Profile - To The Moon

IMTCG

Posts · 4Posts · 4
Following · 0Following · 0
Followers · 0Followers · 0

- IMTCGIMTCG
  ·2021-06-15
  Nice write up
  Netflix: The Selloff Looks Overdone
  Summary Netflix has been unreasonably sold down and unjustifiably cited as losing its competitive e
  Netflix: The Selloff Looks Overdone
  114 Comment
  Like
  Share
  Report
- IMTCGIMTCG
  ·2021-06-15
  Apple is good
  Apple Plans Faster Watch, Future Temperature and Glucose Sensors
  Updated screens and performance this year, new functions later. New entry-level and extreme sports models planned for 2022. A customer tries on an Apple watch at a store in Palo Alto, California. Photographer: Nina Riggio/Bloomberg. Apple Inc. is working on new Apple Watch models and health features, spanning display and speed upgrades, an extreme sports edition and body temperature and blood sugar sensors.The Cupertino, California-based tech giant is planning to refresh the line this year -- wi
  Apple Plans Faster Watch, Future Temperature and Glucose Sensors
  105 Comment
  1
  Share
  Report
- IMTCGIMTCG
  ·2021-06-15
  Long Adobe!
  Why Adobe Could Be Worth $590: A Promising Look Ahead Of Q2 Earnings
  Summary Despite rising over 8% in the past week ahead of earnings, there is still room for upside i
  Why Adobe Could Be Worth $590: A Promising Look Ahead Of Q2 Earnings
  123 Comment
  Like
  Share
  Report
- IMTCGIMTCG
  ·2021-06-15
  Good information!
  Tesla, MicroStrategy, Riot Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level
  Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level. Bitcoin has seen significant gai
  Tesla, MicroStrategy, Riot Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level
  75 Comment
  1
  Share
  Report

Most Discussed

Terms and Conditions·Privacy Policy

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email：uservice@ttm.financial

{"i18n":{"language":"en_US"},"isCurrentUser":false,"userPageInfo":{"id":"3571017109514640","uuid":"3571017109514640","gmtCreate":1607925090229,"gmtModify":1607925090229,"name":"IMTCG","pinyin":"imtcg","introduction":"","introductionEn":"","signature":"","avatar":"https://static.laohu8.com/default-avatar.jpg","hat":null,"hatId":null,"hatName":null,"vip":1,"status":2,"fanSize":0,"headSize":5,"tweetSize":4,"questionSize":0,"limitLevel":999,"accountStatus":4,"level":{"id":0,"name":"","nameTw":"","represent":"","factor":"","iconColor":"","bgColor":""},"themeCounts":0,"badgeCounts":0,"badges":[],"moderator":false,"superModerator":false,"manageSymbols":null,"badgeLevel":null,"boolIsFan":false,"boolIsHead":false,"favoriteSize":0,"symbols":null,"coverImage":null,"realNameVerified":"success","userBadges":[{"badgeId":"1026c425416b44e0aac28c11a0848493-2","templateUuid":"1026c425416b44e0aac28c11a0848493","name":"Senior Tiger","description":"Join the tiger community for 1000 days","bigImgUrl":"https://static.tigerbbs.com/0063fb68ea29c9ae6858c58630e182d5","smallImgUrl":"https://static.tigerbbs.com/96c699a93be4214d4b49aea6a5a5d1a4","grayImgUrl":"https://static.tigerbbs.com/35b0e542a9ff77046ed69ef602bc105d","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2023.09.11","exceedPercentage":null,"individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1001},{"badgeId":"44212b71d0be4ec88898348dbe882e03-3","templateUuid":"44212b71d0be4ec88898348dbe882e03","name":"President Tiger","description":"The transaction amount of the securities account reaches $1,000,000","bigImgUrl":"https://static.tigerbbs.com/fbeac6bb240db7da8b972e5183d050ba","smallImgUrl":"https://static.tigerbbs.com/436cdf80292b99f0a992e78750ac4e3a","grayImgUrl":"https://static.tigerbbs.com/506a259a7b456f037592c3b23c779599","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2023.07.14","exceedPercentage":"93.02%","individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1101},{"badgeId":"972123088c9646f7b6091ae0662215be-2","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Master Trader","description":"Total number of securities or futures transactions reached 100","bigImgUrl":"https://static.tigerbbs.com/ad22cfbe2d05aa393b18e9226e4b0307","smallImgUrl":"https://static.tigerbbs.com/36702e6ff3ffe46acafee66cc85273ca","grayImgUrl":"https://static.tigerbbs.com/d52eb88fa385cf5abe2616ed63781765","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2022.09.08","exceedPercentage":"80.18%","individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1100},{"badgeId":"7a9f168ff73447fe856ed6c938b61789-1","templateUuid":"7a9f168ff73447fe856ed6c938b61789","name":"Knowledgeable Investor","description":"Traded more than 10 stocks","bigImgUrl":"https://static.tigerbbs.com/e74cc24115c4fbae6154ec1b1041bf47","smallImgUrl":"https://static.tigerbbs.com/d48265cbfd97c57f9048db29f22227b0","grayImgUrl":"https://static.tigerbbs.com/76c6d6898b073c77e1c537ebe9ac1c57","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.21","exceedPercentage":null,"individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1102},{"badgeId":"a83d7582f45846ffbccbce770ce65d84-1","templateUuid":"a83d7582f45846ffbccbce770ce65d84","name":"Real Trader","description":"Completed a transaction","bigImgUrl":"https://static.tigerbbs.com/2e08a1cc2087a1de93402c2c290fa65b","smallImgUrl":"https://static.tigerbbs.com/4504a6397ce1137932d56e5f4ce27166","grayImgUrl":"https://static.tigerbbs.com/4b22c79415b4cd6e3d8ebc4a0fa32604","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.21","exceedPercentage":null,"individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1100}],"userBadgeCount":5,"currentWearingBadge":null,"individualDisplayBadges":null,"crmLevel":5,"crmLevelSwitch":0,"location":null,"starInvestorFollowerNum":0,"starInvestorFlag":false,"starInvestorOrderShareNum":0,"subscribeStarInvestorNum":0,"ror":null,"winRationPercentage":null,"showRor":false,"investmentPhilosophy":null,"starInvestorSubscribeFlag":false},"page":1,"watchlist":null,"tweetList":[{"id":187600100,"gmtCreate":1623750800700,"gmtModify":1704210444297,"author":{"id":"3571017109514640","authorId":"3571017109514640","name":"IMTCG","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3571017109514640","authorIdStr":"3571017109514640"},"themes":[],"htmlText":"Nice write up&nbsp;","listText":"Nice write up&nbsp;","text":"Nice write up","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187600100","repostId":"1193778475","repostType":4,"repost":{"id":"1193778475","pubTimestamp":1623749978,"share":"https://ttm.financial/m/news/1193778475?lang=&edition=fundamental","pubTime":"2021-06-15 17:39","market":"us","language":"en","title":"Netflix: The Selloff Looks Overdone","url":"https://stock-news.laohu8.com/highlight/detail?id=1193778475","media":"seekingalpha","summary":"Summary\n\nNetflix has been unreasonably sold down and unjustifiably cited as losing its competitive e","content":"<p><b>Summary</b></p>\n<ul>\n <li>Netflix has been unreasonably sold down and unjustifiably cited as losing its competitive edge due to weaker Q1’21 membership adds.</li>\n <li>However, short-sighted investors did not consider Netflix’s overall game to evaluate the strength of its moat.</li>\n <li>Netflix looks attractively-priced now, and should be a worthy addition to both value and growth investors.</li>\n</ul>\n<p><b>Investment Thesis</b></p>\n<p>Netflix (NFLX) has come under the weather recently, as the company had to face increased competitive pressure from the growth of Disney+, recent industry consolidation fromWarner Bros. Discovery(T,DISCA) and Amazon's (AMZN)acquisition of MGM's deep content IP. Furthermore, the company also reported an\"underwhelming\" Q1'21results that saw the company even missing its own net membership adds estimates by 2m. In short, there seems to be no shortage of bad news for NFLX recently.</p>\n<p><img src=\"https://static.tigerbbs.com/59d9e43b35cbdb0cbc2330837c796371\" tg-width=\"1280\" tg-height=\"784\" referrerpolicy=\"no-referrer\"></p>\n<p>Source: TradingView</p>\n<p>Therefore, it's not surprising to me at all that Mr. Market reacted somewhat negatively to all these competitive headwinds as NFLX remains about 18% off its January high, while QQQ is withintouching distance of its all time high. As a price-action, momentum based investor, seeing a stock that has demonstrated strong medium term and long term uptrend bias is of paramount importance to me and NFLX certainly checks all of that from this perspective. Although there are other growth stocks that have demonstrated a better uptrend bias profile, NFLX is not a slouch either. It has only lost its medium term 50W MA dynamic support only twice in the last 5 years: 2018 bear market decline of 45%, and Jul-Sep 19 decline of 35%. Even though the stock momentarily lost its 50W support level then, NFLX quickly regained its medium term support level, and during the COVID-19 bear market, NFLX never lost support of its medium term uptrend. Therefore, the 50W MA has proven to be a consistently strong medium term dynamic support level for NFLX over the last 5 years.</p>\n<p>NFLX's price has now approached its 50W support level again thanks to the weak market sentiments lately which makes it appropriate to discuss whether NFLX represents a good buying opportunity now for long term investors.</p>\n<p><b>So What Happened to Netflix's Paid Adds?</b></p>\n<p><img src=\"https://static.tigerbbs.com/17d1ce1d66e99396f67725dcfdaf3db8\" tg-width=\"769\" tg-height=\"476\" referrerpolicy=\"no-referrer\"></p>\n<p>Average Paying Membership by Region. Data Source: Company Filings</p>\n<p><img src=\"https://static.tigerbbs.com/6ca327a13d9645fce263565653d4e390\" tg-width=\"827\" tg-height=\"515\" referrerpolicy=\"no-referrer\"></p>\n<p>Average Paying Membership YoY Growth. Data Source: Company Filings</p>\n<p>As we could observe clearly from the charts above, the market reacted negatively to NFLX's Q1'21 results, sending the stock down 8.21% the day after the release. It added just 3.98M net paid members in Q1'21, which was significantly weaker than the previous quarters as can be seen from its YoY Growth. The management mainly attributed this to the strong pull forward growth in membership during Q1'20 that has somewhat skewed the base upwards and may have disproportionately affected its growth in Q1'21. Although I think there is a reasonable basis for that line of argument, however we did not observe such a drastic decline in Roku, Inc. (ROKU) in its active accounts in Q1'21 (see charts below).</p>\n<p><img src=\"https://static.tigerbbs.com/b6e96b19f4b3eef87be93ecce3953a19\" tg-width=\"878\" tg-height=\"543\" referrerpolicy=\"no-referrer\"></p>\n<p>Roku Active Accounts. Data Source: Company Filings</p>\n<p><img src=\"https://static.tigerbbs.com/04f4053e2022d4c90e8b8ec51c1fc295\" tg-width=\"600\" tg-height=\"371\" referrerpolicy=\"no-referrer\"></p>\n<p>Roku Active Accounts YoY Growth. Data Source: Company Filings</p>\n<p>We could clearly observe Roku's Active accounts YoY growth of 34.7% in Q1'21 to be still largely in line with 2019's growth even though Roku also experienced pull forward growth from COVID-19 last year. Therefore, I think there is a reasonable basis to infer that NFLX's paid adds growth seemed to have slowed down pretty dramatically even though it should be noted that NFLX's net paid membership of 208M significantly outnumbered Roku's 53.6M active accounts and that was not a small difference.</p>\n<p>Now, if you are a short term trader or an \"investor\" with a horizon of 1 quarter, then perhaps it may be a reasonable basis to get out of the stock. However, for long term investors, many of whom NFLX has handsomely rewarded over the last ten years, we need to dig deeper to investigate whether there has been a significant change in its long term competitive moat from the latest quarter's aberration that may significantly change NFLX's ability to compete effectively and weaken the competitive dynamics of its business model.</p>\n<p><b>Revenue Growth Looks Good</b></p>\n<p><img src=\"https://static.tigerbbs.com/d8c6ed8cb94d2134ca5d0d79660ece07\" tg-width=\"1184\" tg-height=\"732\" referrerpolicy=\"no-referrer\"></p>\n<p>Revenue by Region. Data Source: Company Filings</p>\n<p><img src=\"https://static.tigerbbs.com/3ee95424dd68c5abe3591347f9dd9fad\" tg-width=\"1010\" tg-height=\"624\" referrerpolicy=\"no-referrer\"></p>\n<p>Revenue by Region YoY Growth. Data Source: Company Filings</p>\n<p>First up, let's take a look at its revenue by region performance. We could observe clearly that the company's most important revenue drivers: UCAN and EMEA had YoY revenue growth of 17.3% and 36% in Q1'21, respectively, as compared to 19.8% and 39.7% in Q1'20, respectively. Sure, there was a slight blip in its YoY growth rate in Q1'21, but it was still very much in line with Q4'20 YoY numbers (which Mr. Market cheered by pushing the stock up 17.74% the day after earnings release), so it was nothing too significant that warranted a serious look into its competitiveness. Moreover, its fastest growing region: APAC also looked to have performed well with a 57.6% YoY growth rate that was even better than Q1'20's YoY growth rate of 51.3%.