Wall Street Unplugged
Episode: 883April 20, 2022

Netflix won’t be the only company to bomb its quarterly earnings

Netflix
Inside this episode:
  • A breakdown of Netflix’s big plunge [1:05]
  • Why the steaming business is getting harder [3:35]
  • How Russia hurt Netflix—and why other companies will suffer [7:10]
  • The competitive market for consumers’ screen time [11:35]
  • Why billions are flowing into the metaverse [16:40]
  • Frank says banks need to do this… or they’ll be gone [20:30]
  • The metaverse will fix everything you hate about the internet [26:30]

Streaming giant Netflix (NFLX) is down nearly 40% after reporting dismal quarterly earnings. Daniel and I go over the numbers… whether the stock is a buy at current levels… what these results say about the streaming business in general… and why we’ll see other companies suffer similarly bad results this quarter.

We also cover how the metaverse will solve the internet’s biggest problems.

Transcript

Wall Street Unplugged | 883

Netflix won’t be the only company to bomb its quarterly earnings

Announcer: Wall Street Unplugged looks beyond the regular headlines, heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.

Frank Curzio: How is it going out there? It’s Wednesday, April 20th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down headlines and tell you what’s really moving these markets. Going to bring in the one and only Daniel Creech, Senior Analyst at Curzio Research, who joins me every single Wednesday. What’s up Dan? How’s it going?

Daniel Creech: Not too much. Another great day on Amelia Island, Wednesday, first day of the week.

Frank Curzio: Your favorite date is today, right?

Daniel Creech: Yeah. Boy, lead in with that. Hey, it’s 4/20 everybody.

Frank Curzio: I just go right on you. 4/20. He’s like, “It’s 4/20 today. Yeah, we can get effects of us smoking.” I said, “Who wants effects? Let’s just light it up.”

Daniel Creech: Yeah, let’s just light it up. We’re expecting something fun from Elon with all his 4/20 references, going back to the Tesla takeover to the $54.20 with Twitter, all that kind of stuff. But for once, Twitter is not dominating headlines, but another stock is.

Frank Curzio: Oh, another stock is, yes. And by the way, happy 4/20 day to everybody. But it’s Netflix. Right? Wow. Holy cow. They bomb the quarter. As I’m looking right now, Netflix is down over 35 percent now. Let’s start with your two on it. The numbers were very, very bad, very few positives. Free cashflow margins a little bit better, but man, the net ads really killed them and the negative numbers and the weak guidance and people just… Yeah, are leaving in droves.

Daniel Creech: The, the biggest number… It was a shock on the ads. And to be honest, I haven’t followed this. I’ve never followed Netflix very closely because it’s not something that interests me. I like the service. I understand it. It’s getting my attention, Frank. The one number that stood out… We can go into the shock on that. A hundred million households. What am I referencing there? A hundred million households are using the sharing passwords that now Netflix has to focus on to monetize that, turn that into revenue. As they were saying, hey, when we were just in all growth, we didn’t care that we knew it was going on, but we didn’t care. Now, you can only grow so big for so long. They’re getting that market penetration. A hundred million… You think that’s accurate? I’m blown away by that.

Frank Curzio: You know what? If they’re include current households, and they said they weren’t, but if you’re including…

Daniel Creech: And that’s worldwide, right? They’re talking…

Frank Curzio: Yeah, worldwide. But if you’re including like your current household, where downstairs and upstairs, you’re using the same password for your kids and stuff like that. Regardless, it’s amazing that we can have technology that tracks everything that we do every second of the fricking day, every minute, like it knows what we’re going to do before we do it and we get advertisements for it. It’s like, holy shit, who’s listening to… But we can’t figure out the password thing. Right? And that’s in our business. A lot of businesses, there are always a catcher when you do. For our business, especially, if we do, you lose your subscription. So, if it’s a $5,000 subscription, whatever it is that we see that you’re sharing that password with others and we have technology for that, that’s different. But when you’re paying $14.99 or $12.99 or $8.99, going after these people is not really… You could shut them off or something, but there’s different ways they can get back online. That’s a problem that’s been around for a while.

