Thursday Oct.17, 2019

Netflix wants to defeat TV

_"Back to work for more pay"_

Hey Snackers,

Date night stress? We noticed a dating app and a restaurant reservation app hooked up to find the perfect spot for your next dinner.

Markets dipped slightly Wednesday as earnings season gets its groove on.

Rebound

Netflix added almost 7M subscribers last quarter (and is targeting your TV time)

100% of investors should have liked this... Netflix shares surged 10% after releasing its 3rd quarter earnings report. That's better than the previous quarter, when the stock dropped by the same amount. Get a comfy seat on the couch and let's compare:

Q2 (Apr – Jun): 2.7M new subscribers.
Q3 (July – Oct): 6.8M new subscribers.

The reason's in the seasons... CEO Reed Hastings explained away Q2's weakness by blaming the new shows, which were duds. But in Q3, all eyeballs were on Netflix's seasons on seasons of new content.

Bingeable in the USA: "Stranger Things" Season 3 set a Netflix record 64M households tuning in the first 4 weeks after its July launch. And 32M checked out "Unbelievable."
Bingeable abroad: Since 98% of subscriber growth the past 6 months has been international, Netflix invested in non-English hits like "The House of Paper" (about a Spanish heist) and "The Naked Director" (about a Japanese porn director). "Terrace House" is our personal fave. 130 seasons of non-English content hit in 2020.

Netflix is above the streaming wars... A "benchmark" is the standard you compare your performance to (for LeBron, it's Jordan. For Beyoncé, it's Madonna). Netflix prefers to benchmark itself against old-school cable TV.

Netflix has over twice as many paying subscribers (158M) as rival Hulu (76M).
But it gets just 10% as much viewing as old school American TV.
So although it's miles ahead of streaming competition, it's miles behind TV — and it thinks all this streaming competition will just accelerate cord-cutting.

Deal

GM's longest strike in 49 years is about to end — and markets reacted rationally

You're gonna have to fix that carburetor solo... 48K car-crafting General Motors employees spent the last 30 days on strike — GM's longest walkout since 1970. The union and the car giant reached a tentative labor contract after CEO Mary Barra finally intervened last weekend. But here are the key $$$ numbers:

$2B: That's the estimated hit GM's business suffered while employees picketed.
$800M: That's the size of the United Automobile Workers union's “strike and defense fund” — it's been paying out-of-work union humans $275/week during the strike.

So what's in the trunk?... Details aren't public yet (and Union members still have to vote in favor of the deal). But early reports show the month-long strike got the union 3%-4% annual raises/bonuses for workers, a $9B investment by GM in American factories, and thousands of new jobs. And temp workers will have a path to become full-time ones.

GM’s stock price during the strike shows that markets are rational... Investors punished GM shares by almost the perfect amount — the same amount as the lost profits caused by the strike. Here's how the numbers break down:

Losses to GM: $2B. We mentioned that the strike cost the company an estimated $2B in losses while cars weren't being produced.
Losses to GM's stock: $2.5B. GM's stock price dipped 5% during the strike, meaning the company lost $2.5B in market value (5% of GM's $52B market cap = $2.5B)

Stock markets often seem emotional and erratic, but they can be rational, too.

What else we’re Snackin’

Worldly: Under Armour unveils Earth's 1st-ever commercial space suit, designed for Virgin Galactic's future voyages
Payday: MGM just sold off 2 of its top Vegas casinos to bring home $5B
Bacon: Pork prices in China have surged 70% from last year because swine flu is messing with supply
TBD: United's CEO admits that "no one knows" when those Boeing 737 Max jets will actually return to flying people around
Stamped: Sprint and T-Mobile's long-awaited merger is officially approved by the FCC, but it still needs to settle with a bunch of states suing it
Slower: US retail sales surprisingly fell for the first time in 7 months

Thursday

Earnings from Morgan Stanley, E-Trade, and Honeywell

ID: 985093

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Tangential remarks

Nicolai Tangen, the CEO who holds the purse strings of Norway’s $1.6 trillion sovereign wealth fund, thinks that his fellow Europeans don’t quite stack up to US employees when it comes to pure hustle, telling the Financial Times in a recent interview that there is a difference in “the general level of ambition” and that “the Americans just work harder”.

Tangen has clearly been putting his money — or more specifically Norway’s — where his mouth is: the sprawling Norwegian oil fund, now one of the largest investors on the planet, has been pumping more capital into its US holdings in the past decade, while decreasing its investment into European entities.

The troublesome news for our European readers? Tangen might be onto something. According to data from the OECD, American workers are putting in almost 60 hours a year more than the weighted average for OECD nations… a benchmark that workers from countries in the European Union are already ~180 hours shy of.

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Friday, Apr 26th

10h

What’s happening

Pop Quiz!

Sales of what are up 136% since 2019?

Don't be a sucka

$70B

Alphabet shares are soaring in the after-market session, with a initial jump of more than 10% implying a gain of upwards of about $200B in market value when the stock opens tomorrow morning.

Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

What’s up doc?

23h

HOP TO IT

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We get results!

4/25/24

This earnings season is fully operational

Balancing Act

4/25/24

Acrobatic Accounting

So, you want to join the circus?

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4/25/24

No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?