</p>\n<p><img src=\"https://static.tigerbbs.com/298a4247dfc847726b87f80e24cc874f\" tg-width=\"876\" tg-height=\"542\" referrerpolicy=\"no-referrer\"></p>\n<p>ARPU by Region. Data Source: Company Filings</p>\n<p><img src=\"https://static.tigerbbs.com/ce59d0df25c1a8b2fde74a772c918433\" tg-width=\"1023\" tg-height=\"632\" referrerpolicy=\"no-referrer\"></p>\n<p>ARPU by Region YoY Growth. Data Source: Company Filings</p>\n<p>NFLX also performed admirably well in its ARPU. ARPU was up in all the regions except for LATAM where the growth was flat on a QoQ basis. Although ARPU growth was quite volatile between quarters, ARPU in UCAN, EMEA and APAC went up by 8.4%, 11.5% and 9% in Q1'21, respectively. Even though LATAM's ARPU was down YoY, but on a QoQ basis it was flat, so there was nothing materially serious to take note here. Therefore, NFLX's ARPU performance looked really good in Q1'21.</p>\n<p><img src=\"https://static.tigerbbs.com/bee3698456324209ed6c9cf58bed58da\" tg-width=\"1280\" tg-height=\"995\" referrerpolicy=\"no-referrer\"></p>\n<p>Timeline of NFLX Price Hikes. Source:Variety</p>\n<p>If NFLX had faced intense competitive pressure in the past that forced it into a price war with competing platforms as it acquired more users, we would have seen the company forced to reduce its prices over time. On the contrary, NFLX has been increasing its prices steadily over time, with the latest round of price hikes on October 20. Even though there were some knee-jerk cancellations from some subscribers in the short term over the price hikes, over the long term it has never affected the company's ability to attract more users. This shows NFLX's strong competitive moat that gives it a huge ability to raise prices over time without losing its subscribers. In fact,NFLX well encapsulatedits strong ability to retain its subscribers despite the price hikes:</p>\n<blockquote>\n Our churn is actually below pre-price change levels already in the U.S. and in most of the markets and where we have adjusted prices and just some of the newer ones haven't come all the way back down, but they're rapidly getting there.\n</blockquote>\n<p>These well-planned price increases are extremely beneficial to NFLX's topline, given NFLX's growing subscriber base as the recent price increase is expected toadd $500Mto NFLX's revenue in FY 21 (consensus: $29.72B). Even though it's not a significant sum as compared to the revenue base, however more importantly it demonstrated clearly that NFLX has considerable pricing power in a highly competitive SVOD segment.</p>\n<p><img src=\"https://static.tigerbbs.com/42059a78e3a3f7dc656556dc27761343\" tg-width=\"1280\" tg-height=\"958\" referrerpolicy=\"no-referrer\"></p>\n<p>Top Reasons for Video Streaming Subscription Cancellations. Source:Variety</p>\n<p>When we consider that the single most important reason for subscribers to cancel their streaming subscriptions is: \"If the subscription price increased\", then investors should now be able to really understand how Mr. Market has significantly underestimated NFLX's pricing power, which is extremely important to NFLX's business model to introduce more and more high quality content as its subscriber base gets larger over time.</p>\n<p>If we revisit NFLX's ARPU by region again, we could certainly see a generally healthy trend of ARPU over time even as the company increased its prices. It's important to note that increasing subscriptions prices is the primary way for it to further monetize its growing user base (although the company has also recently introduced more monetization methods such asNetflix shop, as well as thegaming market, so investors are highly encouraged to continue monitoring these developments). The price increases will help to bolster the consistency of the ARPU such that it would help with times when the company has found some difficulty in adding more users such as in Q1'21, while YoY revenue growth was still very healthy.</p>\n<p>Investors should take note that NFLX's growing membership base of 208M paying members is a formidable moat for it to keep producing its slate of high quality original content.</p>\n<p>Strong Content Pipeline</p>\n<p><img src=\"https://static.tigerbbs.com/02eea9bd487d52b352dd3894f2563edf\" tg-width=\"1043\" tg-height=\"646\" referrerpolicy=\"no-referrer\"></p>\n<p>Content Assets. Data Source: Company Filings</p>\n<p><img src=\"https://static.tigerbbs.com/4a49a1facb41f2c4e848cced7724c68d\" tg-width=\"910\" tg-height=\"563\" referrerpolicy=\"no-referrer\"></p>\n<p>Produced Content YoY Growth. Data Source: Company Filings</p>\n<p>NFLX has been growing its original content base rapidly over the last few years, although the COVID-19 crisis has somewhat slowed down its growth. Thecompany emphasized:</p>\n<blockquote>\n [W]e think we'll get back to a much steadier state in the back half of the year and certainly in Q4, where we've got the returning seasons of some of our most popular shows like The Witcher and You and Cobra Kai as well as some big tempo movies that came to market a little slower than we'd hoped, like Red Notes with The Rock and Ryan Reynolds and Gaga, and Escape From Spiderhead with Chris Hemsworth, big event content.\n</blockquote>\n<p>Therefore, the company is not resting on its laurels and would keep on its record of producing high quality content to keep engagement at a high level with its viewers.</p>\n<p><img src=\"https://static.tigerbbs.com/b4aaf52a7c9c18a4fc5664c9000282d1\" tg-width=\"1280\" tg-height=\"781\" referrerpolicy=\"no-referrer\"></p>\n<p>Ranking of original streaming series titles in the U.S. Data Source: Nielsen, Media Play News</p>\n<p>In this survey conducted in early May, NFLX's slate of original series took home 7 out of the top 10 slots for the most watched series, demonstrating the high quality and appeal of its content with viewers. In fact, there were many other surveys that also showed Netflix's dominance in viewership over time.</p>\n<p>Netflix's original content didn't just dominate hours watched, but also award nominations. The company highlighted its recent achievements:</p>\n<blockquote>\n Netflix led all studios for recent award nominations including the Oscars, Golden Globes, SAG Awards, BAFTA and the NAACP Image Awards, among others. Heading into the Academy Awards this weekend, we have 36 nominations across 17 films including two nominees in each of the Best Picture (Mank, The Trial of the Chicago 7), Best Documentary Feature (Crip Camp, My Octopus Teacher), and Best Animated Feature (Over the Moon, A Shaun The Sheep Movie: Farmageddon) categories. Mank led all films with 10 nominations.\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/0a756085b63c0d9b1e40d39f3fd21609\" tg-width=\"764\" tg-height=\"473\" referrerpolicy=\"no-referrer\"></p>\n<p>Reasons for subscribing to SVOD services in the U.S. Data Source: Vorhaus Advisors</p>\n<p>As we could observe from the above, high quality original series (35%) and specific TV series or movies (43%) ranked very highly on the reasons for subscribing to SVOD services, and investors can rest assured that NFLX is certainly leading in these areas.</p>\n<p><img src=\"https://static.tigerbbs.com/afa2be3ca5cfa415aee98a9c45f8e6c9\" tg-width=\"956\" tg-height=\"591\" referrerpolicy=\"no-referrer\"></p>\n<p>Share of SVOD subscribers, who also subscribe to other services. Data Source: Reelgood</p>\n<p>In the SVOD space, we could clearly observe NFLX's importance to subscribers even if they subscribed to other services, which definitely helps to downplay the significance of increasing competitive threats to NFLX. In fact, NFLX was the most important service among these subscribers as the subscribers of the company's competitors also subscribed to NFLX: Peacock Premium (90%), HBO Max (90%), Amazon Prime (84%), Disney+ (87%), Hulu (85%) and Apple TV+ (92%), demonstrating clearly the importance and dominance of NFLX to its competitors' subscribers.</p>\n<p><img src=\"https://static.tigerbbs.com/a2c1e2c429e015e113242ffeac4d3f07\" tg-width=\"600\" tg-height=\"371\" referrerpolicy=\"no-referrer\"></p>\n<p>Netflix Video Content Budget. Data Source: eMarketer</p>\n<p>Many critics also pointed to NFLX's increasing need to dedicate huge amounts of investments to drive its engagement levels, protect its moat, grow its revenue. In fact, I think unless NFLX is working on a model like Roku, whose business model I havediscussed recently here, having a high quality slate of original content is important in order to maintain its competitive edge, especially when we have witnessed a series of industry consolidation where NFLX may lose more and more access to high quality licensed content, so NFLX's committed investments in original content a few years ago led by Co-CEO Ted Sarandos has certainly been a masterstroke that has helped maintain the company's competitive edge. In addition, NFLX has been getting more and more efficient in producing original content over time, certainly helped by the large and growing paying membership base, which as I mentioned in itself is a strong moat.</p>\n<p><img src=\"https://static.tigerbbs.com/e592ee98fcd2477f5e9332e664c74afa\" tg-width=\"1153\" tg-height=\"712\" referrerpolicy=\"no-referrer\"></p>\n<p>Other Operating Activities [LTM] as a % of Revenue [LTM]. Data Source: S&amp;P Capital IQ</p>\n<p>NFLX's other operating activities segment mainly include the company's investments in content assets which are classified as a cash outflow in the company's Cash from Operations [CFO]. If we observed clearly, despite the company's increasing video content budget, these investments have been forming a smaller and smaller component of the company's revenue from 2018 (even if we were to exclude the skewed figures from recent quarters due to reduced original content being produced as a result of COVID-19 delays), demonstrating the company's improved CFO position that has driven results towards FCF profitability. As a result, this allowed the company to confidently declare to investors that: \"So we expect to be about cash flow breakeven this year and then sustainably free cash flow positive and growing thereafter.\" This is definitely a highly important development, as that means NFLX now has more and more cash flow flexibility to invest in content to further drive its competitive edge against its closest rivals. The company's expected FCF profitability has also given the company confidence to announce a $5B share buyback in order to return excess cash to investors.</p>\n<p><img src=\"https://static.tigerbbs.com/ee2072e791610e16b97ed6d432f1fcb9\" tg-width=\"1280\" tg-height=\"750\" referrerpolicy=\"no-referrer\"></p>\n<p>Projected Revenue Consensus Estimates, Projected Revenue Growth, Unlevered FCF Margin. Data Source: S&amp;P Capital IQ</p>\n<p>In fact, when I factored in NFLX's growth assumptions into its forecast model, NFLX is expected to consistently improve its FCF margin in the years ahead, while maintaining a steady revenue growth over time. NFLX is fast becoming a FCF driver that is capable of sustaining its growth and protecting its competitive moat strongly.</p>\n<p><img src=\"https://static.tigerbbs.com/67cbb70240f511c861aa1e4fd5b8c00d\" tg-width=\"893\" tg-height=\"552\" referrerpolicy=\"no-referrer\">SVOD market share in Japan. Data Source: GEM Partners</p>\n<p>Turning to NFLX's fastest growing region: APAC (shortsighted investors seemed to ignore NFLX's dominance in this region). There's absolutely no doubt who was the clear leader in the SVOD market in Japan with NFLX holding a 19.5% market share. In fact, Japan was expected to take over Australia as APAC'slargest market by the end of 2021. Japan's revenue is expected to grow at about 37% YoY from $2.4B to $3.3B, and subscriptions from 25.5M to 33.3M, which would represent a 30.6% increase YoY.</p>\n<p><img src=\"https://static.tigerbbs.com/02d5751919369a578902516e76f5793a\" tg-width=\"600\" tg-height=\"371\" referrerpolicy=\"no-referrer\"></p>\n<p>Most popular OTT in Korea. Data Source: IGAWorks</p>\n<p>In its third largest APAC market: Korea, NFLX is also the well-established leader with a market share well ahead of the other OTT services, allowing the company a lot of leverage in producing top quality original Korean content. Korean content is very popular in Asia, and Netflix relies heavily on the Korean Wave (Hallyu) as the main gateway to audiences in Asia and has committed$500M to invest in Korean content in 2021 alone, from $700M spent between 2015 to 2020. Co-CEO Ted Sarandos summed up the company's approach in Korean content:</p>\n<blockquote>\n <b>Over the last two years, we've seen the world falling in love with incredible Korean content</b>, made in Korea and watched by the world on Netflix. Our commitment towards Korea is strong. We will continue to invest and collaborate with Korean storytellers across a wealth of genres and formats.\n</blockquote>\n<p><img src=\"https://static.tigerbbs.com/06889e84d7faf18b5d1a8da1b4542895\" tg-width=\"600\" tg-height=\"371\" referrerpolicy=\"no-referrer\"></p>\n<p>Popular OTT for accessing Korean Dramas Worldwide. Data Source: Korean Foundation for International Cultural Exchange; MCST Korea</p>\n<p>Netflix's commitment to build up its investments in Korean content has allowed it to maintain a strong position as the second ranked OTT platform behind YouTube for worldwide access to Korean dramas mainly because in my opinion, AVOD-based YouTube is free. However, Netflix has produced a lot of Original Series Korean dramas that have often quickly become a hit, and which were not available for distribution on YouTube.