In my personal opinion, an obvious winner of the shift in the capital cycle from excess to austerity is Netflix.
Hulu, Disney+, Max, Peacock, and Paramount+ are all either unprofitable or barely profitable. Their executives have (as a group) commented on seeking profitability, as opposed to previous comments about focusing on user growth. What this translates into is subscription price increases.
Unlike these subscale players, Netflix has the minimum efficient scale needed to purchase the licenses that the subscale players need to offload to generate profitability. On top of that, Netflix has a huge lead in actual user watch time (read pricing power). So, as Netflix's competitors raise prices and offload content to Netflix, this will allow Netflix to actually raise prices faster than their competitors. Due to the inherent operating leverage in Netflix's model this will translate to earnings/FCF growing faster than revenue.
I do think this is a bit of a consensus view and as disclosure I am long Netflix.
Interesting to consider. But I would certainly want to screen for candidates that are “ capital light” vs capital intensive, have good moats, and preferably have significant management ownership.
Interesting take on rental cars. If you want to invest in rental cars, IMO the best way to play the rebound is Sixt and Autohellas. Both have large ROIIC & sustainable RoICs above 20% w nice runways.
In my personal opinion, an obvious winner of the shift in the capital cycle from excess to austerity is Netflix.
Hulu, Disney+, Max, Peacock, and Paramount+ are all either unprofitable or barely profitable. Their executives have (as a group) commented on seeking profitability, as opposed to previous comments about focusing on user growth. What this translates into is subscription price increases.
Unlike these subscale players, Netflix has the minimum efficient scale needed to purchase the licenses that the subscale players need to offload to generate profitability. On top of that, Netflix has a huge lead in actual user watch time (read pricing power). So, as Netflix's competitors raise prices and offload content to Netflix, this will allow Netflix to actually raise prices faster than their competitors. Due to the inherent operating leverage in Netflix's model this will translate to earnings/FCF growing faster than revenue.
I do think this is a bit of a consensus view and as disclosure I am long Netflix.
Alaska airlines acquiring Hawaiin airlines... hmm, another DoJ case potentially cooking?
Interesting to consider. But I would certainly want to screen for candidates that are “ capital light” vs capital intensive, have good moats, and preferably have significant management ownership.
Interesting take on rental cars. If you want to invest in rental cars, IMO the best way to play the rebound is Sixt and Autohellas. Both have large ROIIC & sustainable RoICs above 20% w nice runways.