Netflix Taps Peter Rice to Pivot Content Strategy Toward Prestige

奈飞起用彼得·赖斯，推动内容策略转向精品化 奈飞的营收增速放缓属于暂时的创作阻碍，而非被YouTube结构性击败；随着新领导层转向优质精品内容，该股具备了非对称的上行潜力。 约瑟夫·卡尔森在奈飞发布最新财报后对其进行了分析，指出围绕营收增速放缓以及来自YouTube竞争的看空论调，忽视了该公司创纪录的自由现金流、大规模的股票回购，以及在彼得·赖斯领导下前景良好的创作转型。他还重点强调了SpaceX在星链用户增长和AI算力扩张推动下的强劲基本面动能，同时为直觉外科具备高粘性的手术机器人生态系统进行辩护。最后，卡尔森在“本周败笔”环节批评了AI怀疑论者埃德·齐特隆在Substack上针对英伟达CEO黄仁勋情绪化的激烈指责，提醒观众防范带有主观动机的研究。 奈飞正面临市场对其营收增长放缓和收视率见顶的质疑，但其过去十二个月仍创造了创纪录的29亿美元标准化季度自由现金流，并回购注销了129亿美元的股票。 (5:00) 为解决创作停滞和本土内容质量不足的问题，奈飞更换了首席内容官贝拉·巴贾里亚，由行业资深人士彼得·赖斯接任，并正在争取好莱坞顶尖高管人才，以推动内容向精品节目转型。 (13:26) SpaceX季度营收规模已达14.5亿美元，正迈向预计400亿美元的年化运行率，这得益于星链用户扩大至1360万以及不断增长的AI计算服务器基础设施。 (20:18) 卡尔森提醒投资者警惕情绪化的市场评论，并以科技评论家埃德·齐特隆在Substack上用粗俗言语攻击英伟达CEO黄仁勋为例，称其为先入为主、存在缺陷的看空研究典型。 (23:08)

Joseph Carlson contends that Wall Street's pessimism over Netflix's slowing revenue growth ignores its underlying cash generation, disciplined share buybacks, and strategic content overhaul, while also evaluating operational expansion at SpaceX and warning against emotionally driven AI skepticism. Netflix Deceleration Versus Underlying Cash Generation (5:00) Although Netflix's quarterly revenue growth has moderated from over 15% down to between 9.8% and 10.5%—with consensus estimates projecting 13.2%–13.3% in 2026 and 10.9% in 2027—Carlson argues that market fixation on top-line deceleration obscures a strengthening cash engine. On a normalized basis excluding a one-off $2.9 billion payment linked to Warner Bros. Discovery, Netflix delivered a record $2.9 billion in quarterly free cash flow and retired $12.9 billion in shares over the trailing twelve months without offsetting dilution from stock-based compensation. Carlson points out that unadjusted earnings charts misrepresent the business by making growth appear to stall in 2027. Once non-operating items are removed, he estimates normalized earnings per share will compound at roughly 20% annually across 2026, 2027, and 2028. At a forward price-to-earnings ratio of 18 and a 4% free cash flow yield, he views the current valuation as providing asymmetric upside. Debunking the YouTube Substitution Myth (10:18) Carlson challenges media narratives, including coverage from The Wall Street Journal, asserting that YouTube's viewership gains come at the expense of Netflix's business model. While YouTube viewing hours increased by 14%, Netflix still expanded revenue by 12% over the same period. Furthermore, Netflix reported that third-quarter subscriber churn declined year-over-year both in the United States and globally, outperforming internal forecasts. Rather than competing directly in a zero-sum contest, the two services fulfill complementary consumer habits. YouTube captures casual, frequent daily consumption such as tutorials, podcasts, and short entertainment during commutes or work breaks, whereas Netflix serves as a destination for long-form narrative dramas and prestige productions. At roughly $8 per month for an ad-supported plan, Carlson argues consumers readily maintain both services simultaneously. Strategic Content Restructuring and Quality Overhaul (13:26) According to Carlson, Netflix's genuine vulnerability is an internal creative drought following earlier cultural sensations like Bridgerton, Squid Game, and Stranger Things. To reverse catalog dilution and prioritize premium, risk-tolerant storytelling over algorithmic volume, Netflix replaced Chief Content Officer Bela Bajaria with veteran film and television executive Peter Rice, whose production credits include award-winning titles such as Slumdog Millionaire, The Bear, and Shogun. Netflix is also reportedly in discussions with former Warner Bros. executives Michael De Luca and Pam Abdy to rebuild relationships with premier Hollywood filmmakers. Carlson notes this high-level executive turnover represents a deliberate push toward prestige, critically acclaimed content comparable to HBO or Apple TV+, rather than a routine margin-cutting measure. Scaling Momentum at SpaceX and Intuitive Surgical (20:18) Beyond Netflix, Carlson highlights SpaceX's operational expansion as quarterly revenue doubled sequentially from $7 billion to $14.5 billion, moving toward an estimated $40 billion annual run-rate. Growth was propelled by Starlink, which expanded its subscriber base from 12.0 million to 13.6 million while growing monthly average revenue per user from $66 to $69. SpaceX is also investing heavily in orbital launch infrastructure and AI compute server farms. Carlson similarly defends Intuitive Surgical following a post-earnings market decline. He characterizes the company as an integrated medical ecosystem with formidable switching costs, where installed robotic platforms generate durable, high-margin recurring revenue from instruments, services, and software upgrades, making selective hardware discounting a sound market-share strategy rather than a structural weakness. The Analytical Flaws of Emotion-Driven Research (23:08) In a critique of persistent artificial intelligence bears, Carlson examines an unfiltered Substack commentary by Ed Zitron attacking Nvidia CEO Jensen Huang and hyperscaler executives. Carlson argues that Zitron's polemic abandons objective financial critique in favor of personal hostility, misrepresenting Huang's decades-long trajectory in parallel computing and semiconductor leadership. Carlson cautions investors against motivation-driven research, where an analyst starts with an inflexible, hostile conclusion—such as viewing corporate leaders as malicious or all AI spending as an imminent scam—and selectively gathers evidence to validate that narrative. He stresses that filtering complex market developments through personal contempt blinds investors to technological utility and company fundamentals. Carlson concludes that short-term market reactions frequently penalize revenue deceleration while underappreciating free cash flow resilience, deliberate operational pivots, and durable competitive moats. He maintains that tracking execution and objective financial metrics provides a more reliable investing framework than following sentiment-heavy or emotionally polarized commentary.