</p>\n<p>The Elephant in the Room: Disney</p>\n<p><img src=\"https://static.tigerbbs.com/2eb61cee21092f710c0e1446f1d598d2\" tg-width=\"1207\" tg-height=\"746\" referrerpolicy=\"no-referrer\"></p>\n<p>Estimated number of SVOD subscribers worldwide. Data Source: Digital TV Research</p>\n<p>Disney (DIS) perhaps represents the largest threat in terms of subscribers growth as it's expected to take over NFLX as the largest SVOD player worldwide by 2026 with 294M subscribers as compared to NFLX's 286M subscribers.</p>\n<p>DIS has grown its subscribers base impressively as it reached103.6M subscribers in Q2'21. DIS's Hotstar platform is the dominant platform in two of Asia's most populated countries: Indonesia and India. This is expected to continue driving strong subscribers growth that would help it to exceed NFLX's subscriber base eventually.</p>\n<p><img src=\"https://static.tigerbbs.com/30f463be13597df4819879aa4b894285\" tg-width=\"600\" tg-height=\"371\" referrerpolicy=\"no-referrer\"></p>\n<p>DIS+ ARPU. Data Source: Company Filings</p>\n<p>However, DIS's ARPU is also substantially lower than NFLX as Hotstar is very much a lower-priced offering and therefore skewing DIS's ARPU to the downside even as it adds more users. However, Hotstar looks like the better equipped option for growth in these two important Asian markets for DIS and I think DISpossesses the edge over here.</p>\n<p><img src=\"https://static.tigerbbs.com/63f805876a22e4da556a27db39e6cdc8\" tg-width=\"600\" tg-height=\"371\" referrerpolicy=\"no-referrer\"></p>\n<p>Estimated penetration rate. Data Source: The Motley Fool, Stifel</p>\n<p>However, NFLX is still expected to make inroads in all its segments, and particularly in APAC and EMEA as it continues to drive content growth to cater to the markets where it has the lead. l certainly think NFLX can't win in all markets, and in some markets the company definitely has to spend a lot more time and resources to develop them such as in APAC where its penetration is still very low, therefore offering huge potential for growth.</p>\n<p><img src=\"https://static.tigerbbs.com/20878384ca9242ab35b248fb2b73ff6f\" tg-width=\"951\" tg-height=\"588\" referrerpolicy=\"no-referrer\"></p>\n<p>OTT Revenue Worldwide. Data Source: Digital TV Research</p>\n<p>Most importantly, the whole market still offers a lot of opportunities for growth for well positioned players in both the AVOD and the SVOD space. In the SVOD market, it is expected to grow at about 10.16% CAGR from 2020 to 2025, which although not as fast as the AVOD market, it's still expected to grow at a highly respectable rate.</p>\n<p><b>Valuations are Not Expensive</b></p>\n<p><img src=\"https://static.tigerbbs.com/5d390f14679f74fb62a364d0921d5923\" tg-width=\"1280\" tg-height=\"733\" referrerpolicy=\"no-referrer\"></p>\n<p>Revenue CAGR and Revenue Multiples. Data Source: S&amp;P Capital IQ</p>\n<p>NFLX's projected growth (5Y CAGR of 15.1%) is definitely expected to slow as it matures, and turn FCF profitable. I don't think it's a bad thing. NFLX is still the dominant player in SVOD and expected to be so. In addition, it's still expected to grow faster than the SVOD market growth of 10.1%, thus further reinforcing NFLX's market leadership expectation. In addition, it's also trading at a slight discount on its EV / FY+1 Rev of 7.8x as compared to its 5Y Av. EV / LTM Rev of 8.8x.</p>\n<p><img src=\"https://static.tigerbbs.com/becc49bc5dfbfa222226bd7426fd4e9e\" tg-width=\"1280\" tg-height=\"707\" referrerpolicy=\"no-referrer\"></p>\n<p>CapEX Margin &amp; Projected CapEx Margin. Data Source: S&amp;P Capital IQ</p>\n<p><img src=\"https://static.tigerbbs.com/c44673eb90f5086b3eeae98397e1115f\" tg-width=\"1276\" tg-height=\"1122\" referrerpolicy=\"no-referrer\"></p>\n<p>5Y Av. EV / EBITDA &amp; EV / Fwd EBITDA. Data Source: S&amp;P Capital IQ</p>\n<p>Given that its CapEX margins (see above) are expected to be largely consistent over time as compared to the last few years, I also find it useful to consider its cash flow generating capacity and value it accordingly. When we consider NFLX's EV / Fwd EBITDA (see above), we could see the company's improved FCF generating capability has now made NFLX a lot more undervalued than when we compared it against its revenue growth.</p>\n<p><img src=\"https://static.tigerbbs.com/2e39e44f4f13ac6efc0b91aed6045771\" tg-width=\"1280\" tg-height=\"716\" referrerpolicy=\"no-referrer\"></p>\n<p>EV / Fwd (EBITDA - CapEx). Data Source: S&amp;P Capital IQ</p>\n<p>In fact, NFLX is expected to continue generating a high level FCF moving forward which would thus further support the NFLX's competitive valuation from the FCF point of view.</p>\n<p>Price Action and Technical Analysis</p>\n<p><img src=\"https://static.tigerbbs.com/2da4bd6973d2fa92a51a7b159b05efce\" tg-width=\"1280\" tg-height=\"784\" referrerpolicy=\"no-referrer\"></p>\n<p>Source: TradingView</p>\n<p>The current price level at $489 is a possible entry point, with a more conservative entry point at $458. The \"Buy more\" entry point is at $398, which is also supported above the key 200W MA. Avoid buying near $563 and $593 in the near term as they look to be key resistance levels.</p>\n<p><b>Wrapping it all up</b></p>\n<p>Netflix's \"loss of competitiveness\" and \"weak fundamentals\" that were called into question recently are largely unfounded. The company enjoys strong dominance and competitive advantages in the SVOD market that is still expected to grow at double digit growth rates of which NFLX is expected to exploit in the years ahead.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Netflix: The Selloff Looks Overdone</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNetflix: The Selloff Looks Overdone\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-15 17:39 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4434692-netflix-the-sell-off-looks-overdone-nflx><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nNetflix has been unreasonably sold down and unjustifiably cited as losing its competitive edge due to weaker Q1’21 membership adds.\nHowever, short-sighted investors did not consider Netflix’s...</p>\n\n<a href=\"https://seekingalpha.com/article/4434692-netflix-the-sell-off-looks-overdone-nflx\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NFLX":"奈飞"},"source_url":"https://seekingalpha.com/article/4434692-netflix-the-sell-off-looks-overdone-nflx","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1193778475","content_text":"Summary\n\nNetflix has been unreasonably sold down and unjustifiably cited as losing its competitive edge due to weaker Q1’21 membership adds.\nHowever, short-sighted investors did not consider Netflix’s overall game to evaluate the strength of its moat.\nNetflix looks attractively-priced now, and should be a worthy addition to both value and growth investors.\n\nInvestment Thesis\nNetflix (NFLX) has come under the weather recently, as the company had to face increased competitive pressure from the growth of Disney+, recent industry consolidation fromWarner Bros. Discovery(T,DISCA) and Amazon's (AMZN)acquisition of MGM's deep content IP. Furthermore, the company also reported an\"underwhelming\" Q1'21results that saw the company even missing its own net membership adds estimates by 2m. In short, there seems to be no shortage of bad news for NFLX recently.\n\nSource: TradingView\nTherefore, it's not surprising to me at all that Mr. Market reacted somewhat negatively to all these competitive headwinds as NFLX remains about 18% off its January high, while QQQ is withintouching distance of its all time high. As a price-action, momentum based investor, seeing a stock that has demonstrated strong medium term and long term uptrend bias is of paramount importance to me and NFLX certainly checks all of that from this perspective. Although there are other growth stocks that have demonstrated a better uptrend bias profile, NFLX is not a slouch either. It has only lost its medium term 50W MA dynamic support only twice in the last 5 years: 2018 bear market decline of 45%, and Jul-Sep 19 decline of 35%. Even though the stock momentarily lost its 50W support level then, NFLX quickly regained its medium term support level, and during the COVID-19 bear market, NFLX never lost support of its medium term uptrend. Therefore, the 50W MA has proven to be a consistently strong medium term dynamic support level for NFLX over the last 5 years.\nNFLX's price has now approached its 50W support level again thanks to the weak market sentiments lately which makes it appropriate to discuss whether NFLX represents a good buying opportunity now for long term investors.\nSo What Happened to Netflix's Paid Adds?\n\nAverage Paying Membership by Region. Data Source: Company Filings\n\nAverage Paying Membership YoY Growth. Data Source: Company Filings\nAs we could observe clearly from the charts above, the market reacted negatively to NFLX's Q1'21 results, sending the stock down 8.21% the day after the release. It added just 3.98M net paid members in Q1'21, which was significantly weaker than the previous quarters as can be seen from its YoY Growth. The management mainly attributed this to the strong pull forward growth in membership during Q1'20 that has somewhat skewed the base upwards and may have disproportionately affected its growth in Q1'21. Although I think there is a reasonable basis for that line of argument, however we did not observe such a drastic decline in Roku, Inc. (ROKU) in its active accounts in Q1'21 (see charts below).\n\nRoku Active Accounts. Data Source: Company Filings\n\nRoku Active Accounts YoY Growth. Data Source: Company Filings\nWe could clearly observe Roku's Active accounts YoY growth of 34.7% in Q1'21 to be still largely in line with 2019's growth even though Roku also experienced pull forward growth from COVID-19 last year. Therefore, I think there is a reasonable basis to infer that NFLX's paid adds growth seemed to have slowed down pretty dramatically even though it should be noted that NFLX's net paid membership of 208M significantly outnumbered Roku's 53.6M active accounts and that was not a small difference.\nNow, if you are a short term trader or an \"investor\" with a horizon of 1 quarter, then perhaps it may be a reasonable basis to get out of the stock. However, for long term investors, many of whom NFLX has handsomely rewarded over the last ten years, we need to dig deeper to investigate whether there has been a significant change in its long term competitive moat from the latest quarter's aberration that may significantly change NFLX's ability to compete effectively and weaken the competitive dynamics of its business model.\nRevenue Growth Looks Good\n\nRevenue by Region. Data Source: Company Filings\n\nRevenue by Region YoY Growth. Data Source: Company Filings\nFirst up, let's take a look at its revenue by region performance. We could observe clearly that the company's most important revenue drivers: UCAN and EMEA had YoY revenue growth of 17.3% and 36% in Q1'21, respectively, as compared to 19.8% and 39.7% in Q1'20, respectively. Sure, there was a slight blip in its YoY growth rate in Q1'21, but it was still very much in line with Q4'20 YoY numbers (which Mr. Market cheered by pushing the stock up 17.74% the day after earnings release), so it was nothing too significant that warranted a serious look into its competitiveness. Moreover, its fastest growing region: APAC also looked to have performed well with a 57.6% YoY growth rate that was even better than Q1'20's YoY growth rate of 51.3%.\n\nARPU by Region. Data Source: Company Filings\n\nARPU by Region YoY Growth. Data Source: Company Filings\nNFLX also performed admirably well in its ARPU. ARPU was up in all the regions except for LATAM where the growth was flat on a QoQ basis. Although ARPU growth was quite volatile between quarters, ARPU in UCAN, EMEA and APAC went up by 8.4%, 11.5% and 9% in Q1'21, respectively. Even though LATAM's ARPU was down YoY, but on a QoQ basis it was flat, so there was nothing materially serious to take note here. Therefore, NFLX's ARPU performance looked really good in Q1'21.\n\nTimeline of NFLX Price Hikes. Source:Variety\nIf NFLX had faced intense competitive pressure in the past that forced it into a price war with competing platforms as it acquired more users, we would have seen the company forced to reduce its prices over time. On the contrary, NFLX has been increasing its prices steadily over time, with the latest round of price hikes on October 20. Even though there were some knee-jerk cancellations from some subscribers in the short term over the price hikes, over the long term it has never affected the company's ability to attract more users. This shows NFLX's strong competitive moat that gives it a huge ability to raise prices over time without losing its subscribers. In fact,NFLX well encapsulatedits strong ability to retain its subscribers despite the price hikes:\n\n Our churn is actually below pre-price change levels already in the U.S. and in most of the markets and where we have adjusted prices and just some of the newer ones haven't come all the way back down, but they're rapidly getting there.