1 00:00:00,100 --> 00:00:03,100 This is a hard business content is not one. 2 00:00:03,100 --> 00:00:05,700 Could you spend more content has to be good. 3 00:00:06,200 --> 00:00:09,500 Netflix had a huge lead over everyone else, but eventually 4 00:00:09,500 --> 00:00:12,400 the media industry realized that they needed to compete and they 5 00:00:12,400 --> 00:00:15,300 have advantages, like they have Brands, they have sitcom 6 00:00:15,300 --> 00:00:19,400 libraries, they have ad sales. So we look at the model and this 7 00:00:19,400 --> 00:00:23,300 is the first time I can ever say is, you know, our confidence in 8 00:00:23,300 --> 00:00:26,600 the forward model is so low on April 19th, the leading 9 00:00:26,600 --> 00:00:29,800 streaming service Netflix reported their earnings and to 10 00:00:30,000 --> 00:00:33,200 The astonishment of a lot of people including myself the 11 00:00:33,200 --> 00:00:36,400 company reported that they lost 200,000. 12 00:00:36,400 --> 00:00:40,300 Net subscribers at quarter and they forecasted an additional 13 00:00:40,300 --> 00:00:42,800 loss of 2 million subscribers next quarter. 14 00:00:42,900 --> 00:00:46,500 Now, after this, Netflix news of the company, basically crumbling 15 00:00:46,500 --> 00:00:48,700 and the stock price going down 50%. 16 00:00:48,700 --> 00:00:52,900 Plus there's been endless analysis on what Netflix needs 17 00:00:52,900 --> 00:00:55,800 to do, what they need to change, how they need to compete with 18 00:00:55,800 --> 00:00:59,400 HBO Max and how they need to compete with Hulu and so on. 19 00:00:59,400 --> 00:01:01,900 And so, Earth. Lots of people doing specific 20 00:01:01,900 --> 00:01:05,099 analysis of how Netflix needs to change their business model. 21 00:01:05,099 --> 00:01:07,000 It's gotten to the point where it's almost like an 22 00:01:07,000 --> 00:01:10,700 intervention, where all the online personalities have have 23 00:01:10,700 --> 00:01:14,500 come together and said, Netflix, you gotta change in my expert 24 00:01:14,500 --> 00:01:16,000 opinion and it pains me to do this. 25 00:01:16,000 --> 00:01:19,800 I'm going to have to diagnose Netflix with key content 26 00:01:19,800 --> 00:01:22,800 disease, but it doesn't mean it's terminal yet. 27 00:01:23,000 --> 00:01:26,300 Critical here, for example, diagnosis Netflix with shizzy 28 00:01:26,300 --> 00:01:30,100 content disease, he does believe that they have a chance to to 29 00:01:30,100 --> 00:01:32,600 make it out of this though. Now critical here in the online 30 00:01:32,600 --> 00:01:35,900 community might be right, maybe Netflix is content isn't up to 31 00:01:35,900 --> 00:01:39,200 Snuff and the stock price. Certainly reflects that it's 32 00:01:39,200 --> 00:01:43,600 down a staggering 72 percent from its November heís. 33 00:01:43,600 --> 00:01:47,600 Just back in November, this stock traded above six hundred 34 00:01:47,600 --> 00:01:49,800 and eighty dollars a share. Now, don't get me wrong, there's 35 00:01:49,800 --> 00:01:52,600 a lot of reasons to uniquely criticize Netflix and their 36 00:01:52,600 --> 00:01:54,700 business model. The companies clearly been 37 00:01:54,700 --> 00:01:57,600 lacking in their Direction, but there's one more unique thing 38 00:01:57,600 --> 00:01:59,800 about Netflix. That's very specific to the 39 00:02:00,000 --> 00:02:03,100 Company. It is the first major company to 40 00:02:03,100 --> 00:02:06,900 report ahead of the earning season they reported on April 41 00:02:06,900 --> 00:02:09,800 19th. So this is before almost every 42 00:02:09,800 --> 00:02:12,400 other company reports their earnings and that means that 43 00:02:12,400 --> 00:02:16,300 Netflix is unique and being the first one to report and often 44 00:02:16,300 --> 00:02:18,800 times, you really don't know what to expect because there's 45 00:02:18,800 --> 00:02:22,600 no other company to gauge your earnings reports, based off of 46 00:02:22,800 --> 00:02:25,400 Netflix is just going in, without any context. 