Joseph Carlson认为，尽管华尔街因营收增速放缓及YouTube竞争叙事而重罚Netflix，但其底层自由现金流、低流失率与管理层重组内容品质的举措提供了不对称的上行空间；同时，SpaceX与Intuitive Surgical亦展现出扎实的基本面扩张。 Netflix营收减速与现金流引擎反差 (1:45) Netflix股价因市场对营收增速放缓的单向关注而受到惩罚。在打击密码共享和推出广告层级带来的15%以上峰值增速逐渐消退后，其季度营收同比增速回落至9.8%至10.5%，市场普遍预期2026年全年增速为13.2%至13.3%，2027年进一步放缓至约10.9%。Carlson指出，市场过于痴迷于表层营收，忽视了底层现金流的稳定性。在剔除与华纳兄弟探索公司（Warner Bros. Discovery）相关的29亿美元单次款项后，Netflix最新季度的常规自由现金流创下29亿美元纪录。过去12个月内，公司执行了总计129亿美元的真实股票回购，而非仅为对冲股权激励的稀释。若剔除非经常性项目，其每股收益预计将在2026至2028年间保持每年约20%的复合增长，当前对应18倍的前瞻市盈率与包含股权激励在内4%的自由现金流收益率。 澄清YouTube竞争与内容战略重组 (10:18) 针对《华尔街日报》等媒体关于Netflix在流媒体竞争中“撞墙”的论调，Carlson反驳了YouTube崛起属于零和博弈的观点。数据显示，在YouTube观看时长增长14%的同时，Netflix营收依然增长了12%，且第三季度美国本土与全球流失率同比改善并优于管理层预期。两者满足不同场景：YouTube服务于日常碎片化与随性消费，而约8美元/月的Netflix广告订阅则承载周末大剧和叙事内容，两平台在家庭预算中共存。Netflix真正的核心痛点在于近期爆款大作减少与自制内容口碑平庸。为此，公司启动高管洗牌，裁撤约1,000名员工并清洗高层，原首席内容官Bela Bajaria离职；同时引入曾掌舵《贫民窟的百万富翁》《大熊餐厅》和《幕府将军》的前迪士尼与FX高管Peter Rice，并接触华纳前高管Michael De Luca与Pam Abdy，力图摆脱纯算法主导，转向能吸引好莱坞顶尖导演的高水准剧作。 SpaceX与直觉外科的基本面表现 (20:18) 在流媒体之外，SpaceX与直觉外科（Intuitive Surgical）展现了稳固的业务扩张。SpaceX单季营收从上一季度的70亿美元翻倍至14.5亿美元，年化营收奔向400亿美元轨道。其Starlink卫星互联业务季度付费用户净增160万户，总规模达1360万户，每用户平均收入（ARPU）从66美元微升至69美元；除常规发射与卫星组网外，公司正建设大型计算集群与服务器以抢占AI算力需求。另一边，直觉外科虽财报公布后股价回落，但其手术机器人业务具备强粘性生态体系，设备进驻后能持续撬动高毛利的器械耗材销售、软件升级与维护合约；虽然个别硬件配置在特定场景下采取折扣以加速渗透，但其高转换成本、稳健的营收增长与经营杠杆显示出长线复利特质。 批判带情绪偏见的AI空头研究 (23:08) 节目将AI怀疑论者Ed Zitron列为“本周败笔”，批评其针对英伟达首席执行官黄仁勋及超大规模云服务商高管的粗俗言论。Zitron在Substack上发文痛骂黄仁勋是贪婪、无灵魂的恶棍，指控其制造虚假供应链短缺谋取私利。Carlson指出，黄仁勋从Denny's底层洗厕所起步，带领英伟达发展至全球市值前列，促使内部约70%员工成为百万富翁，并长期推动并行计算与AI技术演进。Carlson警告投资者警惕此类以个人仇恨为导向的研究，指出先入为主设定恶意结论并倒推证据的分析方法，往往会使研究者将企业的所有投资与产品创新均扭曲为泡沫与骗局，进而丧失对客观基本面与技术价值的判断力。 本期节目通过拆解财务数据与竞争本质，主张在市场因单一指标情绪化抛售Netflix时逆向关注其现金流与内容改良潜力；同时告诫投资者应依据真实的留存率、单位经济效益与长期护城河评估资产，避免被情绪化的极端空头叙事所误导。

[1:45] Joseph Carlson: In today's market, it seems like really the only metric that matters is revenue. And as soon as that slows down, the stock gets heavily penalized.

