WEBVTT - Instant Reaction: Netflix Misses, Reed Hastings Steps Down

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. This is a breaking

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<v Speaker 1>news update from Bloomberg.

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<v Speaker 2>Instant reaction and analysis from our three thousand journalists and

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<v Speaker 2>analysts around the.

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<v Speaker 1>World focuses on Netflix, just out with its latest quarterly results.

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<v Speaker 1>The company beating estimates though read hate stings. Of course,

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<v Speaker 1>one of the co founders is stepping down from the

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<v Speaker 1>board after twenty nine years to pursue philanthropy and personal interests.

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<v Speaker 1>But again you should point out in terms of the company,

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<v Speaker 1>we can talk about that in just a moment. Did

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<v Speaker 1>report revenue that beat analyst estimates in the first quarter,

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<v Speaker 1>buoyed by strong subscriber growth, engagement, keeping subscribers there and

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<v Speaker 1>bringing them in. That's important.

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<v Speaker 2>The guidance, though, is what has people concerned. Second quarter

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<v Speaker 2>earnings for sheriff seventy eight cents is what Netflix is

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<v Speaker 2>guiding for the estimates for eighty four cents. I want

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<v Speaker 2>to bring in Githa Ranganathan, Bloomberg Intelligence Senior media analyst.

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<v Speaker 2>She joins us from Bloomberg Intelligence quarters in Princeton. Keith,

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<v Speaker 2>are there two elements that we want to talk about here.

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<v Speaker 2>One is the light guide that disappointed analysts but also

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<v Speaker 2>read Hastings moving away, which one is a bigger way

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<v Speaker 2>on the stock in the after hours.

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<v Speaker 3>Yeah, thanks so much, Tim, And it's definitely the lighter guidance.

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<v Speaker 3>So I think not only were we looking at the

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<v Speaker 3>second quarter guidance, which of course is lighter both on

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<v Speaker 3>the revenue side as well as on the EPs front,

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<v Speaker 3>but we were also anticipating some kind of take up

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<v Speaker 3>for the full year revenue guidance. So remember the quarter

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<v Speaker 3>before they had set twelve to fourteen percent for the

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<v Speaker 3>full year, and they basically just came out this time

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<v Speaker 3>and reaffirmed that same number. And I think the street

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<v Speaker 3>was really looking for all the recently implemented price hikes

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<v Speaker 3>to contribute to maybe at least one hundred basis points

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<v Speaker 3>of improvement in revenue growth. The same goes for operating margin.

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<v Speaker 3>I mean when the guidance first came out for operating

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<v Speaker 3>margin at thirty one point five percent, that was considered

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<v Speaker 3>to be pretty muted, and I think the street was

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<v Speaker 3>disappointed last time around, and they haven't. They continue to

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<v Speaker 3>be pretty I think they're still kind of taking conservative approach,

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<v Speaker 3>but definitely the street is going to be pretty disappointed

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<v Speaker 3>on this.

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<v Speaker 1>So what do we want to do. Does everybody want

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<v Speaker 1>to push them on the call with analysts to say, wait,

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<v Speaker 1>give us a little bit more color around this. Are

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<v Speaker 1>you being conservative? Is it as easy as that, KEITHA.

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<v Speaker 3>So, I think there are a couple of different things

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<v Speaker 3>here happening, Carol, especially with the second quarter. So the

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<v Speaker 3>reason why their revenue guide fell a little short of

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<v Speaker 3>analyst expectations was because they did implement a big price

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<v Speaker 3>hike in the second quarter of last year, so they're

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<v Speaker 3>obviously lapping those increases. So that's one thing to kind

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<v Speaker 3>of keep in mind. And then the second thing is

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<v Speaker 3>on the on the EPs front, and the reason why

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<v Speaker 3>we're seeing a little bit of pressure in terms of

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<v Speaker 3>guidance for EPs and operating profit is because they do

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<v Speaker 3>expect very very heavy content amortization in the second quarter.

