The Daily Ticker: DIS or NFLX Better Cash Flow? With David Trainer

Hey everybody, it’s Pete Renzulli. Welcome to today’s episode of the Daily Ticker. We’re joined again by David Trainor. How’s it going today, David? I’m doing great, Pete. How are you doing? I love that thinking cap. That’s awesome. Trucks. I’m sorry, I forgot to mention that keeps the shine off the head.

That’s okay. That’s okay. So today we’re going to talk about something streaming services seems to be the our. Cinemas in trouble is cinemas doing everything where everything has to be now only in theaters before it’s on. On your TV at home. So we’re going to start out, so we’re going to talk about Disney and we’re going to do a little bit of a deep dive into Netflix as well.

But Dave, you just mentioned some pretty exciting news. Can you share it? Yeah. And we are expecting to launch the Bloomberg New Constructs true earnings. Index next month. It’s going to be an ETF designed specifically around our proprietary core earnings data. And they’ve shown that this etf strongly outperforms all other comparable ETFs.

And it’s the idea that thesis behind it is that if you own stocks with negative or very little earnings distortion, Then you’re going to outperform stocks with lots of earnings. Distortion are overstating their earnings. Stocks with no earnings distortion are stating their truer profits.

Stocks with a negative earnings distortion are understating earnings, and so we’re really excited to partner with Bloomberg to launch this and eventually a family vfs. Can you give a little bit more specificity of earnings distortion, what that means and how you clarified distortion to make, say one has it, one doesn’t, that kind of thing.

Yeah really this came out of research done by Harvard Business School and m i t Sloan into whether or not the footnotes work that we do matters. And we’ve got a history with Harvard Business School where they’ve introduced us as a tool to help students appreciate the benefit of actually reading footnotes.

Because for a while, there are folks who just didn’t want to take the class anymore. What benefit does this add? And introduce intro new contracts introduced us like an efficiency tool. But the question came up is yeah, it’s more efficient, but. The number and the numbers are supposed to be better, but does how much does better matter and better only is better if it generates idiosyncratic alpha.

So they did a very deep dive and compared new constructs data to everything that all the competitors have to offer. And the numbers were very different. And that difference does generate idiosyncratic alpha. The difference comes primarily from unusual gains and losses. And the footnotes that you can’t find in the income statement.

So companies bury charges. They bury gains and things like cost of good, sold, sg and a depreciation all kinds of things. Other, that other category, you never know what’s in there. Sometimes it’s operating, sometimes it’s a non-operating item. They bury things everywhere. They bury things in revenue.

And we make it our goal in life to give people the truest, best possible measure of profitability. And we actually created the core earnings number for the Harvard Business School folks because they wanted, in order to prove the thesis that the data was actually materially better and generated alpha.

We, they needed like an apples to apples number. Pete we do economic earnings, or we do ever and we do free cash flow, but there are a million different ways that people can say they calculate that. So it’s hard to say there’s an apples to apples comparison. So you can have a true taste test, so to speak, and so core earnings corresponds to. Gap earnings, reported earnings. It corresponds to Wall Street Analyst estimates. It corresponds to income before extraordinary items. It comes corresponds to op operating income after depreciation. All the different numbers that people have out, it corresponds to non-AP earnings.

It corresponds to, they run it up against a bunch of different metrics. But the idea is that it’s being compared to the well-known metrics out there. And they specifically studied how well does core earnings do at predicting next period earnings compared to all these other metrics.

And it became out way better. And it was also shown that if you hold portfolios of stocks that are low earnings distortion in short, high earnings distortion, that generates alpha because nobody’s looking at footnotes. That’s super interesting. It’s almost, not that you’re saying this, but. It’s almost as if something is put in the footnotes intentionally.

Not that you’re saying that, I’m saying that but it sure feels that way sometimes. I remember during the financial crisis, I had never really heard the phrase off balance sheet assets so much. I think it was every single day. That was the phraseology that they were using to say they weren’t sure where these assets were or what they were.

