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Welcome back, everyone. 
We have a lot of news to get 

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into in this episode. 
We have an update on an episode.

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I did last week, I did one on 
stock-based compensation, and in

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particular with Google, Google 
has a growing problem with 

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stock-based, compensation, 
because they hire so many 

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employees. 
And they pay those employees so 

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much money and this has caused a
lot of issues. 

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That's costing investors a lot 
of money to pay all these 

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employees and even active 
managers, like Josh Homme has 

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stepped in and said, look Google
you need a fire, some of these 

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employees. 
You need to pay some of them 

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less because this is ridiculous 
and I want to know what they're 

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actually doing at the company. 
Well, we have a research paper 

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here, this new article that dug 
into it. 

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That actually answers that exact
question, and I think it's very 

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interesting. 
So we're gonna be going over it 

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in this episode. 
Now we have some other news were

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going to be getting to as well. 
AMC is firing people, Disney's 

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focusing on profits, I'll go 
over what I think this means for

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Netflix, and their positioning 
in the streaming market. 

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And then we have some rather 
disappointing news about one of 

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my largest Holdings, which is 
Apple, it appears that they're 

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bending the Need to the Chinese 
Communist Party, making it so 

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that protesters in China can no 
longer use the full air drop 

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feature, that they were reliant 
on to communicate. 

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And this is part of something 
where I think apple is running 

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into trouble. 
I think they're going down a 

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very dangerous road hair. 
We even have politicians like 

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the Santa's speaking out loudly 
against apple and it's awfully 

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reminiscent of what he did 
against Disney, which I thought 

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was a mistake for Disney to go 
into this political Arena. 

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So I'll be going over what I 
think's happening with Apple and

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I think this could be a big 
mistake for the company. 

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Now, obviously, we have a lot to
get into. 

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Let's go ahead and start off 
with a quick portfolio update. 

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This is the story fund. 
If you enjoy seeing this level 

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of transparency every single 
week and what I'm actually 

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investing in go ahead and follow
the channel, hit the thumbs up 

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button, you can support it that 
way. 

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Now I have to say this is one of
my two portfolios. 

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This one's a smaller one. 
I also have a much larger 

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dividend growth portfolio. 
That's doing actually really. 

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Well, it's kind of having the 
opposite performance of this one

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while. 
This one's going down that one 

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continues to go up So the tech 
companies in general just have 

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not done. 
Well, Amazon is down like 40 or 

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50 percent on the year Netflix 
is down, huge, even, alphabets 

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falling and Microsoft is 
falling. 

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All of these companies are 
falling and I'm looking at their

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fundamentals and it paints a 
different picture. 

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I see all of these companies 
growing generating more profits 

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and doing really well. 
The one company that I think is 

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possibly the most mismatched 
right now in terms of valuation.

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And it's actual fundamentals is 
Google and this is a Any that, I

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just recently purchased another 
two thousand dollars of. 

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So I actually just increase my 
steak of Google once again, 

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because I'm so bullish on this 
company and I think it's trading

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at such a cheap valuation. 
When I look at Google, we can 

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look at the, the PE ratio of the
company. 

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It's at an 18 forward P/E, that 
is cheap in and of itself, just 

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above the rest of the market. 
But you also have a company that

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has a hundred and sixteen 
billion dollars in cash. 

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If you netted out the cash and 
assume they use that for 

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BuyBacks that. 
It's treating more like a 16 PE.

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So this company is trading 
extremely cheap. 

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It is a very cheap stock right 
now and it's also basically a 

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monopoly, it's a monopolistic, 
highly profitable, very cheap 

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company but Google has one big 
issue that is facing, I think 

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one Challenge and that's getting
more attention. 

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That is the stock based 
compensation on cultural 

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insights, which this websites 
available to all Patron members.

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You can try it out for free, in 
the link in the description 

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below on quatrain sites. 
You can see See, not only the 

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free cash flow quarter by 
quarter when we can also see it 

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with the amount of stock-based 
compensation, the stock base 

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compass in purple. 
Now, stock-based Compensation, 

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is basically a different form of
paying an employee. 

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You pay them some in cash, and 
you pay them some in stock. 

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A lot of people argue that these
are very different and they 

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should be accounted for 
differently. 

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I don't think so. 
I think it's basically a payment

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in kind, if you pay someone 
fifty thousand dollars in cash 

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and fifty thousand dollars in 
stock. 

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That cost the investor the 
owners of the company. 

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One hundred thousand dollars 
worth of value. 

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Exactly the same whether you pay
someone ten thousand dollars in 

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stock or ten thousand dollars in
cash. 