\n\nThese well-planned price increases are extremely beneficial to NFLX's topline, given NFLX's growing subscriber base as the recent price increase is expected toadd $500Mto NFLX's revenue in FY 21 (consensus: $29.72B). Even though it's not a significant sum as compared to the revenue base, however more importantly it demonstrated clearly that NFLX has considerable pricing power in a highly competitive SVOD segment.\n\nTop Reasons for Video Streaming Subscription Cancellations. Source:Variety\nWhen we consider that the single most important reason for subscribers to cancel their streaming subscriptions is: \"If the subscription price increased\", then investors should now be able to really understand how Mr. Market has significantly underestimated NFLX's pricing power, which is extremely important to NFLX's business model to introduce more and more high quality content as its subscriber base gets larger over time.\nIf we revisit NFLX's ARPU by region again, we could certainly see a generally healthy trend of ARPU over time even as the company increased its prices. It's important to note that increasing subscriptions prices is the primary way for it to further monetize its growing user base (although the company has also recently introduced more monetization methods such asNetflix shop, as well as thegaming market, so investors are highly encouraged to continue monitoring these developments). The price increases will help to bolster the consistency of the ARPU such that it would help with times when the company has found some difficulty in adding more users such as in Q1'21, while YoY revenue growth was still very healthy.\nInvestors should take note that NFLX's growing membership base of 208M paying members is a formidable moat for it to keep producing its slate of high quality original content.\nStrong Content Pipeline\n\nContent Assets. Data Source: Company Filings\n\nProduced Content YoY Growth. Data Source: Company Filings\nNFLX has been growing its original content base rapidly over the last few years, although the COVID-19 crisis has somewhat slowed down its growth. Thecompany emphasized:\n\n [W]e think we'll get back to a much steadier state in the back half of the year and certainly in Q4, where we've got the returning seasons of some of our most popular shows like The Witcher and You and Cobra Kai as well as some big tempo movies that came to market a little slower than we'd hoped, like Red Notes with The Rock and Ryan Reynolds and Gaga, and Escape From Spiderhead with Chris Hemsworth, big event content.\n\nTherefore, the company is not resting on its laurels and would keep on its record of producing high quality content to keep engagement at a high level with its viewers.\n\nRanking of original streaming series titles in the U.S. Data Source: Nielsen, Media Play News\nIn this survey conducted in early May, NFLX's slate of original series took home 7 out of the top 10 slots for the most watched series, demonstrating the high quality and appeal of its content with viewers. In fact, there were many other surveys that also showed Netflix's dominance in viewership over time.\nNetflix's original content didn't just dominate hours watched, but also award nominations. The company highlighted its recent achievements:\n\n Netflix led all studios for recent award nominations including the Oscars, Golden Globes, SAG Awards, BAFTA and the NAACP Image Awards, among others. Heading into the Academy Awards this weekend, we have 36 nominations across 17 films including two nominees in each of the Best Picture (Mank, The Trial of the Chicago 7), Best Documentary Feature (Crip Camp, My Octopus Teacher), and Best Animated Feature (Over the Moon, A Shaun The Sheep Movie: Farmageddon) categories. Mank led all films with 10 nominations.\n\n\nReasons for subscribing to SVOD services in the U.S. Data Source: Vorhaus Advisors\nAs we could observe from the above, high quality original series (35%) and specific TV series or movies (43%) ranked very highly on the reasons for subscribing to SVOD services, and investors can rest assured that NFLX is certainly leading in these areas.\n\nShare of SVOD subscribers, who also subscribe to other services. Data Source: Reelgood\nIn the SVOD space, we could clearly observe NFLX's importance to subscribers even if they subscribed to other services, which definitely helps to downplay the significance of increasing competitive threats to NFLX. In fact, NFLX was the most important service among these subscribers as the subscribers of the company's competitors also subscribed to NFLX: Peacock Premium (90%), HBO Max (90%), Amazon Prime (84%), Disney+ (87%), Hulu (85%) and Apple TV+ (92%), demonstrating clearly the importance and dominance of NFLX to its competitors' subscribers.\n\nNetflix Video Content Budget. Data Source: eMarketer\nMany critics also pointed to NFLX's increasing need to dedicate huge amounts of investments to drive its engagement levels, protect its moat, grow its revenue. In fact, I think unless NFLX is working on a model like Roku, whose business model I havediscussed recently here, having a high quality slate of original content is important in order to maintain its competitive edge, especially when we have witnessed a series of industry consolidation where NFLX may lose more and more access to high quality licensed content, so NFLX's committed investments in original content a few years ago led by Co-CEO Ted Sarandos has certainly been a masterstroke that has helped maintain the company's competitive edge. In addition, NFLX has been getting more and more efficient in producing original content over time, certainly helped by the large and growing paying membership base, which as I mentioned in itself is a strong moat.\n\nOther Operating Activities [LTM] as a % of Revenue [LTM]. Data Source: S&P Capital IQ\nNFLX's other operating activities segment mainly include the company's investments in content assets which are classified as a cash outflow in the company's Cash from Operations [CFO]. If we observed clearly, despite the company's increasing video content budget, these investments have been forming a smaller and smaller component of the company's revenue from 2018 (even if we were to exclude the skewed figures from recent quarters due to reduced original content being produced as a result of COVID-19 delays), demonstrating the company's improved CFO position that has driven results towards FCF profitability. As a result, this allowed the company to confidently declare to investors that: \"So we expect to be about cash flow breakeven this year and then sustainably free cash flow positive and growing thereafter.\" This is definitely a highly important development, as that means NFLX now has more and more cash flow flexibility to invest in content to further drive its competitive edge against its closest rivals. The company's expected FCF profitability has also given the company confidence to announce a $5B share buyback in order to return excess cash to investors.\n\nProjected Revenue Consensus Estimates, Projected Revenue Growth, Unlevered FCF Margin. Data Source: S&P Capital IQ\nIn fact, when I factored in NFLX's growth assumptions into its forecast model, NFLX is expected to consistently improve its FCF margin in the years ahead, while maintaining a steady revenue growth over time. NFLX is fast becoming a FCF driver that is capable of sustaining its growth and protecting its competitive moat strongly.\nSVOD market share in Japan. Data Source: GEM Partners\nTurning to NFLX's fastest growing region: APAC (shortsighted investors seemed to ignore NFLX's dominance in this region). There's absolutely no doubt who was the clear leader in the SVOD market in Japan with NFLX holding a 19.5% market share. In fact, Japan was expected to take over Australia as APAC'slargest market by the end of 2021. Japan's revenue is expected to grow at about 37% YoY from $2.4B to $3.3B, and subscriptions from 25.5M to 33.3M, which would represent a 30.6% increase YoY.\n\nMost popular OTT in Korea. Data Source: IGAWorks\nIn its third largest APAC market: Korea, NFLX is also the well-established leader with a market share well ahead of the other OTT services, allowing the company a lot of leverage in producing top quality original Korean content. Korean content is very popular in Asia, and Netflix relies heavily on the Korean Wave (Hallyu) as the main gateway to audiences in Asia and has committed$500M to invest in Korean content in 2021 alone, from $700M spent between 2015 to 2020. Co-CEO Ted Sarandos summed up the company's approach in Korean content:\n\nOver the last two years, we've seen the world falling in love with incredible Korean content, made in Korea and watched by the world on Netflix. Our commitment towards Korea is strong. We will continue to invest and collaborate with Korean storytellers across a wealth of genres and formats.\n\n\nPopular OTT for accessing Korean Dramas Worldwide. Data Source: Korean Foundation for International Cultural Exchange; MCST Korea\nNetflix's commitment to build up its investments in Korean content has allowed it to maintain a strong position as the second ranked OTT platform behind YouTube for worldwide access to Korean dramas mainly because in my opinion, AVOD-based YouTube is free. However, Netflix has produced a lot of Original Series Korean dramas that have often quickly become a hit, and which were not available for distribution on YouTube.\nThe Elephant in the Room: Disney\n\nEstimated number of SVOD subscribers worldwide. Data Source: Digital TV Research\nDisney (DIS) perhaps represents the largest threat in terms of subscribers growth as it's expected to take over NFLX as the largest SVOD player worldwide by 2026 with 294M subscribers as compared to NFLX's 286M subscribers.\nDIS has grown its subscribers base impressively as it reached103.6M subscribers in Q2'21. DIS's Hotstar platform is the dominant platform in two of Asia's most populated countries: Indonesia and India. This is expected to continue driving strong subscribers growth that would help it to exceed NFLX's subscriber base eventually.\n\nDIS+ ARPU. Data Source: Company Filings\nHowever, DIS's ARPU is also substantially lower than NFLX as Hotstar is very much a lower-priced offering and therefore skewing DIS's ARPU to the downside even as it adds more users. However, Hotstar looks like the better equipped option for growth in these two important Asian markets for DIS and I think DISpossesses the edge over here.\n\nEstimated penetration rate. Data Source: The Motley Fool, Stifel\nHowever, NFLX is still expected to make inroads in all its segments, and particularly in APAC and EMEA as it continues to drive content growth to cater to the markets where it has the lead. l certainly think NFLX can't win in all markets, and in some markets the company definitely has to spend a lot more time and resources to develop them such as in APAC where its penetration is still very low, therefore offering huge potential for growth.\n\nOTT Revenue Worldwide. Data Source: Digital TV Research\nMost importantly, the whole market still offers a lot of opportunities for growth for well positioned players in both the AVOD and the SVOD space. In the SVOD market, it is expected to grow at about 10.16% CAGR from 2020 to 2025, which although not as fast as the AVOD market, it's still expected to grow at a highly respectable rate.\nValuations are Not Expensive\n\nRevenue CAGR and Revenue Multiples. Data Source: S&P Capital IQ\nNFLX's projected growth (5Y CAGR of 15.1%) is definitely expected to slow as it matures, and turn FCF profitable. I don't think it's a bad thing. NFLX is still the dominant player in SVOD and expected to be so. In addition, it's still expected to grow faster than the SVOD market growth of 10.1%, thus further reinforcing NFLX's market leadership expectation. In addition, it's also trading at a slight discount on its EV / FY+1 Rev of 7.8x as compared to its 5Y Av. EV / LTM Rev of 8.8x.\n\nCapEX Margin & Projected CapEx Margin. Data Source: S&P Capital IQ\n\n5Y Av. EV / EBITDA & EV / Fwd EBITDA. Data Source: S&P Capital IQ\nGiven that its CapEX margins (see above) are expected to be largely consistent over time as compared to the last few years, I also find it useful to consider its cash flow generating capacity and value it accordingly. When we consider NFLX's EV / Fwd EBITDA (see above), we could see the company's improved FCF generating capability has now made NFLX a lot more undervalued than when we compared it against its revenue growth.\n\nEV / Fwd (EBITDA - CapEx). Data Source: S&P Capital IQ\nIn fact, NFLX is expected to continue generating a high level FCF moving forward which would thus further support the NFLX's competitive valuation from the FCF point of view.\nPrice Action and Technical Analysis\n\nSource: TradingView\nThe current price level at $489 is a possible entry point, with a more conservative entry point at $458. The \"Buy more\" entry point is at $398, which is also supported above the key 200W MA. Avoid buying near $563 and $593 in the near term as they look to be key resistance levels.