[0:00] Well, yesterday we had a big day. It was [0:01] the beginning of week two of earning [0:03] season. In this case, we had Netflix [0:05] report earnings. This is a very large [0:06] position in my portfolio. We have SpaceX [0:09] reported as well as Intuitive Surgical. [0:12] Now, I'm going to be spending some time [0:13] going over Netflix's earnings report [0:16] because, like I mentioned, it's a big [0:18] position in my portfolio. And although [0:20] I'm currently in the green on this one, [0:22] I'm in the green by $15,000. Uh, it's [0:24] done well so far. Netflix is a company [0:27] that it has a lot of opinions. A lot of [0:29] people don't even know what's going on [0:30] with Netflix. Are they struggling with [0:32] engagement? Are they growing? Is growth [0:34] slowing? Are they changing around [0:36] everything with their company? [0:37] Apparently, Netflix fired a thousand [0:39] employees. Now, that was big news in and [0:41] of itself, but this wasn't a normal [0:43] firing. They also fired numerous [0:45] executives. They really cleaned house. [0:47] They fired big people, like top people [0:50] at the company. And then we had the [0:51] earnings call. Some things look really [0:53] good on it. Some things look really [0:54] questionable. And in this episode, we're [0:56] going to be going over all of it. In [0:58] this episode, I'm going to give you a [0:59] clear picture of Netflix, what's [1:01] actually going on with the management, [1:02] the reason they're making these changes, [1:04] a clear financial picture of the [1:06] company, how their performance was this [1:07] quarter, and looking into the future. [1:10] So, we'll be going over all of it and [1:11] trying to put this in context. And then, [1:13] of course, we have SpaceX. They gave the [1:14] report yesterday as well. I'll be going [1:16] over that one as well. The changes [1:18] they're making, the reason the stock's [1:20] up, and Elon Musk's remarks that SpaceX [1:23] could do up to a trillion dollars in [1:25] annual recurring revenue by 2028. And of [1:28] course, we have the fail of the week, [1:29] which in this case is the notable AI [1:31] skeptic and bearer Ed Zitron. Ed has [1:34] become popular by making lots of claims [1:36] about how the AI bubble will collapse, [1:38] and he just had a crash out on a [1:40] Substack this morning. It's really a [1:41] taking the mask off moment, so we'll be [1:43] going over that. Now to begin, we'll [1:45] start off with Netflix. Netflix knows [1:47] that this was a dicey quarter. Netflix [1:49] knows and management knows that [1:51] sentiment is about rock bottom on this [1:54] company. Their stock price is cut nearly [1:56] in half. There's many investors [1:58] concerned about engagement. Many [2:00] investors concerned about YouTube. [2:02] YouTube on the charts is is just [2:03] trending up. It continues to climb up. [2:05] Netflix is going about level on [2:07] viewership and even down. Now, before [2:09] going into some of the context here on [2:11] their content slate and competition with [2:13] YouTube, I think it's important to [2:15] understand how truly remarkable of a [2:17] company Netflix actually is in terms of [2:19] the raw fundamentals, the financials of [2:21] it. I have a series of charts here to [2:23] illustrate this. Let's go ahead and [2:24] start off with the first one here. This [2:26] chart is not of the total revenue of the [2:28] company. It's how much the revenue is [2:29] growing every single quarter, [2:31] year-over-year. So, you can see back in [2:33] 2021, Netflix growth was growing really [2:36] fast. But then they ran into a problem. [2:38] their growth basically came to a [2:39] standstill. In fact, in 2022, there was [2:42] one quarter they barely grew at all. [2:43] They actually lost subscribers, so it [2:45] was only pricing power growing them. Not [2:47] a good situation. And of course, that's [2:49] when the stock crumbled. Then Netflix [2:51] instituted a series of price hikes. They [2:54] also instituted ad tears and that caused [2:56] the growth to speed back up. And this [2:58] category up here, 15% or above, is [3:01] really what Wall Street likes to see. [3:03] These 15% grower companies get the [3:06] premium valuation. But Netflix was [3:08] growing that fast because they had a lot [3:09] of tailwinds. They had the price [3:11] increases on top of the password [3:12] crackdown on top of the rapidly growing [3:15] ad tear. So they had a lot of things [3:17] moving in their advantage to cause them [3:19] to grow above 15%. Growth is [3:21] decelerating for Netflix based on just [3:23] the past couple of quarters. And now we [3:25] get to a point where it's growing [3:26] between 9.8% and 10.5% [3:30] right on that double digit limit. And [3:32] that's a little bit of a landmark for [3:34] investors. They want companies that are [3:35] growing above 10% even if you're a [3:37] mature company. So Netflix is now in [3:39] this dicey territory where they're [3:41] trying to still keep growth above double [3:43] digits. Now when I look at this on a [3:45] closer time scale, let's go ahead and [3:46] look at an annual one here instead of [3:48] quarterly. This is what it looks like. [3:50] 2025 they grew 16%. Then we have 2026. [3:53] They're expected to grow this year [3:54] around 13.2 to 13.3%. [3:58] That's still healthy growth. I don't [4:00] think any investor has really big [4:01] concerns with how fast Netflix is [4:03] growing this year. The problem is [4:04] [snorts] when we get into 2027. The big [4:07] question going into 2026 is how much can [4:10] they grow next year? How much can they [4:12] grow in 2027? And the annual assessments [4:15] today are around 10.9%. [4:17] So we see this deceleration. We see [4:20] Netflix going from 16% now struggling to [4:23] grow above 10%. Now this level of [4:25] deceleration is not terrible. Netflix [4:27] went from a period of excessive growth [4:29] now to a more moderate growth level. And [4:31] normally this wouldn't be such a bad [4:33] thing. But in the