Best Uber story yet!!! 5-min ago.
On my way to the airport.
Noticed my driver nervously looking at his phone. Turns out he is looking at stock prices. I ask him if he could please pay attention to driving.
He then asks if he could pull over. I ask why... To sell stocks!
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Andrew Freedman, CFA 
@HedgeyeComm
Comms Sector Head
(Internet, Media & Cable/Telco)
Beware of Sarcasm
For access to research contact sales@hedgeye.com
Beware of Sarcasm
For access to research contact sales@hedgeye.comAndrew Freedman, CFA 🦅’s Tweets
How is this for a wall of worry? Absent fresh stimulus, gravity takes over in Q3 as:
1) Unemployment Insurance Expires
2) Rent/mortgage Forbearance Ends
3) $1,200 Checks Spent
3) Election Uncertainty
4) China Tensions
5) Unemployment Rate 20%
What else am I missing? $SPY
New investment process:
Has the company filed for Chapter 11?
Yes.
Best Idea Long.
Incredibly excited to introduce Cole Freedman to the world!
...aka Baby Freebird 🦅
Mom is doing great!
7% Terminal Rate
6% 10-Year Treasury
9% 30-Year Mortgage
28% Corp Tax Rate
40% Cap Gains
🚀🚀🚀
Here is a brief history of the 2007-2008 economic crisis and the timing of government intervention programs...
The "Financial stability and recovery act" was signed on Feb. 17, 2009.
The $SPY bottomed 18-days and ~15% later on Mar. 6, 2009.
I may just renounce my CFA.
Renewal coming up in July.
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Buying NVIDIA shares today costs you 40 times historical annual revenues. That's 40 years to get your money back, assuming $0 cost, 0% tax and a 100% payout ratio. Good luck!
Be right back... I have to adjust all my company models and take my 2023 revenue and EPS estimates up because Core CPI came in at 6.3% vs 6.5% expected.
Tired of seeing so many charts on Twitter comparing the absolute number of #COVID19 cases by country, without any consideration for population size.
So... here you go:
U.S. ~135k cases = ~0.04% of population
Italy 98k cases = ~0.16% of population
Buddy of mine opened up his first brokerage account in April on Webull, is up about 120% and I am pretty sure thinks he is an investing God.
He told me (with confidence) he was buying more shares of $TSLA since the stock-split news because...
Wait for it...
"It is free money"
My favorite part of the $SNAP release is they announced a $500M share repurchase... but the company has deeply negative free cash flow and EBITDA if you include SBC.
They have been funding the deficit through SBC and convertible issuances...
'Twas the night before $NFLX
When all over the street, analysts updating models - wondering, will they beat?
The alt data collected & scrubbed with care, in hopes that alpha will be there
The bears nestled, snug in their beds, with visions of sub losses swirling in their heads
Love it. Stock misses revenue by 5% and it is down 30% so of course it is an overreaction. But when it beats by 5% and up 30% on pure multiple expansion it is justified!
"So, of course we only accept #bitcoin and other cryptocurrency cause, you know, it's the future.
We've all decided centralized banking is rigged, so we trust more in fly-by-night Ponzi schemes."
😆😆😆
At a restaurant... sitting next to a table of millenials talking about buying stocks on robinhood.
There is NO escape!
We are saying goodbye to $ROKU this morning - still believe in the long-term opportunity, but risk/reward is less attractive with the stock up 350% in 6-months and many of our positive catalysts (e.g., HBO Max and Peacock) have played out.
Debt does not equal growth...
Debt does not equal growth...
Debt does not equal growth...
I asked my wife tonight, would you be okay if we cancelled $NFLX? After some deliberation, she said yes, that would be fine. 6 months ago the answer was a quick no.
TCI Letter to $GOOGL
"In a new era of slower revenue growth, aggressive cost management is essential."
tcifund.com/files/corporat
$AMC Adam Aaron is effectively orchestrating a massive pump n dump scheme, no?
Insiders know the stock is completely overvalued. They are gaslighting retail investors into believing their selling is because of "prudent estate planning".