47 00:02:25,500 --> 00:02:27,700 Now that we've had a couple more companies report, their 48 00:02:27,700 --> 00:02:29,800 earnings, I've noticed a common theme. 49 00:02:29,900 --> 00:02:32,800 Name something that I think is a bigger concern than just 50 00:02:32,800 --> 00:02:34,400 Netflix. I've noticed it. 51 00:02:34,400 --> 00:02:37,500 We're in a Content bubble. That is starting to explode. 52 00:02:37,600 --> 00:02:39,300 That's right. I believe are in a Content 53 00:02:39,300 --> 00:02:41,600 bubble and that bubble right now is being pop. 54 00:02:41,600 --> 00:02:43,600 Now, hear me out here. Let's consider the evidence. 55 00:02:43,800 --> 00:02:46,800 One of my biggest Holdings is Microsoft and they just reported 56 00:02:46,800 --> 00:02:48,500 earnings. Microsoft's earnings were 57 00:02:48,500 --> 00:02:51,400 frankly, amazing. As usual as you would expect 58 00:02:51,400 --> 00:02:54,700 with this company, they reported earnings that beat both in the 59 00:02:54,700 --> 00:02:57,500 top line revenue, the bottom line earnings, and they're 60 00:02:57,500 --> 00:02:59,600 growing their Microsoft cloud business. 61 00:02:59,600 --> 00:03:02,300 Like, Crazy. Do you realize that Microsoft's 62 00:03:02,300 --> 00:03:05,600 Cloud business? Has a revenue run rate of ninety 63 00:03:05,600 --> 00:03:09,600 three point six billion dollars per year, just in their Cloud 64 00:03:09,600 --> 00:03:13,200 business, they're almost revenue and over 100 billion per year 65 00:03:13,400 --> 00:03:15,200 and to give that some perspective. 66 00:03:15,200 --> 00:03:18,500 This ninety three point six billion is more in Revenue than 67 00:03:18,500 --> 00:03:23,100 Microsoft did in its entire business in 2016, just five 68 00:03:23,100 --> 00:03:25,600 years ago. So, Microsoft's Cloud business 69 00:03:25,600 --> 00:03:28,700 has grown to be this Juggernaut and the company is doing 70 00:03:28,700 --> 00:03:31,800 fantastic. Now, this was the headline news. 71 00:03:31,800 --> 00:03:34,700 This is what everyone looked at is Microsoft's office, suite 72 00:03:34,700 --> 00:03:36,700 doing well and their Cloud business doing well. 73 00:03:36,800 --> 00:03:39,400 But after listening to the earnings call of Microsoft, 74 00:03:39,400 --> 00:03:42,600 something caught my attention, Microsoft gives their forecasts 75 00:03:42,600 --> 00:03:45,200 for next quarter. They say, in Windows commercial 76 00:03:45,200 --> 00:03:48,300 products and cloud services, customer demand for Microsoft 77 00:03:48,300 --> 00:03:52,400 365 and our Advanced Security Solutions should drive growth in 78 00:03:52,400 --> 00:03:55,400 the low double digits that's consistent with their previous 79 00:03:55,400 --> 00:03:57,700 growth. They say in surface, Revenue 80 00:03:57,700 --> 00:04:01,000 growth in the low double digits. That's Stick with their history. 81 00:04:01,200 --> 00:04:04,900 They say in Search and news advertising, we expect Revenue 82 00:04:04,900 --> 00:04:07,200 growth of approximately 20 percent. 83 00:04:07,300 --> 00:04:10,300 That's pretty decent growth, 20% growth, but here's where 84 00:04:10,300 --> 00:04:14,300 Microsoft gets to the content portion of their business. 