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It is the same at the time of 
payment and what we see here is 

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even though Google is generating
a lot of growing free cash flow.

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This purple line, the 
stock-based compensation is 

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growing at a very fast pace. 
It now makes up basically one 

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third of their free cash flows. 
So about a third of the free 

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cash flows is deluded away from 
A from the shareholders that's 

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value being transferred away, 
from the shareholders to the 

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employees. 
And stock-based compensation is 

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paid to two different groups. 
Either, the executives or the 

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employees. 
In this case, it's mostly going 

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to the employees. 
Now, this issue of excessive 

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stock-based compensation has 
become such an issue for 

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companies like Google that is 
drawing the attention of 

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activist investors. 
Super investors that control a 

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lot of money. 
Chris home who has six billion 

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dollars invested in Google wrote
a letter saying. 

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Head count is too high employees
are being Paid too much. 

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He's instructing Sundar to cut 
down on this expense because 

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it's taking away from me. 
The investor who owns this 

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company. 
Now, as all of, that has been 

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unfolding, my question the 
entire time has been. 

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Why are all these employees 
being hired? 

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What is Google doing with an 
additional 30,000 employees in a

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single year and this article 
answers those questions where 

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Google has grown buckle up, 
Google has increased headcount 

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across the company in the past 
three years, but some units have

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grown faster than others. 
This chart here shows how fast 

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different Departments of Google 
have. 

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Actually grown. 
We have the headcount and 2019, 

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you can see Cloud sales 
Hardware, Android ads products 

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search and YouTube, then we 
fast-forward to 2022, and we can

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see the change. 
Now, that's a pretty big change,

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but one part changes more than 
others. 

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Let me put them both on the 
screen here so you can see the 

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difference. 
Here is 2019 at the top and 

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there's 20 22 at the bottom. 
Notice one Department in 

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particular has grown its Count 
far more than all the others. 

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It's Google Cloud. 
That's where all the growth has 

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come from. 
That's the first thing that they

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highlight here. 
Alphabet has doubled, the 

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headcount of its Google Cloud 
unit. 

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The Google Cloud unit has 
doubled since early, 2019, the 

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rapid growth helps explain why 
Google clouds losses continue to

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widen even as the revenue grows 
rapidly. 

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So even though the cloud units 
growing a revenue, they're 

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growing, the amount of employees
like crazy, making it so that 

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the margins aren't coming up as 
fast as they normally would. 

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Google's Hardware unit and 
YouTube also each roughly 

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doubled headcount between the 
first quarter of 2019 and fall 

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now that's true. 
YouTube has doubled in head 

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count, but if you notice the 
difference here starting in 

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2019, YouTube was was Tiny. 
It's like 3,000 people. 

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That's YouTube in 2019, which is
just remarkable to me that 

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YouTube is running with that 
head count. 

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So, we have something here that 
I think is very interesting. 

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Look at the growth and head 
count of the cloud business. 

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This Left bar. 
Just incredible. 

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It started off with a lot of 
people working at Cloud 25,000. 

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Then it grows all the way to 50 
thousand, 50 thousand people 

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just working at Google Cloud, 
that one division. 

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Meanwhile, we look at YouTube, 
YouTube started off with like 

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3,000 people 3000 compared to 
the clouds 25,000 and then the 

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growth was doubled to maybe 
6,000. 

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But I look at this and I think 
it's very interesting because 

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you YouTube is often cited as 
one of like the biggest parts of

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Google, when you are, I look at 
Google and we look at investing 

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in this company. 
A lot of it is because of the 

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search business because of 
YouTube because of Android. 

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And then the cloud is kind of 
like a little side thing. 

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It's like a little a little side
part. 

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It's nice to have as part of 
Google, but the main properties 

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are YouTube. 
We look at this, in the YouTube 

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portion of Google takes up a 
tiny portion of their overall 

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employees. 
This is YouTube, YouTube must be

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one of the most efficiently. 
Ramparts of Google Running that 

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huge company with only 6,000 
employees in the meanwhile, we 

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have this part over here. 
The cloud portion, that isn't 

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even profitable that has 52,000 
employees working at it. 

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This is a money-losing part of 
the company, just staggering 

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when we actually break this 
down. 

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And look at where the jobs 
actually are going. 

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And what part of alphabet, we 
actually look at and 

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acknowledge, I think it's crazy 
to see that almost all of the 

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new employees are going to Cloud
when that's a part of Google 

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that most investors, don't pay 
much attention to their usually 

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focused on search. 
They're focused on YouTube and 

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Android. 
And the cloud is just this 

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little side thing, but right 
now, they have 51 52 thousand 

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people working at Google Cloud. 
So if you're an investor in 

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Google, you have to know that 
cloud is a major part of the 

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company, not just some side 
project. 