Daniel Creech: Yeah. Oh yeah.

Frank Curzio: And more to the numbers here, Daniel, when it comes to Netflix, they’re not adding names because they don’t do what Disney does and just charge… Just gets free people on a list. And hopefully, they’re going to pay for it one day. Disney’s done a great job masking the massive problems. Disney’s done a great job, where their entire business was shut off during COVID so they had no choice to do this. Everything that they do, they were the most impact… Almost just as much as airlines. Everything that they you do with the cruises, the parks, everything was shut off. So they were, like, streaming. We got to get the streaming, because people are home all the time. And this is the greatest business. It’s the worst fricking business model in the world. I’ve been saying that for such a long time.

Frank Curzio: I’ve never seen so many smart, brilliant people, immediately jump into this industry, which the economics are horrible. You spend 30 billion dollar on content. Let me tell you something with Netflix, if spending 30 billion dollars on content and the people and the A-listers they have locked up, and they have the best content out there on all platforms outside of HBO… Who’s really been killing it lately, after the merger and stuff. But if they can’t get this right, and this market is saturated already, forget it. Because right now, we’re not saying, wow, this is a growth industry. This isn’t even a value industry. Because after this right now, Netflix is trading about 19,20 times forward earnings, which is insane.

Frank Curzio: And it’s selling. I would say, if you have longer than a two month horizon… Because this is all algorithm, it should be down about 15 percent today. And then it went down 20 percent, and now the algorithms are kicking in and it’s down like 30, 35. You look at a company still growing sales faster than the overall market at 10 percent, trading at times forward estimates. They could implement advertising on the lower prices what other platforms are doing for revenue. Their margins are still pretty tight. Their free cash flows up. Listen, it was a negative quarter, but at this level, when you see a massive, massive sell off and it’s two straight quarters, it just makes you think a little bit. But the entire industry, look, they don’t have pricing power anymore. There’s just too many of these services.

Frank Curzio: I tell you, Disney needs to get the hell out of this immediately. They have the greatest content they could license to everyone who’s in dire need of content. Instead, they’re trying to compete, trying to spend 30 billion new content, which they don’t have. They don’t have it on their balance sheet, their free cash flow isn’t enough. I have no idea where they’re going to get that money from, unless they raise it somehow, maybe in a debt market or whatever. But it’s one of a few companies where their earnings in Disney has not got back to levels pre-COVID, one of the only companies that you find. And it’s crazy when you look at it because the entire industry and how much money is being poured into this and how many options you have, whether it’s Prime or Hulu, which is owned by Disney, the Disney plus, and Netflix, Discovery, HBO. Holy cow.

Frank Curzio: There’s hundreds and hundreds of these. You only heard about 7, 8, 9, 10 of them, but there’s hundreds of them with different content. And now, it’s starting to show, where I want to see what other companies do based on these results, because this isn’t just limited to Netflix. This is the best company in the industry spending the most money with the best content and they’re not adding subscribers. So, how do you add them? Well, you add them by providing it for free and providing for… The average revenue per users is probably around, if I had to guess 13, 14 dollars for the industry, for Disney it’s four bucks. They’re going to look at that number, say, they’re adding, they’re adding, that’s great. They’re still adding and Netflix isn’t adding. Netflix doesn’t give their service away. Yeah, you’re going to add, but obviously Disney does have pricing power and they’re just going on that ad number of how many people they’re going to add.

Frank Curzio: But at the end of the day, it’s not just they’re adding, it’s the average revenue per user. If you look at Disney, it’s four bucks. If you look at everyone else in the industry, even Netflix, I think it’s like 14 in the US. Let’s see how this plays out. It’s not good for the whole industry. Definitely not good for Netflix. But Netflix is getting to the point where it is a buy here. You it’s got to be volatile. It’s going to be crazy. But holy shit, to lose 40 percent of its values is insane.

Daniel Creech: All right, so you’d buy it here, trade it, buy it. What, do you ignore it? What do you do?