So they were, at that point they were considered off balance sheet assets. Yeah. That’s super interesting. That’s really interesting. Alright, so what I’m going to do first is I’m going to dive first into, I’ll just do a quick overview of the charts and where they are now since a couple of them actually just recently reported.

We’re winding down, earning season, and then David can hop into the fundamentals behind. What’s super interesting is always the first move after earnings. And then how the stock trades afterwards. We actually just had yesterday, home Depot or two days ago, home Depot had this monster gap down, and now it was actually up $10 today, two days after, two days after the fact that everybody agreed that it should be down.

I guess based on the algorithmic move, To the downside. AMD did the same thing, virtually the same thing about a month ago where it had a big gap down after earnings, and now the stock is probably up 15, 18% since the earnings gap down. Really interesting to dive behind the numbers which actually we’re talk.

I’ll show first take a look at Disney. So Disney here you can see where the earnings just came out a couple of days ago. And this is the consensus. Whether you believe a technical analysis or not, it’s continuing to hold this bid right at the price where it pulled back to. Hasn’t bounced at all.

Early numbers coming out of Disney. Don’t like the number. Netflix on the other side. And again, with most of these companies, David, you can correct me if I’m wrong. They are all based on subscriber growth. And you can see actually nothing really moved the needle here at all for Netflix after earnings.

So Disney was not subscriber numbers. They wanted, Netflix didn’t move the needle at all, basically in a trading range for about seven weeks now. Let’s dig a little deeper into the numbers. Yeah, these are two very controversial stocks in which we’ve had some I think well-known opinions.

We’ve been negative on Netflix for a while. You can see the rating here is unattractive. And when you look at the reverse DCF on Netflix, the What you got to do in terms of profitability and growth for 40 years is really pretty. Im impressive. 8% compounded annual growth in revenues while maintaining their return on capital versus cost to cap versus cost to capital spread for 40.

Years. That’s the market imply growth, appreciation period, the number of years of profit growth baked into the stock price. That’s a long time. And that, that’s a big number. And you’ll see also that it’s, it’s a pretty heavy return on invested capital spend to get there as well.

With this 70%, but it’s still way below what the company’s done in the past. And what you also find with Netflix and most people don’t know, is that it’s really unprofitable on a cash flow basis. So if we go down here to look at free cash flow you can look over the last five years and it’s a net negative, right?

We’ve really only got one quarter. So you’d look at this number. One quarter in the ttm, one new quarter. So this number and this and this. I think on average it’s about 1.2 billion a year. They’ve lost in free cash flow over the last five years. If you go back longer than that, it’s way. So let me ask you a retail investor question, David, that just to me, On the surface doesn’t make any sense.

How does the stock with those parentheses for four and a half years or better commit at $340? What is the market? Is that all emotion? Is that hype? Like how is a company with those negative numbers $340 stock? For me, Pete, this is one of the original meme stocks. I remember, almost 10 years ago talking about Netflix and talking about how much money it was losing and how competitively disadvantage it was.

Let’s face it, anybody can stream it. Content over the internet. You and I are streaming content over the internet. Pete, we don’t have a, last I checked, my stock price is well below 345. I think. My wife puts me as a penny stock. And yeah, it’s all been hyped. And I remember pointing that out one time on a, on I think a, an interview on a major network and I had one of these Wall Street guys on the other side.

I was the bull. He was the bear. And I was talking about fundamentals and his reaction was fundamentals. Who cares about fundamentals? Why are we talking fundamentals? Wow. It was all subscriber growth. And the interesting thing about subscriber growth is that so much of the subscriber growth recently is in unprofitable, highly unprofitable customers.

International clients are very unprofitable, and that’s why you’re seeing a negative free cash flow number for these guys. It’s just never been a strong free cash flow business. And I think, yeah, for me, Pete creating. Proprietary original content, high quality, proprietary original content that people are really going to want to watch.