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Now, moving on, we have some 
other news regarding apple and 

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this is rather disappointing 
news apples. 

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One of my better Investments, 
I've made money in this company 

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in both the story fund and I 
have it in a dividend portfolio 

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where I have around 50,000 
dollars in the company, it has 

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been a fantastic holding. 
I think it's a great. 

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Me. 
So this is especially 

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disappointing to read. 
We have news. 

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That apple is limiting airdrop 
in China after it was used to 

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spread protests messages. 
So we read into this and it 

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just, it doesn't, this is not a 
good look for Apple. 

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It's not something that I like 
to see. 

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And I think it's disappointing, 
they're doing this. 

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They say, the apple is 
restricted, the use of airdrop 

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on iPhones, in China, after 
protesters use the wireless file

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sharing feature to secretly 
spread messages criticizing the 

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Chinese Authorities. 
So people are using this 

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technology are drop, which if 
you're not an Apple user, you 

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can basically just instantly 
share files with basically 

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anyone and it is instant like 
you you are drop something in 

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three seconds. 
Later a big file will be 

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transferred from one phone to 
the other. 

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It's a pretty amazing feature, 
but it looks like these 

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protesters were using it to do 
something, the Chinese 

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government didn't like Chinese 
users who updated their iPhones 

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diversion. 16.1 released 
Wednesday will be able to use 

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the feature to receive files 
from strangers. 

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Only for 10 minutes at a time. 
See, there's the Restriction 

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right there. 
They added in a time limit, 

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previously, the setting to 
accept files from everyone had 

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no time limit. 
Now, after 10 minutes, the 

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device will fall back to 
accepting files from contacts. 

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Only they say that. 
That feature airdrop was one of 

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the few relatively untraceable 
methods of sharing digital files

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in China, where the social media
platforms and even private 

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messaging apps are scrutinized 
by moderators and the government

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censorship apparatus. 
So the Chinese government has a 

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tight control on basically every
form of messaging. 

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This is one of them that they 
there now clamping down on. 

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So basically, the Chinese 
government does not like airdrop

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anymore because it's being used 
as a way of transferring, these 

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photos that are critical of the 
Chinese government. 

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And unlike the us where we can 
make fun of anyone including our

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leaders and our presence which 
we often do. 

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We can say that Trump looks 
orange or that bite and looks 

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lost. 
And doesn't know what state he's

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in. 
We can mock openly our presents 

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which I think is amazing and I 
think presidents should Made fun

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of, that's part of the job. 
But you can't do that in China. 

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And this puts Apple between a 
rock and a hard place. 

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They're in the situation where 
they can either be defiant 

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against the Chinese government, 
which would cause Apple to 

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simply not be able to do 
business in China, or they can 

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be compliant with the Chinese 
government, their rules, and the

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regulations, which is what Apple
has chosen to do because that 

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allows them to continue to 
operate within China. 

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Now, this also has the added 
impact of becoming a political 

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Target within the us and we're 
starting to see this. 

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Open with Rhonda Santa's. 
Now I've gone over before how I 

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think Rhonda Santa's. 
Basically, dismantled Disney in 

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the political Arena. 
I think that he won. 

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That exchange was bad for 
Disney. 

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I think it was good for on 
DeSantis. 

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The fact that he got re-elected 
by a 20% margin. 

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I think shows that people like 
that exchange of him fighting 

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against Disney and calling out 
their aggressive attempts to 

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change policy within a state. 
And now his Targets in his 

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sights have changed from Disney 
to Apple. 

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Listen to this little speech. 
He gave this morning. 

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His reports that apple is not 
allowing the protesters to use 

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this airdrop function, where 
they're trying to communicate 

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that obviously is providing Aid 
and comfort to the CCP. 

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And so you see that report and 
that's very concerning and then 

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when you also hear reports that 
apple is threatening to remove 

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Twitter from the app store 
because Elon Musk is actually 

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opening it up for free speech 
and is Restoring a lot of 

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accounts that were unfairly and 
illegitimately suspended for 

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putting out accurate information
about covid. 

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That's like one of the main 
things that's being reinstated, 

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so many things, these experts 
were wrong at and you had people

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on Twitter that were calling 
that out and Twitter. 

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The old regime in Twitter, their
response was to try to just 

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suffocate The Descent and an 
Elon must knows, that's not a 

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winning formula and so he's 
Riding free speech. 