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<v Speaker 3>So you know, they think that that would ease a

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<v Speaker 3>little bit in the second half, but in the second

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<v Speaker 3>quarter it's going to be pretty heavy, which might be

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<v Speaker 3>part of the reason why they're still kind of take

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<v Speaker 3>a little bit of a conservative stance. And you know,

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<v Speaker 3>we've seen them kind of really invest in a lot

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<v Speaker 3>of different pieces of content, most notably sports. Whether you

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<v Speaker 3>know it was the MLB opening Day game or the

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<v Speaker 3>World Baseball Classic, and you have a couple of boxing

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<v Speaker 3>matches coming up, and so I think all of that,

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<v Speaker 3>With all of that, they're kind of taking probably a

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<v Speaker 3>slightly more measured, cautious stone.

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<v Speaker 2>We don't get actual subscriber numbers anymore, unfortunately, but the company,

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<v Speaker 2>as you mentioned, boosted its standard plan with that ads

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<v Speaker 2>by two dollars to twenty dollars a month. That was

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<v Speaker 2>in March. Any indication based on these numbers or doing

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<v Speaker 2>some quick back of the envelope math what that did

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<v Speaker 2>in terms of churn or maybe pushing people to the

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<v Speaker 2>advertising tiers that are less expensive.

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<v Speaker 3>Yeah, So historically, Tim, what we've seen is, and we've

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<v Speaker 3>seen this in multiple price increases that Netflix has done

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<v Speaker 3>over the past four years or so, is that churn

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<v Speaker 3>has been pretty low. It is actually for Netflix, it's

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<v Speaker 3>actually the lowest across the board. It's about one point

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<v Speaker 3>seven percent. You compare that to about six to eight

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<v Speaker 3>to nine percent for some of the others services, So

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<v Speaker 3>you know, they've historically seen very very low cancelation rates.

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<v Speaker 3>Of course, there is the possibility, you know, with the

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<v Speaker 3>price increase, that there could be a little bit of

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<v Speaker 3>tearing down. As you just pointed, I'm not sure it

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<v Speaker 3>necessarily had a huge impact at least for the quarter

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<v Speaker 3>that is reported, but maybe they are factoring in some

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<v Speaker 3>of that for the second quarter, which is why we're

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<v Speaker 3>kind of seeing that lighter than expected guidance in terms

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<v Speaker 3>of revenue growth.

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<v Speaker 1>Huh okay, I mean listen, I feel like, you know,

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<v Speaker 1>when we talked about Netflix right in the last how

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<v Speaker 1>many months, of the story that gave and gave and

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<v Speaker 1>gave over the past year was Warner Brothers Discovery. I mean,

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<v Speaker 1>is there any rethink that that was a mistake or

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<v Speaker 1>now that has nothing to do with what we're seeing here.

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<v Speaker 3>So you bring up a really interesting point, Carol, And

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<v Speaker 3>I think you know, when they announced the deal, people

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<v Speaker 3>were kind of, you know, flummox and they were like,

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<v Speaker 3>why are you doing the deal? Is it because you

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<v Speaker 3>need it or is it just nice to have? Is

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<v Speaker 3>it because this is you know, a once in a generation,

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<v Speaker 3>once in a lifetime opportunity for you guys to get

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<v Speaker 3>hands on an asset that will probably never come to

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<v Speaker 3>the market. What is it? And I think you know,

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<v Speaker 3>people were kind of looking at this first quarter report,

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<v Speaker 3>as you know, providing some more answers to that, but

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<v Speaker 3>I think we have more questions than answers at this

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<v Speaker 3>point because you know, we're not necessarily seeing a great

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<v Speaker 3>acceleration in the revenue numbers, in the operating margin numbers,

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<v Speaker 3>which is exactly what they needed to show in order

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<v Speaker 3>to you know, basically assuage investors that did not need

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<v Speaker 3>Warner Brothers Discovery. So this kind of it's it's it

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<v Speaker 3>kind of leaves investors, I think a little bit, you know,

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<v Speaker 3>hanging a little bit.

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<v Speaker 2>What about the ben Affleck acquisition.

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<v Speaker 3>That is a great acquisition, so, you know, and I

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<v Speaker 3>think we can we will continue to see more of

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<v Speaker 3>this going forward. So that is you know, I think

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<v Speaker 3>as we kind of ponder about whether AI is going

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<v Speaker 3>to be a positive or a negative for some of

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<v Speaker 3>these media companies, I think we're definitely going to see

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<v Speaker 3>Netflix kind of flip the script and be more of

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<v Speaker 3>an AI winner, and that you know, the ben Affleck

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<v Speaker 3>company Interpositive acquisition, which was basically for six hundred million dollars,

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<v Speaker 3>I think it's a really smart discipline move, which again

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<v Speaker 3>helps them really kind of hone in on AI and

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<v Speaker 3>make it, you know, make it a positive gap.