85 00:04:14,600 --> 00:04:18,000 The gaming portion, remember that, Microsoft is a massive 86 00:04:18,000 --> 00:04:19,700 gaming company. In fact, they're literally going 87 00:04:19,700 --> 00:04:22,200 to be the second biggest gaming company in the world they say 88 00:04:22,200 --> 00:04:25,700 and in gaming we expect Revenue to decline. 89 00:04:26,000 --> 00:04:29,500 It's going to decline in the middle to high single digit. 90 00:04:29,900 --> 00:04:34,400 Even by low engagement H year over year as well as constrained 91 00:04:34,400 --> 00:04:37,700 console Supply. So they blamed some of this on 92 00:04:37,700 --> 00:04:40,400 the fact that they're having problems making enough consoles, 93 00:04:40,700 --> 00:04:43,300 but they also highlight something very important there, 94 00:04:43,500 --> 00:04:46,000 lower engagement, that's the technical way of saying that 95 00:04:46,000 --> 00:04:47,400 less people are playing video games. 96 00:04:47,400 --> 00:04:50,600 Now, they say, we expect Xbox content and service Revenue to 97 00:04:50,600 --> 00:04:54,700 decline to mid-single digits. Now, it's going to be growing at 98 00:04:54,700 --> 00:04:58,100 mid-single digits. So the growth in the Xbox and 99 00:04:58,100 --> 00:05:02,000 content category of Has basically dried up for the time 100 00:05:02,000 --> 00:05:05,200 being low single digits is very slow growth. 101 00:05:05,200 --> 00:05:08,200 So so far we know that Netflix is losing subscribers and 102 00:05:08,200 --> 00:05:10,800 they're forecasting 2 million loss in subscribers next 103 00:05:10,800 --> 00:05:12,900 quarter. But now we have Microsoft saying 104 00:05:12,900 --> 00:05:16,200 that they're going to have lower engagement than anticipated and 105 00:05:16,200 --> 00:05:19,400 the content and service revenue of the Xbox will decline to 106 00:05:19,400 --> 00:05:21,600 mid-single digits. So this is where I'm starting to 107 00:05:21,600 --> 00:05:23,900 think that we might have a general issue with a Content 108 00:05:23,900 --> 00:05:26,200 bubble. Maybe these issues are broader 109 00:05:26,200 --> 00:05:28,600 than just Netflix alone. Now moving on, we can look at 110 00:05:28,600 --> 00:05:31,500 the next piece of evidence. Google reported earnings and 111 00:05:31,500 --> 00:05:33,300 their earnings were actually a Miss. 112 00:05:33,300 --> 00:05:35,400 They missed on the top line and the bottom line. 113 00:05:35,500 --> 00:05:38,100 Now overall this wasn't a big Miss and don't get me wrong. 114 00:05:38,100 --> 00:05:40,600 Google's doing great, this company is in great shape right 115 00:05:40,600 --> 00:05:44,000 now and they just announced 70 billion dollars in share 116 00:05:44,000 --> 00:05:45,800 BuyBacks. So they're going to be pouring 117 00:05:46,000 --> 00:05:49,500 free cash flow into BuyBacks and I see this company as a very 118 00:05:49,500 --> 00:05:51,800 strong by right now. Now aside from all that, there 119 00:05:51,800 --> 00:05:54,400 was one interesting part about Google's earnings report. 120 00:05:54,700 --> 00:05:57,600 The weak part of the company. In fact, the weakest part of the 121 00:05:57,600 --> 00:05:59,900 company was YouTube. That's right. 122 00:06:00,000 --> 00:06:03,300 YouTube had the slowest Revenue growth, YouTube missed, its 123 00:06:03,300 --> 00:06:05,900 numbers by the biggest margin, the earnings of Google was 124 00:06:05,900 --> 00:06:08,900 barely a miss, and this is mostly caused by investment, not 125 00:06:08,900 --> 00:06:11,000 by operating income. So, I wouldn't read into this 126 00:06:11,000 --> 00:06:13,800 EPS missed too much. The revenue was barely a Miss. 127 00:06:13,800 --> 00:06:17,200 Sixty eight point zero, 1 billion versus sixty eight 128 00:06:17,200 --> 00:06:18,700 point. One one, that's a hundred 129 00:06:18,700 --> 00:06:21,200 million dollars out of a 68 billion dollar Revenue. 