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And so if Apple response to that
by nuking them from, from the 

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App Store, you know, I think 
that that would be a huge, huge 

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mistake, and it would be a 
really raw exercise of 

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monopolistic power that I think 
would Merit a response from the 

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United States Congress. 
And so there's the warning right

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there if Apple, after having 
worked with the Chinese 

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government and placated to them 
and did an update that helps 

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out. 
The Chinese government, right 

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after doing that, if they took 
down Twitter in the same, in the

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same length of time, I think it 
would be a massive mistake and 

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you have Governors like this. 
They have a lot of political 

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influence, Rhonda Santos. 
I think is one of the most 

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influential governors in the 
country right now. 

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Openly threatening just saying, 
look Apple, if you do this, the 

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US government and Congress is 
going to respond because this 

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portrays apple as not only 
working with the Chinese 

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government but also a huge 
monopolistic power. 

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That's Rolling other companies 
like Twitter. 

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So I think the apple right now 
is in some dicey territory, I 

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think if they did boot Twitter 
off of the App Store, I think 

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that'd be disastrous for both 
Twitter, which it would 

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obviously, destroy their 
business but also Apple, it 

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would be disastrous for Apple 
because it would basically be 

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asking, hey congress, come in 
and regulate us because we're 

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way too powerful, we're way too 
much of a bully so we'll see how

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things go. 
My guess is Apple will not be 

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booting Twitter off the App 
Store. 

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I think that'd be a massive 
miscalculation if they did that.

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I Be questioning the Judgment of
apples leaders. 

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It actually makes me question 
their judgment. 

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Now, moving on from that, we 
have some news coming from the 

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streaming and media World. 
Another One Bites, the Dust. 

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We have AMC here planning to do 
layoffs and this is networks. 

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This is an AMC Theaters. 
So AMC networks that has like 

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The Walking Dead and Breaking 
Bad. 

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Those type of shows they're 
planning to do layoffs. 

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And this is another company that
tried to go into streaming 

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because streaming so easy to go 
into, so easy to become a 

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00:14:57,408 --> 00:14:58,700
Netflix. 
It's something you can do 

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overnight, right. 
They're finding out. 

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It's much more difficult, it's 
much easier, said, than done. 

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We have a lot of companies, like
MC, that continue to just say 

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that we can't make it in 
streaming. 

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We can't hack it. 
Getting to scale is incredibly 

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difficult and that's where 
Netflix already is. 

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They go over that. 
They have all these great 

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properties, Mad Men, Breaking 
Bad, The Walking Dead, right. 

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And they grew the streaming 
service AMC plus is the name of 

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00:15:24,000 --> 00:15:26,000
the streaming service. 
They say, quote it was our 

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00:15:26,000 --> 00:15:30,100
belief that cord cutting losses 
would be offset by he's in 

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00:15:30,100 --> 00:15:33,400
streaming, so they'd have the 
losses in their legacy business,

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00:15:33,400 --> 00:15:35,800
but they'd have gains in 
streaming and overall it would 

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00:15:35,800 --> 00:15:38,600
be neutralized. 
They'd be even, but that's not 

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00:15:38,600 --> 00:15:40,800
happening. 
They say, quote, this has not 

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been the case. 
This is the problem. 

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With all of these other wannabe 
streaming companies, they're not

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00:15:46,800 --> 00:15:49,800
getting to scale and they can't 
get to scale and Netflix is 

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00:15:49,800 --> 00:15:52,500
already gotten to profitability.
They're already free cash flow 

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00:15:52,500 --> 00:15:55,400
positive. 
So Netflix is already at scale 

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00:15:55,800 --> 00:15:59,100
AMC's, not at scale. 
Another company that right now 

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is not it. 
Gail is Disney in this one 

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00:16:01,900 --> 00:16:05,300
likewise is having just a lot of
issues right now, we've seen the

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00:16:05,300 --> 00:16:09,000
profitability tank, even with 
the parks holding in and trying 

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00:16:09,000 --> 00:16:11,300
to fund the rest of the company 
at the meeting. 

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I ge said, in his words, instead
of chasing subscriptions with 

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aggressive marketing and 
aggressive spending on content, 

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00:16:17,800 --> 00:16:19,700
we have to start chasing 
profitability. 

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00:16:20,200 --> 00:16:22,600
Uygur said his team would have 
to take a hard look at costly. 

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Tried to ask swage concerns, 
that they wouldn't spend a lot 

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00:16:26,200 --> 00:16:28,100
on content and so, there you 
have it. 