market we're in today, [4:35] investors basically only care about [4:37] revenue growth. It's like the only thing [4:39] that matters. In a normal market, all [4:41] the financials matter. The earnings per [4:43] share means something or the free cash [4:44] flow or buybacks mean something. In [4:46] today's market, it seems like really the [4:48] only metric that matters is revenue. And [4:50] as soon as that slows down, the stock [4:52] gets heavily penalized. So, when we look [4:53] at a chart like this and we see those [4:55] bars of revenue growth year-over-year [4:57] going down instead of up, that is bad [4:59] news for Netflix. But I don't believe [5:01] the market will only care about revenue [5:03] forever. I think that's just a temporary [5:06] thing. Markets tend to care about free [5:08] cash flow and profits over time. And [5:10] Netflix is incredibly good at growing [5:11] its profits. For example, in this past [5:14] quarter, Netflix did a record amount of [5:16] free cash flow on a normalized basis. [5:18] They did $2.9 billion in free cash flow. [5:21] Now, there's a quarter here that [5:22] obviously beat it, but that's because of [5:23] the Warner Brothers Discovery payout. [5:26] That was $2.9 billion paid to Netflix. [5:28] When you take out that additional [5:30] payment, Netflix just broke its record [5:32] of how much free cash flow it generated. [5:34] This is really strong. Now, you can see [5:37] it quarter over quarter here. When we [5:38] look at this chart, we can see the free [5:39] cash flow over time. Netflix is steadily [5:41] marching its free cash flow higher over [5:43] time. Now, what are they doing with [5:44] their massive amounts of cash flow? [5:46] Well, of course, they raise their [5:48] content budget, so they're spending more [5:49] on content than ever before, but they're [5:51] also doing more in buybacks than ever [5:52] before. Netflix is a company that's [5:54] returning tremendous amounts of money [5:56] back to the investor via buybacks. In [5:58] fact, this chart here shows the growth [6:00] of it. This is on a trailing 12-month [6:02] basis. They bought back $12.9 billion. [6:05] Now, again, some of this is aided by the [6:07] Warner Brothers Discovery payout, but [6:09] even if you factor that out, their [6:10] buybacks are going to be at a record [6:11] high this year. So right now Netflix is [6:14] buying back shares aggressively and [6:16] that's especially helpful when stock [6:18] prices drop. The stock price dropping [6:20] enhances the effectiveness of the share [6:22] buybacks which increases the per share [6:24] free cash flow growth and the per share [6:25] earnings per share growth. All of that's [6:27] really good for the investor. So we're [6:29] not in a situation where the stock price [6:31] drops and there's nothing Netflix can [6:33] do. No tools in their toolbox. No, if [6:36] you're a long-term investor and the [6:37] stock price drops, you can just wait [6:39] around and watch them reduce shares [6:42] continually, making it so that you have [6:43] a greater stake in the company. All of [6:45] this shows that Netflix is an extremely [6:47] profitable, efficient company that can [6:49] return a tremendous amount of dollars [6:51] back to the investor. This isn't money [6:53] that they're diluting by paying out [6:55] stockbased comp and then buying back [6:56] those shares, going on a treadmill. This [6:59] is actually reducing the share count. [7:01] Now, the next thing we can look at is [7:02] the earnings per share. Typically, [7:04] investors think earnings per share is [7:06] important. I know in today's market, [7:07] it's not stressed as much, but earnings [7:10] per share is kind of the thing that's [7:11] really important over time with the [7:12] stock. Netflix is growing their earnings [7:15] per share incredibly fast. This chart is [7:17] misleading. The reason this chart is [7:19] misleading is because it shows from 2025 [7:22] into 2026, Netflix is going to have a [7:25] massive step up in EPS. And then from [7:28] 2026 to 2027, it appears like growth is [7:31] basically halting. But this is not [7:34] really accurate because again we have [7:35] that Warner Brothers Discovery payout [7:37] that counted as net income that was part [7:40] of their earnings per share. So we had [7:42] an artificial boost from 2025 to 2026 [7:45] making it look like the jump from 2026 [7:47] to 2027 as not impressive. Here's [7:50] another chart showing the growth rate [7:51] every single quarter year-over-year. And [7:54] you can see again that during these time [7:55] periods, this is back in 2024 and 2025, [7:58] the growth rate was crazy. And then it [8:00] looks like the earnings per share growth [8:01] rate all of a sudden hit a wall. The [8:03] growth rate did not hit a wall here. [8:04] Even though this chart shows that these [8:06] bars are growing around 6% per year, [8:08] then it's going to speed back up to 21% [8:10] year-over-year. The reality here is that [8:12] if you take out the Warner Brothers [8:13] Discovery merger, in 2026 they grew [8:16] around 20%. In 2027, they'll grow around [8:18] 20% and then in 2028 they'll grow around [8:21] 20%. That's what the true estimates are. [8:24] You can see that better visualized on [8:25] this chart. We're looking at the [8:26] earnings per share growing over time. [8:28] This is where we're at with the most [8:30] recent quarter. And then you can see the [8:31] analyst estimates. The reason that these [8:33] four quarters are so big is because this [8:35] is the trailing 12 months. And once that [8:37] initial Warner Brothers Discovery payout [8:39] is worked out of that trailing 12 [8:41] months, you can see that the EPS [8:42] projected goes down, then it starts to [8:44] climb back up on a normal level. A way [8:46] to visualize cutting out the Warner [8:48] Brothers Discovery payment is just to [8:50] pretend you chopped off the tops of [8:52] these four bars. If you did that, this [8:54] is a picture of their organic growth. [8:55] Now, I understand the financials