Welcome back to the Joseph Carlson show, we have a lot to get to in this episode. First of all we have Advanced Autoparts today and you can see it's down 33 percent 33% in a day after its earnings and they say that it's also cutting its dividend by 80%. So the dividends is basically
gone. We're going to be looking into this earnings report Reading what the CEO of the company actually says about it. And seeing if this has a greater impact on the overall Auto industry, is this going to hurt companies like Tesla is It going to hurt to AutoZone, we're going to be looking at that as well. We also have some other news. We have some fun news with Netflix, not so fun.
If you're one of the ones who are, who are sharing passwords Netflix, finally launched their password, Crackdown in the US, and there's reports that it seems to be working. So there's some third-party data that's gone in and seen what this is doing to people, canceling or people signing up. We're going to be looking at the data there. As Netflix is one of my largest Holdings, we also have an interview. I want to get two of Mark
mahaney. He's someone that I follow with my growth portfolio because he is a longtime growth investor specifically in Tech. He's almost like the Peter Lynch of tech companies. He looks for the fast-growing, fast-moving tech companies and he has his three picks. So we're going to be going over and doing analysis, on the three companies that he now says are a bye. And then finally, we also have to do a portfolio update. On the story fund will be looking at this.
I'm going to be going over the performance this month. Comparing it to spy and the Q and we'll be looking at that as well. So without further Ado, we have a lot to get to a lot of news to cover. Let's go ahead and get started. So let's go ahead and start off with a portfolio update. For those of you new to the channel and I appreciate you for joining because we have literally thousands of new people join every single month. We've gained over 3,000 subscribers and the past 30
days. So, welcome all of you that that I've joined along, just a reminder, we do things a little bit differently here. A lot of YouTubers and financial content creators take stalkers fin. Twitter's whatever you want to call them. They don't really show their whole performance for, for lack of a better term. They're just opaque. They, they might talk about stocks, they might get excited about them. They might Heat make huge Declarations of what a stock is going to do.
But you rarely see one that shows their total performance over long periods of time. And that is precisely what I do here with my channels. I don't just show a snapshots or little slices of my current Holdings. I show my entire performance with every single stock that I've ever bought. Bought or sold for the lifetime of the portfolio, every single week. And that's what you're seeing here. This represents my performance in this portfolio since the
beginning. Now, it's in the red right now but it's actually not that bad because I started this portfolio right around 20 21 which was one of the worst times that you could start a portfolio. The market has gone down since then. So right now I'm down. Eight thousand. Nine. Hundred dollars nine percent money waited.
If I look at this, There's the glass half empty glass half-full way of looking at it. I feel very good about this performance because just a about a year ago, one year ago I was - forty thousand dollars in this portfolio. That was gloomy. That was a little bit depressing when I'm running a public portfolio and I'm doing this in front of a lot of people and things aren't going your way. Netflix is plummeting Amazon's not playing out it's like every stock that I'm picking is going down.
That's not a fun thing. But I've done the research on these companies, I still feel the same way I do when I first bought them and they have been on an absolute streak. They've been on a tear they've been really having a major comeback. They went from - 40,000 to now - 9,000 and we're just a bit aways from going back in the green, a couple more good days. And this portfolio will be in the green overall. When I compared against the S&P 500, this is what it looks like overall.
So We have the whole timeline here and a lot of people ask, why don't I compare this against the queue or whatever different index for me? The S&P 500 has always been the standard. It's what Warren Buffett compares to Cathy wood. It's what every major hedge fund compares to is the S&P 500. That's the reason I chose it. What I plan on doing is at the end of five years, I plan on adding in a bunch of different indexes, as well as the QQQ.
So I will be comparing this against other things as well. When I look at this, we can see that over. The past couple of months. The story fund has been like a rocket just rocketing backup, really closing in the Gap. We were major gap between my performance and the S&P 500, and now it's just a minor Gap. We've almost closed the Gap completely to put this in perspective in the past. 30 days. This portfolio is up. Let's take a look here, almost 13%.
So sixteen thousand nine hundred dollars in the past 30 days. When we look at this, when we compare against the S&P 500, we can bring it up. Here we go to the past 30 days, performance spice flat. So, the S&P 500, The Benchmark is flat. And the story fund is up 13 percent over the past 30 days, that's the Gap. Being closed. When your portfolio goes up 13 percent over. The index that you're comparing to Over The Benchmark, that's closing the Gap and even more.
So even if we compare against the QQQ, over the same time, period, That's only up seven point eight percent. So we still outperform the QQQ over the past 30 days. Most of that has been led by a couple companies here, primarily Amazon and Netflix they have been on a roll Netflix is up five thousand four hundred dollars. Twenty percent Amazon is up 13.5% even Google which I went heavy into. Remember I sold a lot of Salesforce and I went into Google.
