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Valuation and Analysis of Netflix
- Netflix's stock has dropped 43% since November 2021, and there are doubts about its ability to keep growing.
- Analysts have downgraded the stock, and investors are concerned about the potential increase in interest rates.
- Projections and fair value calculations are based on past performance.
- Netflix reported full-year revenue of $30 billion, operating income of $6.2 billion, and 222 million paid members.
- However, they missed on new subscribers in the fourth quarter of 2021, with only 2.5 million additions compared to the expected 5.8 million.
- This has led some to believe that Netflix may be reaching a limit on growth.
Management and Competitive Advantages:
- Netflix's conference calls with analysts are efficient and effective.
- However, some individual investors are not checking the calls, despite owning 4% of the company.
- Management does not see any structural changes in the business and attributes the lower subscriber growth to macroeconomic strains and competition.
- While there are concerns about Netflix's growth, management remains optimistic.
- The company's big titles are landing later in the quarter, and they are changing prices in countries every quarter.
- Overall, Netflix's future growth will depend on its ability to adapt to competition and changing market conditions.
Why Are YouTube Ads Full Of Scams? - How Money Works
Social Media: The Drug We Can't Resist
- Social media companies use our attention as a product to sell to advertisers
- Google's Adsense generates billions of dollars in revenue from online advertising
- However, ads on social media platforms often appear to be full of scams
How Advertising Works:
- Advertising on YouTube and other social media platforms goes through a system called Adsense
- Businesses can create ads and launch them to target a specific audience
- YouTube's algorithm runs an auction to determine which ads are shown to which viewers
- The algorithm chooses the highest bidder that the viewer is likely to watch for long enough to get paid
- Advertisers only pay when the viewer watches at least 30 seconds of the ad, watches the entire ad if it's less than 30 seconds long, or clicks on the ad link
Why Ads on Social Media Are Full of Scams:
- Most viewers skip ads on social media platforms, so advertisers need to keep them engaged long enough for their ad to count
- Ads often use flashy visuals or bizarre gameplay to keep viewers distracted and engaged
- Some ads may create a strong impact in the first 20 seconds and then end with horrible screeching to make viewers skip the ad, allowing the advertiser to avoid paying
- However, the algorithm chooses the highest bidder that the viewer is likely to watch for long enough, so these tactics are unlikely to work
- Social media companies use our attention as a product to sell to advertisers
- While advertising on these platforms is a great business model, ads on social media often appear to be full of scams
- The algorithm used to choose which ads are shown to which viewers may be the reason for this, as advertisers need to keep viewers engaged long enough for their ad to count
- The exact formula for the algorithm is a closely guarded corporate secret, but all these companies will be running an algorithm similar to the ad space auction house.
Accounting Weekly Show S02 E04
Hi everybody and welcome to the UTS Accounting Weekly Show! It's week four and I always forget, but my name is Dr. Amanda White and I'm Dr. Nelson. So Amanda, how are you doing this week?
Oh look, I'm in self-isolation still waiting for the results of a test. My son was a close contact, so you know, we're surviving, trying to just take it one day at a time. How are you?
I'm generally well. Um, I was designated a casual contact, so... and your test result has come back from before my test result. I think I got tested after.
Yeah, yeah. So I live in the city, so maybe there's fewer people getting tested, so maybe...
Well, I live in an LGA of concern, so also people have to get tested every three days for work to travel. Um, but yes, curfew, but you know, we're doing well. I'm trying not to eat too many carbs. Stress eating carbs is my thing.
Imagine there's lots of temptations.
Well, I bought a big bag of bread flour, so you know, I could make as many carbs as I...
I've been hearing a lot of baking. People are doing a lot of baking these days. A friend is trying to like replicate all those desserts with koi. That's fancy.
I know. So, uh, this week our big story, the biggest business news, has to be BHP, Broken Hill Proprietary Mining Company, and Woodside combining their operations and creating this mega oil and gas company. And I think, in our research, it's going to be a top 10 independent energy company by volume of production. So super big deal. They're now, um, so BHP announced as part of the release of the annual report that they're basically, uh, in some ways digesting their or the gas portfolios, the Woodside, and in return, they're getting they're getting stock from Woodside to then give back to shareholders. So I was wondering, Amanda, what is why would they do this and what are the benefits?
I think BHP is signaling a bigger move towards sustainability. Obviously, they're still in the steel business, but they're moving some of their assets into this other merger. So part of that signaling sustainability, there's also lots of cost efficiency. So the reason that businesses in the same industry will often merge is because of cost efficiencies and that economies of scale when businesses merge within the supply chain, that's a different type of economy of scale. Yeah, and that way they can share knowledge innovation. They can concentrate their R&D. So they're probably doing the same types of research and development work and exploratory scientific work in specific areas. And this way they can work more efficiently and hopefully generate new technologies and more sustainable technologies faster.
