 --> 00:26:14,880 give different people their money back. 529 00:26:14,960 --> 00:26:17,400 And ironically, Crowdstrike is one of the companies they pay 530 00:26:17,400 --> 00:26:19,680 specifically to avoid this type of event. 531 00:26:19,680 --> 00:26:23,640 Delta Airlines is the first company to seek compensation 532 00:26:23,640 --> 00:26:26,800 from Crowdstrike and Microsoft. They've now hired lawyers, and 533 00:26:26,800 --> 00:26:28,880 they're going to go after them to make them whole. 534 00:26:29,200 --> 00:26:32,520 So this so far has been a horrible event for Crowdstrike, 535 00:26:32,760 --> 00:26:35,360 for the CEO of the company, for the reputation. 536 00:26:35,880 --> 00:26:39,240 It's very difficult to actually quantitate how bad this has been 537 00:26:39,240 --> 00:26:42,120 for Crowd Strike, but I don't think the stock price fully 538 00:26:42,120 --> 00:26:45,240 reflects it, even after the 11% decline today. 539 00:26:45,760 --> 00:26:48,840 In fact, if we look at Crowd Strike stock since the beginning 540 00:26:48,840 --> 00:26:53,440 of this event, it's down. Around 40 to 50%, and then once 541 00:26:53,440 --> 00:26:56,600 this event happened, it immediately dropped around 20% 542 00:26:56,920 --> 00:26:59,920 and it continues to drop as investors assess the outcome. 543 00:26:59,920 --> 00:27:02,480 The difference with Crowdstrike's failure is not 544 00:27:02,480 --> 00:27:05,080 that the company failed and it caused an outage. 545 00:27:05,400 --> 00:27:08,960 The problem is how difficult it was to get things back up and 546 00:27:08,960 --> 00:27:11,960 running, for example, when we look at any type of similar 547 00:27:11,960 --> 00:27:14,720 event throughout history. There's none that really come 548 00:27:14,720 --> 00:27:16,800 close. We've had instances where stuff 549 00:27:16,800 --> 00:27:19,960 like AWS has gone down and that caused a lot of problems with 550 00:27:19,960 --> 00:27:22,000 websites going down for a couple of hours. 551 00:27:22,000 --> 00:27:25,080 But the difference is, once Amazon fixed the issue and AWS 552 00:27:25,080 --> 00:27:28,120 went back online, all the websites continued to work. 553 00:27:28,120 --> 00:27:30,760 With a simple refresh, everything was back up and 554 00:27:30,760 --> 00:27:32,440 running. When Google went down with 555 00:27:32,440 --> 00:27:34,600 Google search or with YouTube going down? 556 00:27:35,080 --> 00:27:37,400 That's a bummer, and it highlights how many people miss 557 00:27:37,400 --> 00:27:39,520 YouTube and Google when they go down. 558 00:27:39,880 --> 00:27:42,280 But as soon as the website was back up, everybody could 559 00:27:42,280 --> 00:27:44,960 immediately visit the website and use it again. 560 00:27:45,000 --> 00:27:47,760 The issue with Crowdstrike was not that the company went down 561 00:27:47,760 --> 00:27:50,040 for a couple hours, it's the fact that it bricked the 562 00:27:50,040 --> 00:27:51,960 computers. It made it so they had to be 563 00:27:51,960 --> 00:27:55,600 manually restarted with an IT person for every single 564 00:27:55,600 --> 00:27:58,760 individual computer. This was a critical disaster, 565 00:27:58,760 --> 00:28:01,160 one that caused an immense amount of damage and one that's 566 00:28:01,160 --> 00:28:04,320 very difficult to repair. The damage this also did to the 567 00:28:04,320 --> 00:28:07,000 reputation of Crowd Strike is still unknown. 