\nWrapping it all up\nNetflix's \"loss of competitiveness\" and \"weak fundamentals\" that were called into question recently are largely unfounded. The company enjoys strong dominance and competitive advantages in the SVOD market that is still expected to grow at double digit growth rates of which NFLX is expected to exploit in the years ahead.","news_type":1},"isVote":1,"tweetType":1,"viewCount":114,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":187844689,"gmtCreate":1623750362141,"gmtModify":1704210428061,"author":{"id":"3571017109514640","authorId":"3571017109514640","name":"IMTCG","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3571017109514640","authorIdStr":"3571017109514640"},"themes":[],"htmlText":"Apple is good","listText":"Apple is good","text":"Apple is good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187844689","repostId":"1109511555","repostType":4,"repost":{"id":"1109511555","pubTimestamp":1623727571,"share":"https://ttm.financial/m/news/1109511555?lang=&edition=fundamental","pubTime":"2021-06-15 11:26","market":"us","language":"en","title":"Apple Plans Faster Watch, Future Temperature and Glucose Sensors","url":"https://stock-news.laohu8.com/highlight/detail?id=1109511555","media":"Bloomberg","summary":"Updated screens and performance this year, new functions later. New entry-level and extreme sports models planned for 2022. A customer tries on an Apple watch at a store in Palo Alto, California. Photographer: Nina Riggio/Bloomberg. Apple Inc. is working on new Apple Watch models and health features, spanning display and speed upgrades, an extreme sports edition and body temperature and blood sugar sensors.The Cupertino, California-based tech giant is planning to refresh the line this year -- wi","content":"<ul>\n <li>Updated screens and performance this year, new functions later</li>\n <li>New entry-level and extreme sports models planned for 2022</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e86dd58655f96500dda750d2b1350121\" tg-width=\"2000\" tg-height=\"1333\"><span>A customer tries on an Apple watch at a store in Palo Alto, California. Photographer: Nina Riggio/Bloomberg</span></p>\n<p>Apple Inc.&nbsp;is working on new Apple Watch models and health features, spanning display and speed upgrades, an extreme sports edition and body temperature and blood sugar sensors.</p>\n<p>The Cupertino, California-based tech giant is planning to refresh the line this year -- with a model likely dubbed the Apple Watch Series 7 -- by adding a faster processor, improved wireless connectivity and an updated screen, according to people with knowledge of the plans. Next year the company plans to update the main Apple Watch alongside a successor for the lower-end Apple Watch SE and a new version targeting extreme sports athletes.</p>\n<p>Apple had previously aimed to put a body temperature sensor in this year’s model, but that is now more likely to be included in the 2022 update. The blood-sugar sensor, which would help diabetics monitor their glucose levels, is unlikely to be ready for commercial launch for several more years.</p>\n<p>For this year’s model, Apple has tested thinner display borders and a new lamination technique that brings the display closer to the front cover. The new Watch is likely to be slightly thicker overall, but not in a way that’s noticeable to the user.</p>\n<p>The model will include updated ultra-wideband functionality, the same underlying technology in the Apple AirTag item finder. At its developer conference in early June, Apple previewed the upcoming watchOS 8 software update that will let the device unlock door and hotel rooms.</p>\n<p>The extreme sports model, described by some inside Apple as either an “explorer” or “adventure” edition, was in development for release as early as this year, but it is now more likely to launch in 2022. That new model would help Apple compete with rugged offerings from players like&nbsp;Garmin Ltd.&nbsp;and&nbsp;Casio Computer Co.</p>\n<p>An Apple spokeswoman declined to comment. The company’s plans remain fluid and could change, the people said.</p>\n<p>Luxshare Precision Industry Co.&nbsp;is the primary assembler for the main Apple Watch, while&nbsp;Hon Hai Precision Industry Co., or Foxconn, shares some of those orders in addition to splitting assembly of the Apple Watch SE with Taiwan’s&nbsp;Compal Electronics Inc.</p>\n<p>Measuring body temperature became an essential part of Covid-19 detection, prompting a&nbsp;surge&nbsp;in demand for gadgets such as the&nbsp;Withings Thermo. Some companies offer small digital thermometers that plug into a smartphone’s charging port. Adding the functionality into its watch would help Apple match other smartwatches and fitness bands, including products from&nbsp;Alphabet Inc.-owned&nbsp;Fitbit.</p>\n<p>Blood sugar monitoring has been long in the works at Apple and would be a feature thus far unrivaled by competitors. Apple and others currently rely on apps that let users input their glucose levels manually, while medical device companies like&nbsp;Dexcom Inc.&nbsp;offer blood sugar monitors that share data with the Apple Watch. Users typically need to prick their finger to draw blood for an accurate glucose test, but Apple is aiming for a non-invasive solution that can analyze blood through the skin.</p>\n<p>Since going on sale in 2015, the Apple Watch has grown into a key part of Apple’s product portfolio. Along with the iPhone and iPad, it fills out the company’s hardware ecosystem and helped Apple’s broader wearables, home and accessories category generate more than $30 billion last fiscal year.</p>","source":"lsy1584095487587","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Apple Plans Faster Watch, Future Temperature and Glucose Sensors</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nApple Plans Faster Watch, Future Temperature and Glucose Sensors\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-15 11:26 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.bloomberg.com/news/articles/2021-06-14/apple-plans-faster-watch-future-temperature-and-glucose-sensors><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Updated screens and performance this year, new functions later\nNew entry-level and extreme sports models planned for 2022\n\nA customer tries on an Apple watch at a store in Palo Alto, California. ...</p>\n\n<a href=\"https://www.bloomberg.com/news/articles/2021-06-14/apple-plans-faster-watch-future-temperature-and-glucose-sensors\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AAPL":"苹果"},"source_url":"https://www.bloomberg.com/news/articles/2021-06-14/apple-plans-faster-watch-future-temperature-and-glucose-sensors","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1109511555","content_text":"Updated screens and performance this year, new functions later\nNew entry-level and extreme sports models planned for 2022\n\nA customer tries on an Apple watch at a store in Palo Alto, California. Photographer: Nina Riggio/Bloomberg\nApple Inc. is working on new Apple Watch models and health features, spanning display and speed upgrades, an extreme sports edition and body temperature and blood sugar sensors.\nThe Cupertino, California-based tech giant is planning to refresh the line this year -- with a model likely dubbed the Apple Watch Series 7 -- by adding a faster processor, improved wireless connectivity and an updated screen, according to people with knowledge of the plans. Next year the company plans to update the main Apple Watch alongside a successor for the lower-end Apple Watch SE and a new version targeting extreme sports athletes.\nApple had previously aimed to put a body temperature sensor in this year’s model, but that is now more likely to be included in the 2022 update. The blood-sugar sensor, which would help diabetics monitor their glucose levels, is unlikely to be ready for commercial launch for several more years.\nFor this year’s model, Apple has tested thinner display borders and a new lamination technique that brings the display closer to the front cover. The new Watch is likely to be slightly thicker overall, but not in a way that’s noticeable to the user.\nThe model will include updated ultra-wideband functionality, the same underlying technology in the Apple AirTag item finder. At its developer conference in early June, Apple previewed the upcoming watchOS 8 software update that will let the device unlock door and hotel rooms.\nThe extreme sports model, described by some inside Apple as either an “explorer” or “adventure” edition, was in development for release as early as this year, but it is now more likely to launch in 2022. That new model would help Apple compete with rugged offerings from players like Garmin Ltd. and Casio Computer Co.\nAn Apple spokeswoman declined to comment. The company’s plans remain fluid and could change, the people said.\nLuxshare Precision Industry Co. is the primary assembler for the main Apple Watch, while Hon Hai Precision Industry Co., or Foxconn, shares some of those orders in addition to splitting assembly of the Apple Watch SE with Taiwan’s Compal Electronics Inc.\nMeasuring body temperature became an essential part of Covid-19 detection, prompting a surge in demand for gadgets such as the Withings Thermo. Some companies offer small digital thermometers that plug into a smartphone’s charging port. Adding the functionality into its watch would help Apple match other smartwatches and fitness bands, including products from Alphabet Inc.-owned Fitbit.\nBlood sugar monitoring has been long in the works at Apple and would be a feature thus far unrivaled by competitors. Apple and others currently rely on apps that let users input their glucose levels manually, while medical device companies like Dexcom Inc. offer blood sugar monitors that share data with the Apple Watch. Users typically need to prick their finger to draw blood for an accurate glucose test, but Apple is aiming for a non-invasive solution that can analyze blood through the skin.\nSince going on sale in 2015, the Apple Watch has grown into a key part of Apple’s product portfolio. Along with the iPhone and iPad, it fills out the company’s hardware ecosystem and helped Apple’s broader wearables, home and accessories category generate more than $30 billion last fiscal year.","news_type":1},"isVote":1,"tweetType":1,"viewCount":105,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":187846682,"gmtCreate":1623750270546,"gmtModify":1704210423486,"author":{"id":"3571017109514640","authorId":"3571017109514640","name":"IMTCG","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3571017109514640","authorIdStr":"3571017109514640"},"themes":[],"htmlText":"Long Adobe!","listText":"Long Adobe!","text":"Long Adobe!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187846682","repostId":"1140381227","repostType":4,"repost":{"id":"1140381227","pubTimestamp":1623736805,"share":"https://ttm.financial/m/news/1140381227?lang=&edition=fundamental","pubTime":"2021-06-15 14:00","market":"us","language":"en","title":"Why Adobe Could Be Worth $590: A Promising Look Ahead Of Q2 Earnings","url":"https://stock-news.laohu8.com/highlight/detail?id=1140381227","media":"seekingalpha","summary":"Summary\n\nDespite rising over 8% in the past week ahead of earnings, there is still room for upside i","content":"<p><b>Summary</b></p>\n<ul>\n <li>Despite rising over 8% in the past week ahead of earnings, there is still room for upside in Adobe stock.</li>\n <li>The firm is well-positioned to benefit from trends in the immediate future and beyond.</li>\n <li>Adobe’s scale and dominance will allow it to continue to thrive and benefit from rapid growth in its total addressable market across its diverse products.</li>\n <li>Strong Q2 earnings could be the catalyst to push the stock over $600.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c4641d2a64b72a5def91db89c766c634\" tg-width=\"1536\" tg-height=\"1023\" referrerpolicy=\"no-referrer\"><span>hapabapa/iStock Editorial via Getty Images</span></p>\n<p><b>I. Investment Thesis</b></p>\n<p>Despite rallying well over 8% in the past week ahead of earnings, there is still room for upside in Adobe Inc. (NASDAQ:ADBE) stock.</p>\n<p>Adobe's historical success with execution of a transition to a cloud-based subscription model will continue to drive strong revenue growth.</p>\n<p>The firm is also well-positioned to benefit from trends in the immediate future and beyond, however, many of these trends and growth opportunities are unrecognized.</p>\n<p>Adobe's scale and dominance will allow it to continue to thrive and benefit from rapid growth in its total addressable market across its diverse products.</p>\n<p>Lastly, strong Q2 earnings could be the catalyst to push the stock over $600 in a bull scenario.</p>\n<p><b>II. Company Overview</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8f64603318c032d51062fefbac14e0a4\" tg-width=\"635\" tg-height=\"403\"><span>Data by YCharts</span></p>\n<p>Adobe operates worldwide, offering software and services used by professionals, marketers, students, and more for creating, managing, measuring, and engaging with compelling content and experiences. As of&nbsp;Q1 FY 2021, the firm generates their revenue from three main segments: Digital Media (~73% of revenues), Digital Experience (~24%), and Publishing &amp; Advertising (~3%).