Out Fox The $treet

  Spotify reported solid Q3'21 earnings with revenue growing 27%. The company is poised to build a second strong revenue stream via Ad-Supported revenues. The stock is cheap compared to peers at only 4x '22 sales targets. Looking for more investing ideas like this one? Get them exclusively at Out Fox The Street.  Learn More » Spotify Technology  ( SPOT ) continues to build on a strong business shift from a pure focus on streaming music where profit margin were low. The company is one of the few media companies shifting towards ad revenues and away from premium subscription services, to open up a massive digital advertising opportunity. My  investment thesis  remains very Bullish on the stock following weakness earlier this year. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Netflix (NFLX) remains on a path to generate record subscriber additions for the year which should send the stock back to previous highs. As the year progresses, the free cash flow burn will become a huge problem as new streaming competition from Disney (DIS) and WarnerMedia (T) comes online.

Activision Blizzard is down nearly $40 from the highs near $85. Their prime Activision and Blizzard game franchises have a whole mobile world waiting for expansion. The interactive entertainment giant has a strong moat evident by 30% operating margins. The stock trades at 17x 2019 EPS estimates and is likely to dip further based on the CFO firing. Like most stocks lately,   Activision Blizzard   ( ATVI ) has seen the stock take a substantial hit. Some of the $40 hit is justified based on disappointing numbers, but the game developer is riding a strong industry for the next decade to build an interactive entertainment giant without the large content costs of other entertainment players. Read the full article at Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details .   

The streaming video wars should reach peak competitive levels in 2019. Netflix enters the competition while burning cash at a $3 billion annual rate. The entry of the tech giants leaves Netflix at a balance sheet disadvantage with net debt approaching $10 billion in 2019. The stock is due for another rally in early 2019 for investors to fade. The planed addition of several tech giants along with traditional media players into the direct-to-consumer streaming video segment should expose the biggest weakness of leader  Netflix  ( NFLX ). The problems with developing a leading market position without building up a pristine balance sheet is that competitors can easily attack the company's weakness and ultimately prevent a player like Netflix from achieving the massive cash flows and profits warranting a market valuation of $132 billion. Read the full article on Seeking Alpha.

iQIYI expects to go public next week. The Chinese online video leader seems overlooked by the market in comparison to other high-profile IPOs. The proposed offering price is attractive and the focus on Chinese tariffs could hold back the IPO excitement. As the market focuses on streaming video and music services in the U.S., a fast-growing opportunity is opening up in China. The potentially under the radar IPO of  iQIYI  ( IQ ), majority-owned by Chinese search giant  Baidu  ( BIDU ), provides an opportunity as the market focuses on more high profile public offerings and Chinese stocks face tariff related weaknesses. Read the full article at Seeking Alpha.  Disclosure: Long BIDU. Please review this disclaimer page for more details. 

Summary DISH Network begins offering limited pay-TV services online. The satellite TV operator has a first mover advantage, but the service doesn't appear to offer anything proprietary that couldn't be replicated or enhanced. Content providers with the best content will benefit the most from these scaled-down online packages that feature only top channels such as ESPN and TNT. DISH Network (NASDAQ: DISH ) made the interesting announcement last week that it is joining the over-the-top revolution for pay-TV services. The company follows recent announcements by Time Warner's (NYSE: TWX ) HBO and CBS (NYSE: CBS ) to offer subscription services online to compete with Netflix (NASDAQ: NFLX ) due to the increasing amount of consumers that are cutting the cord. Read the full article at Seeking Alpha. Disclosure: Long TWX. Please review the disclaimer page for more details. 

 Summary Netflix reported Q314 earnings. Investors should sell the stock trading at 100x current earnings. The higher content costs without the subsequent revenue was anticipated as a major problem for the stock going forward.  Netflix (NASDAQ: NFLX ) reported Q314 earnings and provided guidance for Q414 that sent the stock down nearly $100 for a roughly 20% loss. The leading Internet TV provider continues to push forward with new original content that will pressure margins and especially free cash flow over the next couple of years without any major benefits from additional revenue per subscriber. Under that model, Netflix will undoubtedly add more subscribers, but the big question is the ability to cover those costs that continue to spiral higher. Read full article at Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details.

Historical research from Schaeffer’s shows that stocks entering the Nasdaq-100 shouldn’t be bought at that point. Typically the best stock to buy is the one leaving an index such as the Nasdaq-100. In the normal scenario, a company that leaves such a big index has faced a couple of weak years and the exclusion from the list places extra pressure on the stock. In essence, a catalyst that more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

While performing research for an article on Netflix ( NFLX ) , the constant discussion on original content made me wonder about other content generators. Especially when considering the massive valuations of entertainment content companies. As an example, nonfiction content creator Discovery Communications ( DISCA ) has a market value of $28B and The Walt Disney Corporation ( DIS ) is worth $111B. Is it possible for user generated content to ever create companies of that size? All of those firms are vastly different from a focus of distributing content in the case of Netflix to the creating content for a vast network of cable channels at Discovery to creating films and TV shows at Disney. In general, all of the companies are involved in the creation and distribution of entertainment content that has historically had significant value creation. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more deta...

This article is the second part of a series focused on the stocks being removed from the Nasdaq-100 Index. The first part highlighted the stocks being removed and the research behind the benefits of investing in these stocks. This one will focus on analyzing which stock might provide the best investment opportunity. Valuation Metrics One way to ascertain the stock that provides the best value at the current levels is more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Netflix (NFLX) has been a favorite short target of Stone Fox for a while. Luckily we've never engaged in more then short term short positions on this stock as its been one of the bright performers during this recession. The recession and high gas prices has in fact likely helped business as consumers have migrated to the cheapest forms of entertainment - DVD rentals via mail. It saves gas and eliminates late fees all for a low monthly subscription fee. Getting DVDs via the mail is clearly a doomed business as even highlighted by the CEO in this Wall Street Journal interview . It's actually pretty incredible that the business model as done so well considering the huge competition in the DVD rental space and the fact that renting by mail was actually seen as a step back for that market. After all, why wait days for a item via the mail when you could just stop at the local store and pick up whatever you wanted and the price of $2-4 per rental didn't seem overly costly. That...