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<v Speaker 2>But there's this balance and maybe the Ben Affleck element

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<v Speaker 2>helps because he is a creator. He's a Hollywood creative

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<v Speaker 2>more more so than an executive. But the scary thing is,

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<v Speaker 2>I think for a lot of people in Hollywood is like,

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<v Speaker 2>what does it mean for their own jobs? And is

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<v Speaker 2>it existential if AI can do what they're doing?

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<v Speaker 3>Yeah, and I think you know, Netflix has said this

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<v Speaker 3>many times and just the fact that you know, Ben

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<v Speaker 3>Affleck is obviously he represents Hollywood and the creative community.

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<v Speaker 3>I think the company itself is really more about offering

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<v Speaker 3>creators better tools for storytelling. So I don't think it's

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<v Speaker 3>necessarily replacing them. And that's the same story that that

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<v Speaker 3>Netflix obviously has been saying to This is just to

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<v Speaker 3>help them do their jobs better. This is not necessarily

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<v Speaker 3>to replace them. So we'll see how it all. You know,

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<v Speaker 3>it's still early days to tim and we'll see how

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<v Speaker 3>it plays out. But you know, so far, they're you know,

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<v Speaker 3>saying the right things.

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<v Speaker 1>I guess seconds the company's going to be okay with

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<v Speaker 1>read Hastings off.

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<v Speaker 3>The board, I think, so. I think he's kind of

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<v Speaker 3>been in the background now for a while. It's really

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<v Speaker 3>just been tet Sorrando's and Greg Peters running the show,

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<v Speaker 3>and I think they will be fine.

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<v Speaker 1>All right, cool, Steph.

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<v Speaker 2>I want to bring in Eric Clark. He's Accuvest Global

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<v Speaker 2>Advisor's CIO. He's also the portfolio manager of the logo ETF,

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<v Speaker 2>which has Netflix as its second biggest holding. He joins

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<v Speaker 2>us from inside for some reason, even though he's in

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<v Speaker 2>beautiful San Diego, California. Eric, thanks for going into the

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<v Speaker 2>office today to actually talk to us. Do appreciate that

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<v Speaker 2>we want to just get your quick reaction on Netflix

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<v Speaker 2>down nine percent right now? Carol mentioned some of the

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<v Speaker 2>headlines The light guide certainly has investors a little concerned

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<v Speaker 2>read Hastings stepping away a big deal, but maybe not

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<v Speaker 2>as concerning to investors. What's your quick reaction?

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<v Speaker 4>Well, Carol said it earlier, the stocks up forty percent.

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<v Speaker 4>I mean, you know, it went down forty per from

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<v Speaker 4>the highs in September, and then it went up forty

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<v Speaker 4>percent or forty two percent since the lows. It's seventy

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<v Speaker 4>five bucks. So you know, short term, any stock that

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<v Speaker 4>runs forty percent into an earnings print better be an

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<v Speaker 4>absolutely perfect print. And but we don't care that, you know,

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<v Speaker 4>short term noise in a quarter has never bothered us.

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<v Speaker 4>It's as long as the dominant theme of any company

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<v Speaker 4>is still intact. You ride through some of the noise

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<v Speaker 4>quarter to quarter and you take advantage of that. And

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<v Speaker 4>we certainly the stock was down forty percent and we

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<v Speaker 4>added to it a number of times to beef the

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<v Speaker 4>position up pretty meaningfully because we do believe in this

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<v Speaker 4>long term and we've been getting paid to do that.

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<v Speaker 4>So sometimes you just have to be willing to look

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<v Speaker 4>through short term noise, and we did come hot into

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<v Speaker 4>the print.

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<v Speaker 1>Yeah, listen, I think based on was it the end

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<v Speaker 1>of last year, this looks like it's the number two

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<v Speaker 1>holding in your ETF the logo ETF roughly five point

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<v Speaker 1>eight percent. But you can correct me. You're going to

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<v Speaker 1>add to that position or is you know, is this

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<v Speaker 1>kind of near the top of how much you want

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<v Speaker 1>in the portfolio?