Frank Curzio: I would buy it. I would buy it as a long term holder because I think even if they bomb next quarter or the quarter after, it’s already factored in, so I think that part’s out. I own it personally, so I’m losing money on this. I’m still holding, and I’m going to be adding to my position. Netflix is one of the few streaming companies I do own. Not a big position if I do own it, so I’m getting hit. Look, there’s a lot of things here, Daniel, I want to cover. First, and we covered a little bit, these little things here. So if you took away Russia, the cost of shutting down operations there hurts. And it’s nice to say it as a company, be like, oh, we’re not dealing with Russia anymore. We saw that with Shell with their operations to take off massive write downs, but no one’s dealing with Russia.

Frank Curzio: To put this perspective with Russia, why it’s such a big deal with Netflix, if the war wasn’t going on, these numbers would’ve been positive if you’d include Russia, which isn’t as bad as a negative 200,000, right? Maybe it’s whatever, plus a 100,000, 150,000, but it’s not as bad as the headline. Right? So, what does that say for the rest of the companies reporting, right?

Daniel Creech: Yeah.

Frank Curzio: Because a lot of these companies canceled operations in Russia. And remember these are growth stocks that are used to growing 20, 30, 40 percent, and if they’re grow… Netflix is still growing their sales by 10 percent, which is amazing. They’re growing earnings, trading at 20 times forward estimates. But when you lose that growth component and it slows that hurts companies, especially in a market where it’s a negative market, right? It’s a market that’s bearish now where it’s hard to really gain traction. So, the littlest thing that goes wrong you’re got to get nailed, especially in growth stocks.

Frank Curzio: Another thing when I look at in January, 47 hours covering the stock, there’s only three sales. The median target of the stock was $692. It’s 235 right now, 230, 235, after the sell off. In January, Bill Ackman purchased 3.1 million shares in Netflix for over a billion dollars. Reed Hastings followed, right? CEO, owner, co-CEO but he’s the founder of Netflix. He followed it with a 20 million purchase, which is a massive purchase for a CEO, guys. That’s a huge purchase. I know he’s rich, but that’s a huge purchase someone that already owns a ton of shares.

Daniel Creech: And sorry, this is in January?

Frank Curzio: This is in January.

Daniel Creech: Gotcha.

Frank Curzio: They both paid around 390 for it.

Daniel Creech: Gotcha.

Frank Curzio: Okay. 390, right? This is in January, right? This is four months later, right? So, it’s 235. I’m not here to poke fun at them because I own Netflix too. What I’m saying is the smartest minds in the world are getting it wrong. And more importantly, these guys bought just a few months ago, showing how crazy the market has changed over the past four to five months. And it’s changed dramatically, where the Fed went, hey, everything’s okay. It’s transitory to holy shit, we are tightening like crazy. Right? And that’s going to happen to you. We’re going to reduce a balance sheet, anxious rates of surging, supply chain concerns, inflation through the roof, a war going on with there’s no end in sight which creates more uncertainty. So, if you’re looking at a three, four month period, this isn’t just it to Netflix. This is like great investors. The person who knows more about Netflix than anything is getting it wrong. That explains how difficult this market is when you see people like this, getting it this wrong.

Frank Curzio: And I covered this in educational segment and it was with Kodiak Sciences where everyone thought that was going to get approval. It didn’t. It went from like 100 to 10 bucks. This is the market that you’re in where you have to be very, very careful. Where this is a huge surprise, everyone leaning the wrong way. I even thought Netflix… Look, if they’re buying Disney, if they’re buying Time Warner, they’re buying everything else, Netflix is the king and they’re spending, their content is great. They’re putting out more content and everybody at right now, new content and they’re getting nailed and having trouble getting subscribers. That just goes to tell you, watch out for the rest of the industry that’s really depending on this model.

Daniel Creech: And they’re all trading lower, Warner Brothers, the new Discovery Edition or combination…

Frank Curzio: And they’ve been killing it with their content. They probably had the best content out there right now.

Daniel Creech: Yeah. And HBO Max and all that. So, they’re all trading in sympathy with that. From my perspective, the 100 million, like I said, shocked the hell out of me. That’s just funny to think about. I like your play on the long-term thing. I would maybe trade it here, but I’m okay just being on the sidelines with this. Again, it is just personal preference on, I think they have great quality and content. I like from the macro view, you have a lot of con… For now, we’ve gone from, we love competition to it’s no big deal to now acknowledging it and saying, hey, there is there… We’re fighting for consumers. We’ve got to figure that out.