That’s a difficult thing to do consistently. Yeah. People sure get lucky at it all the time, but to do it consistently is very hard. And you not really see Netflix do it consistently. They’ve had to pay huge royalty fees to license content from other people to grow subscribers. And otherwise they’re spending, billions and basically becoming a network.

And at that point, networks aren’t running for free. They’re charging heads. So they’re going to have to change that entire model. Subscription plus ads or one or the other. Yeah. To me that they’re going to now start selling ads like it’s a huge capitulation. They always, oh, we’ll never do that. We’ll, never, we’ll never have to do that to.

That just signals that the business model’s broken, and here’s why it’s broken, Pete. It boils down to one simple thing. Netflix is a one trick pony. They stream content over the internet. Again, very low barriers to entry there. As evidenced by our appearance here today, right? Whereas compared to Disney, right?

They can string content, but they have other ways to monetize that content. Theme parks, merchandise to name the two biggest ones where they do really well. Not to mention the vacations, the cruises, right? These are all Disney theme things that people pay up for as part of the Disney experience.

And number, another advantage from Disney’s, they got a much deeper library of content. All those classics I just saw the other day. It was like an, there’s a commercial for another version of Little Mermaid. I mean like they, they’ve already done one, they’ll just do another one. People are still going to go watch it live version, I believe.

You know what’s interesting is when you do think about these kinds of business models, entrepreneurship is a very big part of my life, is that Disney has the ability to cross sell from a movie into toys and, into all those other areas. Or even now, actually, what they’re even doing now is they’re doing TV shows that are integrating with their movies.

Which there’s so many other ways that they could monetize that. And if just hearing that kind of makes sense. Where’s Netflix going to have something similar to that? That’s exactly, you’re, that’s exactly what I’m saying. It’s the cross sells the ability to monetize through multiple channels.

That’s where Disney has a huge advantage. That’s why Disney actually generates positive cash flow and Netflix does not, despite the fact that they have all of that. Hard assets, they have the theme parks and all those employees and everything like that, as opposed to just opening an online business and you don’t have all those expenses.

So even with that, Disney has the positive cash flow. Yeah, no, it’s amazing. It’s amazing. Now that’s excluding over the last five years, it’s excluding the acquisition of Fox, because that was, I think around a 70 billion deal. Yeah. Yeah. Excluding that they’re very positive and even through the Covid.

Period. Positive cash flow. And that’s a great point because they’ve invested a lot of capital in these theme parks and they’re like pretty amazing. I always have been, I never, as of right now they’re in Florida, depending on what happens with, between them and DeSantis, they’ve been battling, I lived down here, so they’ve been battling it out now for a few months.

Yeah, that’s I don’t, I don’t really understand what’s going on there. I feel like these egos are getting in the way. It’s not really Yeah, that’s exactly what’s going on there. Yeah. I feel like that’s I would bet on Disney every time. because they’re going to, they’ve been around a little bit longer than the latest politician.

Yeah. Plus like you said, that the barrier to entry is not as high as building another theme park that’s been in existence for 60 years. Yeah, just the legacy content and all that, just like Disney does. People cry. I’ve heard people cry on that around the world ride in Orlando, I’m blanking on the name.

It’s a small world after all, and I took my kids, hey, I had to check the box. Everybody, you got kids, you got to check the box on Disney. But sometimes at Disney, they were just building Epcot center in 1970. Yeah. So it’s been a while. Yeah. I’m not big on it.

Otherwise, I wouldn’t be going, if not for having to check the box with the kids. And honestly, it’s, my wife and I also won some weird Like free two week stay because we agreed to be assaulted for some marketing timeshare. Yes. Timeshare marketing pitch. We were like sure we can sit through this for an hour.

And I was like, oh my gosh, these people are pros. And we ended up doing something but it turned out great. Cause we got like several days in this place in Disney and we used it. It would turn out to be actually a good deal. So with the subscriber services, we, in our community, we, every time earnings are coming up or they’re getting announced, we usually talk about what’s the driver for this particular announcement, obviously we’re talking about what the, what were the sales versus what was expected.