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<v Speaker 4>Well, we by flexibility, we can go higher. I don't

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<v Speaker 4>know that, you know, on a small print, on a

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<v Speaker 4>small pullback like this, I don't know that there's a

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<v Speaker 4>reason to add to it. I think, you know, the

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<v Speaker 4>goal is that there's been a lot of names that

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<v Speaker 4>have come down. There's been a lot of turbulence under

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<v Speaker 4>the surface, so We have a pretty full position in Netflix.

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<v Speaker 4>Sometimes we trade around it. So you know, if I

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<v Speaker 4>got the opportunity to do that, I could certainly do that.

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<v Speaker 4>But you know, our goal is to find what are

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<v Speaker 4>the next trillion dollar brands? Who else joins the trillion

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<v Speaker 4>dollar club? Walmart joined not long ago, And you know

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<v Speaker 4>Netflix only has to to do about thirteen percent revenue

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<v Speaker 4>ongoing and generate good free cash flow. We even cap

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<v Speaker 4>the margin assumption at thirty five percent. We cap the

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<v Speaker 4>content spend at twenty billion, driving some more share ibas,

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<v Speaker 4>and you get to a trillion in market cap in

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<v Speaker 4>twenty thirty two. So big picture, there's a lot more

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<v Speaker 4>upside to go. You just have to go through different,

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<v Speaker 4>you know, noisy quarters in a market that can be volatile.

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<v Speaker 2>That's a more than doubling of the market cap in

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<v Speaker 2>the next six years. Do you think that happens? I

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<v Speaker 2>do I do without without Warner Brothers Discovery? I don't know.

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<v Speaker 4>I completely agree. I think it would have been great

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<v Speaker 4>to have that big content library, But you know, again,

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<v Speaker 4>at what costs they've They've just saddled paramount with a

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<v Speaker 4>pretty significant debt load so that they can do lots

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<v Speaker 4>of other things on the content spend. They're going to

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<v Speaker 4>clearly do more on sports. You know, the gaming is

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<v Speaker 4>probably more of a free call option. I think going forward,

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<v Speaker 4>it's a little hard to know, excuse me, how that's

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<v Speaker 4>going to go. But if they just do what they've

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<v Speaker 4>continued to do, ratchet up margins a bit, use AI

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<v Speaker 4>to enhance the business, draw viewership in, and you know,

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<v Speaker 4>Netflix is still the benefit of It's the place we

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<v Speaker 4>go first for content search, and then we go out

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<v Speaker 4>from there. Well there's nothing new on Netflix, Okay, now

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<v Speaker 4>I'll go to HBO and okay, now I'll go to

0:11:12.960 --> 0:11:16.160
<v Speaker 4>Amazon or Apple. So there, you know, and at twenty

0:11:16.160 --> 0:11:19.400
<v Speaker 4>seven bucks a month, it's still an incredible value to

0:11:19.480 --> 0:11:22.520
<v Speaker 4>the average consumer for all the entertainment that you get.

0:11:22.520 --> 0:11:25.240
<v Speaker 4>And obviously I do agree eight we have a ten

0:11:25.400 --> 0:11:28.520
<v Speaker 4>We have an eight billion dollar revenue estimate from the

0:11:28.600 --> 0:11:31.080
<v Speaker 4>AD tier in twenty thirty two, and I think your

0:11:31.080 --> 0:11:34.360
<v Speaker 4>prior guest was talking about somebody having ten billions. So

0:11:34.640 --> 0:11:36.520
<v Speaker 4>I think there's just a lot of things that you

0:11:36.559 --> 0:11:40.000
<v Speaker 4>can a lot of levers to pull for Netflix on

0:11:40.040 --> 0:11:42.520
<v Speaker 4>the free cash flow, on the margin, on the AI side,

0:11:42.559 --> 0:11:44.280
<v Speaker 4>which is still a little bit of an unknown so

0:11:45.080 --> 0:11:47.280
<v Speaker 4>I think Dipster are to be bought here.

0:11:47.360 --> 0:11:47.840
<v Speaker 2>Yeah, go go.

0:11:47.840 --> 0:11:48.640
<v Speaker 1>Ahead, go ahead.

0:11:48.679 --> 0:11:51.240
<v Speaker 2>Well, Read Hastings, he has Powder Mountain in Utah. He's

0:11:51.240 --> 0:11:55.439
<v Speaker 2>off skiing and creating this. David Weston got to go

0:11:55.520 --> 0:11:58.480
<v Speaker 2>to Powder Mountain last year and talk to Read Hastings.