568 00:28:07,000 --> 00:28:09,400 Crowd Strike's going to have to change a lot of things about the 569 00:28:09,400 --> 00:28:12,640 company, including their sales technique, their branding, their 570 00:28:12,640 --> 00:28:15,240 public appearances. One of the blunders that the 571 00:28:15,240 --> 00:28:18,200 Crowd Strike CEO did was one of the interviews he did on the 572 00:28:18,200 --> 00:28:21,880 news following this outage. Where bug can have such a 573 00:28:21,920 --> 00:28:26,600 profound and immediate impact. Well, when you look at the 574 00:28:26,600 --> 00:28:29,680 complexity of cybersecurity, you're always trying to stay 575 00:28:30,080 --> 00:28:33,400 one. Excuse me, One step ahead of the 576 00:28:33,400 --> 00:28:35,680 adversaries. Excuse me. 577 00:28:36,240 --> 00:28:39,000 And just one second, please. Oh, yeah. 578 00:28:39,000 --> 00:28:41,240 Take take a drink of water. Yeah. 579 00:28:41,240 --> 00:28:41,680 Sorry. Sure. 580 00:28:42,600 --> 00:28:44,000 Always trying. It's been a long night. 581 00:28:44,000 --> 00:28:46,400 We're always trying to stay one step ahead of the adversaries. 582 00:28:46,720 --> 00:28:49,000 Now he just lost his voice a little bit there. 583 00:28:49,000 --> 00:28:51,920 He coughed and couldn't speak and had to drink some water, 584 00:28:52,400 --> 00:28:55,320 which on any other day would have been fine. 585 00:28:55,480 --> 00:28:58,200 That's something that you can do on a podcast or in a normal 586 00:28:58,200 --> 00:29:00,480 setting and it's no big deal. But when you're coming on to 587 00:29:00,480 --> 00:29:03,800 explain causing the biggest IT outage in history, that just 588 00:29:03,800 --> 00:29:06,200 adds a little bit more attention to the outage. 589 00:29:06,280 --> 00:29:09,320 Crowdstrike also was quick to remove a lot of their branding 590 00:29:09,320 --> 00:29:10,760 and change a lot of their messaging. 591 00:29:10,920 --> 00:29:13,280 They're being forced to change their sales techniques. 592 00:29:13,520 --> 00:29:16,600 For example, on one of their pages, they said Crowdstrike 593 00:29:16,600 --> 00:29:18,840 versus Microsoft with the subtext. 594 00:29:19,120 --> 00:29:22,000 Microsoft security products can't even protect Microsoft. 595 00:29:22,040 --> 00:29:25,120 How can and they protect you? Well, quickly after the IT 596 00:29:25,120 --> 00:29:28,520 outage caused by Crowdstrike, that subtext was removed. 597 00:29:28,840 --> 00:29:31,320 Because now Crowdstrike has suffered the same thing as 598 00:29:31,320 --> 00:29:33,440 Microsoft. They can't seem to protect 599 00:29:33,440 --> 00:29:35,200 themselves. Another web page from 600 00:29:35,200 --> 00:29:38,440 Crowdstrike's website was completely removed saying 62 601 00:29:38,440 --> 00:29:40,400 minutes could bring your business down. 602 00:29:40,680 --> 00:29:43,920 That's the average time it takes an adversary to land and move 603 00:29:43,920 --> 00:29:47,080 literally through your network when your data, reputation and 604 00:29:47,080 --> 00:29:50,720 revenue are at stake. Trust the pioneer and adversary 605 00:29:50,720 --> 00:29:53,640 intelligence this messaging. Is completely gone because they 606 00:29:53,640 --> 00:29:56,600 can no longer say it's 62 minutes to bring your business 607 00:29:56,600 --> 00:30:00,480 down when Crowdstrike themselves just brought down your business. 608 00:30:00,880 --> 00:30:03,920 So this creates a challenge for their sales and marketing team. 609 00:30:03,920 --> 00:30:06,720 The reputational damage to Crowdstrike creates further 610 00:30:06,720 --> 00:30:09,000 obstacles to selling the product in the future. 611 00:30:09,000 --> 00:30:12,520 So a lot of investors just jumping into this one, buying 612 00:30:12,520 --> 00:30:15,480 swaths of Crowdstrike stock right after the initial dip 613 00:30:15,680 --> 00:30:19,240 without any time to process fully what's going on, I believe 614 00:30:19,240 --> 00:30:21,480 may have jumped in a little bit early. 