Podcast Summary
Strong Q4 for Alphabet with YouTube and Cloud success: Alphabet's YouTube and Google Cloud saw significant growth, with YouTube reaching $15B in ad revenue and Cloud ending the year at a $10B run rate, contributing to higher-than-expected profits.
Alphabet, the parent company of Google, had a strong quarter with higher-than-expected profits, driven in part by the success of its YouTube and cloud businesses. These segments, which have previously been grouped under "Other Bets," saw significant growth, with YouTube reaching $15 billion in ad revenue and ending the year at a $3 billion annual run rate for subscription and non-advertising revenue. Google Cloud also performed well, ending the year at a $10 billion run rate, and growing at a faster rate than Amazon Web Services. However, the company struck a defensive tone regarding the "Other Bets" segment, which brought in $659 million in revenue but lost over $4.5 billion. Overall, Alphabet's Q4 results suggest that it has no plans to spin off YouTube and Google Cloud from Google anytime soon, and that these businesses are becoming increasingly important to the company's bottom line. For investors and professionals looking to improve their communication skills, the Think Fast, Talk Smart podcast, mentioned in the intro, offers valuable insights and tips from experts on effective communication in various situations.
Alphabet's YouTube Revenue and Disney's Streaming Success: Alphabet reported a significant YouTube revenue run rate but faced questions due to lower-than-expected numbers. Disney had a strong start with Disney+ and offset losses in streaming with diversified revenue streams.
While Alphabet's earnings report showed a significant revenue run rate for YouTube, the defensive tone from the company and lower-than-expected revenue numbers led to some questions. However, the acquisition of Fitbit and Disney's strong start with Disney+ indicate potential for growth in new areas. Alphabet's CEO, Sundar Pichai, had previously shown interest in YouTube's revenues, and the company reported a $15 billion run rate. Despite this, analysts were expecting higher numbers, leading to some debate about YouTube's revenue potential. On the other hand, Disney had a solid start to its fiscal year, with impressive subscriber growth for Disney+, Hulu, and ESPN+. The company's diversified revenue streams, including its theme parks and media unit, helped offset the losses in its streaming business, which is expected to continue for a few years as Disney invests in content. Overall, while there were some surprises in both reports, the potential for growth in new areas and the value of diversified revenue streams were key takeaways.
Disney+ needs new content to keep subscribers engaged, while Pinterest impresses with revenue growth: Disney+ requires fresh content to prevent subscriber churn and price increases, while Pinterest continues to see strong revenue growth but struggles to effectively monetize internationally
Disney+ needs to focus on producing new and engaging content to keep subscribers engaged and potentially prevent future price increases. Despite having popular content like Disney and Pixar movies and shows, the platform's lack of fresh content could be a concern for some users. On the other hand, Pinterest had a strong quarter with impressive revenue growth, particularly in international markets. However, monetizing their platform effectively, especially for their large international user base, remains a key challenge for the company. Despite its attractive advertising-driven business model and growing augmented reality and direct consumer revenue streams, Pinterest's $15 billion market cap may be out of reach for potential acquirers like Alphabet for now. Ultimately, both Disney+ and Pinterest face unique growth opportunities and challenges in their respective industries.
Success for Activision Blizzard, Challenges for Take-Two and Casper: Activision Blizzard thrived with Call of Duty's success, while Take-Two faced tough competition and Casper struggled post-IPO. Pinterest's role as a purchasing platform makes it a valuable acquisition target, and Twitter reported record revenue growth.
Activision Blizzard had a successful 4th quarter with better-than-expected profits, driven by the success of Call of Duty: Modern Warfare and Call of Duty Mobile. Meanwhile, Take-Two Interactive missed estimates due to tough competition and the impact of last year's blockbuster release, Red Dead Redemption 2. Casper, the mattress company, went public but struggled after its IPO, facing intense competition and high marketing costs. Pinterest continues to be a platform where people make purchasing decisions, making it an attractive acquisition target. Twitter reported its biggest quarter ever for revenue growth.
Twitter's solid growth not enough for investors: Twitter's impressive 21% daily active usage and 11% revenue growth were overshadowed by investor expectations for more, while Chipotle's 13% same-store sales and 18% revenue growth continued to impress, with digital sales up 78%.
Twitter had a strong quarter with impressive growth in daily active usage and revenue, but the market's reaction was surprising given the company's past performance. The numbers were solid, with 21% year-over-year growth in daily active usage and 11% top-line growth, but investors seem to be looking for more. Twitter's important audience of journalists, politicians, and celebrities keeps the platform relevant, but the company may need to do more to keep it engaging. Meanwhile, Chipotle had an impressive quarter with over 13% same-store sales growth and 18% revenue growth, driven by operational excellence and innovation. The company has shown respectable growth for eight consecutive quarters, with digital sales up 78% and now accounting for 1 in 5 sales. Despite the success, Chipotle has no current plans to introduce breakfast, but they may be ready to do so when the time is right. Both companies have shown strength in their respective industries, but Twitter may need to do more to satisfy investors, while Chipotle continues to innovate and grow.
Yum! Brands' Struggling Pizza Division and SEC's New Proposed Rules: Yum! Brands' pizza division, Pizza Hut, underperformed, hurting KFC and Taco Bell's stocks. SEC proposes new rules making it harder for investors to challenge corporate management on ESG issues, causing controversy.