This one's up 13.5% another three thousand dollars. So these three companies Companies, Amazon Netflix and Google have really, really done well, but the biggest one that's really caring. The portfolio right now is Netflix. This is done phenomenal. Netflix is up so much over the past year. A lot of people are talking. They're talking about Nvidia and how, how great nvidia's done. That's true. And video has been shockingly. Good.
We look at the performance and videos up, 113 percent over the past trailing gear. We look at Netflix here. Netflix hasn't done too bad over the past trailing year, over the past year. It's up 103 percent. So this company just hanging on to it and doubling down on. It really has helped out the performance and it continues to and I'll be talking more about that one later as we get into the password. Crackdown. But this is what the portfolio looks like over the past 30
days. We have the losers right here. The more value oriented companies Crocs. That one is down, 10%, but I have a just a watcher position in it. It same with Berkshire, Hathaway pool Corpus down, 10% $200 smaller position, but I'm still very bullish on pool Corp, we have every other company, all the tech names, make them big gains, big gains. The biggest winner over the past 30 days of my portfolio, is Netflix by about double. So this one has really helped
out the portfolio. It's now position size of 35,000 dollars. It's a lot of money to be invested in this company. I've remained very optimistic about this company over. Optimistic and I want to go into that a little bit more later. But that is a performance over this month. Right now, we're down 9,000, and I still think we can pull out of this and beat the S&P 500. That's the goal. And I'll continue to track this
portfolio and share it publicly. Now, let's go ahead and get to the shocking news here about Advanced Auto Parts to me. This seems like an AutoZone company is basically the same type of business model. So if we go to Advanced Auto Parts, let's see where it's at right now. Maybe it's recovered a bit. Nope, this company still down.
34%, we have a note here, saying the Advanced Auto Parts Shares are trading lower after the company reported less worse, than expected, q1 Financial results, and cut the financial 23 earnings per share on Revenue guidance below estimates. So reported bad, earnings last quarter and then it cut guidance and Advanced Auto Parts is an auto parts company. Simple, simple deduction, here are car companies in trouble. That's we're going to be looking at this company.
Overall has steady Revenue growth, the free cash flows, not really growing over the past decade, actually it's pretty flat. The sheer counts going down. They're probably trying to follow AutoZone but the share price has just been pummeled. You're at a date, it's down 49 percent past year, it's down 59%, this is an astonishing. Just drop in price. In fact, this is the lowest by far and five years down. 40% in five years, company's, not doing
great. Let's take a look at AutoZone and see how that one's holding up with this news autosomes down 5%. I thought there'd be some sympathy trading down, there is a little bit but I thought there might be a little bit more. Seems like AutoZone may have a better business model. They may have a more resilient business to some degree because it's odd to see one of them down 30% and this one only down four percent but we'll see.
What AutoZone does when we look at the actual report here, I want to bring up the actual earnings report and we have it right here. This is from the actual CEO of the company not from CNBC, or their interpretation. So, let's just go ahead and read what the company themselves are
saying about the situation. I want to thank our Advanced team members and independent partners for their continued hard work and focus on serving our customers while we anticipate, the first quarter would be challenging our results
were below. Patient's, net sales grew one point, one point, three percent in the quarter, our operating margin rate of 2.6% in the quarter was well below expectations due to higher than planned Investments to narrow competitive price gaps in the professional sales Channel, as well as unfavorable product mixes usually unfavorable product mixes. When I look at what that
actually means, that's a fancy. Corporate way of saying, that people are trading down when they come by the really hired. Name brand stuff, the more expensive stuff, the premium stuff. They don't pick that they pick the generics. So it's like if you go, you go into Walmart and you have the normal brand of Oreos and then you have the good value. Walmart brand of knockoff Oreos, unfavorable product mix would be people choosing the lower end breads. That's what that means.
Typically, now he continues on here and it actually gets worse. He says that we remain focused on improving inventory, availability, while sustaining competitive price targets to improve. Top Line Sales, we expect the competitive Dynamics, we face in the first quarter to continue resulting in a shortfall to our 2023 expectations. I don't know if this is a good thing or a bad thing for Auto Zone in the other companies. This may be an admission that
they're gaining market share. They're really, they're competing really well, it might be that the entire industry is doing poorly. He says that we have reduced our full-year guidance, and the board of directors made the difficult decision to reduce our quarterly. Early dividend, when you have a company and let's take a look at this. Let's see how long that they've paid the dividend. We don't even have a dividend ago. This is Auto Sound.
