Preparing for Earnings Season
This post will be short, and as always, Jams first:
Baseball is back and spring has sprung.
My beautiful San Francisco Giants are back to defend their National League West Division Title from their historic run last season. Can we catch lightning in a bottle again?
I’m not sure. We lost Kevin Gausman who signed for tons of money with Toronto, Brandon Crawford is 35 and I’m not sure he can repeat his magic from last season, and our SUPERMAN, Buster Posey has finally retired and gone off into the sunset.
This season will be an amazingly slow-and-fast 162 games. Sign me up.
Buster, I’ll miss you and thanks for all of the memories:
He retires as one of the GOATS:
7x All Star
3x World Series Champ
NL MVP (2012)
NL Rookie of the Year (2010)
5x Silver Slugger
etc.
Starting Lineup Performance and Valuation
The last 2 weeks have been rough. $COST has been my light in a dark cave. Have I told you how much I love this company?
Q1’22 Earning Season started. None of our Rookie Companies have reported yet. But heres what’s coming this week (Source).
There a few key companies reporting this week
Monday: $KO
Tuesday: $MMM $GOOGL $V
Wednesday: $FB $PYPL $TDOC
Thursday: $AAPL $AMZN $MA $MCD $ROKU $TEAM
Friday: $ABBV $PSX
$TDOC + $TEAM will be the first Rookies to announce earnings.
It will be interesting to see how $TDOC performs in a post-COVID world and if telemedicine can continue it’s secular growth. $TEAM will be interesting to see how Enterprise SaaS spend is trending for 2022 and if companies are tightening up their wallets.
It will be key / intriguing to see how the companies listed above perform as they act as proxies for specific industries, consumer spending trends, and the overall health of the consumer / economy.
One signal we got last week was from $NFLX.
$NFLX fell +30% after announcing earnings and the drop was justified. For the first time ever, $NFLX LOST 200K subscribers, and growth is starting to mature (i.e. slowdown).
How is $NFLX combating these changes? They are contemplating on how to slowdown password sharing, and offering a lower pricing-tier that is Ad-Supported.
I’m not sure how much this grows $NFLX’s revenue growth, but it will definitely hurt it’s brand and potentially customer loyalty.
My take: Competition for customers’ attention is getting tougher. $NFLX doesn’t only compete against Disney+, AppleTV, etc., but $NFLX competes for attention from Snapchat, Youtube, Tiktok etc.
With that said, $NFLX is the leader (Source) in the streaming space, and they need to act like it.
$NFLX needs to focus on creating quality content. AND instead of releasing everything at once, they need to start slowly releasing high quality content to keep customers sticky and churn down. They’ve already started this with shows like “Ozarks” and “Love is Blind”.
$NFLX is a good company and can win the future, but they’ve lost their first mover advantage, pricing power, and Blue Ocean. They are now swimming with sharks and management needs to prepare for battle.
Not investment advice. This is for entertainment purposes only.