615 00:30:21,680 --> 00:30:25,560 Kathy Wood being amongst them. She jumped in almost immediately 616 00:30:25,560 --> 00:30:27,800 after the first dip buying up this stock. 617 00:30:28,280 --> 00:30:32,160 And while I I applaud the idea of trying to buy good companies 618 00:30:32,160 --> 00:30:35,080 once they've fallen or stumbled, I think it's also important to 619 00:30:35,080 --> 00:30:37,440 look at how these events actually impact the fundamentals 620 00:30:37,440 --> 00:30:40,120 of the company. So far, Crowd Strike has been an 621 00:30:40,120 --> 00:30:44,080 incredibly good company. The fundamentals are insanely 622 00:30:44,080 --> 00:30:46,720 strong. The revenue chart looks almost 623 00:30:46,760 --> 00:30:49,280 fabricated. It's a continually step. 624 00:30:49,320 --> 00:30:52,320 Up quarter after quarter. This is because of their. 625 00:30:52,400 --> 00:30:55,480 Residual recurring revenue, their subscription service makes 626 00:30:55,480 --> 00:30:57,640 up the majority of that. So I don't know how long this 627 00:30:57,640 --> 00:31:00,720 will take for Crowdstrike to recover fully, but I do think it 628 00:31:00,720 --> 00:31:03,200 will take a bit longer than investors are expecting. 629 00:31:03,400 --> 00:31:07,040 Now, on a side point, in this lawsuit, Delta also named 630 00:31:07,120 --> 00:31:09,920 Microsoft. They included Microsoft and part 631 00:31:09,920 --> 00:31:13,320 of this lawsuit saying they're at fault because it was 632 00:31:13,320 --> 00:31:17,280 Microsoft devices that went down, it wasn't Apple devices. 633 00:31:17,400 --> 00:31:19,680 We can look at a simple illustration of what Crowdstrike 634 00:31:19,680 --> 00:31:21,920 did here and the critical errors they made. 635 00:31:22,400 --> 00:31:25,800 First of all, to run Crowdstrike and to run this type of security 636 00:31:25,800 --> 00:31:29,800 software on each device, you need to have core access to the 637 00:31:29,800 --> 00:31:32,520 device. Crowdstrike requires that, so 638 00:31:32,520 --> 00:31:36,240 you need the core kernel access, which means you have the deepest 639 00:31:36,240 --> 00:31:40,000 root access to the device that even the operating system of the 640 00:31:40,000 --> 00:31:42,640 device has. The operating system can't do 641 00:31:42,720 --> 00:31:44,880 anything to protect you at that point. 642 00:31:45,240 --> 00:31:49,200 Crowdstrike has complete control over your device. 643 00:31:49,280 --> 00:31:52,600 They can do whatever they want, and by installing their software 644 00:31:52,680 --> 00:31:55,800 on your device and giving them those incredibly deep 645 00:31:55,800 --> 00:31:59,080 permissions, you're allowing them to have that control. 646 00:31:59,520 --> 00:32:01,680 Now, Microsoft warns against this. 647 00:32:02,000 --> 00:32:05,000 Microsoft says that you should be really careful about who you 648 00:32:05,000 --> 00:32:07,440 give that level of control over your device. 649 00:32:07,760 --> 00:32:10,520 But Microsoft still allows you to do this because after all, 650 00:32:10,800 --> 00:32:12,760 it's your decision and it's your device. 651 00:32:13,320 --> 00:32:16,760 So companies that installed Crowdstrike onto their devices 652 00:32:17,040 --> 00:32:21,040 willingly and knowingly gave Crowdstrike this route access. 