✈️"Put Some Respect On My Name"🎥
Big Portfolio Moves, Our #1 Investment Opportunity, And So Much More!
👋Welcome!
What is up Cruisers?!
This week’s newsletter recording is back!
🎧To listen on Apple Podcasts CLICK HERE!
🎧To listen on Spotify CLICK HERE!
Showtime!
What is Inside?
📕 Chart of The Week | 😂Meme of the Week
💸Portfolio Update | 📰Portfolio News
|🔍Spotlight: $VIAC|✈️🎙️Final Thoughts
📈Chart Of The Week
Our portfolio pick $PENN is not only one of our best performers, but also one of our favorite picks! (Okay. Maybe there is a slight correlation there).
One reason we love $PENN so much is their ownership of Barstool Sports who is a huge player in the “Sports Gambling Wars”.
Check out this chart below by RoundHill Investments:
🎰Barstool Sportsbook has almost as many Twitter followers as all of the other major sportsbooks COMBINED! Barstool is all over the next generation of gamblers. As sports gambling becomes legal in more states, and people under 21 become of age, watch out, Barstool is here!
🤣Meme Of The Week
We think this is a joke. It is crazy times though. Who knows…
💸Portfolio Update
For the first time, the CA portfolio is in the red. How do we feel about this? We are absolutely chilling. This happens. The market goes up. The market goes down- sometimes even a lot.
We were uncharacteristically very busy this week in the market. There were some awesome opportunities that we could not pass on.
Next week, we will be dedicating the newsletter to explaining some of our moves and some of the strategies that we used.
We could not be more confident and excited about our portfolio- especially after the moves we made this week!
📰Portfolio News
🔔🔔🔔 RING RING- Portfolio pick $BWAY had the privilege of ringing the closing bell this past week at NASDAQ in honor of Mental Health Awareness Month. It was an awesome ceremony and a phenomenal press opportunity. CEO Christopher Van Jako crushed it and made the CA team very proud.
🏃♂️🏃♂️🏃♂️ Sprinting Away- During their earnings call this past week, portfolio pick $FSLY announced that their CFO would be leaving the company. The company crushed earnings but with the news of the CFO departure (which is not a concern to CA), the stock dropped 25%! We love it at these levels even more!
🚀🚀🚀To The Moon- Portfolio pick $PENN released phenomenal earnings as they beat Wall Street expectations last week. The stock dropped 10% because the market is absolutely crazy these days. We love $PENN and picked up some more after their great earnings and big dip!
🎮Trivia Night!
A question you shouldn't know the answer to but will serve as a fun way to learn more about the portfolio picks or the Spotlight company.
Question:
Who was the original Chairman for National Amusements, the parent company for ViacomCBS, and what was he famous for saying?
A. Lebron James: “Cleveland!!! This is for you!!!”
B. Martin Luther King Jr: “The time is always right to do what is right”
C. Justin Bieber: “I’m living proof that dreams do come true. Work hard. Pray. Believe.”
D. Sumner Redstone: “Content is King”
Answer: A. Kidding. It is D. Sumner Redstone, who passed away a few months back, is considered one of the biggest media legends ever. His daughter Shari Redstone is now the Chairman of ViacomCBS and National Amusements.
🔍Spotlight: $VIAC
Introduction
Monthly Active Users (MAU) - MAU is defined as the number of users that have performed some action on an app within a given month. It is one of the most important statistics reported by streaming companies and social networking companies because it is used to see how how many users a service has!
Average Revenue Per User (ARPU) - Interestingly, we do not mention ARPU in this week’s newsletter. Why are we including it? Because it is important and we will include it in the future! ARPU is very self explanatory and is a key statistic used by many services to show how much business every user brings!
⛳The Comeback Story
April 14, 2019, Augusta National. Tiger Woods just capped off one of the greatest comeback stories ever seen in sports. After a decade filled with cheating and divorce scandals’, drug abuse, dozens of back surgeries, and endless scrutiny, Tiger clawed (pun intended duh) his way back into relevance and returned to the pinnacle of golf again by winning the Masters.
On that April day in 2019, the patented Tiger roar returned, but arguably, what was most powerful, was his son walking side by side him finally getting to see his father be a “champion” and his daughter walking behind him, with Tiger’s now girlfriend, all with smiles on their face. A beautiful day. A beautiful story. One that Hollywood could not even script.
We have a similar comeback story brewing with one of our portfolio picks. Well- this is a less drama filled and less relatable comeback story as it is a $28 Billion entity. Nonetheless, the comeback story of ViacomCBS is setting up to be one of the greatest the business world has seen.
For decades, ViacomCBS was considered one of the greatest media conglomerates releasing some of the greatest TV Series and Movies in Entertainment history. With the rise of Netflix and so many other streaming companies, many have written ViacomCBS off saying their best days are behind them.