Okay, so basically, you know, if one person, if one company is going to engage in research and development, they may as well, you know, both share their knowledge and innovation because obviously because in the market you have, you know, companies trying to monopolize their innovations and their patents. So, you know, if you still need to have competition, right? Competition still spurs organizations on. I think if you had a single monopoly that would actually stifle some of that innovation because there's no need to innovate because you don't have any competitors who are innovating as well.
Yeah, but this is a pretty global market for oil and gas, right? So you probably don't need within Australia, you probably don't need to sort of have that much competition because you're going to be competing the likes of, you know, Saudi Aramco and Saudi Arabia. So my question followed to that is how does this impact the accounting?
This is an accounting nightmare. If you're an accountant of one of these companies, you have to take, you have to split out all the assets from BHP from oil and gas, figure out what their value is, transfer them in ownership, move all that information, all that historical data in their systems over to the Woodside systems or whether they go to a brand new system. So there is so much information to transfer and there are so many accounting issues. I talked about, you have to split off those assets, figure out what they're worth, because when you transfer those assets to a new entity, we need to figure out what the fair value of those is so that they can be recorded. When you have the merger of these two organizations, you're potentially going to have some intangible assets which need to be accurately calculated. Add to that a combination of systems, people, and then on top of that also the restructuring costs that come with that. You're going to need to figure out how you're going to consolidate these two companies so you're accounting for a group. And on top of that, you need to think about the audit perspective. So the auditor in the first year of any sort of merger or joint venture acquisition, there's extra risk because all of these changes are happening while they're trying, like, Oh, is this the right value for this item? I don't know. We have something similar at Woodside. It's worth this. If something at BHP, oh, it's worth much more money. So trying to come to a consensus on all of this can be quite complicated. And the auditors are likely also going to need to employ experts on the petroleum, on the asset side, on the valuation side, on the intangible side as well. So auditors and accountants might not know everything, and so they're likely to need to also hire consultants to get their expertise to help them answer these questions. Accounting nightmare, but you know, it's always interesting to see financial statements after that first year of the merger. And analysts, of course, are going into prediction mode. They're trying to figure out what splits off. They're probably creating their own models of what the financials of a combined firm should look like so that they could make their own predictions.
Well, that's exciting stuff. Something to look forward to next year's financial analytical nerd heaven, I'm sure.
Absolutely. And so for our second story this week, we have Snoop Dogg. Never thought he'd make it onto this podcast, but Snoop Dogg. So he is the brand ambassador for one of Treasury Wines, the Treasury Wine is a listed Australian company that sells wine. So he... Yeah, and then the brand is called 19 Crimes. So Treasury Wines, they actually did a lot better than expected. They were super reliant on China for sales, and then obviously because of the whole political situation, stop buying as much wine from them. But they still did pretty well in terms of their profit margins. They had a EBITDA that... EBIT that fell from... that fell, by the way. So basically, your net profit before you add in tax and interest. Okay, so... So it's considered a bit more fundamental, and, you know, it doesn't take... takes into account things that a business can change, but basically, it only fell by about... about two million dollars, roughly, to $510 million. I guess this is the Snoop Dogg effect. So this is when Snoop Dogg comes in because sales of his wine brand that he's the ambassador for actually skyrocketed. You know, they sold 5 million cases in 2020-2021 together, and that's about 16% of their total sales. So people are hailing Snoop Dogg as the savior of... We've seen Snoop Dogg in a lot of different places. I think he's on Menu Log ads, and... And so when you think about celebrities and their value now, it used to be, what did they get from album sales, from merchandise, from concert ticket sales? And so, like businesses who are looking to diversify because of COVID, I think celebrities who can't go on tour, you know, probably earn less revenue from streaming services than they used to from CD sales and royalties. People probably don't buy as much merch as they did before because we can't have concerts. You know, they're looking for other ways to generate revenue, and through brand collaborations, you know, we're seeing this everywhere. And Snoop Dogg is into wine. You've got the Kardashians, you've got wannabe social media influencers where brands are... have a product, wear it in a post, you know, on Insta.
ICT Twitter Spaces - How To Win Trades: An Interactive Love Story
In this article, we will be discussing how to win in trades and find consistency in trading. We will use the non-farm payroll event as a foundation for this discussion. It is important to understand yourself and your personal weaknesses in order to find success in trading.
- Understanding your personal weaknesses is a critical part of finding consistency in trading.
- Many of us resist this endeavor because it requires us to face our weaknesses and flaws.
- There are no shortcuts to finding consistency in trading, and it requires discipline and objectivity.
- It is important to identify what makes you prone to recklessness and avoid it.
- Substance abuse, such as alcohol and drugs, can hinder your ability to be consistent and should not be invited into your trading.