Daniel Creech: And they will. Like you said, these guys are the smartest guys in the room. They’re leading the industry in a lot of different areas. They’re going to look at doing ad revenue and things like that, that’ll give opportunities for ad agencies and stocks for us, individual investors. But again, I can’t prove it, Frank, I’m not that smart. But to your point, 40 percent drop in one day that gets everybody lurking for a bounce in a trade and all that. So, that’s how I would prove it and then sit on the sidelines and just enjoy the streaming service for, whatever, $10 a month.

Frank Curzio: And it’s…

Daniel Creech: But I’m boring. This isn’t my bag.

Frank Curzio: No. For me, this is an industry I covered for a long time. I didn’t get it. Listen, I’m wrong on this as well with Netflix. But it’s an industry that if you want to own, you own the best, it’s Netflix. They’re by far the best platform, best technology, best everything behind it. And what does that say for the rest of the industry who got in late with all this competition? Because how many of these services you’re actually going to own? Not only that this is about time. This is about how much time you have in a day and how much time you’re spending on these. Now, when you’re home during COVID, you’re spending a ton of time watching movies, trying to find what to do. Now, you’re looking at Facebook, you’re looking at social media platforms. With Facebook a lot of it. Instagram had a lot of it.

Frank Curzio: Now, this is something that I really believe TikTok is taking away from. People are spending a ton of time on TikTok. And why is that? And we had this back and forth with TikTok. I’m going to tell you why, it’s simple. Because TikTok got it right. Now, TikTok I haven’t seen them ban anybody. Maybe they did. Maybe they didn’t. I don’t know. But what I do know is they provide a platform where with Twitter, everybody sees everything, with Facebook your friends and stuff like that, whatever. But with TikTok, it feeds you what you like. In Twitter, and a lot of these other places, it feeds you what you don’t like and it gets you pissed off. It gets you angry. You’re seeing posts that go against everything you believe in way, way, way far to the point where even if you’re just slightly conservative, slightly moderate, just Democrat, Republican, most close to the middle, they’re trying to push you to the right and to the left. And just with some of these posts, you’re like, what the fuck is going on?

Frank Curzio: With TikTok, listen, whatever you like, that’s what it feeds you. It could be extreme, something nuts, but that’s what it’s going to feed you. It’s not going to feed… So, I’m not going to get something I hate or I don’t like. And that’s where they get it right because it’s entertaining. You’re laughing. It’s fun. And it provides an experience where you’re on it even more. Where every time I’m on Twitter, I find myself going after someone because it has something so ridiculous that they said, and I’m like, come on. And it’s not just politics. It’s like stocks and this is going up. And then they provide a comparison to another year when interest rates are like 12 percent, look at the market fell 90 percent… Whatever.

Frank Curzio: And I’m like, come on. But I find myself always doing it… With TikTok, you’ll sit there and you just watch a video. You don’t like it, you flick through it, but it’s giving you what you want and it’s a big difference, but that’s the time factor where how much time the people have in a day and you don’t have a lot these days and you work in and you spend time with kids. But that time, where is it going to? A lot of it is TikTok. A lot of it isn’t going to all these streaming services anymore, it seems like, and that’s going to hurt this model. Let’s see. Listen, this about consumer behavior and when it changes, you need to change. So, let’s see how they handle this.

Daniel Creech: Yeah. It’ll be a good story to watch unfold. Speaking of how much time do you have to do everything and competing for timeframe? Does that segue into the metaverse?

Frank Curzio: The metaverse. Yeah.

Daniel Creech: Because I have another fun stat to throw at you here. This is from Morgan Stanley. They expect… Well, forget about, we’ll get into the high things. They talk about competition and social media and their big question is, is the metaverse going to be evolutionary or revolutionary, an extension of just the internet, social media, or something completely brand new. However, this is what stood out to me, Frank. American, daily users already spend the total equivalent of 11 billion days per year consuming digital media. Now, that’s just one of those fun things to say and you can’t really fathom and then you start thinking about comparing that to… That’s hilarious. To put that in perspective, 14 billion total annual days are spent by Americans watching linear television.