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We have Bob Iger back at 
Disney's. 

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00:16:29,800 --> 00:16:32,000
Saying we're not chasing 
subscribers, we're chasing 

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00:16:32,000 --> 00:16:34,000
profits now. 
And this is the problem. 

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00:16:34,000 --> 00:16:36,500
With all of these streaming 
companies that aren't at scale, 

337
00:16:36,800 --> 00:16:40,900
whether it's Disney, or AMC, or 
Paramount, or Warner Brothers 

338
00:16:40,900 --> 00:16:44,100
Discovery, none of them are at 
scale, except for Netflix. 

339
00:16:44,100 --> 00:16:46,700
It's the only Standalone 
streaming product in the 

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00:16:46,700 --> 00:16:49,200
industry. 
The only one that exists that's 

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00:16:49,200 --> 00:16:53,000
at scale and profitable. 
Even Amazon Prime is likely not 

342
00:16:53,000 --> 00:16:55,900
profitable on its own. 
We don't have the Insight, they 

343
00:16:55,908 --> 00:16:59,000
won't give us the numbers, but 
my guess is that Amazon Prime is

344
00:16:59,000 --> 00:17:01,300
a money-losing. 
Part of Amazon currently. 

345
00:17:01,300 --> 00:17:04,500
And I think that Netflix will 
continue to grow albeit at a 

346
00:17:04,500 --> 00:17:06,200
slower Pace, but that doesn't 
matter. 

347
00:17:06,200 --> 00:17:09,000
It's already a profitable 
company, they can continue to 

348
00:17:09,000 --> 00:17:11,099
grow at a slow pace. 
That can minimize their debt. 

349
00:17:11,099 --> 00:17:15,400
They can do share BuyBacks, this
company can become a behemoth, a

350
00:17:15,400 --> 00:17:19,599
massive company over time, 300 
million, 400 million subscribers

351
00:17:19,599 --> 00:17:22,500
and you have to be worried about
them, not having cash flows like

352
00:17:22,500 --> 00:17:25,500
Disney or AMC or any of the 
other streaming companies. 

353
00:17:25,500 --> 00:17:29,600
We have reports like this Glass.
Onion could have made 200. 

354
00:17:29,800 --> 00:17:32,800
Million dollars in the box 
office but Netflix only, let it 

355
00:17:32,800 --> 00:17:35,300
play in theaters for a week. 
So we have Glass Onion in the 

356
00:17:35,308 --> 00:17:38,600
theaters right now, which is 
received really good reviews 8.1

357
00:17:38,600 --> 00:17:41,200
out of 10 on IMDb. 
Now blast onions going to be 

358
00:17:41,208 --> 00:17:44,400
streaming on Netflix at the end 
of December, right around the 

359
00:17:44,408 --> 00:17:46,800
Christmas holiday. 
So they're targeting when a lot 

360
00:17:46,800 --> 00:17:49,100
of people are going to be home 
looking for something to watch. 

361
00:17:49,300 --> 00:17:52,300
And I think this is by far the 
best strategy, they can make a 

362
00:17:52,300 --> 00:17:56,000
lot of money, 60 million dollars
in a single week by releasing 

363
00:17:56,000 --> 00:17:59,000
movies like this in the box 
office, it creates a lot of 

364
00:17:59,000 --> 00:18:01,100
hype. 
It's a lot of perceived value, 

365
00:18:01,100 --> 00:18:04,000
having it in the box office, 
then they immediately put on 

366
00:18:04,000 --> 00:18:06,200
their streaming service and 
monetize it again. 

367
00:18:06,200 --> 00:18:08,800
And if Netflix can continue to 
do this with highly rated shows,

368
00:18:08,800 --> 00:18:11,700
like Glass Onion, I think they 
have a very good business model 

369
00:18:11,700 --> 00:18:14,000
here. 
So, I feel very confident in the

370
00:18:14,000 --> 00:18:16,500
Netflix position. 
My sentiment has not changed 

371
00:18:16,500 --> 00:18:19,000
towards this company. 
It's free, cash flow positive. 

372
00:18:19,000 --> 00:18:20,600
It's coming out with good 
content. 

373
00:18:20,600 --> 00:18:23,300
I think it will continue to grow
at a steady and slow pace. 

374
00:18:23,300 --> 00:18:25,800
And I think over time, I think 
I'll make money on the company. 

375
00:18:25,800 --> 00:18:28,100
So we'll see what happens. 
I'll keep you up to date. 

376
00:18:28,100 --> 00:18:28,900
That's all for now.