653 00:32:21,600 --> 00:32:24,720 Now Crowdstrike, with that access, decided to push the 654 00:32:24,720 --> 00:32:28,640 update out like this. If the update is in blue, this 655 00:32:28,640 --> 00:32:31,880 is what Crowdstrike did. And one day at the same time, 656 00:32:32,120 --> 00:32:35,440 they pushed out the update to all of their customer base. 657 00:32:35,680 --> 00:32:37,240 Now, there's lots of rationalizations and 658 00:32:37,240 --> 00:32:39,480 justifications of why Crowdstrike would want to push 659 00:32:39,480 --> 00:32:42,280 out this update to all their customers at once. 660 00:32:42,840 --> 00:32:45,080 They wanted to be quick. They wanted to have routine 661 00:32:45,080 --> 00:32:47,440 updates every single week for security reasons. 662 00:32:47,680 --> 00:32:50,400 They want to be very fast to get ahead of the adversary. 663 00:32:50,480 --> 00:32:53,000 But at the same time, every developer knows you shouldn't 664 00:32:53,000 --> 00:32:56,560 push out an update to all of your customer base at once, 665 00:32:56,840 --> 00:32:58,640 especially without thorough testing. 666 00:32:59,120 --> 00:33:02,320 The way that Crowd Strike should be dealing with these updates is 667 00:33:02,320 --> 00:33:07,040 pushing out the update first to 5% of their customer base, the 668 00:33:07,040 --> 00:33:10,320 least critical 5%. They should push it out to 669 00:33:10,320 --> 00:33:13,000 customers that aren't running businesses that are crucial to 670 00:33:13,000 --> 00:33:16,600 travel and infrastructure. Then once that goes well and 671 00:33:16,600 --> 00:33:19,800 these customers don't report any problems, they should push out 672 00:33:19,800 --> 00:33:24,560 to another. 10% and then the next 10% and then the next 10%. 673 00:33:24,760 --> 00:33:27,000 This is common developer knowledge to have staggered 674 00:33:27,000 --> 00:33:29,800 updates, especially for things that have root access to your 675 00:33:29,800 --> 00:33:32,040 computer. If Crowd Strike would have done 676 00:33:32,040 --> 00:33:35,920 this method, their update only would have affected 5% of their 677 00:33:35,920 --> 00:33:38,760 customer base and the least critical portion of their 678 00:33:38,760 --> 00:33:41,000 customer base. And doing this method would 679 00:33:41,000 --> 00:33:45,400 allow Crowdstrike to push their update out last to hospitals and 680 00:33:45,400 --> 00:33:48,720 airports and important infrastructure, making sure 681 00:33:48,720 --> 00:33:51,960 everything is working perfectly by the time those companies 682 00:33:51,960 --> 00:33:54,480 receive the update. Crowdstrike is now instituting a 683 00:33:54,480 --> 00:33:57,960 policy where every update they push out is going to be pushed 684 00:33:58,000 --> 00:34:00,720 first to a small portion of their customer base and then an 685 00:34:00,720 --> 00:34:03,960 increasingly bigger portion of their customer base over time. 686 00:34:04,240 --> 00:34:07,280 Now, to be clear, again, this is 100% Crowdstrike's fault. 687 00:34:07,520 --> 00:34:10,360 It's their fault that they required core access to run 688 00:34:10,360 --> 00:34:12,679 their software. It's their fault also that they 689 00:34:12,679 --> 00:34:15,600 pushed out an update to all of their customers at once and 690 00:34:15,600 --> 00:34:17,840 didn't follow smarter update procedures. 691 00:34:18,360 --> 00:34:21,480 So this is Crowdstrike's fault. And the reason I believe Delta 692 00:34:21,480 --> 00:34:25,040 is including Microsoft is because Microsoft has a lot of 693 00:34:25,040 --> 00:34:26,719 money. I think that's the primary 694 00:34:26,719 --> 00:34:29,520 driver behind this. This company's profitable and it 695 00:34:29,520 --> 00:34:32,440 does have cash to be able to pay that, but that's still an 696 00:34:32,440 --> 00:34:34,920 enormous amount of money for this company. 