Anyone else see the irony in this?
Maybe it is just me... but my Twitter feed has really gone downhill. Barely showing me any tweets from folks I follow and engage with the most. Much less utility. Frustrating...
We are at the point where pumpers are calling out other pumpers for pumping!
😂
Whatever happens at 4:05 pm ET.
Just remember.
$SNAP is the economy. It is the only thing that matters.
We had to say goodbye to our best friend of 14 years today. Words can't describe how blessed we are to have had him in our lives for so long. Everything was better because of him. He was our soul dog. Thank you Kolby. We love you.
Tweeting our entire $NFLX Short Black Book from March 2019.
Part 1: Industry Overview + Competition
Part 2: Addressable Market Analysis
Part 3: Content Accounting + Valuation
Part 1 is below, Part 2 and 3 coming shortly.
Link to slide deck + video: bit.ly/37BGqH4
I am seeing many tweets:
1) ridiculing shorts
2) criticizing financial analysis
2) shorts questioning why they short
3) valuation doesn't matter (stories do)
4) cycle doesn't exist
"Those who cannot remember the past are doomed to repeat it."
cc
I just stumbled into a place where I never want to be again... a land of fomo, momo, and bubbles where storytelling and confirmation bias reigns supreme and facts are blinded by egos.
Cities are burning.
Real economy is on life support.
And here we are...
Debating whether the $SPY holds $3k and when the next round of stimulus / easy money is coming.
Divergences everywhere.
Cheap can always get cheaper and we are in a risk-off market... but $ROKU at $60!
This thing should still grow platform revs 30% per year, for the next 5-years and come out a disproportionate winner from the collapse of linear TV.
Fed:
We are fighting inflation to protect you, the American family.
Also Fed:
We are going to destroy your life savings that is mostly in equities after a decade of ZIRP/TINA.
$GOOGL looks like a miss to me...
Revenue (Pod 1)
❌Search/other +4% vs Consensus +8%
❌YouTube -2% vs +3%
❌Network -2% vs +3%
❌Total Advertising +3% vs +6%
Profit (Pod 2)
❌EPS $1.06 vs $1.26
❌Operating Margin 29.9% vs 33.9%
❌EBIT -19% YoY vs -7%
❌FCF $16.1B vs $18.9B
I don't think investors are appropriately evaluating the post-crisis capital structure of many businesses that are raising tons of debt to stay alive.
Not good for equity value...
$GOOGL that was not a good quarter...
Search/Other -1.6% YoY
YouTube -7.8% YoY
Total Advertising -3.6% YoY
Operating Income -17% YoY
And we know 1Q23 trends are worse than 4Q22!
Numbers are going lower!
I am pretty confident $FB is exaggerating the IDFA hit to their business...
Self serving narrative that takes antitrust pressures off.
It had an impact for sure... but a lot of other factors at play here.
$NFLX longs watching the credit markets freeze up knowing the business model is:
1) completely dependent on capital markets
and the level of cash burn is:
2) Not sustainable/irresponsible
Tick tock... Who shoots first?
GIF
At this point... anyone analyzing $NFLX and streaming industry economics without taking into account cash content costs / amortization, and just looking at the IS needs to get their head checked and excel license taken away.
$NFLX better than feared... but let's think about something.
Netflix just LOST 1.3M subscribers UCAN Q2.
Even with 'Stranger Things' outperforming to become their biggest season of English TV ever.
Long $ROKU
"We see a path to $300 over the next 12-24 months as revenue growth accelerates and estimates move higher."
Institutional Call 8/20 at 12:30pm ET
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Replying to
So many things that I love about this photo...
The "don't chase" post it... (I have one that says "it's never all priced in")
The Bayer aspirin...
The $10 bill...
Received some constructive criticism today from #FinTwit
Apparently, I need to focus more on the story and "big picture", and how consumers "feel" about a specific product.
and less so on...
Financials, valuation, my models and data.
...can't make this stuff up.
