Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

<ul>
<li>Record high quarterly margins at Disney's parks and experiences would not be the silver bullet to high shareholder returns.</li>
<li>Higher future margins are already priced in and with that upside appears limited, even if management executes on its current strategy.</li>
<li>Disney's business model is shaken by yet another restructuring, according to the company.</li>
</ul>


Record high quarterly margins at Disney's parks and experiences would not be the silver bullet to high shareholder returns.
Higher future margins are already priced in and with that upside appears limited, even if management executes on its current strategy.
Disney's business model is shaken by yet another restructuring, according to the company.


Disney's Q1 2023 Results: 3 Charts To Tell The Story

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

<ul>
<li>Netflix is now up 50% from its lows on hope that advertising and paid sharing drive a revenue reacceleration and multiple rerating. Part B has happened.</li>
<li>Advertising uptake will be slow. But consensus has 55M incremental ad-subs (20% of the total) and $8B in revenue assumed in 2025! </li>
<li>Netflix intends on keeping content spending flat for the next few years, raising the importance of its hit rate - which has not been Netflix's forte.</li>
</ul>


Netflix is now up 50% from its lows on hope that advertising and paid sharing drive a revenue reacceleration and multiple rerating. Part B has happened.
Advertising uptake will be slow. But consensus has 55M incremental ad-subs (20% of the total) and $8B in revenue assumed in 2025! 
Netflix intends on keeping content spending flat for the next few years, raising the importance of its hit rate - which has not been Netflix's forte.


<ul>
<li>Multiple negative data points have come out reflecting limited initial uptake for Netflix's ad-based tier.</li>
<li>(We think) Netflix lack of AVOD uptake is due to it being fully saturated in its major markets wheras competing services starting from scratch have higher AVOD uptake.</li>
<li>Lack of incremental subs from AVOD points towards a weaker than expected 4Q22 and downside to guidance...not good for a stock that has ripped since 2Q22 earnings.</li>
</ul>


Multiple negative data points have come out reflecting limited initial uptake for Netflix's ad-based tier.
(We think) Netflix lack of AVOD uptake is due to it being fully saturated in its major markets wheras competing services starting from scratch have higher AVOD uptake.
Lack of incremental subs from AVOD points towards a weaker than expected 4Q22 and downside to guidance...not good for a stock that has ripped since 2Q22 earnings.


Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Iqiyi's 3Q results released on Tuesday disappointed markets due to dim growth despite  sustained profitability for the third quarter in a row.</li>
<li>"Iconic" turnaround actually put IQ on firmer footing almost on all counts compared to one year ago.</li>
<li>Stabilizing cost base, strong operating leverage potential and troughs in business and macro cycle spell for compelling asymmetrical payoff - limited downside VS. multi-fold upside.</li>
</ul>


Iqiyi's 3Q results released on Tuesday disappointed markets due to dim growth despite  sustained profitability for the third quarter in a row.
"Iconic" turnaround actually put IQ on firmer footing almost on all counts compared to one year ago.
Stabilizing cost base, strong operating leverage potential and troughs in business and macro cycle spell for compelling asymmetrical payoff - limited downside VS. multi-fold upside.


Iqiyi (IQ US): Compelling Asymmetrical Payoff

<ul>
<li>The suprise return of Bob Iger as Disney CEO can fix certain Bob Chapek specific issues: relationships with investors, politicians, and creative types.</li>
<li>But Iger faces similar intractable issues: accelerating cord cutting, a transition to a less profitable form of media distribution, and a potential recession.</li>
<li>We think Iger will refocus investors on revenues/profits at Disney+ rather than subscribers, will more efficiently spend on content through decentralizing decision making... and potentially sell Disney to Apple.</li>
</ul>


The suprise return of Bob Iger as Disney CEO can fix certain Bob Chapek specific issues: relationships with investors, politicians, and creative types.
But Iger faces similar intractable issues: accelerating cord cutting, a transition to a less profitable form of media distribution, and a potential recession.
We think Iger will refocus investors on revenues/profits at Disney+ rather than subscribers, will more efficiently spend on content through decentralizing decision making... and potentially sell Disney to Apple.


United States

The Walt Disney Company is an entertainment company that conducts operations in media networks, studio entertainment, theme parks and resorts, consumer products, and interactive media. The Company produces motion pictures, television programs, and musical recordings, as well as books and magazines.

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The Walt Disney Co (DIS US)

Disney's Q1 2023 Results: 3 Charts To Tell The Story

Higher future margins are already priced in and with that upside appears limited, even if management executes on its current strategy.

Vladimir Dimitrov, CFA

Netflix 4Q22: Priced for Perfection

Netflix is up 50% from its lows based on investors pricing in a successful ad tier and a churnless paid sharing crackdown. Bulls point to $400, we...

Aaron Gabin

Netflix AVOD Not Chill

We think Netflix's lack of AVOD uptake is due to full saturation, and unless paired with cracking down on passwords, will not generate incremental...

Aaron Gabin

Iqiyi (IQ US): Compelling Asymmetrical Payoff

Despite disappointed topline for 3Q, "iconic" turnaround put IQ on firmer footing for the long term. Current valuation offers compelling...

Eric Chen

Disney: Could Iger Sell to Apple?

We think Iger will refocus investors on revenues/profits at Disney+ over subscribers, will efficiently spend on content through decentralizing...

Aaron Gabin

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