130 00:06:21,200 --> 00:06:23,000 The cloud service is actually beat. 131 00:06:23,000 --> 00:06:27,700 Google's cloud is growing like crazy. 5.82 billion versus 5.76. 132 00:06:27,700 --> 00:06:30,700 That's good news for cloud, but then we get to The YouTube 133 00:06:30,700 --> 00:06:33,600 portion of Google. Again, this is the content 134 00:06:33,600 --> 00:06:36,900 portion of the company. Six point eight, seven billion 135 00:06:37,200 --> 00:06:41,300 versus 7.5. 1 billion, the almost missed by a billion 136 00:06:41,300 --> 00:06:43,600 dollars, that's a pretty substantial Miss. 137 00:06:43,600 --> 00:06:45,800 Not to give this some perspective, YouTube is still 138 00:06:45,800 --> 00:06:49,700 growing, but the growth rate was much slower than anticipated in 139 00:06:49,700 --> 00:06:52,300 q1 of 2022. This is just the most recent 140 00:06:52,300 --> 00:06:56,800 quarter, it grew by 14%, now the quarter before that YouTube grew 141 00:06:56,800 --> 00:07:01,500 by 25% the quarter before that it grew by 43% the quarter 142 00:07:01,500 --> 00:07:08,000 before that it grew by 83%. So we go from 83 to 43 225 to. 143 00:07:08,000 --> 00:07:10,900 Now 14 the deceleration and growth of YouTube has been 144 00:07:10,900 --> 00:07:13,300 pretty substantial. So after reviewing all three of 145 00:07:13,300 --> 00:07:15,900 these earnings reports, I'm starting to see a common theme 146 00:07:15,900 --> 00:07:17,800 Here. The part of the business that 147 00:07:17,800 --> 00:07:20,200 struggling is content. That's the common theme. 148 00:07:20,400 --> 00:07:23,600 Now, unfortunately, for Netflix, their entire business is 149 00:07:23,600 --> 00:07:26,900 content, so their entire business is struggling for 150 00:07:26,900 --> 00:07:28,700 Microsoft. Only a small part of their 151 00:07:28,700 --> 00:07:31,600 companies content. Just Xbox in entertainment part. 152 00:07:31,600 --> 00:07:33,900 So even though that part of the company gave really weak 153 00:07:33,900 --> 00:07:37,200 guidance and it's clearly slowing down overall Microsoft 154 00:07:37,200 --> 00:07:39,800 is doing just fine because that plays a small role and again 155 00:07:39,800 --> 00:07:42,300 with Google overall the company's growing at a Brisk 156 00:07:42,300 --> 00:07:45,800 Pace, 20% year-over-year clouds growing like crazy. 157 00:07:46,000 --> 00:07:49,500 The big part of the company that was a weakness was the content 158 00:07:49,500 --> 00:07:51,900 part of the company. Now after seeing the content 159 00:07:51,900 --> 00:07:55,100 part of these companies do poorly, I was very interested in 160 00:07:55,100 --> 00:07:58,500 how Warner Bros Discovery did. This is a new big content 161 00:07:58,500 --> 00:07:59,900 Juggernaut that's going to be competing. 162 00:08:00,000 --> 00:08:02,900 Eating with Netflix and Hulu and they just reported earnings 163 00:08:02,900 --> 00:08:05,800 yesterday after hours. Well, wouldn't you know, the 164 00:08:05,800 --> 00:08:10,100 company's down 7.5% today and that's with the market currently 165 00:08:10,100 --> 00:08:13,100 in the green across the board. So, Warner Brothers Discovery is 166 00:08:13,100 --> 00:08:16,100 following that trend of content not doing too well. 167 00:08:16,100 --> 00:08:18,700 So I listened to Warner Brother discoveries earnings call. 168 00:08:18,700 --> 00:08:21,800 And I was looking for anything in this earnings call where they 169 00:08:21,800 --> 00:08:25,500 talk about churn or engagement or issues, keeping people 170 00:08:25,500 --> 00:08:28,400 engaged to their content. That's what I was trying to find 171 00:08:28,400 --> 00:08:31,000 out and here's a clip from that. All from Gunner, one of the 172 00:08:31,000 --> 00:08:34,500 executives, talking about the struggles, they're facing with 173 00:08:34,500 --> 00:08:37,100 engagement and turn but we want to get it right. 