After ViacomCBS released their Q1 earnings, it is clear, they are looking to have another day in the sun. They have a multi-pronged streaming approach that Wall St. just does not seem to get, but we at Cruising Altitude do and have. Today we look forward to sharing the exciting developments of ViacomCBS over the past quarter and how they are forcing the world to “put some respect on their name”
🔢The Numbers
First, let us check out how ViacomCBS preformed in regards to Wall Streets expectations for Q1:
Revenue- $7.41 Billion (actual) vs. $7.32 Billion (projected)
This is a beat
EPS*- $1.52 (actual) vs. $1.22 (projected)
This is a big beat
*EPS (earnings per share) is a standardized profitability metric. Just know the bigger the better! We will define it for you, our valued Cruiser, in the coming weeks!
From the view at the top of Paramount Mountain, the company crushed it. As we all know and mentioned earlier, the real success story here is streaming.
📺Streaming! Streaming! Streaming!
From a Streaming perspective, ViacomCBS crushed it as well. Here are some key stats:
Fueled by the Paramount+ re-brand, the company Added 6 million new streaming subscribers to the various paid services worldwide! (Best quarterly new sign up metric ever.)
The other new sign ups come from Showtime (which we talk about next), BET+, and Noggin (an educational Nick inspired service).
Showtime had their greatest quarter ever in regards to new signups and engagement with the app
Showtime is a critical part to ViacomCBS three pronged approach to streaming (free-pay-premium) as Showtime is part of the premium package! Seeing success here is huge and they are absolutely crushing it
PlutoTV, the companies AVOD/FAST (free streaming service) continues to absolutely crush it as they added 6.5 millions new MAUs worldwide and also doubled their revenue year over year for the third quarter in a row!
PlutoTV is poised to earn their first billion dollar year of revenue this year even though ViacomCBS acquired the asset for just $340 million a few years back! #grandslam!
🤗Why Will the good times keep rolling?
Because the company is just getting started. Check out these 5 key takeaways from the investor call that show how big ViacomCBS plans are for their streaming services:
Paramount+ will be receiving an influx of 1000 movies this summer and not just “deep library” movies
The movies include: The Avengers, SkyFall, Mission Impossible, and 997 others! (good one Alan!)
If re-runs are not your thing, how about 1 NEW ORIGINAL MOVIE A WEEK starting in 2022!
Yes. You read that right. ViacomCBS will be putting Paramount Picture quality movies on the service every week starting in 2022. Until then, the company bought the rights to “Infinite”, a new Mark Wahlberg movie that will be exclusively shown on P+
ViacomCBS is not even focusing on monetization of PlutoTV yet, but they can’t stop making money! Here is the exact quote that the CEO shared:
"We haven't actually pushed pricing on Pluto TV in the last two years so it's really one of the most efficiently priced products on the marketplace. And that gives us a really great pricing lane going forward when we choose to pull that lever."
Why haven’t they pulled that lever yet? I don’t know. If I had to guess, it is because this would takeaway from the Cable TV ad sales and the company wants to keep that!
Paramount+ International
P+ has now launched in over 20 countries but the company is now just launching huge advertising campaigns with local companies and distributors. On top of this, since there is no Showtime international package, P+ oversees is jam packed with awesome Showtime hits (as well as native tongue hits) that we just don’t get here domestically!
Sports! Champions League, NFL, PGA, NWSL, March Madness and more?!?!
One of $VIACs biggest competitive advantages to other streaming services is the fact that they have live sports! In the last quarterly call, management reiterated that they are not done acquiring sports rights. In a world where people watch shows on their own time, the power of live sports is getting more and more important. ViacomCBS understands that and is on the prowl!
🎁Wrapping It Up?
ViacomCBS is up to huge things in regards to streaming as we described above. ViacomCBS is expected to do $4 Billion in streaming revenue this year. Netflix, the pure play streaming company, is trading at 8x revenue even while they are already at $25 Bill in revenue and have a much tougher pathway to growth
If you put an 8x multiple on $VIAC’s rapidly growing streaming assets, that is a market cap of $32 Billion which is already greater than the current market cap of $28 Billion.
And remember, $VIAC has $20 Bill+ of revenues from other sources excluding streaming!
#SLAMDUNK
-Alan
💭Final Thoughts:
“If you're going to be in this game for the long pull, which is the way to do it, you better be able to handle a 50% decline without fussing too much about it.”
-Charlie Munger (Warren Buffett’s sidekick)
At Cruising Altitude, we love to see a strong market correction. This gives us the opportunity to buy more of what we love and re-iterate our long term principles. We have been very busy this week in the market as we realign our portfolio. This will not be our norm.
Next week we breakdown the moves we made and why we made them. It is going to be absolutely lit! See you then!