sport football: 📊 Netflix Is Printing Cash

October 20, 2024 | Read Online

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Happy Sunday!

I've already decided what tops my Christmas wish list: the Ferrari F80.

The F80 is the latest masterpiece from the Italian luxury brand and is the company's first hypercar in 11 years.

It features a V6 turbo engine paired with three electric motors.

And with nearly 1,200 hp, it's easily the most powerful Ferrari ever built.

True to Ferrari's focus on exclusivity, only 799 units will be made, each priced at $3.9M.

Over its production run, the F80 is expected to add $3.2B to Ferrari's top line.

Some key data bites from this week that you should know:

Meta fired around two dozen employees for misusing $25 meal credits.
1 in 8 Americans have worked at a McDonald's at one point in their lives.
Goldman Sachs sees the S&P 500 increasing 7% to 6,270 by year end.
Walgreens plans to close 1,200 U.S. stores, 13% of its total, over the next 3 years.
The Apple Vision App Store introduced only 10 new apps in September.
Hurricane Milton will cost insurers an estimated $36B.
China is looking to raise $850B in new debt over three years to reignite growth.
The IMF projects global public debt will surpass $100T in 2024.
Boeing wants to raise up to $25B in debt or shares over the next three years.
SoFi announced a $2B deal with Fortress Capital to grow its loan platform business.
Google's AI Research Unit, DeepMind, saw operating profit increase 91% in 2023.
The average annual salary of a securities industry worker fell 5.2% to $471,370 in 2023.
The European Central Bank lowered its rate by 25 bps to 3.25%.

In today's newsletter:

📈 S&P 500's Sector Performance
💸 Dividends Every Month
🐐 Nancy Pelosi Is The GOAT
🫧 Is Palantir In A Bubble?
🍿 Netflix Is Printing Cash

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Despite the usual market turbulence during an election year, the S&P 500 shows no signs of slowing down.

The index continues to hit all-time highs, trading more than 20% above Wall Street's 2024 consensus, according to The New York Times.

Which sectors are leading the charge?

Unsurprisingly, the information technology sector takes the top spot with a 33% YTD return.
Perhaps unexpected, in second place is the utilities sector, which is up 29%.
The sector's return over the last year marks its best 12-month performance this century, per Barrons.

What's driving utilities?

Two key factors: lower interest rates, which drives investors toward dividend-heavy stocks, and higher energy demand needed to fuel the AI revolution.

As earnings season picks up steam, one trend to watch is companies increasing their dividends.

For example, from this list, Taiwan Semi, Broadcom, Verizon, Altria, and Microsoft all recently raised their payouts.
When a company increases its dividend, it signals a commitment to shareholders and typically reflects strong cash flow needed to support the higher payments.

The beauty of dividend investing?

You can strategically pick 12 stocks with staggered payout schedules, ensuring consistent monthly income from different companies.

Step aside, Warren Buffett—there's a new GOAT.

Her name is Nancy Pelosi.

While the market has been soaring, Congress is cashing in too.

According to estimates from our friends at Quiver Quant, Congress has made around $133M so far this year.

Leading the pack is Pelosi, with an impressive $24.1M in profits.

One of her biggest home runs? Nvidia.
She bought call options in November 2023, followed by 10,000 shares in both June and July 2024.
Since her call option purchase, Nvidia has surged nearly 190%.

There's expensive.

There's Zurich, Switzerland expensive.

And then there's Palantir expensive.

The big data analytics company holds the highest Price-to-Sales ratio in the S&P 500, currently trading at 39x sales. This is higher than Nvidia's 35x.

Here's where it gets interesting though.

According to FinChat, Palantir's two-year forward revenue growth is projected at +22%, while Nvidia expects +70%.
In other words, Nvidia is estimated to deliver much more aggressive growth at a slightly lower multiple.

Valuation, though, isn't just about revenue growth.

Expanding margins, increasing profitability, and product breakthroughs all play a role.
Palantir, a key beneficiary of the AI revolution, has seen rising profitability and strategic partnerships, driving the stock up 159% this year.

But can Palantir sustain this momentum?

Anything is possible, and so far, CEO Alex Karp has successfully hunted all bears in sight.

One thing's for sure though. It's not cheap.

Netflix just pressed play on a blockbuster quarter.

The streaming giant reported strong Q3 2024 earnings on Thursday, pushing shares up 11% on Friday.

Here's the quick breakdown:

Earnings: $5.40 vs. $5.12 Est.
Revenue: $9.83B vs. $9.77B Est.
Global Paid Subscribers: 282.7M vs. 282.15M Est.