0:11:58.480 --> 0:12:00.000
<v Speaker 2>I would like to do some skiing at Powder MOUNTA.

0:12:00.320 --> 0:12:03.600
<v Speaker 2>I bet you would an issue at all for this

0:12:03.679 --> 0:12:07.040
<v Speaker 2>company that Read actings. And look, he hasn't been CEO

0:12:07.120 --> 0:12:09.720
<v Speaker 2>or co CEO for a time at this point. Not

0:12:09.800 --> 0:12:12.240
<v Speaker 2>an issue to you. That he's exiting the board when

0:12:12.240 --> 0:12:13.079
<v Speaker 2>his term is over.

0:12:13.640 --> 0:12:15.560
<v Speaker 4>Not an issue at all. And he still has two

0:12:15.559 --> 0:12:18.160
<v Speaker 4>billion dollars worth of stock. So he's pretty vested in

0:12:18.960 --> 0:12:23.559
<v Speaker 4>keeping up with Netflix and being comfortable enough to walk

0:12:23.600 --> 0:12:27.079
<v Speaker 4>away while still having you know, last I checked twenty

0:12:27.080 --> 0:12:31.240
<v Speaker 4>one million shares. He's committed to Netflix success, similar to

0:12:31.800 --> 0:12:34.600
<v Speaker 4>Balmer with Microsoft success. And look how it's worked out

0:12:34.600 --> 0:12:36.960
<v Speaker 4>for Steve Balmer with all the things that he's done

0:12:36.960 --> 0:12:38.200
<v Speaker 4>with with Microsoft stock.

0:12:38.360 --> 0:12:41.400
<v Speaker 2>I should note I do believe Read Hastings is a

0:12:41.600 --> 0:12:44.040
<v Speaker 2>board member of Bloomberg LP, the parent company he is

0:12:44.280 --> 0:12:49.360
<v Speaker 2>of Bloomberg Radio and Bloomberg Television. So full disclosure there.

0:12:49.280 --> 0:12:52.080
<v Speaker 1>Yeah, no, we like to do that. Having said that,

0:12:52.160 --> 0:12:54.760
<v Speaker 1>all right, so let's talk about the folks that are

0:12:54.840 --> 0:12:57.120
<v Speaker 1>behind the helm, and let's just remind everybody. First of all,

0:12:57.120 --> 0:13:00.040
<v Speaker 1>we're talking to Eric Clark Akives Global Advisor CIO, so

0:13:00.400 --> 0:13:03.960
<v Speaker 1>he's also a portfolio manager of the logo ETF. Netflix

0:13:04.040 --> 0:13:07.719
<v Speaker 1>is the second largest position in that ETF. Right now,

0:13:07.720 --> 0:13:11.679
<v Speaker 1>we're looking at Netflix shares continuing to trade near their

0:13:11.720 --> 0:13:15.040
<v Speaker 1>lows in the aftermarket, down about nine percent. This is

0:13:15.080 --> 0:13:19.920
<v Speaker 1>after the company's revenue did beat estimates. We did have

0:13:20.000 --> 0:13:22.800
<v Speaker 1>that in the first quarter, but revenue did go up

0:13:22.800 --> 0:13:24.520
<v Speaker 1>sixteen percent in the first three months of the year

0:13:24.559 --> 0:13:26.800
<v Speaker 1>to twelve point three billion. That was a slight beat.

0:13:27.720 --> 0:13:30.520
<v Speaker 1>Earnings per share about twenty three compared with estimates of

0:13:30.600 --> 0:13:34.360
<v Speaker 1>seventy six cents in the current quarter, though the company

0:13:34.400 --> 0:13:37.600
<v Speaker 1>forecasting earnings per share of seventy eight cents a share.

0:13:37.640 --> 0:13:39.800
<v Speaker 1>That's less than the eighty four cents predicted by Wall

0:13:39.800 --> 0:13:43.080
<v Speaker 1>Street analysts. So that is the backdrop for those earnings.