Frank Curzio: Mm-hmm.

Daniel Creech: Okay? To your point, I’ll ask you this because we’ve had a good discussion about this multiple times on the metaverse. I don’t understand the negativity towards it because dumbing it down to Daniel Creech’s version, I simply see the metaverse as an extension of social media in a better interactive experience, meaning people already log into Facebooks, social medias, TikToks. If all you’re doing is logging on to another platform, I don’t see the big barrier to entry there. That being number one. Number two, if you can take the experience, what you were just talking about, versus Twitter, Facebook giving you stuff to upset you and get you aggravated versus TikTok, which is more of an enjoyment. Why can’t you just do that on that platform and have a better visual, better graphics, better technology? I equate this to man, I remember playing PlayStation One, Super Nintendo and things like that. When you play the latest versions, those old ones look terrible, but in the reality they’re great.

Daniel Creech: I see some critics pointing out to the metaverse graphics, not being as good as other video games. Okay, that’s funny for right now in a good punchline, but to think that that won’t improve dramatically, and it already is, and there’s not already great graphics and designs out there is just silly given the technology we have. So, that’s my general take on why I think this is a no brainer. It’s going to be bullish. We can argue how big, but the extent that this isn’t going to be a multi-billion and trillion dollar industry, which we’ve shared in the past, we can get it into expectations. Am I dumbing it down too much, Frank, just to think that you’re logging onto a different platform therefore, the barrier entry’s very easy here?

Frank Curzio: The barrier of entry’s not going to be easy because you need a lot, a lot of money to create a metaverse. You can get on it. It’s going to be easy for people, but in terms of creating metaverses there’s a big difference. And you’re seeing tons of money flow into this sector and here’s why. Okay. When you look at Web One, which was 1996 or 2004, and Goldman Sachs does a good job, they have a… I think it’s a 30 page report, just like Morgan Stanley has a 30 page report. Citi Group has 170 page report, and they all are taking… It’s great, because contributors are people who have been in crypto that have commented and these are all metaverse reports that came out in the last three, four months. All of them are highlighting how this industry is between will be 8 trillion to 13 trillion. They break it down with numbers, right? And it’s not a fluff piece because I say a lot has to happen. It could take longer than expected.

Frank Curzio: To me, to see the money pouring in right now is incredible, billions over the past couple months. But if you’re looking at Web 0.1, or Web One, mostly read-only web forms in 2004. 2016, the individuals gained the ability to create information into a global database. They could read and write the apps. It was interactive. Mobile came into… It was a big force. Web Three individuals had the potential to monetize their own data. This is what I believe the internet was created for because right now, the internet is owned by basically five or six different companies where all the content that you’re seeing, which is spent the most on the internet is owned by somebody, right?

Frank Curzio: They could remove it from wherever and everything that you publish… If you’re on YouTube, you have YouTube channel with seven million people on it, if you say the wrong thing, YouTube could be like, okay, you’re off. Goodbye. They own the content. They own everything you do. Facebook owns everything you do on their platform. That’s why they’re able to sell all of your personal information, right? That’s what’s in all that private policy stuff that you just click and you just go on, otherwise you can’t use a site. So, when people say, what is the metaverse? To me, it’s the new internet, right? It’s a decentralized place that’s going to be permissionless, that’s censorship resistant. And when you’re censorship resistant, that means think of the thing you hate the most and if you are the most racist person in the world, listen, if you believe America and freedom of speech there’s a market for that and there are people that could say it on different platforms, but this is permission list, right?

Frank Curzio: Totally open marketplace. That’s going to replace all of social media as the medium for people to communicate, interact, own, monetize their own content, their own creations, right? And it’s bringing every single thing together. All these innovations together where it’s DeFi-ed, which decentralized apps, decentralized finance. You have NFTs, which are not just bored apes and they’re changing a freckle and trying to charge a million dollars for these things. This is permission. Giving you permission to NFTs. I explained this through ticket sales and royalties and music royalties. I just talked to a Grammy winning producer of music in a rap industry who wanted a little bit of advice and stuff on NFTs and things like that. But showing the royalties, the payments that could be made. You look at Security Tokens Dow, which is governance tokens, where the users govern the site, right?

