Investing

Netflix > $75b

Netflix > $75b 150 150 JP

Netflix has a market cap now under $75 billion and still boasts more than 222 million users globally. Could they charge $20 a month for a subscription in the next 5 years? Still don’t know what the market will handle. The company’s current price hike has (along with inflation across the board) caused slow subscriber growth. At the same time, there are many more options for streaming and consumers have to choose or bundle.

If only Netflix could also have a partnership with Disney, Hulu, Amazon, and/or YouTube AND they could create a better UI (user interface). If nothing else a better UI would make for a better UX (user experience) and adding some traditional media things like live sports would be great. All that said, it’s a bargain a this price. People always pay a high price for the only game in town. That’s not the case anymore.

However, the company still generates over $5 billion in net profit on $30 billion a year in revenue. That is done with 46% gross margins, 15% net margin, a 31% return on equity, and the best content selection available. Also, I hate waiting for the next week. Binge watching is still the preferred way to consume content for me. What the market decides if Netflix changes its model at all, only time will tell.

And, at $74.4 billion, Berkshire Hathaway could buy it like it should’ve bought Disney. Long-term, people will still join and watch its streaming service and the prices will continue to rise and the content library will continue to grow and get more valuable. Buffett should bag this elephant.

PLTR: Dollar Cost Average

PLTR: Dollar Cost Average 150 150 JP

Palantir offers transformational software for business and government use, both large a small. It’s the leader in terms of quality, value, and impact in my opinion. To that note, as with the rest of the market, it’s taken a hit. I originally wrote about it in October 2020 when the stock was hovering around $10 a share. In that time, it’s triple in price and then come crashing back to earth. Long-term, I think it’s a $100 billion company, or more depending on how much dollars are left circulating. That would be a 7x increase from today’s closing price of $7.29 per share. So, even if you bought it at $10 or $30, if you have the money to dollar cost average, it likely makes a lot of sense to do so.

At $10, let’s say you bought 1,000 shares for a $10,000 investment, you need to buy 1370 shares at this price. That will bring your average price down to $8.44. If you put $10k up at $30, doing the same now will bring your cost average down to $11.76. In both cases, if the price just gets back to it’s high in 2021 you net over 200%. If it does reach the $50+ mark you make 4-5x. Don’t get me wrong, the stock could still go to $5 a share. I just think long-term Palantir continues to be the dominate player with the niche data software it sells.

The next chapter…

In 2018, I had ceased publication of my paid newsletter and while I was still writing articles for GuruFocus, my main work was with business leaders. By 2019, I had started a company called Key Bridge, named after a landmark here in Washington, DC; and as a foundational tenet of the new service. A pandemic and many rounds of golf later, we’re building again.

Washington, DC 20003