</p>\n<p>The digital media segment includes their most well-known product, Creative Cloud, as well as Document Cloud. Creative Cloud is a diverse toolkit built for creating, publishing, and promoting digital content. Some of the most well-known applications include Photoshop and Illustrator. Adobe Document Cloud is gaining momentum against pure-play firms like DocuSign and is becoming a fierce competitor, especially with regard to small and medium-sized businesses.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b0cc4cdfcefc85d46031470ea14b0b96\" tg-width=\"640\" tg-height=\"534\"><span>(Figure 2.1: All Adobe Creative Cloud and Document Cloud tools. Source:Adobe Investor Relations)</span></p>\n<p>The Digital Experience Cloud is designed to help users manage, measure, automate, and optimize customer experiences and customer engagement. Adobe has done a great job expanding into various industries through this segment, including retail, media, financial services, technology, education, and more. The segment has been slowly increasing in size and can be expected to provide long-term support to Adobe's strong revenue growth.</p>\n<p>The third segment, formerly known as Print &amp; Publishing, was renamed last quarter to \"Publishing &amp; Advertising\", as Adobe shifted the revenues from their advertising portion of Digital Experience to this new segment. With the demand of print on the decline, this reclassification allows for a more accurate balance of product divisions. With data from only one quarter of this new classification, it's hard to evaluate the performance of advertising, but there should be more clarity over the next few quarters.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/87624e36a52106e31d0d80466051fbed\" tg-width=\"640\" tg-height=\"306\"><span>(Figure 2.2: Some large organizations and industries using Experience Cloud. Source: Personal Pitch Deck;Adobe Financial Analyst Meeting 2020 Slides, Adobe Investor Relations)</span></p>\n<p><b>III. Growth Drivers1) Digital Business Transformation</b></p>\n<p>Historically, Adobe has been one of the most successful firms in migrating a user base from a traditional one-time license-based model to a cloud-based subscription revenue model. A cloud-based subscription model is extremely crucial as it allows technology firms to see more stability in future revenue streams. As of last quarter, Adobe generates approximately 83% of revenues through a recurring stream. For analysts and investors, this gives confidence and a much clearer indication as to the quality and consistency of cash flows. It also allows cloud firms to strengthen margins and benefit from scale, which we already see with Adobe. Subscription revenues are derived from the Digital Media and Digital Experience segments, and the new Publishing &amp; Advertising Segment (not accounted for below).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ae29c71332820c9ea3bc7feb3e34f3f4\" tg-width=\"612\" tg-height=\"287\"><span>(Figure 3.1: Subscription Revenue by Segment &amp; Growth. Source: Personal Financial Model;Adobe 10-Qs and 10-Ks 2017-2021)</span></p>\n<p>Annualized recurring revenue, a more software industry-specific metric, sheds light on how much revenue the firm generates over the course of a year that is guaranteed to occur again. This value doesn't just tell us how much revenue is generated from subscriptions and contracts, but also roughly the net value of expansions and churn. As ARR growth continues to be positive, we see that a) more customers are paying for services each year, and b) customers are on average spending more with Adobe. Essentially, net expansions are outweighing churn, which could mean either a) or b) above, or a mix of both. Since the quantifiable values of net expansion and churn are not readily available in public filings, it is too difficult to explore this avenue further.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/94c83308896f43725bd3fa575223afd3\" tg-width=\"640\" tg-height=\"315\"><span>(Figure 3.2: ARR and % Growth. Source: Personal Financial Model; Adobe 10-Qs and 10-Ks 2017-2021)</span></p>\n<p>Even with a plateau of subscription and ARR growth, we are seeing &gt;20% YoY revenue growth for a large-cap firm that has been a leader in the industry for well over a decade. The customer transition to the new revenue model is essentially complete and has consistently outperformed expectations, with stronger comparable margins across the board as Adobe continues to dominate in scale.</p>\n<p><b>2) Advertising, Analytics, &amp; New Tech</b></p>\n<p>Various profitable digital and marketing-related trends of 2021 and into the future include e-commerce, analytics, AI &amp; automation, augmented reality, and virtual reality. We typically see large software firms position themselves to benefit from tailwinds through R&amp;D to strengthen innovation, or M&amp;A to expand market share and product diversification.</p>\n<p>Adobe has recently completed over a dozen strategic acquisitions and investments that revolve around these key areas. The firm is taking care to ensure their most recent acquisitions will be effectively integrated into their respective platforms to set up strong market positioning. At the end of last year, we heard from management that the team was most likely not planning any large acquisitions in 2021, mainly because 1) speculative software is trading at high multiples and is overvalued, and 2) so they can focus on working with what they currently have.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b3d4103feae0e6b47c7e25cb538ad6a8\" tg-width=\"640\" tg-height=\"268\"><span>(Figure 3.3: Acquisitions &amp; Investments, 2018-2021. Source: Bloomberg)</span></p>\n<p>Spending about 17% of revenues on R&amp;D as of last quarter, the firm has utilized their capital efficiently to foster innovation and a competitive edge. Adobe most recently has worked to expand the breadth of their Creative Cloud tools - especially ones designed for mobile devices - to increase the appeal of their products to different user groups in new or unique markets.</p>\n<p>Effective use of capital towards R&amp;D and M&amp;A initiatives led by strong margins and cash flows should allow the company to gain traction in new verticals and continue to accelerate revenue growth in the subscription segment.</p>\n<p><b>3) Market and Global Opportunity</b></p>\n<p>As the firm shed light on its Total Addressable Market [TAM] for the next few years in its financial analyst meeting of 2020, Adobe has huge plans to capture diverse user groups to an expanding TAM in Creative Cloud, Document Cloud, and Experience Cloud by 2023 - their largest areas for growth. The projected TAM in these segments from 2021 to 2023 has grown 40.4%*, 180.0%*, and 19.4%*, respectively. We see Adobe has the largest potential in its Digital Media segment through Creative Cloud and Document Cloud, although the market for its Experience Cloud has still grown modestly. In the figures below, we take a look at some of these numbers, and some of the plans outlined by Adobe.</p>\n<p><i>(* - numbers calculated from financial analyst meeting slides from2018,2019, and2020, respectively)</i></p>\n<p><img src=\"https://static.tigerbbs.com/78c05a2d3b73284773f38278b989864a\" tg-width=\"640\" tg-height=\"339\" referrerpolicy=\"no-referrer\"></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9cbbdf4bdb593b40ba4be71e3483ac91\" tg-width=\"640\" tg-height=\"340\"><span>(Figures 3.4, 3.5, &amp; 3.6: Total Addressable Market, various product lines. Source: Financial Analyst Meeting 2020 Slides, Adobe Investor Relations)</span></p>\n<p>Adobe's product depth, market share, customer loyalty, and high brand recognition for their flagship creative software over the past two decades make a strong case as to why the firm can be expected to successfully execute its intermediate-term growth strategies. Adobe is positioned well to benefit from growth in the total addressable market for all three segments and specific products.</p>\n<p>We have seen from earlier mentions of Adobe's expansion into key areas that they have already been successful in penetrating markets with web and mobile-based tools, and increased adoption of 3D development. This reinforces my view of Adobe's ability to continue to capture a larger share of the total addressable market for its Creative Cloud.</p>\n<p>The firm's deep customer loyalty and brand recognition will allow the firm to continue to grab larger shares of the CRM market with their Experience Cloud platform as the company continues to expand further into unique industries like healthcare and education.</p>\n<p>In this section, I'd also like to explore the importance of strong margins a bit further. According to Bloomberg data, Adobe's subscription revenue (which is generated from its cloud-based business) achieved a gross margin of 91% last quarter. If we look back to 2009, before Adobe began their transition to a cloud-based model, gross margin from subscription revenue was ~35%. For Salesforce (NYSE:CRM), another large-cap application software firm, gross margin last quarter from subscription was ~80%. Previously to their cloud model, in 2008, Salesforce's gross margin for the segment was ~87%.</p>\n<p>My conclusion is that a company like Salesforce has struggled to execute a long-term cloud strategy that would allow them to truly benefit from scale. With the growth in gross margin for Adobe from 35% to 91% (a 160% increase) from 2009 to 2021, this means that cost of revenue for subscription and cloud-based services has been decreasing proportionally, which makes sense for a strategy that has been executed successfully. Essentially, this gives firms like Adobe the upper hand with the ability to reinvest more capital into the business to achieve its strategic initiatives, such as those outlined in their financial analyst meeting slides above.</p>\n<p>Next is global opportunity. As consumer confidence continues to increase, Global IT Spending is already on the rebound, benefitting Adobe nicely. Results for Q1 FY2021 gave insight toward how enterprises are increasing software spending again post-pandemic, with total revenue up about 26% over the previous quarter. This, along with Adobe's solid performance during the pandemic, prove how strong the company's fundamentals really are.</p>\n<p>Furthermore, Adobe currently generates ~58% of revenues from the Americas, which means that they already have proven success in other areas globally. If Adobe can increase exposure specifically in EMEA it can be lucrative as emerging markets are expected to outperform and benefit from increased foreign investment. There is more to be explored in this area of expansion.</p>\n<p><b>IV. Major Risks</b></p>\n<p>Although subscription growth is beginning to plateau at about 20% YoY, in the next few years, it may begin to decline. This means Adobe must work harder in gaining a competitive edge, most likely through M&amp;A and R&amp;D. If Adobe does not effectively integrate its acquisitions into its platforms, it can impact margins short-term and prove to be inefficient use of capital. With a strong cash flow and relatively small debt load, even in this scenario, I don't believe it would impact Adobe's ability to generate cash flows intermediate to long term.</p>\n<p>According to an analysis of Porter's Five Forces, the application software subsector has a high degree of competition and a medium threat of substitutes. Currently, Salesforce dominates the relationship management space. Adobe is gaining traction, but due to the long enterprise sales cycle nature of the industry, there may be a lag in a shift to an environment that is more favorable for Adobe's Experience Cloud growth. Therefore, stock price may not accurately reflect the success of this segment immediately.</p>\n<p>Software products are reliant on the same enterprise IT budget of a given firm. Adobe and other large-cap application software firms may have to develop a strategy to reduce costs and pricing short-term. However, with strong roots in the industry, a successful business model, and a long sales cycle, I don't see this having a huge impact on Adobe's market share.</p>\n<p>Although consumer confidence has continued to increase post-pandemic, there are still unprecedented effects that are unexpected and cannot be measured. If Global IT Spending does not rebound as quickly as expected, Adobe may continue to see quarters of unexpectedly slow growth. This is most damaging for companies that rely on large enterprise spending. However, the technology firms that seem to be benefitting the most from the pandemic and lockdown orders are cloud-based software.</p>\n<p><b>V. Valuation</b></p>\n<p><b>1) Comparative Valuation</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/bb5f13cdb163707d91d814d480a77cb4\" tg-width=\"563\" tg-height=\"292\"><span>(Figure 4.1: Comparable Analysis. Source: Bloomberg)</span></p>\n<p>Starting with a quick comparative analysis, we see that Adobe is trading at a slight discount to its peers. In an industry that is highly speculative, Adobe provides an investment in a stock with less risk and solid returns.