Frank Curzio: The users govern it, right? So there’s a vote. It’s not the board of directors who we now… You should know, they don’t really act in the best interest of the shareholders that get paid a lot of money. We’re seeing a lot of that with Twitter, right? Why wouldn’t they accept this bid that’s 50 percent higher and these assholes on a board of directors who don’t want to accept this bid, why the hell weren’t you buying it? Because you’re not accepting the bid because you think it’s worth more trying to get someone else to buy it. But why the hell weren’t you buying it in the low thirties? Right? And now you’re just trying to sell it for more. How do you make that pitch to somebody? Oh, Twitter’s worth more. Than why the fuck aren’t you buying it in the thirties, which was three months ago? And two months ago, one month ago before Elon Musk started purchasing this stuff.

Frank Curzio: It’s a good offer. It’s a fair offer in this market where growth sucks. And for them to be looking for something else is incredible. Well, Dow changes that, right? So, it brings together all of these trends together and it’s going to disrupt everything. You look at the banking industry street, Wall Street… Banking right now… And I’m going to make a bold statement. In 20 years, if these banks are not in the metaverse or on a blockchain, they’re not going to be around, because they make their fees… What? Deposits, where they charge money. They charge fees on everything where they’re giving you no interest. You could earn interest on cryptos now. You could send payments for free in certain areas, using different payment services now through crypto. It’s very, very easy. You’re seeing all the middlemen and all the fees where, hey, we know all these people. No. Well, you have the internet now, and now you have these massive freaking groups where we saw WallStreetBets that can come together and change the face of multi-billion dollar companies.

Frank Curzio: And it’s removing that where all this control that people have… And we’re seeing it so much with elections and a political cycle and everything else… Through the metaverse, this is decentralized, permissionless, doesn’t mean the payments and stuff are decentralized. They’re still going to get regulated but this allows everyone to be who they are and this is what social media I think was intended to be like where, holy shit, they’re stealing all the information. They say, if you don’t know what the product is, you are the product. And you’re the product in social media. That’s how they make money, by you going in there and you’re giving all that personal information and they make advertising dolls. Yeah, you want proof that model’s changing so much? Facebook’s changing their entire company for the metaverse and the money flowing…

Frank Curzio: If you look at JP Morgan… Another one, Jamie Dimon was like, I hate the blockchain and Bitcoin. Listen, he’s all over the blockchain now. You got to be on the blockchain because it’s just a permissionless, decentralized where you don’t need someone to charge you fees anymore and it’s growing faster than you could ever believe. I didn’t think the metaverse was a trend where I would be like, hey, invest in it. It’s big. We invested through MANA in our CCI News. We did very, very well. And it’s still doing well. I even know if that site… Who knows three, four years ago… There’s different sites that are absolutely amazing. But the money pouring into this sector right now at Wall Street with these reports, you’re seeing everything come together. They see it. This is the new world. Everything that you do, everything you purchase is retail. Everything that you do is going to be digitalized, and you could get with it or you don’t have to get with it and you could be AOL and Blackberry, it’s up to you.

Frank Curzio: This is why you’re seeing billions and billions and billions of dollars flow into this industry, the only industry I’m seeing that… SPACs are done, IPOs are done, right? They’re on the shelf. You’re seeing all this money that came into this market, right? It’s drying up because what the Fed’s doing raising industry, shrinking its balance sheet, not as much money, it take money out of the system. However, in a market like this, where you think everybody’s selling everything and running and you’re seeing it with Netflix as well, the amount of money pouring into the metaverse is absolutely incredible. And there’s one quote that Goldman has that I want to leave you with here because it says, in an open metaverse world, there’s likely be significant technological and business model disruption. This new world will be a blockchain based ecosystem and Web Three native companies would challenge.