Then we lean a little bit more into guidance. What was the outlook? Was it good? Was it bad? We get a feel for what’s going to happen after they announce. I very rarely trade into the announcement. For me, it’s just easier to wait for all the nonsense to play out and then yeah, whatever’s going to happen happens.

But it seems like subscriber growth, the subscriber number is the number one headline every time, one of these streaming services reports. So I guess taking it back to the Disney, Netflix conversation, while Disney plus, it’s important to have the subscriber growth. There. There’s so much more to Disney’s business and the valuation of their stock than Disney plus subscribers.

That’s right. And that’s a big point that we made in a recent update and some other talks about Disney. It’s you know what for Disney, Disney is and for Disney I see. Streaming as a loss leader. It’s just another way to get people into the funnel for all that cross selling you were just talking about.

Yes, exactly. So another thing, we did this on our webinar, new Constructs webinar. On last Friday, this where this is not loading force. We talked, yeah, I’ve actually heard people say that the Disney movies are commercials to sell the toys. Just to give everybody some context.

Yes, exactly. Exactly. So if we’re looking at Disney interesting thing about Disney, right? It’s actually got a worse rating than Netflix, but it is on our focus list Long. And so we get questions like that from our clients on a regular basis. How is that possible? It’s because the underlying and most important element of any investment decision is to have expectations for future cash flows that are different than what the market believes.

There’s no reason for me to own an individual stock, Pete, the way we look at the world. No reason for me to own an individual stock if I don’t have a meaningfully different view of the future than what the stock market does. That’s why we quantify the expectations, right? So I went into Disney and I put in our for our, for my model and for our basically our stock selection committee, my forecast for what I think the future could hold for Disney.

So you can see here on the forecast page I didn’t do much to change the consensus. In fact, I think these numbers have actually come down a little bit since I entered this, because I meant to have the same numbers as consensus, but that’s not a big deal. What I did in my optimistic scenario though, is just assume that margins get back to pretext margins back to 24%.

If we go back over history, we can see that Disney was well above that, in 2017 through 2014. Right And have been consistently in the twenties for most of its life, right? So I’m a believer that Disney’s got a product, a good product, it’s going to stay around. And then the same is true in return on invested capital.

In the optimistic scenario, we’re not saying it’s going to be that much better than what it’s been in the past, right? because it’s been in the mid-teens recently. Not too distant past. I’m just saying that Disney’s going to get back to where it was in the FU in the past, right? And if we have, we assume that, then we look at our optimistic scenario I have here then to justify about 91 bucks a share, you really only need three years of growing at consensus rates.

And if you believe that they can put that, can make that happen for 10 years, then you’re, you’re looking at easily 110 bucks a share. 115 bucks a share, right? As you can see here in the dcf right here on the blue line. So this blue line is Disney’s margins getting back to close to where they were before, not as not all the way back, but close to growing at consensus rates and so you can make a case for Disney being cheap.

And that’s the. That’s the way we do things. So let’s not assume that everybody knows the language or the acronyms you mentioned dcf. If you could just give a quick overview on that without going too far into the weeds. Yeah, sorry about that. I hate it when no, that’s okay.

That’s what I’m here for. That’s the back and forth of this county cash flow model. And so what I’m showing people when I’m, when I was showing the screen before, is the forecast page where we put in the estimates for the discounted cash flow, and then that set shows that page with the lines that plot the values from the discounted cash flow values per share implied.

Over multiple forecast horizons or what we called growth appreciation period. And spent a lot of time talking about in a prior interview, Pete, right? And so a growth appreciation period measures the number of years a company is expected to grow its profits. because if a company can grow its profits forever, it’s got an infinite value, right?

At some point in time, the law of competition dictates that a business will not be around anymore. And when that and that, that doesn’t happen overnight. But what does happen before that happens is that it loses its competitive advantage and it is no longer growing profits. And typically, eventually then it dies.