0:13:43.120 --> 0:13:46.240
<v Speaker 1>We're headed off to the analyst and investor call in

0:13:46.280 --> 0:13:48.400
<v Speaker 1>a little while, Eric, what do you want to listen

0:13:48.440 --> 0:13:50.600
<v Speaker 1>out for? What would you want to be asking on

0:13:50.600 --> 0:13:53.600
<v Speaker 1>that call? You are an investor in the name, what

0:13:53.600 --> 0:13:56.880
<v Speaker 1>would you be asking of the co CEOs and their

0:13:56.920 --> 0:13:58.200
<v Speaker 1>C suite team.

0:13:58.559 --> 0:14:02.600
<v Speaker 4>Well, I think and they're I mean, they're obviously not

0:14:02.720 --> 0:14:06.000
<v Speaker 4>going to give you a ton of clarity or granularity

0:14:06.000 --> 0:14:07.880
<v Speaker 4>on sports because they don't want to tip their hand.

0:14:08.400 --> 0:14:10.920
<v Speaker 4>But it's clear that sports has been a very big

0:14:10.960 --> 0:14:14.760
<v Speaker 4>win for them. So I expect them to talk more

0:14:14.800 --> 0:14:19.320
<v Speaker 4>about double downing on those kinds of differentiated opportunities and

0:14:20.000 --> 0:14:24.000
<v Speaker 4>just you know, trying to be as mindful about their

0:14:24.120 --> 0:14:26.920
<v Speaker 4>spend and the quality of the spend. Is really what

0:14:27.000 --> 0:14:29.000
<v Speaker 4>I would ask is you know, let's face it, for

0:14:29.040 --> 0:14:31.840
<v Speaker 4>a while there they were in fill the library up

0:14:31.880 --> 0:14:35.320
<v Speaker 4>mode and people kind of critiqued some of the quality

0:14:35.440 --> 0:14:38.800
<v Speaker 4>content that they created. Now they have the ability, they

0:14:38.840 --> 0:14:41.160
<v Speaker 4>have a large library. Now they have the ability to

0:14:41.240 --> 0:14:45.960
<v Speaker 4>really focus on quality content, which certainly drives a lot

0:14:46.000 --> 0:14:50.080
<v Speaker 4>more viewership and engagement. So again, I at twenty seven

0:14:50.160 --> 0:14:54.560
<v Speaker 4>bucks a month, there are very few other services that

0:14:54.640 --> 0:14:57.320
<v Speaker 4>give people more delight and more entertainment, and so there's

0:14:57.400 --> 0:15:00.360
<v Speaker 4>just and the business is so predictable and can system

0:15:00.400 --> 0:15:02.200
<v Speaker 4>if you you know, in the last couple of months,

0:15:02.240 --> 0:15:04.120
<v Speaker 4>every day the market was down with some of the

0:15:04.160 --> 0:15:07.800
<v Speaker 4>Iran headlines. Netflix and Spotify were usually up on the

0:15:07.880 --> 0:15:10.920
<v Speaker 4>day because of the stability of the business model. So

0:15:11.400 --> 0:15:14.400
<v Speaker 4>it isn't just the growth that we are making it

0:15:14.520 --> 0:15:17.200
<v Speaker 4>such a big waiting. It's the stability of the model

0:15:17.760 --> 0:15:20.480
<v Speaker 4>that that is important too. You know, you're just going

0:15:20.560 --> 0:15:22.600
<v Speaker 4>to have some of this volatility on the earnings.

0:15:22.720 --> 0:15:25.560
<v Speaker 1>Yeah, But what's interesting is we're in an environment. When

0:15:25.600 --> 0:15:29.479
<v Speaker 1>I think about the model. YouTube dominant global video program

0:15:30.400 --> 0:15:34.480
<v Speaker 1>roughly two points seventy four billion monthly active users as

0:15:34.480 --> 0:15:38.640
<v Speaker 1>of early twenty twenty six, leading US TV streaming with

0:15:38.680 --> 0:15:41.520
<v Speaker 1>over twelve percent of TV viewing time, driven heavily by

0:15:41.640 --> 0:15:47.000
<v Speaker 1>users over fifty dale. Viewership can include seventy billion shorts views,

0:15:47.040 --> 0:15:49.440
<v Speaker 1>top creators. You know, we can get into that, but

0:15:49.560 --> 0:15:52.680
<v Speaker 1>this is from Nielsen. But people are watching YouTube, and

0:15:52.720 --> 0:15:55.240
<v Speaker 1>I realize it's an older or skewed older, but I

