“Stock prices are the clearest and most reliable signal of the market’s expectations about a company’s future financial performance. The key to successful investing is to estimate the level of expected performance embedded in the current stock price and then assess the likelihood of a revision in expectations.” – Michael Mauboussin
It’s interesting to me how clear it was that Peloton was on this path towards cash flow breakeven yet the market refused to give it any credit until this quarter.
Netflix is getting harder to value. I don’t mean the process is more difficult than it used to be. I mean the range of upside outcomes is becoming wider. It has always been hard to be precise but that is getting even harder.
The headlines focused on Reed Hastings stepping down as co-CEO. That is understandable. Certainly, he is a business legend, having co-founded a DVD-by-mail startup, vanquished larger competitors, pivoted the business twice, first by pioneering into streaming and later into original content. Netflix now dominates the field with $32 billion of global streaming revenue from over 321 million global household users, including 231 million who are currently paying for it.
I used to print everything—10-Ks, 10-Qs, press releases, transcripts. I like to underline and write notes in the margins. I hated reading long documents on my computer screen or iPad. I stare at screens enough as it is. My office was piled high with stacks of papers.
To me, these are signs that suggest Naked may want to deemphasize the “discount wine” angle. Not only have they been having recent success by being less promotional, but it’s also clear wine drinkers broadly assume higher priced wine is higher quality.
Compared to my last published version, I’ve made the following revisions (to my Base case unless otherwise noted):
Some thoughts on Amazon after its third quarter
Some thoughts on Peloton’s fiscal first quarter
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