Let's go back to AP. Let's take a look at the dividend of this company so they've been paying the dividend from 2006-2008 10, 11, 12, 13, 14, 15, every single year. They've been paying a dividend since 2006. They grew it tremendously over the past couple of years. The dividend growth rate is 40%, so they grew as fast as they could, and now they're backtracking and cutting the dividend Warren Buffett has said when a long-term dividend pair. What's their dividend? It's a terrible.
Terrible indicator for the company horrible fundamental indicator. Anytime that happens, it spells, bad news. He does not like seeing that happen in addition, in connection with my pending retirement. You goes on explaining that there's going to be other people taking his role. So he's also retiring as a CEO but that's it. We have customers trading down from premium Brands to lower end Brands. We have competition way. Weighing on them, that's not good.
We have a dividend cut and then we have them also having margins. Well, below their expectations just in the first paragraphs here. I think the 30% sell-off is probably warranted. This company had nothing but bad news to share for investors. So how does this affect the rest of the Auto industry companies? Like AutoZone car companies, popular Investments like Tesla. I'm not sure the ongoing impact. This is going to be on the rest of the industry. When I look at any company.
That's exposed to Auto. We can look at Ally Financial here. If I can type it in correctly, Ally, financials heavily exposed to Auto and the loans that they give out. This company is also done pretty horrible over the past year. This has been one that I've avoided specifically because I didn't like their balance sheet,
so exposed to Auto industry. And it's the same thing with really any company that has this level of exposure to a highly cyclical capital-intensive recession, non-resistant Astri, like the Auto industry. I think it's very dangerous. The games that investors play investing in these companies and I think you really have to know what you're doing. So weather effects companies like Tesla. I think the effects will be very minor.
I don't see this as a big thing but I still believe that Tesla is going to be susceptible to The Wider Auto industry. So I think there's going to be some volatility there.
It's still not a company that I'm looking at unless I can get it at a much more attractive valuation than what it's trading at. So, I'm not going to be buying the dip in these Auto Parts companies or Type of auto company to begin with, for me, it's not the most attractive industry to be in. Now, moving on from that, we have other news here that Netflix has finally done their password sharing Crackdown in the US, the time has finally
arrived. Now, let me just say this when I talk about Netflix stock and my investment in it, I have a fairly large investment in it now as its recovered 100%, but this has been a company that I've been incredibly bullish on, for a long period of time. I've explained the thesis on it, And from what I can tell, the way that I fill, as a Netflix investor is I feel like I'm stranded on an island by myself.
I feel completely alone and isolated it's like nobody else is invested in Netflix. I'm the only one. So if you're invested in Netflix, let me know. Because so far, I have trouble finding anyone else. That likes this investment regardless, I'm going to stick with it. I think a Netflix will prove out to be a very profitable. Free, cash flow, positive
dominant. Benny. And I think that things are working out that way the thesis largely is working out over time and this is one more step that Netflix pivoted, which they frequently do that. I think will be a net benefit. Now a lot of you in the u.s. probably just received emails saying that now is the time you can't keep sharing mom and dad's password.
You got to get your own. And for a lot of people that's frustrating, when you've previously gotten something for free and now you have to pay for it. That's never a fun thing. So, A lot of the, the gut reactions, the impulsive reactions of people having to pay for Netflix. Now, after sharing it for free, for 10 years is one of total anger, resentment people saying that they're going to pirate pirate shows, right?
They're going to go online and torrent all the shows or they're going to, you know, never use Netflix again and they hope the company is torpedoed and does terrible. That's the reaction, I see online as an investor. I look past that because I think that Netflix With the price tag associated with the passwords, it offers tremendous ongoing value to its customers and its customers love it.
When I compare it against other streaming services, most streaming services have two or three shows on it Paramount you basically have Yellowstone with peacock. You basically have the office and Parks and Rec with HBO Max or just max. Now that's the only other one that I think has a decent offering. Netflix is the one that has all the shows on it has so much. Content for both children and adults, adults, and it continually refreshes the content at a much faster rate.
So when I compare the actual price tag with the offering, I still think it has by far the best value proposition even when you're not able to share passwords, I've also maintained that this password sharing Crackdown is going to be a beneficial thing in the end for Netflix. It'll go through a short term pain, but I think that Netflix is going to absolutely come out. On top because of this. And I want to explain the math behind that very, very quickly. This is so simple. Very simple.
Very simple logic to follow. We have the password owner, right? This is the person paying for the account. So, with a password owner and then, we have a couple people will call them PS4 password. Share. So we have, let's say three people and these three are all PS, their password shares. So right here, we have the owner paying for the account maybe fifteen Seventeen dollars a month. And then we have three people that have the same logins that they've been using and enjoying the account.