Sticking with the same playbook:
Stage 1: Panic/Sell-Everything (Timing Late March)
Stage 2: Big Bounce on "Return to Normal" / Govt Intervention (Late March -> Early April)
Stage 3: Earnings Season Reality Check / Sell-off (early-mid May)
June/July = Bottom of sorts?
If you take the time to read $NFLX SEC filings (10-k/10-q) it tells a more sober version of the prevailing bull thesis.
Apparently, no one reads financial statements anymore. Many just parrot management talking points.
Think for yourself. Think differently. Do your own work!
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Rumor has it that may be hosting an #exclusive event for in Las Vegas 11/16 - 11/18 next year.
(And for those who know us, we don't disappoint.)
Hit the like button on this tweet if you have interest in attending and watching the race with us!
I think Zuckerberg will ultimately have to choose between 1) competing with #TikTok and 2) building the #metaverse.
It seems increasingly unlikely (absent a TikTok ban), they will be able to succeed at both while also creating shareholder value.
$META
I don't talk about my personal account performance often here. But between my personal and retirement accounts, I was up 57% in Q1 while maintaining an average 60% cash position. And I was up 75% last year. #blessed
$NFLX $1B lower content spend YoY driving most of the FCF beat... not sustainable, and increases risk of content gap go forward.
GIF
read image description
ALT
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Hot take...
$TWTR won't be a public company this time next year.
I am clearly on the wrong side of this business... how do I get paid to tell everyone to buy at any price, blame market sell offs and factors for when stocks go down, act like a guru when stocks go up and take no accountability for my work?
Nothing triggers me more than when excel crashes and a file doesn't recover.
So many good people lost their jobs today... whether terminated outright or furloughed. Notices must have been sent out at 5pm. Just got 4 text messages from friends in the last hour...😔
I'd ignore these $GOOGL downgrades.
Time to get cautious on search + competition was last year going into Q4/Q1 - when we were short, growth was slowing, and top-line estimates were too high.
Not when staring at 4 quarters of easier comps and my data continues to get better.
$TWTR 🚀🚀🚀
1) Double development velocity by end of 2023
2) Reach at least 315M mDAU in 4Q23 (~20% CAGR 4Q19)
3) At least double revenue to $7.5B by 2023 (consensus $6.5B) / CAGR ~27% from 2020
Reiterates long-term 40-45% adjusted EBITDA
So I may have missed my 7am flight... but now I get to travel with these guys!
Fundawhat?
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*WARREN TO SEC: TAKE STEPS TO ENSURE PRICES REFLECT FUNDAMENTALS
If there was one company where I would ignore the noise, buy the dip and ride for next 5-years it is $ROKU
"I would absolutely NOT be long $ROKU into the print"
Where could the stock go?
"When growth is slowing and estimates are coming down, and reported fundamentals are trending inline with the short case going into a deep Quad4…
the answer is lower." - 2/17/22
$PINS $24.5 a share AHs. That is $24.50 you have left to sell before it goes to $0.
Conversation w/IT team:
Me: My computer is slow
IT: You haven't shut your computer down in 2-weeks, you have 3 instances of chrome running with 40 tabs open on each, you have 20 auto-recovered excel files that you haven't removed from 2-weeks ago, AND your running SQL.
Me: 🤷♂️
It will be very interesting to see where $NFLX finishes the day tomorrow. Here is my initial recap I sent to sales.
Once folks get over the initial euphoria of them reporting an in-line Q3 sub-number, they may start to look at the terrible Q4 guide and reduction in FY targets.
$META revs look about expected, better than feared - guide is light but exp. EPS a lot worse.
Problem is 2023 Capex guide $34-$39B up from $32-$33B. Shareholders will be out for blood.
Higher 2023 opex $96-$101B vs $85-87B 2022... keeping headcount flat from current levels.
$NFLX big miss on Q2 paid subs... Q3 paid guidance doesn't look achievable...
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$NFLX #growthslowing in mobile app downloads, viewers and time spent. Our June 2019 survey published last week showed 2x increase in domestic churn post price increase and flat-to-down adoption since Jan 2019. @Hedgeye
Institutional Note 7/9