174 00:08:37,200 --> 00:08:42,299 It's critical because, you know, you could have a record-breaking 175 00:08:42,299 --> 00:08:44,600 number of people watching Euphoria. 176 00:08:44,800 --> 00:08:47,400 But we want to make sure that when they finish Euphoria, if we 177 00:08:47,400 --> 00:08:51,300 have the goods, if we have, all this great content on that, we 178 00:08:51,300 --> 00:08:55,300 were ability, we have an ability to recommend to people, you just 179 00:08:55,300 --> 00:08:58,000 finished Euphoria. Here's the other eight shows 180 00:08:58,200 --> 00:09:01,500 that you would love whether it's Chip and Jo whether it's Oprah 181 00:09:01,500 --> 00:09:05,200 whether it's 90-day fiance, or whether, or whether it's mink 182 00:09:05,200 --> 00:09:12,300 store or another great HBO Max series, but we have some work to 183 00:09:12,300 --> 00:09:16,200 do on the platform itself that will be significant, but we also 184 00:09:16,200 --> 00:09:19,000 think that one of the big opportunities here is going to 185 00:09:19,008 --> 00:09:21,300 be churned reduction. He says that when you finish a 186 00:09:21,300 --> 00:09:24,400 show on HBO Max, they want to recommend all these great shows 187 00:09:24,400 --> 00:09:27,800 that are somewhat similar to the one, you just finish to keep you 188 00:09:27,800 --> 00:09:31,600 on the platform because obviously, Big opportunity a big 189 00:09:31,600 --> 00:09:33,800 issue. They're facing is churn meaning 190 00:09:33,800 --> 00:09:35,400 people. Leave the platform they 191 00:09:35,400 --> 00:09:37,700 unsubscribe. This is the same exact issue 192 00:09:37,700 --> 00:09:40,300 that Netflix is facing but Netflix is at a much bigger 193 00:09:40,300 --> 00:09:42,700 scale. Turn is a serious issue for any 194 00:09:42,700 --> 00:09:46,000 subscription company, especially competitive media companies. 195 00:09:46,200 --> 00:09:49,000 Any highlights, how turn has been much higher recently than 196 00:09:49,000 --> 00:09:52,000 they've ever seen before. There's meaningful churn on HBO 197 00:09:52,000 --> 00:09:55,900 Max much higher than the churn that's on, that, that we have 198 00:09:55,900 --> 00:09:58,900 seen. And so the ability for us to 199 00:09:58,900 --> 00:10:03,000 come together, Is part of one of the Theses here that managing 200 00:10:03,000 --> 00:10:04,900 churn, and we've seen this, because we've been added in 201 00:10:04,900 --> 00:10:07,800 Europe for eight years as you begin to manage churn in a 202 00:10:07,800 --> 00:10:15,500 meaningful way that provides a real real meaningful growth. 203 00:10:15,600 --> 00:10:18,800 Did you hear the key thing that he said they're the turn on HBO 204 00:10:18,800 --> 00:10:21,800 Max is much higher than the turn that we've seen before. 205 00:10:21,900 --> 00:10:25,500 Now, it's interesting that HBO is also having turn issues after 206 00:10:25,500 --> 00:10:28,500 all, HBO is supposed to be the highbrow entertainment with the 207 00:10:28,500 --> 00:10:31,800 high quality, they don't have All the garbage shows on the 208 00:10:31,800 --> 00:10:34,800 service like Netflix does remember, Netflix is doing 209 00:10:34,800 --> 00:10:36,600 poorly because of its bad content. 