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This is a great 25iQuiz: How would you apply the principles of strategy from my tweetstorm yesterday in assessing the Competitive Advantage Period (CAP) of Netflix? How does your expectation differ from the one implied by current price?

Ps, Go Sounders!

threader.app/thread/1193194…
What 25iQ posts might you read before answering the quiz on the Netflix CAP:

Reed Hastings:
25iq.com/2018/02/03/bus…

25iq.com/2018/02/10/bus…

Subscriptions:
25iq.com/2018/08/11/how…

The "movie" business:

25iq.com/2017/12/30/mov…

Michael Porter:

25iq.com/2013/08/26/a-d…
Have you dug deep into NFLX and OTT video unit economics? Have you run different assumptions through your model to determine sensitivities?

Some people will bury the assumptions by using P/E to assess value, which is like putting ketchup on a hot dog.

25iq.com/2016/12/31/a-h…
Do you recall the 1996 BRK meeting when Buffett said:

"Charlie was a lawyer for 20th Century in the old days and he saw how Hollywood operated. It kept us out of buying any motion picture stocks for about 30 years." buffett.cnbc.com/video/1996/05/…

What was Charlie concerned about?
In the same 1996 BRK meeting:

"The big money is animated films and everything that revolves around that because you go from films to parks to character merchandising and back. It's a circular sort of thing, which feeds on itself."

Cross-selling lowers CAC. Reuse lowers COGS.
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Tren Griffin
@trengriffin
"marijuana taxes approaching 50% in some communities have been blamed for pushing shoppers into California’s tax-free illegal market, which is thriving. Industry analysts estimate that $3 are spent in the illegal market for every $1 in the legal one." news.google.com/articles/CAIiE…
Meanwhile in Canada: "Cannabis gross revenues for Q2 2020, excluding the portfolio restructuring costs, was $94.7M." "Our reported gross margin before fair value impacts in cost of sales was negative 13% of net revenue in Q2 2020." prnewswire.com/news-releases/…
"Canopy Growth only sold 10,913 kg while harvesting 40,570 kg in the quarter. This was the second straight quarter the cannabis company only sold about 25% of production." seekingalpha.com/article/430729…
Read 3 tweets
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Tren Griffin
@trengriffin
The number of posts and articles that use:

(1) earnings,
(2) EBITDA, and
(3) free cash flow

as if they are fully interchangeable seems to have hit a new high this past week. Can that number be used as a statistical factor in an index fund to produce market beating returns?
“Entrepreneurs believe profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most.” Drucker

"Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when absent." Buffett
"When bills come due, only cash is legal tender. Don’t leave home without it.” Warren Buffett

"Ring the freaking cash register." Mark Suster

“When somebody says it’s not about the money, it’s about the money.” H.L. Mencken
Read 3 tweets
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Tren Griffin
@trengriffin
2018 "JOHN MALONE: Look, you’re always worth more dead than alive in the business world. Right? And on any given day you can usually sell a company for more than its market trading value." valuewalk.com/2018/11/libert…
2019: "MALONE: "How important is Nickelodeon to a distributor? You know, when I see them essentially licensing SpongeBob, their best program, to other people, I worry about, you know, the sustainability of the model." valuewalk.com/2019/11/libert…
What business is John Malone taking about?

"When they raised their prices and didn’t lose any material subscribers, I think the financial markets said 'Aha, glue,'right? So if you have glue and you have growth and pricing power, right, now the question is how to manage that."
Read 3 tweets

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Nooresh Merani
@nooreshtech
#TweetStorm - Expensive or deserves to be Expensive ? 1)One thumb rule for screening expensive companies is Market Cap to Sales or Enterprise Value to Sales. A 10x or more is generally expensive unless the company can grow sales rapidly or has extremely high Net Profit Margins.
2)Another way to look at expensive is if the Market Cap is equal to the Total Sales of the Addressable Market Size. This would lead to company having to launch different products in the future.
3)May not be the approach to take a Sell Decision or a Short Sell Decision. Very few companies can command such high valuations. Thumb Rule is just to review the investment thesis and the quality of the business. If doubts on quality , get out.
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Nooresh Merani
@nooreshtech
#TweetStorm -#LTCG Tax on Equity - Taxing Genuine Investors to get a best case 3000-5000 cr of Tax Revenue and losing 15 lakh crore Market Cap but not catching and penalizing Tax Evaders/Money Launderers does not seem Morally or Revenue Right. #Tweetstorm.
The Big Statement in #Budget2018

3.67 Lakh Crores of Exempted #LTCG Tax in A Y 2017-2018 and 20k crores expected in tax revenue in 2019 and 40k crores in 2020.
Matching the 3.67 lakh crore number with Income Tax Website.

incometaxindia.gov.in/Pages/Direct-T…

Looks like 5 years data added as per Income Tax Website.

All Tax Payers – Range of Long Term Capital Gains Tax
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Nooresh Merani
@nooreshtech
#TweetStorm
In 2015-2017 A lot of people wanted to become Full Time #Investors via #Smallcaps seeing #Multibaggers shown by #Advisers #Investors. In 2018-2019 a lot of people want to become Full Time #Traders via #OptionWriting, #Futures seeing #M2M shown by #Trainers #Traders
We used to earlier get influenced by people succeeding in your #social circle where you would know people over the years but now we get influenced by #SocialMedia successes that may or may not be true. #Tweetstorm on questions on approach to #FullTime #Trading
In 2018 we got a crash in #Smallcaps and #portfolios are down 10-50%. This will test out people who became #fulltime #investors without thinking or preparation. Now in 2019 if you want to be a #FullTime #Trader this #tweetstorm gives you only questions to help you think!.
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D. Qu
@DantonQu
Financial economics vs accounting = NPV vs gross profit, an example:
Management communication of positive NPV project and gains for existing vs new shareholders:
"In a famous survey, Graham, Harvey, and Rajgopal found that 80% of CFOs would cut spending on discretionary future-oriented activities such as marketing and R&D to meet short-term earnings targets." nber.org/papers/w10550
Read 88 tweets
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Balaraman
@BalaramanL
நேத்து #Netflix'ல Nightcrawler'ன்னு ஒரு படம் பார்த்தேன். செம Crime Drama. Worth watching! 👌

#ArivomNetflix #ArivomPadangal 😎
#Netflix - "10 Cloverfield Lane" - இது கொஞ்சம் வித்தியாசமான Thriller. முடிவு தான் கொஞ்சம் சொதப்பல். சொதப்பல தவிர்த்திருந்தா இது ஒரு அருமையான படம்! #ArivomNetflix #அறிவோம்திரை
#Netflix - Looper - இது ஒரு Time Loop படம். எனக்கு இது கொஞ்சம் predictable'ஆ இருந்துச்சு. ஆகா-ஓகோன்னு வெளில பேசிக்கிற அளவுக்கு இல்ல. ஆனாலும் பாக்கலாம்! #ArivomNetflix #அறிவோம்திரை
Read 52 tweets
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Aditya Khanduri
@AdityaKhanduri
0/ So I have a #strategy quiz tomorrow, and while making notes I thought I will create a #tweetstorm with the major interesting take aways.

I am doing this coz it is also a great way for me to learn (as mentioned by @farnamstreet in this blog: fs.blog/2012/04/learn-…)
1/ A company can outperform rivals only if it can establish a difference that it can preserve. It must deliver greater value to customers (cost advantage) or create comparable value at a lower cost (differentiation), or do both.
2/ Activities are the basic units of competitive advantage.
Read 16 tweets

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