The quarter had plenty of highlights.

Revenue grew 15%, operating margins expanded by 8 percentage points, diluted EPS increased 45%, and global paid memberships rose 14.4%.
Netflix continues to generate strong free cash flow, with $2.2B in Q3 and $7.1B over the last 12 months.

The company hit the high end of its full-year 2024 revenue forecast, projecting 15% growth, and exceeded its operating margin expectations, raising it to 27% from the earlier estimate of 26%.

For the first three quarters, view hours per member in owner households increased YoY—a key metric for member satisfaction.
The ad-tier membership also grew 35% QoQ.

It appears a sequel to the blockbuster is also in the books — Netflix expects its growth story to continue into 2025.

💰 Wealth Milestone. Elon Musk is set to become the world's first trillionaire by 2027 - CNBC

😢 Missed Gains. Stanley Druckenmiller said it was mistake selling his entire Nvidia stake - YT

☕️ Elite Espresso. Starbucks' new CEO, Brian Niccol, is cutting promotions to reposition the brand as a premium coffeehouse - YF

💾 AI Sanctions. The U.S. is considering restricting Nvidia and AMD AI chip sales to the Middle East - BB

☢️ Fission Fuel. Microsoft, Google, and Amazon are investing in nuclear power plants to power AI data centers - NYT

🚕 Travel Takeover. Uber is reportedly considering the acquisition of travel technology company Expedia - FT

Presented by our sponsor, EarningsHub

Notable Companies Reporting Earnings This Week:

Monday: Nucor $NUE
Tuesday: General Electric $GE, Philip Morris $PM, Verizon $VZ, Raytheon $RTX, Lockheed Martin $LMT, General Motors $GM, Texas Instruments $TXN
Wednesday: Coca-Cola $KO, Thermo Fisher $TMO, AT&T $T, Boeing $BA, Tesla $TSLA, T-Mobile $TMUS, IBM $IBM, ServiceNow $NOW, Lam Research $LRCX
Thursday: S&P Global $SPGI, Honeywell $HON, UPS $UPS, CapitalOne $COF
Friday: Colgate-Palmolive $CL, AON $AON

I use EarningsHub to track earnings, estimates, and receive AI summaries of investor calls.

If you'd like an all-in-one earnings tool and see all other companies reporting, I definitely recommend you check it out!

Access EarningsHub Here

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Major Trades Published 10/14 - 10/18. Trades may be those of family members. [Source: 2iQ]

Buys

Michael McCaul (R)
- Company: Aramark ($ARMK)
  - Amount Purchased: $200K - $500K
- Company: Howmet Aerospace ($HWM)
  - Amount Purchased: $150K - $350K
- Company: Intel ($INTC)
  - Amount Purchased: $115K - $300K
- Company: Global Payments ($GPN)
  - Amount Purchased: $100K - $250K

Sells

Michael McCaul (R)
- Company: Alphabet ($GOOGL)
  - Amount Sold: $200K - $500K
- Company: American International Group ($AIG)
  - Amount Sold: $115K - $300K
- Company: Sun Communities ($SUI)
  - Amount Sold: $115K - $300K
Kevin Hern (R)
- Company: Citigroup ($C)
  - Amount Sold: $250K - $500K
John Hickenlooper (D)
- Company: Chipotle Mexican Grill ($CMG)
  - Amount Sold: $100K - $250K
- Company: Liberty Media SiriusXM Group ($LSXMA)
  - Amount Sold: $100K - $250K

Major Trades Published 10/14 - 10/18

Buys

Upstream Bio ($UPB)
- Insider: Erez Chimovits (Director)
  - # of Shares Purchased: 825,000
  - $ Amount: $14,025,000
  - SEC Forms: [1]
Marvell Technology ($MRVL)
- Insider: Matthew Murphy (Chairman of the Board and CEO)
  - # of Shares Purchased: 13,000
  - $ Amount: $1,009,190
  - SEC Forms: [1]

Sells

Squarespace ($SQSP)
- Insider: Andrew Braccia (Director)
  - # of Shares Sold: 13,929,575
  - $ Amount: $647,725,238
  - SEC Forms: [1]
Ncino ($NCNO)
- Insider: Jeff Horing (Director)
  - # of Shares Sold: 1,356,721
  - $ Amount: $48,869,633
  - SEC Forms: [1]
Constellation Brands ($STZ)
- Insider: Robert Sands (Director)
  - # of Shares Sold: 119,274
  - $ Amount: $28,908,889
  - SEC Forms: [1]

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