Finding Your Lane:
- It is important to find your own lane in trading and not try to mimic others or keep up with social media trends.
- You must endure failures and figure out what will cause you ruin before finding winning consistency in trading.
- Personal relationships and character flaws can affect your trading, so it is important to identify and address them.
In order to find success in trading, it is crucial to understand and know yourself. This requires facing your personal weaknesses and flaws and identifying what makes you prone to recklessness. Finding your own lane and avoiding substance abuse can also lead to consistency in trading. Remember, there are no shortcuts to success and discipline and objectivity are necessary for finding winning consistency in trading.
Luckin Coffee Fraud Explained
Chinese companies have become popular for portfolio diversification, particularly on major US exchanges. However, investors must be cautious about Chinese listings due to lax government regulations and fraudulent companies.
Looking Coffee's Story:
In 2017, two Chinese entrepreneurs opened a premium coffee company to compete with Starbucks. They used technology to offer a unique customer experience, such as only accepting payment through their app.
The company rapidly grew, raising $350 million from investors and going public on the NASDAQ. However, in January 2020, a short-selling firm alleged that the company had fraudulently inflated their profits by up to 88%.
Looking Coffee denied the allegations but an internal investigation confirmed they had fabricated $310 million in sales. The company fired its CEO and COO, and the NASDAQ delisted the stock. The company continues to operate in China but filed for bankruptcy protection in the US.
Looking Coffee's story highlights the importance of caution when investing in Chinese companies. Despite aggressive advertising and rapid growth, fraud can occur, and investors must do their due diligence.
How to Test Your Innovation Ideas: Future Foundry Live - The Highlights
Music Music is a critical part of our lives, and it is no surprise that music has been used to influence and inspire people for generations. In the corporate world, innovation is essential to stay ahead of the competition, but not all ideas are worth pursuing. In this article, we will discuss why testing ideas is critical, how to test ideas effectively, and why traditional business plans may not work for innovation.
Why Test Ideas?
Ideas without evidence are worthless. To develop a new venture, product, or service, you must prove three things: it is desirable to customers, it is feasible technically and organizationally, and it is viable financially. Without evidence for all three, it is a waste of time, money, and effort. Things people want that you don't know how to build, things you know how to build but won't generate a return, and things you don't know whether anyone wants are all pointless. Blind faith in an idea's success is the main reason for innovation initiatives' failure.
How to Test Ideas Effectively?
Testing new venture, product, or service ideas is about testing assumptions. All assumptions need testing and evidence before investing in the idea. Testing takes time and costs money, but it is much faster and cheaper than not testing them. The first step is to flush out all assumptions. The Value Proposition Canvas helps in finding product-market fit and understanding customers. You can lay out all assumptions around what jobs people are trying to get done, what pains they experience when getting those jobs done, and all the gains we think they might have. Then, you can test those assumptions with experiments.
Why Traditional Business Plans May Not Work for Innovation?
Traditional business plans are the worst way to get from idea to value because the line is not straight. It's up and down, forwards and backward. Business plans maximize the risk of failure throughout the messy process. If you sell a business plan to your sponsor or senior leadership, you are condemned to execute the plan. However, most ideas do not look the same when they make it through the process. A more effective way is to design experiments to test assumptions, which are scalable, repeatable, and systematic.
Testing ideas is critical because ideas without evidence are worthless. Testing assumptions takes time and costs money, but it is much faster and cheaper than not testing them. Traditional business plans may not work for innovation because the process is not straight. It is up and down, forwards and backward. Designing experiments to test assumptions is a more effective way, which is scalable, repeatable, and systematic. By testing ideas, you can eliminate risks, improve return on investment, and move faster in the market.
Future Foundry Live - How to test your innovation ideas
Welcome to Future Foundry Live, where we discuss corporate innovation and testing ideas. In this second installment for 2022, we'll be discussing why testing ideas is crucial, how to test them effectively, and examples of failed innovation initiatives. Let's dive in!
Why Test Ideas?
- Ideas without evidence are worthless.
- You need to prove three things: desirability, feasibility, and viability.
- Testing ideas reduces risk and helps you make better investment decisions.
How to Test Ideas Effectively
- Place small bets on lots of ideas and gather evidence for them.
- Design effective experiments to validate assumptions and gather data.
- Kill ideas that don't validate before investing too much time and money.
Examples of Failed Innovation Initiatives
- CNN Plus: A paid streaming news service that failed to attract subscribers.
- Business plans: They maximize the risk of failure and don't survive contact with customers.
Innovation is critical for growth, but traditional approaches to testing ideas often lead to failure. As a corporate innovator, your job is to reduce risk by placing small bets on lots of ideas and gathering evidence for them. By designing effective experiments and killing ideas that don't validate, you can make better investment decisions and avoid wasting time and money on initiatives that won't create value.