210 00:10:36,600 --> 00:10:39,700 Netflix has been funding, basically anything made by 211 00:10:39,700 --> 00:10:42,700 someone with a pulse and even that seems to be spotty. 212 00:10:42,700 --> 00:10:45,600 It feels like they're funding scripts written by being AI. 213 00:10:45,700 --> 00:10:48,600 Everybody sees the HBO and Netflix are different companies 214 00:10:48,600 --> 00:10:51,700 and they have different products HBL makes high quality stuff, 215 00:10:51,700 --> 00:10:54,200 and Netflix, and many cases makes low-quality stuff. 216 00:10:54,400 --> 00:10:57,600 But the thing that they seem to have in common is a common 217 00:10:57,600 --> 00:11:00,600 problem, and that is churn. So we can try I to get into the 218 00:11:00,600 --> 00:11:03,000 nitty-gritty and see what everyone of these individual 219 00:11:03,000 --> 00:11:05,800 companies are doing wrong, but I think people doing that are 220 00:11:05,800 --> 00:11:09,300 actually looking to nuanced into specific and they're not looking 221 00:11:09,300 --> 00:11:13,000 at the glaring problem abroad. It is a Content bubble problem. 222 00:11:13,000 --> 00:11:15,800 Netflix isn't struggling because it suddenly has low quality 223 00:11:15,800 --> 00:11:17,700 content, that was the issue, then. 224 00:11:17,700 --> 00:11:20,800 How do you explain HBO Max with their high quality content and 225 00:11:20,800 --> 00:11:23,800 even a higher level of churn? The Netflix, if this was simply 226 00:11:23,800 --> 00:11:26,800 a Content quality problem, then how do you explain Xbox having 227 00:11:26,800 --> 00:11:29,800 significant deceleration? This is a gaming platform. 228 00:11:30,000 --> 00:11:32,800 Games have literally never been better than they are today, is 229 00:11:32,800 --> 00:11:35,300 it because Xbox suddenly doesn't have a good offering? 230 00:11:35,500 --> 00:11:37,300 Well, I don't think so. I don't think it has anything to 231 00:11:37,308 --> 00:11:40,300 do with that because we also have Google having YouTube being 232 00:11:40,300 --> 00:11:41,700 the biggest part of their company. 233 00:11:41,700 --> 00:11:44,200 That mrs. And YouTube has never had a year 234 00:11:44,200 --> 00:11:47,200 where it's produced more or higher quality content than last 235 00:11:47,200 --> 00:11:48,500 year. So personally, I don't think 236 00:11:48,500 --> 00:11:51,600 this is an issue having to do with low quality content or high 237 00:11:51,600 --> 00:11:53,700 quality content. I don't think it has to do with 238 00:11:53,700 --> 00:11:56,800 the Xbox and particular verse 2, PlayStation, what exclusive 239 00:11:56,800 --> 00:11:58,500 games they have. I don't think this has anything 240 00:11:58,500 --> 00:12:00,600 specifically to do a tick. Talk either. 241 00:12:00,600 --> 00:12:04,300 I think, overall, we are in a Content bubble because of a 242 00:12:04,300 --> 00:12:07,700 significant lingering overhang from covid, Michael burry 243 00:12:07,700 --> 00:12:10,600 tweeted about this problem and how it plays a bigger role than 244 00:12:10,600 --> 00:12:13,500 what's going on specifically with these individual companies. 245 00:12:13,600 --> 00:12:15,400 He says, quote, this is the problem. 246 00:12:15,600 --> 00:12:19,500 The last 18 months, the government has given out 850 247 00:12:19,500 --> 00:12:22,500 billion dollars in direct stimulus, checks four hundred 248 00:12:22,500 --> 00:12:26,500 billion dollars in Cash out. Refinance has one plus trillion 249 00:12:26,500 --> 00:12:29,900 dollars and forgivable Loans 250 to 500. 