of a [8:57] company aren't everything. There's [8:58] additional context that's very important [9:00] beyond it. But what I see here is an [9:02] incredibly impressive company, a super [9:04] profitable one. One that is continuing [9:06] to grow strong, generate strong returns, [9:09] one that runs efficiently. It returns [9:11] capital back to the shareholder without [9:12] diluting it. One that even has good [9:14] estimates in the future. It doesn't seem [9:16] like there's too much trouble based on [9:18] the numbers themselves. But like I said, [9:20] there's context behind that. And what [9:21] investors are worried about is all that [9:23] additional context. What is going on [9:24] with engagement and viewing hours that [9:26] isn't captured in these numbers? Well, [9:28] we can go over a couple things. The [9:30] first thing is the media coverage right [9:32] now is extremely negative for Netflix. [9:34] Like super super negative. We have [9:38] articles like this. This is on the front [9:39] page of the Wall Street Journal [9:40] yesterday saying Netflix America's [9:42] dominant streaming service has hit a [9:44] wall. In this article, there's a chart [9:45] here that the Wall Street Journal [9:46] featured. It's not too detailed of a [9:48] chart, but it illustrates the point very [9:50] clearly. The point is that YouTube is [9:53] winning with view time. People are just [9:55] watching more YouTube and Netflix is [9:57] actually faltering a little bit. So we [9:58] just have this picture being painted. [10:00] Now while investors are looking at these [10:01] numbers of YouTube viewership going up [10:03] while Netflix is staying flat, it paints [10:05] this picture that Netflix is a big [10:07] loser. The stock is decelerating a [10:09] little bit and the narrative spins out [10:11] of control. And I could find a hundred [10:13] other media coverage like this painting [10:16] this incredibly bad picture for Netflix. [10:18] But when I was looking at this, I think [10:19] it leaves out some central questions. [10:21] For example, when YouTube gains [10:23] viewership, does Netflix really lose in [10:25] that situation, and this is the central [10:27] point worth making here. People do not [10:29] necessarily cancel Netflix because they [10:32] watch more YouTube. They cancel Netflix [10:34] when they feel like Netflix is not worth [10:36] paying for. YouTube's viewing went up [10:39] 14% while Netflix grew revenue by 12%. [10:43] So Netflix is growing alongside YouTube. [10:46] And if it were the case that YouTube's [10:48] additional viewership causes people to [10:50] cancel Netflix, then the Bears have some [10:52] explaining to do. For example, why is [10:54] Netflix's churn, which means the amount [10:56] of people canceling going down? [10:58] Management just noted that this quarter, [11:00] the most recent quarter, churn went [11:02] down. Fewer people canled than they did [11:04] last year. The best evidence that we've [11:07] got that we're delivering that value is [11:09] churn. We've got healthy retention in [11:11] every region. Q3 churn both globally and [11:14] in the United States improved year on [11:16] year was better than forecast. It's [11:18] already industryleading. See, some [11:20] investors look at this data and they're [11:21] just mystified. They have no clue, no [11:23] potential clue of how this can happen. [11:26] How can this be? How can Netflix reduce [11:28] churn and improve retention while [11:30] YouTube is gaining more viewership? Is [11:33] it possible for someone to spend more [11:35] time watching YouTube while maintaining [11:37] a Netflix subscription? Is that even a [11:40] possibility? Wait a second. Maybe that [11:42] is a possibility. Maybe a lot of people [11:44] are spending more time on YouTube while [11:47] also enjoying Netflix sometimes. That [11:50] that may actually be the case. And of [11:52] course, when you think about it, it's [11:53] obviously the case. People can spend [11:55] more time watching YouTube as part of [11:57] their daily routine, their commute. They [11:59] can put videos on while they're eating [12:01] lunch. And they can also have a Netflix [12:03] subscription because there might be a TV [12:05] series that they want to watch. Maybe [12:06] they're in the East of Eden. I don't [12:08] know. Maybe they're watching some [12:09] different show. And if they're looking [12:11] forward to watching a couple episodes [12:12] this weekend, they might also maintain a [12:15] Netflix subscription. See, this is the [12:17] type of juxtiposition that doesn't help [12:19] investors. Every time you show a chart [12:21] of YouTube viewership going up, that [12:23] does paint the picture that Netflix is [12:24] losing, but that's not necessarily the [12:26] correct takeaway. And I think that's the [12:28] point here. Netflix is increasing its [12:31] revenue. It's increasing its viewership. [12:33] Churn is going down. Retention is [12:35] improving while YouTube is growing. And [12:37] part of the difference here is the [12:39] purposes that these two things serve. [12:41] YouTube is primarily for podcasts, [12:44] commentary, tutorials, gaming, [12:47] personalities. Frequent and casual [12:49] viewing makes it a daily habit. Netflix, [12:52] on the other hand, is for stories, [12:55] movies, series, and shared household [12:57] entertainment. If you're into the latest [12:59] series that's on TV, East of Eden or [13:02] Below, or whatever it may be, maybe [13:03] you're watching old reruns of The [13:05] Walking Dead. They're all on Netflix. [13:06] Maybe that one show is causing you to [13:09] stick around to Netflix week after week [13:11] because The Walking Dead is not on [13:12] YouTube. That's why these can both exist [13:14] in the same sphere. People put a high [13:17] value on entertainment. Even if there's [13:19] just a couple good shows once in a while [13:21] to watch on Netflix, for most people [13:23] that justifies an $8 a month [13:24] subscription. So, to be clear, the [13:26] argument that I'm making