697 00:34:35,400 --> 00:34:37,800 And if more and more companies sue Crowdstrike, it'll become 698 00:34:37,800 --> 00:34:40,320 more and more difficult to pay those companies off. 699 00:34:40,800 --> 00:34:44,800 Whereas with Microsoft a accompany this large $500 700 00:34:44,800 --> 00:34:46,920 million is like a little speeding ticket. 701 00:34:47,159 --> 00:34:49,600 It's nothing for the pocketbooks of Microsoft. 702 00:34:49,600 --> 00:34:52,880 So I believe the primary reason why these lawyers want to 703 00:34:52,880 --> 00:34:56,080 include Microsoft, even though they're not at fault, is in a 704 00:34:56,080 --> 00:34:59,480 hope that Microsoft will be dragged in to paying a portion 705 00:34:59,480 --> 00:35:02,880 of this, to settling the lawsuit and dishing out some money to 706 00:35:02,880 --> 00:35:05,040 put this behind them. And I think there is a chance 707 00:35:05,040 --> 00:35:07,640 that the lawyers get what they want, that Microsoft is forced 708 00:35:07,640 --> 00:35:10,280 to pay a portion of this even though they're not at fault. 709 00:35:10,320 --> 00:35:13,560 Now finally we get to news that one of my core holdings, Netflix 710 00:35:13,560 --> 00:35:16,760 in my story fund, has found itself in a bit of controversy 711 00:35:16,760 --> 00:35:19,200 once again. This time it was caused by the 712 00:35:19,480 --> 00:35:23,480 Co founder and previous CEO of the company, Reed Hastings. 713 00:35:23,960 --> 00:35:27,400 Now Reed Hastings was the Co founder, he was the CEO, but 714 00:35:27,400 --> 00:35:31,040 he's no longer anymore the CEO. In fact, he took a little bit of 715 00:35:31,040 --> 00:35:33,000 a backseat to the chairman position. 716 00:35:33,400 --> 00:35:36,040 So he's kind of like Jeff Bezos with Amazon. 717 00:35:36,560 --> 00:35:38,920 He will poke his head into the office once in a while to see 718 00:35:38,920 --> 00:35:41,360 how things are running. But he's no longer in charge of 719 00:35:41,360 --> 00:35:43,400 the company. He's not running Netflix right 720 00:35:43,400 --> 00:35:46,000 now. Netflix has two really good Co 721 00:35:46,000 --> 00:35:49,040 CEOs that run the company. But regardless, Reed Hastings 722 00:35:49,160 --> 00:35:53,400 donated $7,000,000 to the Kamala Harris campaign, sparking 723 00:35:53,400 --> 00:35:56,680 outrage online by conservatives and people upset that he's 724 00:35:56,680 --> 00:35:59,840 supporting her campaign money with money that he made from 725 00:35:59,840 --> 00:36:02,800 Netflix. Now this started off small and I 726 00:36:02,800 --> 00:36:06,240 saw it spread online to be a much bigger thing. 727 00:36:06,480 --> 00:36:09,280 Major YouTube channels like the Quartering made video after 728 00:36:09,280 --> 00:36:13,080 video urging his massive follower account to cancel 729 00:36:13,080 --> 00:36:15,760 Netflix. Hashtag cancel Netflix. 730 00:36:16,040 --> 00:36:18,760 Thousands of people posted screenshots of them cancelling 731 00:36:18,760 --> 00:36:21,960 their Netflix accounts in protest of Reed Hastings 732 00:36:22,080 --> 00:36:24,080 donations. Now I realize I'm a shareholder 733 00:36:24,080 --> 00:36:25,920 of Netflix here, so I come at this from a different 734 00:36:25,920 --> 00:36:27,680 perspective. The first thing I want to 735 00:36:27,680 --> 00:36:30,680 mention. Is I think boycotts are fine and 736 00:36:30,680 --> 00:36:33,400 I think supporting which businesses you want to support 737 00:36:33,400 --> 00:36:35,800 are completely fine. If you don't like what a 738 00:36:35,800 --> 00:36:38,680 company's doing and you don't like the stances it has, you 739 00:36:38,680 --> 00:36:41,560 don't like the message they're sharing, then I think you should 740 00:36:41,560 --> 00:36:43,520 boycott a company. I think you should stand for the 