250 00:12:29,900 --> 00:12:33,700 Two billion are fraudulent another four trillion dollars in 251 00:12:33,700 --> 00:12:37,200 indirect Etc. What recapitalize has the 252 00:12:37,200 --> 00:12:40,500 consumer now, higher wages, can't do that. 253 00:12:40,500 --> 00:12:42,400 I think dr. Burr is 100% accurate. 254 00:12:42,400 --> 00:12:46,000 With this tweet, people are given a free pass over the past 255 00:12:46,000 --> 00:12:48,400 18 months. They were given endless amounts 256 00:12:48,400 --> 00:12:50,300 of money. You look at these numbers in 257 00:12:50,300 --> 00:12:53,100 there in comprehensible. The government gave away 258 00:12:53,100 --> 00:12:56,300 trillions and trillions and trillions and trillions over the 259 00:12:56,300 --> 00:13:00,100 past 18 months. That's so much money to why's 260 00:13:00,100 --> 00:13:02,000 the consumer. That's a lot of money that makes 261 00:13:02,000 --> 00:13:05,500 it so people can stay home. Not worried about work, sit home 262 00:13:05,500 --> 00:13:09,900 and consume endless content through Xbox live through HBO. 263 00:13:09,900 --> 00:13:13,400 Max through Netflix, through YouTube, through every other 264 00:13:13,400 --> 00:13:16,600 source, every other podcast, every other Avenue and that 265 00:13:16,600 --> 00:13:20,400 endless capitalization of the consumer, enabling them to stay 266 00:13:20,400 --> 00:13:23,500 home and consume content endlessly, I think has led to a 267 00:13:23,500 --> 00:13:26,800 lot of booming numbers and booming growth that simply can't 268 00:13:26,800 --> 00:13:29,000 be sustained. So what's clear to me now is 269 00:13:29,000 --> 00:13:32,900 that we're still The effects. The overhang of the covid, 270 00:13:32,900 --> 00:13:36,100 lockdowns, the overhang of the mass of capitalization that 271 00:13:36,100 --> 00:13:38,700 happened to Consumers. We're still seeing those effects 272 00:13:38,700 --> 00:13:40,800 hit the companies and their earnings reports. 273 00:13:40,800 --> 00:13:45,000 And what I see right now is the content portion of that starting 274 00:13:45,000 --> 00:13:47,000 to diffuse. So now when I'm looking at the 275 00:13:47,000 --> 00:13:49,400 different companies that I'm investing in, I'm trying to 276 00:13:49,400 --> 00:13:51,800 determine which ones are going to continue to have that 277 00:13:51,800 --> 00:13:55,400 overhang effect, which ones are going to get damaged as we 278 00:13:55,400 --> 00:13:58,200 return back to app, Rico Vdara, when I look at Apple and 279 00:13:58,208 --> 00:14:01,300 Microsoft, it's true that both both of them have their hands in 280 00:14:01,300 --> 00:14:03,900 content. Apple has their Apple TV plus 281 00:14:03,900 --> 00:14:07,300 they have apple music. But in reality, that is a pretty 282 00:14:07,300 --> 00:14:10,400 small portion of their business. Apple has so many different 283 00:14:10,400 --> 00:14:13,200 businesses that they're growing. That I don't think this company 284 00:14:13,200 --> 00:14:16,500 is too exposed to content. Nothing to the extent of a 285 00:14:16,500 --> 00:14:19,600 Netflix or an HBO. We have Microsoft, but the big 286 00:14:19,600 --> 00:14:22,600 story with Microsoft is their cloud and their office tools, 287 00:14:22,800 --> 00:14:25,600 that is what's driving the major growth and the profitability of 288 00:14:25,600 --> 00:14:28,400 the company in consumer, I have one company that is heavily 289 00:14:28,400 --> 00:14:31,300 focused on content. Is of course Disney and wouldn't 290 00:14:31,300 --> 00:14:34,000 you know this is one of the companies that so far isn't 291 00:14:34,000 --> 00:14:36,500 doing well. I'm currently down around 5,000 292 00:14:36,500 --> 00:14:39,300 dollars on Disney, Disney has their earnings report, May 11th. 293 00:14:39,300 --> 00:14:42,300 So we have some time to wait for this one and I assume that their 294 00:14:42,300 --> 00:14:44,100 earnings report is actually going to be decent. 