here is not [13:27] that YouTube doesn't matter or it's not [13:29] competitive at all to Netflix. I do [13:31] think it offers people different [13:33] opportunities of what to spend their [13:34] time on. So, it is a competition, but [13:37] the the bigger point here is that [13:39] Netflix will be successful or not [13:41] successful based on how good their [13:43] content is. That's really what it comes [13:44] down to. If people really feel like [13:47] paying for a subscription is worth it, [13:49] they will pay for it. Even in addition [13:50] to YouTube, the only way for Netflix to [13:52] truly thrive is if they can offer [13:54] entertainment worth paying for. And that [13:56] has been the problem. When you look back [13:58] just like a year ago, Netflix seemed to [14:01] have huge cultural hits after huge [14:04] cultural hits. You had like [14:05] Bridgetgerton, which may not be your cup [14:07] of tea, but it was a a big cultural hit. [14:09] We have Squid Game, again, not for [14:12] everyone, but it was incredibly popular. [14:14] And then we had Stranger Things, which [14:15] seemed like it was for everyone, like [14:16] everybody watched that show. These are [14:18] massive cultural hits. And then they [14:19] just stopped. Like the Wall Street [14:21] Journal said, it just hit a wall. And [14:23] [snorts] this is part of the risk with [14:24] Netflix. It's a company that has [14:26] creative risk. Whenever they release a [14:28] series, they don't know how it's going [14:29] to do beforehand. They have to just wait [14:31] and see. And Netflix has been [14:33] overreactive in some cases, cancelling [14:35] series prematurely, which has hurt their [14:37] library. But it seems like Netflix is [14:40] getting the message. They need better [14:42] shows and they need them quickly. They [14:44] need to change gears. They no longer can [14:46] make mediocre made for streaming [14:49] television and movies. And the way I'm [14:50] confident that Netflix has got this [14:52] message is from these recent layoffs. If [14:54] we look at what's actually going on [14:56] here, I put together a little profile of [14:58] the history of the individuals that were [15:00] laid off and the new people they hired [15:02] and it paints a picture that Netflix is [15:04] really adapting to the feedback. The [15:05] first one that's confirmed is Bella [15:07] Bajaria is fired. She's completely gone. [15:10] Now, in her career prior to Netflix, [15:12] what she brought to the table, her slate [15:14] of content was were things like Brooklyn [15:16] 999, The Mindy Project, Superstore, [15:18] Bates Motel, Chicago Dramas, and she [15:21] moved up in the ranks to the chief [15:22] content officer since 2023. Supervised a [15:25] broad global slate around Bridgetgerton, [15:26] Wednesday, adolescence, and expanded [15:28] live events, the NFL, WWE, so on. This [15:31] is part of the flywheel of Netflix [15:33] making hit shows within the United [15:35] States whether they're produced in the [15:36] UK and Canada wherever. If they're a hit [15:39] in the cultural zeitgeist of the United [15:41] States, it carries through the entire [15:42] world. We've seen that many times before [15:44] and that happened with shows like Squid [15:45] Game. The major point of criticism and [15:48] where I think Netflix is actually [15:49] changing gears here is they want more [15:51] breakout US television. We just have not [15:53] had anything breakout recently. Apple's [15:56] running away with it. Apple has shows [15:58] like Severance. They have a Widow's Bay. [16:00] They have all these shows that are doing [16:02] really well. Netflix really doesn't have [16:03] that much to speak of. The issue here is [16:05] the frequency of must-see hits, shows [16:08] that people feel like they have to sign [16:10] up for to see on Netflix. So, she's out. [16:12] And who did Netflix bring on to replace [16:14] her? They brought on someone named Peter [16:16] Rice. Now, looking at Peter Rice's [16:17] history, he has experience with 20 [16:19] Century Fox and Disney and a really good [16:22] side of Disney. These aren't like the [16:23] little kids shows. He's on the FX side, [16:25] and I really like his history here. He [16:28] started off a long time ago actually [16:29] when I was born 1989. Romeo and Juliet, [16:32] the first X-Men, Mulan Rouge. Those are [16:35] are all great movies. With Fox [16:36] Searchlight, he led shows like Sideways, [16:38] Little Miss Sunshine, Juno, Slum Dog [16:40] Millionaire. At Fox/D, he was over shows [16:43] like This Is Us, Abbott Elementary, The [16:45] Bear, and Shogun. Now, why would Netflix [16:47] want this guy? Well, he has a much [16:49] better history of incredibly prestige [16:52] creative deal making. So, he's not so [16:54] much for like the mass market. The goal [16:56] here isn't to find someone that can [16:58] create content for every little lo local [17:00] jurisdiction and spread uh you know [17:02] daytime television type of shows [17:04] everywhere. The goal here is to make it [17:06] so that Netflix has the cultural hits, [17:09] the must-sea television, the widows, the [17:11] widows bay, the severance shows, all [17:14] these ones that people really sign up [17:15] for services to see, Netflix wants them. [17:18] This is their guy to try to help do [17:19] that. One of the interesting things here [17:20] is it looks like Netflix is becoming [17:22] less algorithm driven and taking more [17:24] creative risks with their big hits. So [17:27] that's the biggest change that's been [17:28] confirmed so far. Now Netflix management [17:31] won't come out and say, "Look, this [17:33] person that we fired wasn't doing a good [17:34] enough job creating original content and [17:36] really cultural hitting shows. They're [17:38] not going to criticize who they just let [17:40] go." They want them to be successful, [17:42] but they're clearly changing gears [17:43] because they want better shows, ones [17:45] that seem like they come from Warner [17:47] Media or Apple TV. movies that