741 00:36:43,520 --> 00:36:45,400 principles that you want to stand for. 742 00:36:45,800 --> 00:36:48,400 And in this case, if you're upset that the Co founder 743 00:36:48,600 --> 00:36:52,760 donated $7,000,000 to Kamala Harris, then I think it's fine 744 00:36:52,760 --> 00:36:56,160 to want to protest that and want to show your disapproval of it. 745 00:36:56,400 --> 00:36:59,400 I support all of that, but at the same time, I think it's 746 00:36:59,400 --> 00:37:01,480 important to make a certain distinction here. 747 00:37:02,040 --> 00:37:07,640 Netflix is being blamed for the private donation of the previous 748 00:37:07,720 --> 00:37:10,160 CEO of the company, someone who started it. 749 00:37:10,520 --> 00:37:13,320 But now he's on his own, donating his own money. 750 00:37:13,880 --> 00:37:16,400 And I wonder what Netflix is supposed to do in this 751 00:37:16,400 --> 00:37:19,640 situation. Netflix did not donate this 752 00:37:19,640 --> 00:37:23,080 $7,000,000 to Kamala Harris. They haven't donated any money 753 00:37:23,080 --> 00:37:26,740 to any candidate and Netflix can't control what the Co 754 00:37:26,740 --> 00:37:29,520 founder does with his own personal pocketbook. 755 00:37:30,000 --> 00:37:32,000 What are people expecting Netflix to do? 756 00:37:32,320 --> 00:37:36,480 Pay an employee money and then dictate how that employee spends 757 00:37:36,480 --> 00:37:38,240 the money that they just paid them? 758 00:37:38,760 --> 00:37:42,040 Is Netflix supposed to write into their paycheck a contract 759 00:37:42,040 --> 00:37:44,440 saying here's how you can spend the money? 760 00:37:44,680 --> 00:37:47,440 You can't donate to political candidates with the private 761 00:37:47,440 --> 00:37:50,000 money you earned. I don't think that's possible. 762 00:37:50,000 --> 00:37:51,560 I don't even think that's legal to do. 763 00:37:51,880 --> 00:37:56,440 Netflix has zero control over how its employees spend their 764 00:37:56,440 --> 00:37:59,040 money after they've earned their paycheck. 765 00:37:59,200 --> 00:38:01,880 Any employee, once they're paid money, can do what they want 766 00:38:01,880 --> 00:38:03,560 with it. And that's exactly what Reed 767 00:38:03,560 --> 00:38:06,440 Hastings is doing. He started Netflix, he ran the 768 00:38:06,440 --> 00:38:09,360 company, he made a bunch of money, and now he's stepping 769 00:38:09,360 --> 00:38:13,080 back from it and using the money privately how he wants. 770 00:38:13,320 --> 00:38:16,760 And Netflix as a corporation can't say anything about it. 771 00:38:17,000 --> 00:38:20,960 They can't do anything about it. Canceling Netflix doesn't send 772 00:38:20,960 --> 00:38:24,680 any take away message because Netflix is not the one giving 773 00:38:24,680 --> 00:38:28,440 Kamala Harris $7,000,000. So although I support your right 774 00:38:28,440 --> 00:38:31,400 to protest how you want to and support which company you want 775 00:38:31,400 --> 00:38:34,600 to, just keep in mind if you're protesting Netflix over the 776 00:38:34,600 --> 00:38:38,320 donations that Reed Hasting is doing privately, it's not going 777 00:38:38,320 --> 00:38:42,040 to do anything with Netflix. They can't change anything 778 00:38:42,040 --> 00:38:44,680 they're doing. They can't dictate and control 779 00:38:44,760 --> 00:38:48,240 what someone does with their own pocketbook after they've paid 780 00:38:48,240 --> 00:38:50,800 them money. So there's no take away here for 781 00:38:50,800 --> 00:38:52,480 Netflix. There's no lesson they can 782 00:38:52,480 --> 00:38:53,960 learn. There's nothing they can do 783 00:38:53,960 --> 00:38:55,680 differently than they're doing right now. 784 00:38:55,720 --> 00:38:57,760 The other thing I'd like to mention from an investment 785 00:38:57,760 --> 00:39:01,560 standpoint is this is likely to have minimal to no impact on 786 00:39:01,560 --> 00:39:03,600 Netflix. We can take the most comparable 787 00:39:03,600 --> 00:39:06,160 boycott that happened way back in 2020. 