0:15:55.360 --> 0:15:58.480
<v Speaker 1>just wonder, you know, do the streaming models do they

0:15:58.520 --> 0:16:00.480
<v Speaker 1>have it right? And to be fair, they have a

0:16:00.520 --> 0:16:03.960
<v Speaker 1>lot of people watching. I watch them, but I just wonder, like,

0:16:04.040 --> 0:16:06.760
<v Speaker 1>what is the model of how people There's so much

0:16:06.800 --> 0:16:10.440
<v Speaker 1>coming at individuals. They have a lot of choices out

0:16:10.440 --> 0:16:14.080
<v Speaker 1>there or they could just you know, turn off their laptop,

0:16:14.120 --> 0:16:17.480
<v Speaker 1>turn off their TV or whatever, and put down their phone.

0:16:17.680 --> 0:16:21.920
<v Speaker 4>Well, I think, you know, we have this short termism

0:16:22.120 --> 0:16:25.200
<v Speaker 4>in a variety of our lives, this dopamine hit. And

0:16:25.240 --> 0:16:29.560
<v Speaker 4>you know, YouTube does provide that short term you know,

0:16:29.680 --> 0:16:32.040
<v Speaker 4>I just want a four minute clip, and so it

0:16:32.040 --> 0:16:36.680
<v Speaker 4>wouldn't surprise me if if YouTube started or Netflix started

0:16:36.680 --> 0:16:40.840
<v Speaker 4>to kind of experiment with some of those you know,

0:16:41.080 --> 0:16:43.960
<v Speaker 4>short type of content as well.

0:16:44.640 --> 0:16:45.440
<v Speaker 1>Yeah, isn't that fun?

0:16:45.520 --> 0:16:46.240
<v Speaker 2>That's so wild?

0:16:46.400 --> 0:16:49.040
<v Speaker 1>But you just think about, right, because you click on

0:16:49.080 --> 0:16:51.480
<v Speaker 1>those short videos. I mean, listen, I have someone at

0:16:51.480 --> 0:16:54.520
<v Speaker 1>home that's really into it. And yeah he's above fifty,

0:16:54.880 --> 0:16:59.440
<v Speaker 1>but I mean, like the amount of stuff in velocity.

0:16:58.960 --> 0:17:02.440
<v Speaker 2>He will go through, you know, like the Instagram YouTube

0:17:02.440 --> 0:17:04.879
<v Speaker 2>TikTok Snap, those short forms are everywhere.

0:17:04.960 --> 0:17:07.120
<v Speaker 1>Yeah, right, but what do you but he's not on that.

0:17:07.160 --> 0:17:08.960
<v Speaker 1>But I just think about those short things and you

0:17:08.960 --> 0:17:10.000
<v Speaker 1>can have ads if you want.

0:17:10.040 --> 0:17:13.399
<v Speaker 2>Like the YouTube copied YouTube now is YouTube shorts and

0:17:13.400 --> 0:17:15.800
<v Speaker 2>they copied the you know, I think Snap, it's fair

0:17:15.840 --> 0:17:18.520
<v Speaker 2>to say, kind of pioneered this and then Instagram copied it.

0:17:18.520 --> 0:17:21.439
<v Speaker 2>It's all over Facebook now LinkedIn has this all?

0:17:21.480 --> 0:17:23.320
<v Speaker 1>I know, Yeah, it's everywhere. I know, I know, I

0:17:23.440 --> 0:17:25.520
<v Speaker 1>just think about, you know, how much YouTube is on

0:17:25.560 --> 0:17:32.040
<v Speaker 1>in our household. It's pretty remarkable, you know. So all right, yeah,

0:17:32.160 --> 0:17:34.600
<v Speaker 1>you're not worried, but you're not necessarily buying more here.