feel like [17:49] ones created by real directors taking [17:51] artistic risk. That's the direction [17:53] Netflix is going because they need those [17:55] hits to generate continual growth [17:57] throughout the entire world. Now, [17:58] there's another change that they're [17:59] potentially making. So, this is [18:01] speculative. We know that they're in [18:02] talks with these two people, but Netflix [18:04] is in discussion with two previous [18:06] people that were really big wigs at [18:08] Warner, and they are over a lot of great [18:10] stuff. Michael Duca and Pam Abdi. with [18:13] Abdi at Warner. They oversaw a ton of [18:15] the biggest hits. Shows like One Battle [18:17] After Another, House of Gucci, The [18:19] Sinners, Minecraft, Weapons, on and on. [18:22] These two are the real deal, and I hope [18:23] that Netflix is able to pick them up [18:25] because the biggest thing that they have [18:27] is a good relationship and connection [18:29] with the rest of Hollywood. It' make it [18:31] so that Hollywood producers and big-time [18:33] filmmakers would seriously consider [18:34] working with Netflix on films that they [18:36] otherwise wouldn't. So, you can see the [18:38] direction Netflix is going here. This [18:39] isn't just a run-of-the-mill layoff by [18:42] saving some margin this quarter. That's [18:44] not their goal. It is a change in [18:46] direction of their content to raise the [18:48] quality of content to take more genuine [18:51] risks to make stuff that is truly art [18:53] and not just optimized streaming service [18:55] hits. Now, when I look at Netflix [18:58] overall, I do think that this company [19:00] has a genuine issue with its content. [19:02] The majority of it is just not good. A [19:05] lot of their shows, they're just not [19:06] good. They get crushed by Rotten [19:07] Tomatoes. They get crushed by Letterbox. [19:09] They get crushed by IMDb. And there's [19:12] services like Apple that are knocking it [19:13] out of the park. They're creating real [19:15] prestige premium television. And it's [19:18] not that Netflix needs all of its [19:19] content to be like that, but they need [19:20] more of it to be like that than they're [19:22] currently giving us. We need to feel [19:23] like there's more HBO shows, more Apple [19:26] TV level of quality shows on Netflix [19:28] service. And the company has the budget [19:30] to do this. The reason they're not is [19:32] specifically because of management, [19:34] which they're now changing. So when I [19:36] look at Netflix, I view it in one simple [19:38] way. The company is as good as it is [19:41] today with the content it currently has. [19:44] Imagine how good this company would be [19:46] if they genuinely get in a rhythm of [19:48] generating extremely good content. If [19:51] that happens, this company could fly. [19:54] The stock could soar far above what it's [19:56] doing. And in the meantime, Netflix is [19:58] trading at a low valuation. The Ford PE [19:59] ratio is at an 18 right now. The free [20:02] cash flow yield even with stockbased [20:04] comp is at 4%. So this is one where [20:06] currently I think the downside is rather [20:08] limited. A lot of the skepticism and [20:10] pessimism is already priced in and [20:12] there's a lot of upside if Netflix can [20:14] improve things and grow faster than [20:16] expected. Now of course at the same time [20:18] we also had SpaceX give their earnings [20:20] report. It was very impressive. SpaceX [20:22] is growing super fast and that's really [20:24] no surprise to anyone. It was expected [20:26] to grow fast. Uh when I looked at this [20:28] again, this is why I mentioned that I [20:30] think in a year or so they'll have [20:31] revenues of $40 billion. So the the [20:34] numbers right now are a bit misleading. [20:36] The quarter before $7 billion in the [20:38] quarter they posted 14.5 billion. That [20:41] is fast growth. They're going to get up [20:42] to $40 billion quickly. When we look at [20:45] the reasons for its growth, we can take [20:46] a look at SpaceX and divide it up into [20:48] two different parts. SpaceX is basically [20:51] a very profitable connectivity business [20:54] with satellite internet. That's one half [20:56] of the business. And it's really good. I [20:58] love this business. I can't stress that [21:00] enough. We have subscribers going up [21:01] from the previous quarter at 12 million [21:04] to now 13.6 million. So they added on an [21:07] incremental 1.6 million subscribers in [21:10] the quarter. They're doing a great job [21:11] with it. We also have this chart here [21:13] showing the SpaceX monthly average [21:16] revenue per user. This y-axis does not [21:18] start at zero. It starts at 66. So it [21:20] just helps illustrate the trend that [21:22] last quarter it was at $66. Then this [21:24] quarter it edged up to $69. very good [21:27] growth and both the number of [21:28] subscribers and the average amount the [21:30] subscribers are paying. Then we have the [21:32] space business. I don't really count [21:34] this as a business in and of its own. It [21:37] kind of is, but it's really not that [21:38] meaningful and it's really there to be a [21:40] catalyst for the connectivity business. [21:42] But the other side of this, really [21:44] what's pushing the numbers is the second [21:46] half, which is AI. Elon's building these [21:48] giant computers, giant server farms that [21:51] will fulfill on a lot of the AI demand. [21:52] Outside of the grand deals promises [21:54] we're used to with Elon Musk, I didn't [21:56] find anything really concerning about [21:57] SpaceX's report. I thought it was good [21:59] overall and I think it gave investors [22:01] exactly what they're looking for. Um, [22:03] next up we have Intuitive Surgical. This [22:05] is a company I've not yet invested in, [22:07] but I really like the stock. I think [22:09] it's a great company. I plan on doing a [22:11] deep dive on Qualrum in it in the [22:12] future. But basically, this company is a [22:15] medical