</p>\n<p>An interesting analysis I conducted was a comparison of R&amp;D expenditures to future projected revenue growth to get insight as to how efficient software firms are at utilizing their profits to focus on firm growth. In an industry where differentiation and innovation are key, I thought this concept would be interesting to observe. The graph below displays the top 25 application software firms, by market cap. Essentially, any firm above the line is currently using their capital efficiently towards greater growth, while those below the line are not using their capital efficiently. Comparing the findings of this graph with the risk vs. return of stocks above the line, we further see that Adobe is a solid long-term pick.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f7b2e34e56a06154b15bbe16a9936cf1\" tg-width=\"640\" tg-height=\"346\"><span>(Figure 4.2: R&amp;D vs. Future Revenue Growth Forecast. Source: Bloomberg; Personal Pitch Deck)</span></p>\n<p><b>2) Intrinsic Valuation</b></p>\n<p>The first set of calculations was forecasting future revenue streams of the business segments. Based on my research and assumptions, I used a weighted moving average to calculate growth rates, then used a regression of historical market and industry growth expectations to adjust the top-line revenue estimates. The rest of the model was built upon a mix of more industry expectations, as well as assumptions, estimates, and long-term goals set forth by management.</p>\n<p>I calculated a discount rate of 6.87%, which was used to discount the projected cash flows until 2025. To calculate the present value of the cash flows of 2026-beyond, I used the perpetual growth rate method, and based on my concluding research, assumed a perpetual growth rate of 3.5%. This brought me to a 12-month PT of ~$590.</p>\n<p>In a bull case scenario where revenue growth exceeds 20% YoY from 2022-2025, or where the perpetual growth rate assumed in the model is changed to 4.0%, we see the price target soaring above $600.</p>\n<p>When initially developing my model and report, Adobe stock was ~$485. However, we've seen a run up of the price over the past few days, from about $515 to surpassing $550. It is typical to see a rally in tech stocks before their earnings, which deflates the potential return. This means that there may be a solid entry point immediately post-earnings, depending on if the price drops or not.</p>\n<p>Furthermore, this does not consider Adobe's share buyback plan that was authorized, which would increase the value of shares and earnings. I think that Q2 earnings should provide more clarity.</p>\n<p><b>VI. Conclusion</b></p>\n<p>Adobe has seen major success in growth and scale, which will support its strategic initiatives. The firm has proven to be a leader in 2021 macroeconomic and software industry trends, which will provide tailwinds for growth of its subscription-based segments.</p>\n<p>With inflation fears, right now is the time to shift investments diversified across technology to more fundamentally stable large-cap firms, like Adobe, to combat uncertainty. I think there should be an optimal entry point immediately post-earnings, unless earnings drive the price higher after-hours. Regardless, as a growth prospect with proven cash flows and healthy margins, I see any entry in Adobe as a solid-long term pick that is less speculative of a play.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Why Adobe Could Be Worth $590: A Promising Look Ahead Of Q2 Earnings</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy Adobe Could Be Worth $590: A Promising Look Ahead Of Q2 Earnings\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-15 14:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4434786-why-adobe-stock-could-be-worth-590-dollars><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDespite rising over 8% in the past week ahead of earnings, there is still room for upside in Adobe stock.\nThe firm is well-positioned to benefit from trends in the immediate future and beyond...</p>\n\n<a href=\"https://seekingalpha.com/article/4434786-why-adobe-stock-could-be-worth-590-dollars\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ADBE":"Adobe"},"source_url":"https://seekingalpha.com/article/4434786-why-adobe-stock-could-be-worth-590-dollars","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1140381227","content_text":"Summary\n\nDespite rising over 8% in the past week ahead of earnings, there is still room for upside in Adobe stock.\nThe firm is well-positioned to benefit from trends in the immediate future and beyond.\nAdobe’s scale and dominance will allow it to continue to thrive and benefit from rapid growth in its total addressable market across its diverse products.\nStrong Q2 earnings could be the catalyst to push the stock over $600.\n\nhapabapa/iStock Editorial via Getty Images\nI. Investment Thesis\nDespite rallying well over 8% in the past week ahead of earnings, there is still room for upside in Adobe Inc. (NASDAQ:ADBE) stock.\nAdobe's historical success with execution of a transition to a cloud-based subscription model will continue to drive strong revenue growth.\nThe firm is also well-positioned to benefit from trends in the immediate future and beyond, however, many of these trends and growth opportunities are unrecognized.\nAdobe's scale and dominance will allow it to continue to thrive and benefit from rapid growth in its total addressable market across its diverse products.\nLastly, strong Q2 earnings could be the catalyst to push the stock over $600 in a bull scenario.\nII. Company Overview\nData by YCharts\nAdobe operates worldwide, offering software and services used by professionals, marketers, students, and more for creating, managing, measuring, and engaging with compelling content and experiences. As of Q1 FY 2021, the firm generates their revenue from three main segments: Digital Media (~73% of revenues), Digital Experience (~24%), and Publishing & Advertising (~3%).\nThe digital media segment includes their most well-known product, Creative Cloud, as well as Document Cloud. Creative Cloud is a diverse toolkit built for creating, publishing, and promoting digital content. Some of the most well-known applications include Photoshop and Illustrator. Adobe Document Cloud is gaining momentum against pure-play firms like DocuSign and is becoming a fierce competitor, especially with regard to small and medium-sized businesses.\n(Figure 2.1: All Adobe Creative Cloud and Document Cloud tools. Source:Adobe Investor Relations)\nThe Digital Experience Cloud is designed to help users manage, measure, automate, and optimize customer experiences and customer engagement. Adobe has done a great job expanding into various industries through this segment, including retail, media, financial services, technology, education, and more. The segment has been slowly increasing in size and can be expected to provide long-term support to Adobe's strong revenue growth.\nThe third segment, formerly known as Print & Publishing, was renamed last quarter to \"Publishing & Advertising\", as Adobe shifted the revenues from their advertising portion of Digital Experience to this new segment. With the demand of print on the decline, this reclassification allows for a more accurate balance of product divisions. With data from only one quarter of this new classification, it's hard to evaluate the performance of advertising, but there should be more clarity over the next few quarters.\n(Figure 2.2: Some large organizations and industries using Experience Cloud. Source: Personal Pitch Deck;Adobe Financial Analyst Meeting 2020 Slides, Adobe Investor Relations)\nIII. Growth Drivers1) Digital Business Transformation\nHistorically, Adobe has been one of the most successful firms in migrating a user base from a traditional one-time license-based model to a cloud-based subscription revenue model. A cloud-based subscription model is extremely crucial as it allows technology firms to see more stability in future revenue streams. As of last quarter, Adobe generates approximately 83% of revenues through a recurring stream. For analysts and investors, this gives confidence and a much clearer indication as to the quality and consistency of cash flows. It also allows cloud firms to strengthen margins and benefit from scale, which we already see with Adobe. Subscription revenues are derived from the Digital Media and Digital Experience segments, and the new Publishing & Advertising Segment (not accounted for below).\n(Figure 3.1: Subscription Revenue by Segment & Growth. Source: Personal Financial Model;Adobe 10-Qs and 10-Ks 2017-2021)\nAnnualized recurring revenue, a more software industry-specific metric, sheds light on how much revenue the firm generates over the course of a year that is guaranteed to occur again. This value doesn't just tell us how much revenue is generated from subscriptions and contracts, but also roughly the net value of expansions and churn. As ARR growth continues to be positive, we see that a) more customers are paying for services each year, and b) customers are on average spending more with Adobe. Essentially, net expansions are outweighing churn, which could mean either a) or b) above, or a mix of both. Since the quantifiable values of net expansion and churn are not readily available in public filings, it is too difficult to explore this avenue further.\n(Figure 3.2: ARR and % Growth. Source: Personal Financial Model; Adobe 10-Qs and 10-Ks 2017-2021)\nEven with a plateau of subscription and ARR growth, we are seeing >20% YoY revenue growth for a large-cap firm that has been a leader in the industry for well over a decade. The customer transition to the new revenue model is essentially complete and has consistently outperformed expectations, with stronger comparable margins across the board as Adobe continues to dominate in scale.\n2) Advertising, Analytics, & New Tech\nVarious profitable digital and marketing-related trends of 2021 and into the future include e-commerce, analytics, AI & automation, augmented reality, and virtual reality. We typically see large software firms position themselves to benefit from tailwinds through R&D to strengthen innovation, or M&A to expand market share and product diversification.\nAdobe has recently completed over a dozen strategic acquisitions and investments that revolve around these key areas. The firm is taking care to ensure their most recent acquisitions will be effectively integrated into their respective platforms to set up strong market positioning. At the end of last year, we heard from management that the team was most likely not planning any large acquisitions in 2021, mainly because 1) speculative software is trading at high multiples and is overvalued, and 2) so they can focus on working with what they currently have.\n(Figure 3.3: Acquisitions & Investments, 2018-2021. Source: Bloomberg)\nSpending about 17% of revenues on R&D as of last quarter, the firm has utilized their capital efficiently to foster innovation and a competitive edge. Adobe most recently has worked to expand the breadth of their Creative Cloud tools - especially ones designed for mobile devices - to increase the appeal of their products to different user groups in new or unique markets.\nEffective use of capital towards R&D and M&A initiatives led by strong margins and cash flows should allow the company to gain traction in new verticals and continue to accelerate revenue growth in the subscription segment.\n3) Market and Global Opportunity\nAs the firm shed light on its Total Addressable Market [TAM] for the next few years in its financial analyst meeting of 2020, Adobe has huge plans to capture diverse user groups to an expanding TAM in Creative Cloud, Document Cloud, and Experience Cloud by 2023 - their largest areas for growth. The projected TAM in these segments from 2021 to 2023 has grown 40.4%*, 180.0%*, and 19.4%*, respectively. We see Adobe has the largest potential in its Digital Media segment through Creative Cloud and Document Cloud, although the market for its Experience Cloud has still grown modestly. In the figures below, we take a look at some of these numbers, and some of the plans outlined by Adobe.\n(* - numbers calculated from financial analyst meeting slides from2018,2019, and2020, respectively)\n\n(Figures 3.4, 3.5, & 3.6: Total Addressable Market, various product lines. Source: Financial Analyst Meeting 2020 Slides, Adobe Investor Relations)\nAdobe's product depth, market share, customer loyalty, and high brand recognition for their flagship creative software over the past two decades make a strong case as to why the firm can be expected to successfully execute its intermediate-term growth strategies. Adobe is positioned well to benefit from growth in the total addressable market for all three segments and specific products.\nWe have seen from earlier mentions of Adobe's expansion into key areas that they have already been successful in penetrating markets with web and mobile-based tools, and increased adoption of 3D development. This reinforces my view of Adobe's ability to continue to capture a larger share of the total addressable market for its Creative Cloud.\nThe firm's deep customer loyalty and brand recognition will allow the firm to continue to grab larger shares of the CRM market with their Experience Cloud platform as the company continues to expand further into unique industries like healthcare and education.