But before it dies it loses its ability to grow profits because of competition. So I guess we could compare that to some of the companies that are leading the market right now are companies that have we all know and love, let’s say Apple, Amazon, Microsoft. Even Google at this particular point.

Everybody knows what those companies’ core businesses were, which had their own original growth appreciation period, and then those great companies while they were riding their initial growth appreciation period. R and d was coming up with their next growth appreciation period. So that turned into a cloud business where Amazon went from books to the everything store to where the other was the A W s, Amazon Web Services.

And now everybody’s in AI conversation and that’s hopefully going to be the next growth appreciation period. So I like to bring it back to layman’s terms because I just want everybody to really get a grip of the significance of what we’re talking about is that a company has a certain shelf life based on what their original competitive advantage was, and the great companies come up with another fueled competitive advantage that should have another growth appreciation period, which is why the companies that from the late seventies are still here because they’re constantly reinventing other ways to increase the cash flow with David showing are the metrics.

Realistic versus fantastic. What’s the word I’m looking for? I’m drawing a blank in my head. Optimistic. Yes. Yeah, optimistic. Different scenarios of growth. And now as investors, you have to decide which of these are realistic based on the current price, which is how the current price is implying future growth.

Based on those margins, sales and those kinds of things. Did I explain that correctly? Yeah, that was great. That was great. Okay. That’s how you expand your moat or expand your, extend your growth appreciation period. You come up with a new product that’s going to grow profits for you, because whatever product you do create, it won’t grow profits for you forever.

Competition will come in and the more profitable you are, the more competition you will invite. And probably the longer or the shorter your growth appreciation period. So you got to come up with a new, you got to reinvent yourself, which is a difficult thing to do, which is why long market implied growth appreciation periods should be looked at rarely or carefully, right?

Like it’s not often that a company can actually extend its growth appreciation period. It’s not. Good Examples of that as well are drug manufacturers where when they’re patent. Is coming up and they’re not going to have that competitive advantage anymore. You start to see the stock do this well before that happens because that particular growth appreciation period from that product is about to go by the wayside.

Now, all these other competitors could come in and come up with them. The CVS brand of whatever it is. Generic. Yeah, that’s right. That’s a great way to think about it, right? Because your patent gives you a built in growth appreciation period. Exactly. Of seven years or so, whatever, and then that ends.

If you don’t have another drug in the pipeline, you’re at the end of your profit growing life cycle. Which I think a lot of people are talking about that with Apple now, I don’t mean to get too far off the off track for as great of a company as Apple is right now.

And their war chest and their balance sheet is ridiculously fat. They haven’t come up with anything new in a while. I know they’re trying to do their credit card thing on Apple pay. I saw that’s like their new thing now. Yeah. And for that matter, it’s also more expensive than it’s ever looked in our system.

Interesting. So it’s been a long time, like this is, like in the new Apple era. It hasn’t looked this expensive in a while. I think we talked about Apple in a couple, about a month ago, I believe. Yeah. Yeah. And so it’s a great, great point. People are pointing to the services business, right?

They’ve got so many people locked in. They’re getting you into the I photos and iCloud stuff and who knows? Which again, that’s getting back to the Disney model. We could hop back into there, but they have the one thing that they’re, every, the one thing that everybody’s got.

And then there’s all these tangential ways to monetize that and. Again, not knocking Netflix, but thinking it through. What other tangential ways do they have to monetize? No, I, you make such a great point, Peter, and I think Apple knows and it was really, to me it was like, it’s what a flex it was when they had those commercials and shut down people like, Other apps being able to track you on the iPhone and Yeah.

Rock the marketing world, that’s for sure. Oh dude. Yeah. Yeah. I even, I know tangentially, the Facebook marketing people just they’re all their business. They blew up, and you know what? That’s fair, right? You shouldn’t just because you have an app. All of a sudden now, if I put an app on my phone, now I’ve just invited and allowed this, that, that app to all the people that know that, that run it to track me in everything I do.