platform. They're not just a [22:17] device seller. They sell a device and [22:20] then when the device is installed, they [22:22] offer an array of services and upgrades [22:24] and expansion. When their device gets [22:26] installed, doctors and surgeons also [22:28] learn how to use it. Once they learn how [22:30] to use it, there's a little bit of [22:32] switching costs cognitively with [22:34] learning a different system. So, it [22:35] becomes part of an entire ecosystem. And [22:38] I won't go into too much detail in this [22:40] quarter other than saying this is a [22:43] great great quarter for Intuitive [22:45] Surgical. The stock price is down today. [22:48] I don't think it should be. They showed [22:50] real growth, real operating leverage. [22:52] They're trying to take more market [22:53] share, so they've lowered some prices of [22:55] some machines in different [22:56] circumstances. I don't view that as a [22:59] red flag. I really think this is a [23:00] strong quarter by Intuitive Surgical. [23:02] Now, that's all we had yesterday, and [23:03] I'll have more commentary on the reports [23:04] that have come out today with Meta and [23:06] others reporting later this week. Now, [23:08] moving on, we get to the fail of the [23:10] week, which in this case, I have to [23:11] highlight Ed Zitron. He is a notable AI [23:13] bear and he comes up with a really [23:15] extensive thesises on why all of this is [23:18] a bubble and it's going to collapse. [23:19] What we see today is a a part of Ed [23:23] Zitron's post. This is from a Substack [23:25] and I think this is the mask coming off [23:27] the face. He says side note F Jensen [23:30] Wong. Now he uses different different [23:32] language there but he says F. Jensen [23:35] Wong man. This means that increased [23:37] prices of RAM and consumer electronics [23:38] was a result of an artificial supply [23:40] chain crisis created by Jensen Wong, [23:43] pushing Nvidia's customers to take early [23:46] deliveries of GPUs. Jensen Wong is [23:48] responsible for making life worse for [23:51] everyone. What a greedy, joyless, [23:53] soulless oaf of a man. Doing this [23:55] requires you to be a certain kind of low [23:57] that no money or status can ever fix. [24:00] Jensen Wong is a piece of shiz. Every [24:03] hyperscaler CEO is too. So it's not just [24:06] Jensen Wong according to him. Every [24:08] hyper hyperscaler CEO is a piece of [24:10] shizz. These scumbags drove the price of [24:13] everything up so that they could help [24:15] they could all help Jensen Wong make [24:18] more money. We did not need him to build [24:20] all these GPUs. He just wanted to sell [24:22] them to boost earnings. Everyone who [24:24] participated in the early shipment of [24:26] GPUs is a scumbag. All of that is a [24:29] direct quote. I haven't changed the [24:30] context of any of it. He has pure [24:32] hatred, unfiltered enmity towards these [24:35] people. Completely hates them. And it's [24:37] been visible in interviews in the past. [24:39] I've noticed that he completely hates [24:40] anybody that's running these successful [24:42] companies. But now it's really just [24:44] there's just no hiding it. He's not even [24:45] attempting to hide it anymore that he [24:47] truly hates every one of these people. [24:49] And this is supposed to be someone [24:50] that's an investor, objective, [24:52] clearsighted, not having his analysis [24:54] driven primarily by personal animus for [24:57] different groups of people. [24:59] He's calling the most successful [25:01] business people in American history, all [25:03] of them, scumbags and saying, "F all of [25:06] them." These are the people that have [25:08] literally created the most successful [25:09] businesses in the world, giving the [25:11] United States a powerful position in [25:13] artificial intelligence for our own [25:15] uses, for our own advancement, for own [25:17] defense. And then the people like [25:18] Jensen, who he specifically points out [25:20] here, Jensen started as a Denny's [25:22] employee. He was scrubbing toilet seats [25:25] in part of his life. He continued to [25:27] build a company Nvidia and run it his [25:30] entire life to become the biggest [25:31] company in the world, making literally [25:34] tens of thousands of millionaires with [25:37] him. In fact, there's polls that show [25:39] that around 70% of Nvidia employees are [25:42] millionaires. That's thousands of people [25:45] that are made rich through Jensen, [25:47] through him creating this company, [25:48] through him navigating it to have so [25:50] much preparation for both uh crypto, AI, [25:53] gaming, you name it, all the computation [25:55] that would eventually happen. He created [25:57] an incredible company, made tons of [25:59] people rich at the same time, and [26:00] instead of living a lavish life, he just [26:02] keeps working. He enjoys working, but [26:05] he's the bad guy. He's the evil one that [26:06] you should hate. This is this is the [26:08] level of analysis we're getting from the [26:09] AI bears. Now, this should go without [26:11] saying, but if your research or who [26:14] you're following their research is [26:16] primarily driven by unfettered hatred [26:18] towards different individuals, it's not [26:20] likely to be the best research. It's not [26:22] likely to be the most objective. It is [26:24] motivationdriven research. You already [26:26] have a motivation. You already have a a [26:28] conclusion in your mind. It's [26:30] predetermined. And you'll just use any [26:32] evidence you can find or any scrapped [26:34] piece of evidence together to get to [26:35] that determination you've already made. [26:37] Ed has figured out that these guys are [26:39] evil. And so anything they do is bad, [26:41] anything they do is evil, and it's all a [26:44] bubble, it's all a scam, it's all gonna [26:45] explode. That's his thoughts. If that's [26:47] the analysis you're following, good [26:49] luck. That's it for this episode. Hope [26:51] you enjoyed. See you in the next one.