788 00:39:06,440 --> 00:39:09,840 It was over the film Cuties. This is one of the many films 789 00:39:09,840 --> 00:39:12,320 that Netflix brought on as licensed content. 790 00:39:12,480 --> 00:39:14,880 Now, I never watched the film. It doesn't interest me at all, 791 00:39:14,880 --> 00:39:17,000 but I heard it had questionable subject matter. 792 00:39:17,240 --> 00:39:21,000 A lot of people were upset that they licensed this content and 793 00:39:21,000 --> 00:39:24,720 accordingly they boycotted. They protest, which again is 794 00:39:24,720 --> 00:39:27,320 your right to do, and I support people's right to do that. 795 00:39:27,400 --> 00:39:30,480 But if we look at the impact that Cuties had on Netflix in 796 00:39:30,480 --> 00:39:33,840 the following months, it spiked their churn rate almost double 797 00:39:33,920 --> 00:39:38,000 from 2% to 3.5%. That means that a couple million 798 00:39:38,000 --> 00:39:41,400 people cancelled their account. This is the largest spike in 799 00:39:41,400 --> 00:39:44,000 churn that Netflix has experienced in years. 800 00:39:44,360 --> 00:39:47,800 Typically it's around 2%, and again, it's spiked almost double 801 00:39:47,800 --> 00:39:51,360 in just a couple of months. Even after a price increase, the 802 00:39:51,360 --> 00:39:54,600 churn rate doesn't go as high as it did with Cuties. 803 00:39:54,760 --> 00:39:56,760 So this is a very effective boycott. 804 00:39:56,800 --> 00:39:58,840 Millions of people cancelled Netflix. 805 00:39:59,240 --> 00:40:02,640 This hit them about as hard as the public could hit them. 806 00:40:03,200 --> 00:40:05,320 But what's happened since that boycott? 807 00:40:05,440 --> 00:40:09,600 When that last boycott happened, they currently had 203,000,000 808 00:40:09,600 --> 00:40:13,760 subscribers. Today they have 277 million. 809 00:40:14,280 --> 00:40:19,000 So Netflix has gained a total of 73,000,000 subscribers since the 810 00:40:19,000 --> 00:40:21,440 effective and impactful Cuties boycott. 811 00:40:21,440 --> 00:40:23,760 So again, I think it's important to support the companies you 812 00:40:23,760 --> 00:40:26,000 want to support and stand up for what you believe in. 813 00:40:26,360 --> 00:40:29,480 But from an investment perspective, I believe that this 814 00:40:29,480 --> 00:40:33,680 boycott will have very minimal, if not no impact on the long 815 00:40:33,680 --> 00:40:37,400 term of Netflix, especially because I believe this boycott 816 00:40:37,400 --> 00:40:41,280 in particular is less warranted than the Cuties boycott. 817 00:40:41,560 --> 00:40:45,280 There is real reason for people to boycott the movie Cuties, but 818 00:40:45,280 --> 00:40:49,560 with cancel Netflix because an individual donated their own 819 00:40:49,560 --> 00:40:52,640 individual money, that makes far less sense in my mind. 820 00:40:52,680 --> 00:40:55,120 We'll see how things develop, but as of right now, I believe 821 00:40:55,120 --> 00:40:57,360 this will have minimal impact and I'm still holding my 822 00:40:57,360 --> 00:40:58,720 Netflix. If you want to see more 823 00:40:58,720 --> 00:41:01,960 exclusive episodes and get access to qualtrum.com, you can 824 00:41:01,960 --> 00:41:04,920 do so by trying out the Patreon. It comes with a free trial. 825 00:41:05,240 --> 00:41:06,880 That's all for now, see you in the next one.