295 00:14:44,100 --> 00:14:46,800 I think they'll beat their EPS number because their Parks 296 00:14:46,800 --> 00:14:49,500 operation and I think they'll beat their revenue estimates 297 00:14:49,500 --> 00:14:52,100 because again their parks are completely packed. 298 00:14:52,100 --> 00:14:55,000 But the big story with Disney is there streaming services. 299 00:14:55,300 --> 00:14:57,600 And in my opinion, I think there's a strong chance that 300 00:14:57,600 --> 00:14:59,700 Disney will fall into some of the same issues. 301 00:14:59,900 --> 00:15:02,900 As these other companies I think they're going to deal with a 302 00:15:02,900 --> 00:15:06,100 heightened level of churn Disney has an advantage over 303 00:15:06,100 --> 00:15:08,400 established dreamers like HBO and Netflix. 304 00:15:08,600 --> 00:15:11,200 They have less subscribers as their total base. 305 00:15:11,300 --> 00:15:13,900 So the fact that they have less subscribers is their total based 306 00:15:13,900 --> 00:15:15,600 means that they have more room for growth. 307 00:15:15,600 --> 00:15:18,700 So Disney will probably continue to grow at a Brisk Pace right 308 00:15:18,700 --> 00:15:21,700 now but under the hood of Disney plus, if you're able to look at 309 00:15:21,700 --> 00:15:24,600 their subscriber growth and their churn numbers, I would 310 00:15:24,600 --> 00:15:27,400 make the strong assumption that they're facing a height level of 311 00:15:27,400 --> 00:15:29,600 churn like every other streaming company. 312 00:15:29,600 --> 00:15:32,100 So I'm Continue to hold Disney as of now because I think there 313 00:15:32,100 --> 00:15:34,800 are Diversified company and their Parks operation. 314 00:15:34,800 --> 00:15:36,800 I believe will put up very good numbers. 315 00:15:36,900 --> 00:15:39,800 But having said that, I think that this year and this upcoming 316 00:15:39,800 --> 00:15:42,500 season might be difficult for their subscriber growth and 317 00:15:42,500 --> 00:15:44,700 outside of Disney, I don't hold any other companies that I 318 00:15:44,708 --> 00:15:46,500 believe have their hand and content. 319 00:15:46,700 --> 00:15:49,000 The core category doesn't restaurants don't. 320 00:15:49,000 --> 00:15:50,900 Real estate doesn't, and financials don't. 321 00:15:51,000 --> 00:15:54,200 So my big exposure to the content category is through big 322 00:15:54,200 --> 00:15:56,600 Tech and Disney. So if you're investing right 323 00:15:56,600 --> 00:15:58,700 now, I think that there's something important to keep in 324 00:15:58,700 --> 00:16:01,200 mind the company. Annie's that have benefited from 325 00:16:01,200 --> 00:16:04,700 the 2020 lockdowns. And from massive capitalization 326 00:16:04,700 --> 00:16:08,500 of consumers are likely going to continue to get hurt over the 327 00:16:08,500 --> 00:16:11,800 next year, whether that's in content or different categories. 328 00:16:12,000 --> 00:16:16,000 I think the same theme will apply any company that benefited 329 00:16:16,000 --> 00:16:18,600 from the lockdowns. And from covid is likely going 330 00:16:18,600 --> 00:16:21,400 to see a precipitous deceleration and their growth. 331 00:16:21,400 --> 00:16:23,900 That's all for this episode. I hope you enjoyed other than 332 00:16:23,900 --> 00:16:25,000 that, I'll see you next time.