No. I should have an, that should be up to me whether or not they do that. Yeah. It should be guaranteed, right? Yeah. And businesses based on that, deserve to, to figure out how to restructure, but that’s a lot of power that Apple holds, for sure. Yeah. Yep. All right, so we’ve got some more numbers to dive into.

We got Netflix and Disney on the Mind right now. Yeah. We can also look at, you said you wanted to look at, we can look at some more on Apple, but we did that one a few weeks ago. I was thinking we would go back to another streamer, Roku. Okay. And with Roku we’ve it’s that’s an expensive, that’s an expensive stock, I think in the streaming business.

Pete, Roku is probably, That’s a hard piece of hardware that isn’t too difficult to replicate. In fact, I’ve got the Google version and I think there’s an Amazon version as well. And so yeah, I don’t, I’m not really sure. You can see here just looking at these numbers that this is not a profitable business, and yet it’s got a lot of pretty big future implied profitability baked into it.

If we’re just going to stick to the ratings page, the trends are going in the wrong direction. It was never very profitable, but it’s getting a lot worse return on invested capital going down, and free cash flow. It’s never been good and it’s getting a lot worse. So Roku is one where, the valuation and the economics.

This one is a screaming sell, in my opinion. This is a competitively disadvantaged business and. Nothing about it looks good here. You’ve got bad trends and bad cash flow and expensive valuation. This, I, this is, it’s barely a streaming stock. It’s just a hardware piece of hardware that’s pretty undifferentiated on top of the fact.

As you mentioned before, David they actually don’t have the streaming original content. No content. It’s again, just a piece of hardware. Yeah. There’s nothing there and it’s just not, it’s not that special piece of hardware. Yeah. I think they were lucky and maybe they did some deals to be integrated with a couple of TV makers, but I don’t see that as lasting.

Pete is a way of last, the growth appreciation period here should be really short on these guys. And right now you’re looking at more than a hundred years. Wow. Wow. I have a question, David. And this might be more of a generalized question, but we’re talking about the current price.

Is implying based on everything we’re talking about now and whether or not it’s a good price whether or not there’s upside and capital appreciation, is there a way of figuring the other direction where if it gets down to this price at what it normally does, then that’s worth looking at?

Yeah, no that’s for sure something we could do. It’s going to be hard to do that with Roku because one, one of the ways we sort of bottom line that Pete, is we look at the economic book value and there’s a section on our ratings page that focuses on that I believe be beneath the free cash flow.

So the economic book value looks at the value of the business based on its current profits. So it says, listen, if you can just maintain your current profits here’s the value of the business, none of all your liabilities. And so when you got a negative economic book value, alright, here’s the economic book.

Value per share. Negative, they did go positive for one year in 2021. But it’s every other year, three year average as well stays negative the whole time. That’s, when I say screaming cell, it’s difficult to come back at a price that would make sense for Netflix on the other hand.

You can come up with something that makes sense. Like it’s not, I’m not saying Netflix is going to go to zero. You look at the economic book value for Netflix, you can see it’s a positive number, right? So the denominator, the price to economic book value is positive. So that means the eco economic book value itself is not negative.

Even if the ratio is really high because the price is so high. And that’s another way of saying, Hey, maybe it’s a good business, but it’s not a good stock because, The expectations baked into the stock price are so high, but the economic book value for Netflix, you can see it’s been all over the place.

There’s only 14 bucks in 2018 and 32 bucks in 2019, and now it’s around 87 bucks a share. The best it’s ever been is 141. And so we all know why it was that price at that particular moment as well. Yes. That’s right. So everybody in the world was home streaming. That’s right. That’s right. This, it was a covid bump.

And we clearly, we know now, like other people can sell streaming businesses too. There’s not, it’s not like there’s not a lot of competition here. There’s like, when Netflix started, there was really one, only one streaming. Now everybody in their brothers got like a streaming service, like every single network.