Let's say that this person is really unhappy with the prospect of paying an extra seven dollars per month. For each one of these shares. So this person out of resentment and anger and impulse, cancels their password, they canceled it. Netflix account, it's no longer active and they say take that Netflix. I want to send you a message that this isn't right? What happens in this situation, it's not just them, that loses
their Netflix account. It's everyone all four people in this situation, no longer have access to Netflix. Now, in my opinion for people individuals, all living in different places that have all been enjoying Netflix for years, suddenly not having access to it, do I Leave that at no point in the future, none of them will ever sign up for Netflix again.
No, I don't, I think at some point in the future, one of them is going to sign up. In fact, I'm willing to bet that at least two of them will and if just two of them sign up, then the amount of Netflix subscribers has doubled. So ultimately, I don't see how this can't be a net benefit for Netflix because as password owners canceled their accounts, it leaves so many more people that now no longer have access to Netflix that are Now, prospective customers of the
company. So looking at the password, Crackdown the simple math, the simple logic shows that this is going to be a success. Moreover, we have Netflix, which is a data driven company that has tested this in multiple countries in South America, and in Canada. So they've already ran extensive testing on this and have proven out the thesis that this is going to be a net benefit. They're not dummies that are going to torpedo their business with this move. So I think Overwhelmingly.
Even though it does feel a little risky and a little scary because it might cause some bad blood with some customers. I really think that this is over all going to benefit Netflix as a company. Now let's go ahead and read the news because we actually have some data here from third-party analysis. It says that according to this third party analysis, so this is not official data. This is third party data analysis websites that try to
gain insights on this. They say that fewer Netflix subscribers in the US and you Okay, are churning or leaving Netflix compared with subscribers in Canada. So u.s. people are canceling at a lesser rate than in Canada where the password Sharon Crackdown rolled out earlier. According to Market Research. Yep. It data where the they've been tracking the launch, this Trends suggest that Netflix is management.
Quote, has been able to successfully improve the user experience and communication relative to their initial rollout. Remember Netflix wanted to delay? The release Out in the u.s. so they can improve it. It seems like those minor changes made a big difference because people in the US are canceling at a much slower rate. Another interesting trend is that new plan signups have increased in the US, as a result of the clamp down. On account sharing, Netflix is
giving account holders. The option to pay to add additional users to their existing plans, but it appears that more us users instead are opting to set up new accounts of their own at least compared with the Nadine users who quote maybe most generous with their plans. In terms of adding other paid users. This is really funny to me, the Canadian users are more generous with sharing their accounts,
then the u.s. users. So we actually have official certified data here from third-party analyst data aggregators that are saying that literally Canadians are nicer than u.s. when the US citizens have to pay more to share their account. They say, you know what? Go get your own. I'm not paying an extra seven dollars per month. For you go, get your own account and Canada. They just add on the extra, seven dollars a month and pay for the person using the
account. So we have actual data there, that Canadians are nicer than US, citizens signs of the initial success. With the broader password sharing Crackdown seem to have helped Netflix talk recently with shares up 9.5 percent in the past two full trading sessions. So this data is come out. It's helped out the stock and Netflix still is headed in the green even today. It's up a little Bit it's up to almost 400 dollars per share and where I believe Netflix will be
over the next couple of years. I think the stocks going to be at 700 to 800 dollars per share. So I think we're going to see it double again because of the cash flows that it has. I think the company will exercise much more operating leverage than we have priced into the stock. But that's a little bit of a, an outsider thesis time will only tell how good the company actually does for right now.
I'm still holding my shares. Now, moving on, we have Mark mahaney with his three Tech stock picks. That evening star the best investments for this year. Let's go ahead and dive into what he has to say that it's going through first is this reals monetization they successfully. This first one is meta borrowed from or stole from Tick-Tock second is.
They've got this, click to message product that's out in the market that's doing well, 10 billion Avenue Revenue, run rate and third is I think they've just been able to recapture a lot of the advertising signal that they lost when Apple went through its privacy changes. So, you're going to have a nice recovery in a revenue growth as You go through the year.
It's already started to accelerate actually faster than any of the other AD platforms because of these products like those changing their name to Metta the wrong move. Yes. I actually think it was and I think there is one of those things that they're going to regret. I think they already do regret it. But yes, it will. If you were to talk to employees of meta or Mark Zuckerberg, I don't think you'd say that it was the wrong move because
Facebook had it had a drag. It just drag down other brands if they tried making Oculus and it was tied to Facebook. A lot of people, their image of Facebook is that it's kind of old and outdated. So they felt like it was this brand name a drag and they needed to get away from that and meta. Resembled a fresh start. Something new. And the focus on the metaverse was just part of that, but they would say the bigger more important thing was moving away from the Facebook name.