Yum! Brands, the parent company of KFC, Taco Bell, and Pizza Hut, had a lackluster end to their fiscal year, with KFC and Taco Bell reporting positive same store sales, while Pizza Hut continued to struggle. The competition in the pizza market is fierce, not just from traditional rivals like Domino's and Papa John's, but also from food delivery apps that offer a wide range of restaurant options. Pizza Hut's poor performance is dragging down KFC and Taco Bell's stocks, leading some investors to question whether it would be better for Yum! Brands to divest from Pizza Hut. Meanwhile, in the world of investing, the SEC is proposing new rules that would make it harder for investors to challenge corporate management on environmental, social, and governance issues. These rules have generated significant opposition, with the Democrats supporting the current system that allows financially sophisticated investors to make their own decisions on subscribing to research and making shareholder proposals, while the Republicans are pushing for more regulation. The outcome of this debate could have significant implications for the future of capitalism and investors' ability to hold companies accountable.
Fake comments influencing government decisions: David Solomon announced Goldman Sachs will only take companies public with diverse board members, citing better IPO performance. Disney+ reported 28M subscribers after 3 months.
There has been a surge in fake comments being submitted in response to government proposals, particularly in the areas of shareholder votes on CEO pay and climate change. These fake comments, which have been used to influence decision-making, have come from fake groups and individuals, some of whom have even admitted to not knowing they had signed the comments or having a connection to K Street lobbyists. This issue was the focus of a hearing in Washington, D.C. on Tuesday. In other news, Goldman Sachs CEO David Solomon recently announced that the investment bank will no longer take a company public unless it has at least one diverse board member. Solomon cited data showing that IPOs of companies with at least one woman on the board have performed better than those without in the past four years. Goldman Sachs' decision is seen as a market-driven response to the growing number of diverse graduates from business schools and executives. Meanwhile, Disney reported over 28 million subscribers to its Disney+ streaming service just three months after its launch, a number that did not surprise analysts given the company's strategic approach to the market.
Disney's focus on television content: Disney's strategic shift to prioritize TV content, like classic Disney Channel series & franchise adaptations, is a smart response to the golden age of TV & declining box office revenue.
Disney's strategic shift to prioritize television content, including the revival of classic Disney Channel series and the successful transition of franchises like Star Wars and Marvel to television, is a smart move in response to the current golden age of television and the declining importance of box office revenue compared to merchandising. Additionally, marketing's increasing influence on movies turning them into infomercials has led to the emergence of lower-budget, high-quality content on television that doesn't need to make huge box office numbers to be successful. This trend is evident in the success of shows like The Mandalorian and Birds of Prey, despite production challenges like delayed merchandise releases. Overall, Disney's focus on television content is a wise investment in light of the changing media landscape.
Oscars: Surprises and Strong Contenders: Joaquin Phoenix, Renee Zellweger are favorites, but Adam Driver, Saoirse Ronan, 'Parasite' and '1917' could surprise in Oscars
The Academy Awards are known for their surprises and keeping the results a secret, as seen in the unexpected ending of the first episode of "The Crown." Joaquin Phoenix is expected to win Best Actor for his committed performance in "Joker," but Adam Driver's varied performances throughout the year made him a strong contender. Renee Zellweger is the favorite to win Best Actress for her committed portrayal of Judy Garland in "Judy," but Saoirse Ronan's dazzling performance in "Little Women" was also noteworthy. The race for Best Picture is between "1917" and "Parasite," with "1917" being the favorite due to its historical epic status and technical achievement. However, "Parasite" could make history as the first non-English language film to win, and Bong Joon Ho could win Best Director for it. Disney's dominance in the Best Animated Film category may be challenged this year with strong contenders like "Toy Story" and "Klaus."
Investment opportunities in real estate and technology sectors: Consider Empire State Realty Trust (ESRT), a REIT with a strong office portfolio and high yield. Also, watch Limelight Networks (LLNW), a small cap digital content delivery company using edge computing for faster content delivery.
There are some intriguing investment opportunities in the real estate and technology sectors, as discussed on Motley Fool Money. The first investment to consider is Empire State Realty Trust (ESRT), a Real Estate Investment Trust (REIT) with a strong portfolio consisting mainly of office space and a flagship asset in the iconic Empire State Building. REITs, by law, distribute 90% of their net income to shareholders, making them an attractive option for investors seeking higher yields. Another stock to watch is Limelight Networks (LLNW), a small cap company in the digital content delivery business that utilizes edge computing to reduce latency and improve consumer experience. The market is crowded, but Limelight Networks aims to stand out by delivering content quickly and vibrantly. For more stock ideas and recommendations, check out The Motley Fool's flagship service, Stock Advisor. And if you're interested in joining The Motley Fool team, visit careers.fool.com for available job opportunities.
Moody's: Crucial Credit Ratings Firm with Growing Profits: Moody's, a dominant credit ratings firm, has seen significant growth and high valuations. Considering potential pullback before earnings, it's a potential watchlist addition.
Moody's, a leading credit ratings analysis firm with a market share over 80% alongside S&P, has been a profitable investment due to its high profit margins and ability to increase prices for its debt ratings. For investors in debt instruments, Moody's ratings are crucial as most require them before purchase. Although the stock has seen significant growth, with a 70% increase over the past year and sales at 30 times earnings and 11 times sales, a potential pullback may be worth considering before their upcoming earnings report. While Moody's doesn't have an index like S&P, they do have a growing Moody's Analytics business. Investors should keep an eye on Moody's as a potential addition to their watchlist.