\nIn this section, I'd also like to explore the importance of strong margins a bit further. According to Bloomberg data, Adobe's subscription revenue (which is generated from its cloud-based business) achieved a gross margin of 91% last quarter. If we look back to 2009, before Adobe began their transition to a cloud-based model, gross margin from subscription revenue was ~35%. For Salesforce (NYSE:CRM), another large-cap application software firm, gross margin last quarter from subscription was ~80%. Previously to their cloud model, in 2008, Salesforce's gross margin for the segment was ~87%.\nMy conclusion is that a company like Salesforce has struggled to execute a long-term cloud strategy that would allow them to truly benefit from scale. With the growth in gross margin for Adobe from 35% to 91% (a 160% increase) from 2009 to 2021, this means that cost of revenue for subscription and cloud-based services has been decreasing proportionally, which makes sense for a strategy that has been executed successfully. Essentially, this gives firms like Adobe the upper hand with the ability to reinvest more capital into the business to achieve its strategic initiatives, such as those outlined in their financial analyst meeting slides above.\nNext is global opportunity. As consumer confidence continues to increase, Global IT Spending is already on the rebound, benefitting Adobe nicely. Results for Q1 FY2021 gave insight toward how enterprises are increasing software spending again post-pandemic, with total revenue up about 26% over the previous quarter. This, along with Adobe's solid performance during the pandemic, prove how strong the company's fundamentals really are.\nFurthermore, Adobe currently generates ~58% of revenues from the Americas, which means that they already have proven success in other areas globally. If Adobe can increase exposure specifically in EMEA it can be lucrative as emerging markets are expected to outperform and benefit from increased foreign investment. There is more to be explored in this area of expansion.\nIV. Major Risks\nAlthough subscription growth is beginning to plateau at about 20% YoY, in the next few years, it may begin to decline. This means Adobe must work harder in gaining a competitive edge, most likely through M&A and R&D. If Adobe does not effectively integrate its acquisitions into its platforms, it can impact margins short-term and prove to be inefficient use of capital. With a strong cash flow and relatively small debt load, even in this scenario, I don't believe it would impact Adobe's ability to generate cash flows intermediate to long term.\nAccording to an analysis of Porter's Five Forces, the application software subsector has a high degree of competition and a medium threat of substitutes. Currently, Salesforce dominates the relationship management space. Adobe is gaining traction, but due to the long enterprise sales cycle nature of the industry, there may be a lag in a shift to an environment that is more favorable for Adobe's Experience Cloud growth. Therefore, stock price may not accurately reflect the success of this segment immediately.\nSoftware products are reliant on the same enterprise IT budget of a given firm. Adobe and other large-cap application software firms may have to develop a strategy to reduce costs and pricing short-term. However, with strong roots in the industry, a successful business model, and a long sales cycle, I don't see this having a huge impact on Adobe's market share.\nAlthough consumer confidence has continued to increase post-pandemic, there are still unprecedented effects that are unexpected and cannot be measured. If Global IT Spending does not rebound as quickly as expected, Adobe may continue to see quarters of unexpectedly slow growth. This is most damaging for companies that rely on large enterprise spending. However, the technology firms that seem to be benefitting the most from the pandemic and lockdown orders are cloud-based software.\nV. Valuation\n1) Comparative Valuation\n(Figure 4.1: Comparable Analysis. Source: Bloomberg)\nStarting with a quick comparative analysis, we see that Adobe is trading at a slight discount to its peers. In an industry that is highly speculative, Adobe provides an investment in a stock with less risk and solid returns.\nAn interesting analysis I conducted was a comparison of R&D expenditures to future projected revenue growth to get insight as to how efficient software firms are at utilizing their profits to focus on firm growth. In an industry where differentiation and innovation are key, I thought this concept would be interesting to observe. The graph below displays the top 25 application software firms, by market cap. Essentially, any firm above the line is currently using their capital efficiently towards greater growth, while those below the line are not using their capital efficiently. Comparing the findings of this graph with the risk vs. return of stocks above the line, we further see that Adobe is a solid long-term pick.\n(Figure 4.2: R&D vs. Future Revenue Growth Forecast. Source: Bloomberg; Personal Pitch Deck)\n2) Intrinsic Valuation\nThe first set of calculations was forecasting future revenue streams of the business segments. Based on my research and assumptions, I used a weighted moving average to calculate growth rates, then used a regression of historical market and industry growth expectations to adjust the top-line revenue estimates. The rest of the model was built upon a mix of more industry expectations, as well as assumptions, estimates, and long-term goals set forth by management.\nI calculated a discount rate of 6.87%, which was used to discount the projected cash flows until 2025. To calculate the present value of the cash flows of 2026-beyond, I used the perpetual growth rate method, and based on my concluding research, assumed a perpetual growth rate of 3.5%. This brought me to a 12-month PT of ~$590.\nIn a bull case scenario where revenue growth exceeds 20% YoY from 2022-2025, or where the perpetual growth rate assumed in the model is changed to 4.0%, we see the price target soaring above $600.\nWhen initially developing my model and report, Adobe stock was ~$485. However, we've seen a run up of the price over the past few days, from about $515 to surpassing $550. It is typical to see a rally in tech stocks before their earnings, which deflates the potential return. This means that there may be a solid entry point immediately post-earnings, depending on if the price drops or not.\nFurthermore, this does not consider Adobe's share buyback plan that was authorized, which would increase the value of shares and earnings. I think that Q2 earnings should provide more clarity.\nVI. Conclusion\nAdobe has seen major success in growth and scale, which will support its strategic initiatives. The firm has proven to be a leader in 2021 macroeconomic and software industry trends, which will provide tailwinds for growth of its subscription-based segments.\nWith inflation fears, right now is the time to shift investments diversified across technology to more fundamentally stable large-cap firms, like Adobe, to combat uncertainty. I think there should be an optimal entry point immediately post-earnings, unless earnings drive the price higher after-hours. Regardless, as a growth prospect with proven cash flows and healthy margins, I see any entry in Adobe as a solid-long term pick that is less speculative of a play.","news_type":1},"isVote":1,"tweetType":1,"viewCount":123,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":187843200,"gmtCreate":1623750206900,"gmtModify":1704210419270,"author":{"id":"3571017109514640","authorId":"3571017109514640","name":"IMTCG","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":5,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3571017109514640","authorIdStr":"3571017109514640"},"themes":[],"htmlText":"Good information!","listText":"Good information!","text":"Good information!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/187843200","repostId":"1123375053","repostType":4,"repost":{"id":"1123375053","pubTimestamp":1623745435,"share":"https://ttm.financial/m/news/1123375053?lang=&edition=fundamental","pubTime":"2021-06-15 16:23","market":"us","language":"en","title":"Tesla, MicroStrategy, Riot Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level","url":"https://stock-news.laohu8.com/highlight/detail?id=1123375053","media":"yahoo","summary":"Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level.\n\nBitcoin has seen significant gai","content":"<p>Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level.</p>\n<p><img src=\"https://static.tigerbbs.com/bcb7953764bb128bc18cd601e00a3e92\" tg-width=\"287\" tg-height=\"367\" referrerpolicy=\"no-referrer\"></p>\n<p><b>Bitcoin</b>&nbsp;has seen significant gains today, as well as stocks of companies related to the world's top cryptocurrency following Elon Musk's reassuring tweet indicating that Tesla will accept the leading cryptocurrency again.</p>\n<p><b>What Happened:</b>&nbsp;CoinMarketCapdatasuggests that Bitcoin price grew by over 14.3% from its 24-hour low of $36,000 to a high of nearly $41,000, before settling at its current price of $40,306 at press time.</p>\n<p><img src=\"https://static.tigerbbs.com/87d03c0cede12209e410f4a012c4c59d\" tg-width=\"1070\" tg-height=\"776\"></p>\n<p>According to Paolo Ardoino, CTO of Bitfinex, \"the king of crypto is carrying cryptocurrency markets higher.\"</p>\n<p>\"Meanwhile, Bitcoin’s utility and use cases such as the Lightning Network continue to strengthen and grow. While it is important to always take a long-term view, we’re seeing a quiet optimism return to the market,\" he added.</p>\n<p>Cryptocurrency mining enterprise&nbsp;<b>Riot Blockchain Inc.</b>(NASDAQ:RIOT) shares are up over 20% Monday, beating even Bitcoin's growth over the last 24-hours, with a stock price of $37.25.</p>\n<p><b>Microstrategy</b>(NASDAQ:MSTR)'s stock has been 15% up Monday and was trading at $590 at press time. The company has invested almost all of its revenue into Bitcoin and raising further capital through the issuance of bonds to buy even more.</p>\n<p>Microstrategy recentlyannouncedthat it intended to raise $400 million to buy Bitcoin but thendecidedto raise $500 instead, and the bond offering got oversubscribed to a total of $1.6 billion.</p>\n<p>Lastly,<b>Tesla Inc</b>(NASDAQ:TSLA) has seen its shares rise by 1.28% Monady after&nbsp;Musk's statement.</p>\n<p><img src=\"https://static.tigerbbs.com/90130509ac2ffdd09edf9123136048fa\" tg-width=\"663\" tg-height=\"440\" referrerpolicy=\"no-referrer\"></p>\n<p>The shares were trading at $618 at press time.</p>","source":"yahoofinance_sg","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla, MicroStrategy, Riot Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla, MicroStrategy, Riot Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-15 16:23 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/tesla-microstrategy-riot-blockchain-stocks-170045555.html><strong>yahoo</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level.\n\nBitcoin has seen significant gains today, as well as stocks of companies related to the world's top cryptocurrency following Elon ...</p>\n\n<a href=\"https://finance.yahoo.com/news/tesla-microstrategy-riot-blockchain-stocks-170045555.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RIOT":"Riot Platforms","MARA":"Marathon Digital Holdings Inc","CAN":"嘉楠科技","TSLA":"特斯拉"},"source_url":"https://finance.yahoo.com/news/tesla-microstrategy-riot-blockchain-stocks-170045555.html","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1123375053","content_text":"Blockchain Stocks Up As Bitcoin Regains Strength At $40,000 Level.\n\nBitcoin has seen significant gains today, as well as stocks of companies related to the world's top cryptocurrency following Elon Musk's reassuring tweet indicating that Tesla will accept the leading cryptocurrency again.\nWhat Happened: CoinMarketCapdatasuggests that Bitcoin price grew by over 14.3% from its 24-hour low of $36,000 to a high of nearly $41,000, before settling at its current price of $40,306 at press time.\n\nAccording to Paolo Ardoino, CTO of Bitfinex, \"the king of crypto is carrying cryptocurrency markets higher.\"\n\"Meanwhile, Bitcoin’s utility and use cases such as the Lightning Network continue to strengthen and grow. While it is important to always take a long-term view, we’re seeing a quiet optimism return to the market,\" he added.\nCryptocurrency mining enterprise Riot Blockchain Inc.(NASDAQ:RIOT) shares are up over 20% Monday, beating even Bitcoin's growth over the last 24-hours, with a stock price of $37.25.\nMicrostrategy(NASDAQ:MSTR)'s stock has been 15% up Monday and was trading at $590 at press time. The company has invested almost all of its revenue into Bitcoin and raising further capital through the issuance of bonds to buy even more.\nMicrostrategy recentlyannouncedthat it intended to raise $400 million to buy Bitcoin but thendecidedto raise $500 instead, and the bond offering got oversubscribed to a total of $1.6 billion.\nLastly,Tesla Inc(NASDAQ:TSLA) has seen its shares rise by 1.28% Monady after Musk's statement.\n\nThe shares were trading at $618 at press time.","news_type":1},"isVote":1,"tweetType":1,"viewCount":75,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"defaultTab":"posts","isTTM":true}