They actually had a term for it internally. I think it was called the Facebook brand tax write, it was a tax on everything they did. Did it just slowed it down a little bit? Was I Thinkin also investors, kind of told them that too because the lot of the market
cap was taken out yet. A lot of people sold the stock last year for good reasons, but one was this excess focus on the metaverse, they should be investing in a metaverse but maybe more to the tune of five billion rather than 15 billion investors would love to see them cut back on that. If they announce that at the shareholder meeting today would be a positive. If when I looked at this in 2021, Facebook was much higher than it was today or it is
today. They were going headfirst into the metaverse and the metaverse was Thing, incredibly unproven and I don't like it. When companies spend an enormous amount of their cash flows in something with an unknown return on Capital, you're basically throwing tens of billions of dollars into something. The return you're going to get, who knows? Maybe it will be good. Maybe not in most cases, these type of trendy things, like the metaverse do not good, they don't give good returns, they
usually don't. So I saw that as a pet project of Mark Zuckerberg. Something, he personally liked that he was using an enormous amount of The funds of the company to fund at the expense of the shareholders because they had no control in voting rights. Now, Zuckerberg has said that, he's he's cooling down on that a little bit, he's focusing on costs. He's doing more things to appeal to Wall Street because his company got in trouble. The stock price going down, 70% investors, being Furious.
That was a wake-up call. So he pivoted hard. The stock has recovered a bit but I agree. I think that he focused way to much on the metaverse, he should have done that gradually. Not made it all of a sudden, the biggest Focus ever for Facebook announced that and change their name back. Yes. But I don't think that's going to happen. I don't think so. Either, that would be too much of an admission. Yes. No new Coke for them. Yes. That's right. What's number?
Two to Uber? You got three value cabalists here so we like it $75 price Target. First catalyst is they're going to reach finally Gap. Earnings status. Going to start actually generating positive Gap. Earnings. Secondly, as we think they'll start buying back stock and third is Is that we think they'll finally reach the metrics needed to be included in the S&P 500. And so I think sometime in 2024, you can have a new addition, it's going to be Uber normally, that's a good Catalyst for
stocks. Well, that's an interesting pick. I have not looked at Uber for some time. Let me bring it up on qual term here. Let's go. Take a look. I want to see what, who buries up to in the financials. So we look at over here, the company's Revenue has flattened out a little bit, that's fine. We look at the cash flows and it is headed. Profitability. I like seeing this trend line, we see years of it being - they're competing, they're going
for market share right there. A company that's trying to grow into cash, flow positive and then right around here. Remember the CEO of uber saying we have to focus solely on profits, right? They did the profitability earnings call similar to Salesforce. When that happened, investors pay attention. When a company says, the leaders say, they are solely focused on generating real profits. Now that changes the perspective for the investor and you can see that they're having quarters
with positive, cash flow. We factor in stock based competent. Look quite as pretty as I still have some of that. But even adjusting for stock-based compensation, they're still leaking into profitability, even adjusting for stock-based complex quarter. They did eighty million dollars of stock based compost. Now, I haven't done any Research into how much operating
leverage. This business has how much profitability that you can really grow, but at a 76 billion dollar market cap, Company. That's barely becoming profitable for me. This is a long shot bed, but that is the type of companies that Mark mahaney goes into, he does ones that sometimes they fail, sometimes they do poorly but in many cases, they can double or triple. That's number three, Amazon, Triple trough thesis.
We think the stock right here is at a trough multiple trough margins and trough Revenue growth. If we're right on that, you could have a material re-rating in a stock gets really underperform for almost three years. Let me ask Amazon number 3 and the triple trough thesis is his thesis on it. He thinks it's the slowest Revenue. Growth is going to be Revenue will re-accelerate. He thinks it's the lowest margins.
It's going to be the margins will improve and he thinks that it's the the lowest profitability. The free cash flows will improve as well. So I agree with them on Amazon. Of course, I'm very bullish on this company. Outside of Netflix. This is my largest holding in the story fund if Amazon. On has a couple good quarters. If this company goes up, 20, 30 %. I'll be back in the green. In this portfolio. I'll be doing well. So that's a three pics, Uber meta, and Amazon.
I agree with them on Amazon. Certainly, Uber, I think is an interesting one and meta overalls, a safer bet, but not a company, I'm looking at getting back into, I don't love social media companies. So that's all for this episode. I hope you enjoyed and I'll see you in the next one.