Frank Curzio: This from Goldman Sachs, perhaps overtake the current internet behemoths. What that statement means, Daniel, is that this is your chance to buy Microsoft in the pennies, Amazon in the pennies, which you could have done eighties, nineties as everything started really taking off, right? And getting in them super, super, super early and changing your life and becoming a billionaire. That’s what they’re saying. That’s the power of the metaverse and why all these companies, tons of big S&P 500 companies, the amount of companies that are going into the metaverse and the money that’s being raised is not by kids. It’s not by people into crypto. It’s coming from Anderson Harwich, which are the smartest venture capitalists in the world. They’ve been around forever. It’s coming from the Winklevoss twins who have been in crypto.

Frank Curzio: It’s coming from billionaires, but it’s the big money pushing into this industry. You have to start learning about it. It’s early, there’s a learning curve. It’s tough, but you have to start learning about it and that’s where I see the metaverse. It’s really incredible. And especially over the past four months of what’s happened, I think it was Facebook announcing their changing their name, just changing the narrative where everyone’s like, holy shit. And now people are getting more involved. You see more sites being created and man, they’re seeing what’s wrong with the central lands and the sandboxes and they’re coming out with better, better metaverses and companies and economies where you’re looking at Roblox and Fortnite. Roblox and Fortnite are not metaverse. It’s like that’s a one way street. They’re making all the money. Metaverse is about a total economy that’s permissionless. Economy, where you could make money. You could open businesses. That’s what the metaverse is. That’s where social media is going. That’s where banking’s going. That’s where everything’s going, and it’s popping a lot faster than I ever thought.

Daniel Creech: Absolutely…

Frank Curzio: A lot there, but you…

Daniel Creech: Well a lot there, and hopefully, it won’t take that long. This is going to go on for years, investments, Facebook’s investing billions and billions per year into this over the next coming years. The big question for investors is when will this follow through to see higher stock prices? So, that’s what we as investors want. So Facebook, Roblox, those are a couple. Snap, I thought was interesting, by Wall Street, just with augmented reality and different things. Google is a big player. So, there’s a lot of ways to gain exposure to that. Obviously, you want to subscribe to our wonderful products to get our best picks, little keys there. But that’s the ultimate question. While this is going to take out and play out over years in the disruption, it’s not a stretch to think that a lot of these gains just like buying the Microsofts and everything for pennies, that’s the life changing gains. And that will happen as we think, and very bullish on over the next 18 months, give or take.

Frank Curzio: Yeah. For me in covering sectors and covering innovation and going to electronics show, and I say that every year with anyone could attend, but having immediate exposure where you have exclusive access and having my contacts there and just being fascinated by so many things and bringing so many of these trends to you early and sometimes so early, when nothing really happens for a while. And then you’ll see the explosion of 5G and AI and all these companies and data analytics and stuff. But this trend is bigger than anything that I’ve seen. This is where everyone’s go… Everything you hate about the internet, everything you hate about social media, that’s going to go into the metaverse now, and you’re going to see people. It’s more than just, oh, am I going to put on a headset? No, you don’t need to put it on headset, but some of them may have a headset, maybe the Oculus and whatever you’re going to use. And it’s not you going into this virtual world and playing games. It’s not just that. It’s conferences.

Frank Curzio: It’s having special meetings. They just held a concert, two different concerts, one on Roblox and one on Fortnite. And they got 30 million people to view this thing, 30 million. Think about every single artist right now is looking at that going, holy shit, I’m performing at venues that have 30,000, 40,000. That was over a two-day period, but that’s how many people have gone into this, right? And this is the younger generation. Like, if you look at… And when I say younger, I’m talking about 35 and younger, okay? 20 years. The next 20 years, this is all that they’re doing. It’s like this next generation… It’s all digital. You can get on or you can… Whatever. You can just sit there and whatever you want to do. But if you’re looking to make money, if you’re looking to get involved in the biggest trends, which is why you listen to this podcast and invest properly, this is where all the innovations coming from.