And so does Disney. And again I think Disney missing on the streaming number, subscriber number was a good thing. What they’re, what’s what Disney is doing is getting rational. About the streaming business, which is to recognize it’s a loss leader, which means we make sure we don’t lose too much money.

Netflix, on the other hand, had a virtually unlimited amount of capital. From investors to just build it and they will come. It was one of those original, Hey, we don’t need to make money now. If we get enough users, we can decide to get profitable later and we’ll scale that and be super profitable. That it’s not working.

And taking that back to the whole conversation before about the r and d coming up with the next competitive advantage. They, as they got started. They built that base, but then their next competitive advantage was original content. And now the debate is out whether or not that’s profitable without changing, turning the whole business model upside down.

Yeah I agree. It was definitely original content. I felt like it was also premised on the idea that there wouldn’t be a lot of competition in the streaming space. You got to recognize it. If it’s a good business, people are going to get into it. But Agreed. And that was one of our early pieces too.

It’s listen, original content is not easy and it’s certainly not cheap. So you know, with a business that’s charging as little as Netflix is charging and with only one way to monetize you, you’re just going to really have a hard time ever making money. So it’s interesting again, turning it back to the entrepreneurial side of this, seeing these mega corporations as a mom and pop business, a lost leader for everybody who doesn’t understand what that means, essentially you’re going into the grocery store and.

They put the milk all the way in the back of the store. You have to walk through the entire store to grab the milk that they’re breaking even on whatever. They’re probably selling it. But you have to go past all of these other things that they could sell you while you’re there. And that’s essentially the competitive advantage that we’re talking about that Disney does have.

Like we said, a Marvel’s movie is a two hour commercial for everyone. a 10 year old kid went out and bought the dolls. What does Netflix have that they’re cross-selling other than maybe affiliate deals, but they’re really spending money to get all that extra content. So we’re not saying one is right or the other, but the numbers don’t lie.

That you could just use common sense walking in the store and you’re picking up all these other things along the way. What are you walking into the Netflix store right now and what are they offering you besides a Netflix subscription and then think that through for whether or not a $340 price.

What’s next? To either keep it there or make it go higher from here. It’s something to really think about. And that’s a different way of investing, really thinking it through as a business, not just the numbers. Yeah, abs. Absolutely. And I don’t think Netflix management has ever really given us what the one gave us what the next thing is.

And I think that’s a problem. Yeah. That’s a real problem because it’s been asked for years. And they just haven’t given you anything except, oh, we’re going to get more subscribers. Oh, it’s going to be international. Oh, we’re going to have great new original content. I thought for a while when they were.

Looking to sell t-shirts for that Stranger Thing show, which I think was really popular. And that was a good piece of original content, great piece of original content. Think people really liked that. I thought maybe they’re good. They’re onto something, selling t-shirts, merchandising, that’s another way to monetize that could work for them.

And that never really got off the ground. Yeah. Surprised me. And the other thing is that as good as that first few seasons of Stranger Things was, it’s passed. It’s gone, that’s how fast things change today, right? You literally need that next piece of content that next was the one that they had House of cards?

Like you need to constantly have that r and d going into it. So that’s a whole bunch of other money that you’re pouring into the next deal, nevermind actually producing the content. So it’s really interesting. So let’s wrap it up here, David. So we got free cash flow with Disney.

All of the other stuff that Disney has going on. Netflix, $340 three times. The price of Disney at this particular moment, even a little bit more than three times without that same recent track record of free cash flow. So pretty interesting. Give us something to think about. Yeah, absolutely. All right, everybody, we’re going to call it a podcast.

And David, we’ll speak to you soon. Great. Thanks Pete. Good being with you. And congratulations on the ETF with Bloomberg. That is really exciting news. Thank you. We’re excited too. All right. I’ll speak to you soon. Thank you everybody. Bye. Bye-Bye.