0:17:35.480 --> 0:17:38.120
<v Speaker 4>No, if we were at two or three percent weight,

0:17:38.200 --> 0:17:40.199
<v Speaker 4>then I would absolutely be buying. But we have a

0:17:40.240 --> 0:17:42.679
<v Speaker 4>full We have a full weight now, and if it

0:17:42.760 --> 0:17:44.919
<v Speaker 4>pulled back a little bit further again, we love to

0:17:44.960 --> 0:17:48.040
<v Speaker 4>trade around names. If we can get the opportunity, I'd

0:17:48.119 --> 0:17:51.320
<v Speaker 4>certainly consider that as an opportunity. But I don't see

0:17:51.400 --> 0:17:54.360
<v Speaker 4>us changing the core weight at five percent or so

0:17:54.840 --> 0:17:58.720
<v Speaker 4>anytime soon, particularly with the assumptions that we feel pretty

0:17:58.720 --> 0:18:02.119
<v Speaker 4>good about by twenty thirty two, with being you know,

0:18:02.200 --> 0:18:04.280
<v Speaker 4>kind of joining the trillion dollar club, because that is

0:18:04.320 --> 0:18:06.600
<v Speaker 4>a big part of what we're doing at Logo, trying

0:18:06.680 --> 0:18:09.560
<v Speaker 4>to find the names who are the next firms to

0:18:09.680 --> 0:18:12.359
<v Speaker 4>join the trillion dollar club, and that you know, there's

0:18:12.359 --> 0:18:14.400
<v Speaker 4>a few on our list that look pretty attractive.

0:18:14.600 --> 0:18:16.600
<v Speaker 2>I want to go back to the AI question. We

0:18:16.760 --> 0:18:19.480
<v Speaker 2>touched on this with keitha a little bit as well.

0:18:20.520 --> 0:18:25.439
<v Speaker 2>The ben Affleck Company are interpositive that Netflix announced it

0:18:25.480 --> 0:18:29.400
<v Speaker 2>was buying back in March. Is Netflix doing the right thing?

0:18:29.440 --> 0:18:31.840
<v Speaker 2>With AI, I.

0:18:31.760 --> 0:18:34.320
<v Speaker 4>Think they are. I mean, you know, AI is still

0:18:34.359 --> 0:18:38.560
<v Speaker 4>I think an unknown to most of the world, so

0:18:38.680 --> 0:18:41.480
<v Speaker 4>you never I think there's a lot of experimentation that

0:18:41.560 --> 0:18:44.119
<v Speaker 4>has to occur. And if you are one of the

0:18:44.200 --> 0:18:46.520
<v Speaker 4>lucky kind of companies that have a bunch of free

0:18:46.520 --> 0:18:50.720
<v Speaker 4>cash that you can experiment with different things to try

0:18:50.720 --> 0:18:53.640
<v Speaker 4>to see what resonates and then do a lot more

0:18:53.640 --> 0:18:56.320
<v Speaker 4>of it once you have some good data that that

0:18:56.560 --> 0:19:00.000
<v Speaker 4>just kind of distances you your firm from all the peers.

0:19:00.160 --> 0:19:02.840
<v Speaker 4>So I do think AI is going to continue to

0:19:02.840 --> 0:19:04.960
<v Speaker 4>be a part of this to be a part of

0:19:04.960 --> 0:19:08.480
<v Speaker 4>this industry. And you know, Netflix is in the cat

0:19:08.520 --> 0:19:11.240
<v Speaker 4>bird seat to be able to use their balance sheet

0:19:11.280 --> 0:19:13.520
<v Speaker 4>to be able to figure out how to do it.

0:19:13.800 --> 0:19:16.840
<v Speaker 4>And you know, we do expect good share buyback activity

0:19:17.119 --> 0:19:20.080
<v Speaker 4>with A They can do all the content they need

0:19:20.119 --> 0:19:22.679
<v Speaker 4>with twenty billion or less a year, which means that

0:19:22.720 --> 0:19:25.200
<v Speaker 4>the more they grow subs, the more they can buy

0:19:25.240 --> 0:19:27.880
<v Speaker 4>back shares and reduce the float, and that helps earnings

0:19:27.880 --> 0:19:30.119
<v Speaker 4>for share growth. And there's just a lot to like

0:19:30.560 --> 0:19:34.000
<v Speaker 4>about the core business and a few things that could

0:19:34.040 --> 0:19:36.200
<v Speaker 4>be you know, big optionality around the core.

0:19:37.040 --> 0:19:40.600
<v Speaker 1>Eric really appreciated Eric Clark he's Acuves Global Advisor CIO

0:19:40.760 --> 0:19:44.800
<v Speaker 1>Logo ETF Portfolio Manager, joining us once again from San Diego.

0:19:44.840 --> 0:19:48.720
<v Speaker 1>As we've mentioned, Netflix his second biggest holding in that

0:19:48.840 --> 0:20:00.160
<v Speaker 1>Logo ETF