Frank Curzio: The metaverse brings all of this together with NFTs, 3D, holograms, everything together, and the amount of companies that you’re seeing in there, where you can open up your own businesses, you can make your own money in it, and you make the money and you make royalties on anything that’s sold and resold and resold again, right? So, you can get royalties or a percentage on every single thing. You can own real estate and collect rent, depending on where you own that real estate. What metaverse you own it in. These trends are very, very serious. There’s a lot of flaws in some of the other companies that I know now, because I’ve been digging in more than you’ll… Holy cow, to the point where just my mind’s about to explode and I can’t even talk to people after just reading all the reports and studying all this and going to all the metaverse sites but this is something that’s incredible guys, and you need to learn about it. There’s a learning curve. I know a lot of people think it’s just a video game or why they get trust me.

Frank Curzio: They were making fun of the internet when it first came out with WW what? What do I have to do? Remember? I think it was The Today Show. Listen, it’s for real. And if you don’t think it’s for real, just follow the money because that’s where all the new capital, the capital being raised, is going to. It’s not 10 million here or 30 million there, or even Qualcomm announcing 100 million fund to invest in the metaverse. This is billions. All right? It’s pouring into this industry just over the past few months. And a lot of stuff is getting done and I’m getting access to a lot of cool stuff, which is awesome. But just seeing it as it’s developing is exciting, and it’s going to be lots of ideas where people can make money from this.

Daniel Creech: Yeah, absolutely. And for a fun throwback, somebody that saw this coming and was singing about the change, listened to Analog Man by Joe Walsh. That’s a great tune. I think he was singing about the changes in metaverse way back then.

Frank Curzio: That’s cool. That’s cool. Yeah. So listen a lot going on. We have Netflix numbers weren’t too good, but look there’s more to that with the entire industry. You got to look at TikTok. Is that really just disrupting streaming as well? Is it taking time away from people, right? Does it mean to actress and actresses who are prime and making more money than they ever made in their entire lives signing up to all these deals, is that going to get cut now? Because again, can they afford it? Could Netflix afford 30 billion a year in new content? Maybe it’s 10 billion now, 15 billion. But what does that say for the rest of the industry? But this is showing when the leader of this industry… Just like Facebook is a leader in social media by far, three billion plus whatever, when they’re changing their entire business model and going into Meta. Pay attention.

Frank Curzio: With Netflix, you see this company get nailed and they have great content on their site. The most new content’s coming on their site, they’re spending the most money and they’re getting nailed. What does that mean for the rest of the industry? That’s how you should look at this. I not worried about HBO, because they have amazing content right now and they’re doing well. And that stock is a lot cheaper and better and just has more growth, not as much hair as Netflix, but it’s something to think about if you own these other names and that’s how you should be looking at investing right now, especially the Russia component. Right? These guys, it’s easy to say, oh we’re no longer dealing with Russia. Cool. That’s awesome. It hurts. And it’s going to hurt companies more than others. And I think it probably shaved at least 15 percent off of the stock price for today for Netflix because that number… Those ads would’ve been positive instead of negative if they included Russia. Which again, they were like, we’re not doing business with Russia ever again.

Frank Curzio: So, let’s see how that influences other companies during earning season. And just be careful, man, because when companies miss, holy cow lookout. No one thought Netflix would come down like this after it’s already down what? 40 percent from its highest. Pretty incredible. You don’t see moves like this in bull markets. You see them in uncertain markets and that’s what we’re in right now.

Daniel Creech: Yeah, absolutely. We live in a crazy world. So, stay tuned in here to help navigate the craziness, Frank.

Frank Curzio: Yeah. Hopefully, we could help you. Again, I own Netflix, I get hit. You looking at great names getting hit, just be careful out there’s a lot going on and that’s it for us. Daniel, thanks so much for stopping by. Really appreciate it, bud.

Daniel Creech: All right. See you guys next week. Cheers.

Frank Curzio: All right. Questions, comments, feel free to email me frank@curzioresearch.com, and Daniel at?

Daniel Creech: Daniel@curzioresearch.com.

Frank Curzio: Thank you for clearing, clarifying that. I always forget. All right guys, that’s it for us. Enjoy the day. And I’ll see you guys tomorrow. Take care.

Announcer: Wall Street Unplugged is produced by Curio Research, one of the most respected financial media companies in the industry. The information presented on a Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.

Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 9 million times.

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