Have you heard of UWMC? I’m curious to hear your take on it seems like a solid Buisness that is undervalued due to being a spac. They pay a good dividend as well
Yeah I'm not thrilled. I have a handful of shares of PSTH, not sure what to do with here now, my avg cost is around $24 so im not down much. Think I'll just dump em and move on, waste of time holding for the last 6 months. I was thinking it would be a restaurant or convenience store...
Comparing Spotify and UMG is like comparing radio and a music label. Sure Spotify does have influence in what people listen to but it's still less influence than radio did back in its heyday. UMG OWNS a lot of famous artists, both classic ones and the newer ones. Would you rather own the platform or content? UMG is basically Disney without the parks and the streaming channel. Spotify doesn't have leverage over UMG. It's the other way around.
Comparing Spotify and UMG is like comparing radio and a music label. Sure, Spotify does have influence in what people listen to but it has less influence than radio did back in its heyday. UMG OWNS the rights to a lot of famous artists, both classic ones and the newer ones. Would you rather own the platform or content? UMG is basically Disney without the parks and the streaming channel. Spotify doesn't have leverage over UMG. It's the other way around.
"What do you think UMG does that's relevant today, aside from just owning a lot of music." - Joseph, this is called royalty. It's very similar to owning real estate. You can ask the same question: What does a real estate company does that's relevant today, aside from just owning a lot of real estates? Either I write a song, and I'm the owner (songwriter) and I own the rights until I die (and my children own it for 70 years after I die), OR I sell the song (and the rights) to someone. The same way, traditionally a record label financed the producing of a record, they own the recording, and get royalty. It's the same like owning real estate. So your argument is not really valid.
This is pretty much my concern. The only real thing you can point to that UMG does to provide value is “they own music”. That’s not value. Previously the value they would provide is, promotion, production, distribution, etc etc. now all they do is “well they still own the music”. It’s clear that their value they actually provide has declined. As value declined eventually the economics match. Value and economics only mismatch for so long. Apple Music, Spotify, and other streaming services have taken the wheel from UMG. They now have the relationship with the customer and the artist. It’s only a matter of time before they flex their muscles and compress margins for UMG. On a side note. Owners of real estate have provided the same value they always have. They take care of property upkeep, taxes, improvements, anything breaks they fix it, etc etc. their value proposition had not been disrupted like UMGs with streaming.
@@JosephCarlsonAfterHours The value is in IP. Same thing with Disney. When u own something, you can do whatever u want with it. If there is a new way to consume music other than streaming services in 20 years, those new companies will have to pay UMG still to use its music while Spotify can be “out-innovated” for lack of a better word. There is no evidence that u can point to that says Spotify has pricing leverage over UMG as long as there are other music streaming services are competing with Spotify. There is almost no competition in music label business. It’s kinda like Disney in that it own it’s IP and can do whatever it wants with it.
@@JosephCarlsonAfterHours I think that this is the first time that I completely disagree with an episode of yours. Royalties is an excellent business. ROIC of music royalties, in case that you have good songs in your catalog, is around 8-10% annually, and will get better with streaming services gaining traction. And some artists like The Beatles, can generate income forever. Second, artists still need promotion, producers, concerts, merchandising, etc. The label is exactly helping on this. I think that this is a good deal from Ackman and I indeed bought more PSH shares after understanding the deal.
Great content as always, just one point. At 26:23, she mentioned Uber because they were one of Twilio's most well known customers until 2017. It wasn't intended to be a comparison between their economic models.
Saying UMG doesn’t add any value is a bit extreme in my opinion. They own content which the likes of Spotify, Apple Music, etc… are nothing without. Most popular artists are still attached to a label. Granted, UMG is probably more of a value play with no crazy growth prospects but it is undervalued vs. Warner Music for example. They have recurring revenue and can keep bringing in cash with not much effort. Spotify is actually the one investment that doesn’t get me excited. All those streaming platforms are easily interchangeable. The moat is limited in that they do not have exclusive content except for maybe a few podcasts (Video streaming is a different story because each platform has its own content attracting a specific audience and most people will end up with probably 3 video streaming services anyway). Pricing power is also very limited with giants in the game like Apple or even Amazon offering ad-free music on 2 million songs with a prime membership… Overall neither UMG nor Spotify get me excited but UMG’s got my preference.
A much needed voice of reason during these trying AMC fueled times hahaha just the type of video I needed to bring me down to earth excellent content as usual! Thanks Joseph! Would it be possible for you to perhaps to a video on how you generated the cash flow required to fund your portfolios? sometime in the future perhaps? That would be really helpful!
At the Senate hearing on the Colonial Pipeline hack, the CEO of Colonial pipeline said that almost all of the employees who know how to manually operate the company's pipelines are either retired or dead, and newer employees don't know how. Perhaps we rely too much on computers.
Spotify has no leverage when UMG owns all the big name artists. Spotify doesn't own any music. They're just another marketing channel for UMG. If spotify gets big enough, they might be able to compete with UMG but it is very difficult to do so and it may never happen. UMG along with sony music and warner music group own the majority of music rights. Any famous artists that you know is owned by these three and combined, they have limitless pricing power. That said, this is not a growth company but very quality company that will continue grow single digits as far as the eye can see.
Spotify has no leverage? So if Spotify were to kick all of UMG music off, and all those artists streaming revenue declined by 40%, you think the artists and UMG wouldn’t care? Every new subscriber that Spotify gains, the more leverage they gain. The economics do not reward these companies proportionate to the value they provide. Spotify and Apple Music prove the value, UMG benefits. This relationship won’t stay this same way forever. Eventually margins will compress and the economics will match the value being provided.
@@JosephCarlsonAfterHours If spotify kicks of UMG’s music, they lose half of their subscribers with that. All the other streaming music companies would literally pay UMG to kick its music off of spotify. Leverage is in the artist not the marketing channel. Content is always king. There is also no evidence that the music labels are losing their leverage because all the big time artists have the resources to own their own content or buy it out right but they don’t.( Taylor swift tried to own all of her content library before signing with Sony music). This goes to show that there is tremendous leverage/moat around their business.
Spotify has more to lose than UMG if the relationship goes sour between the two. UMG is like the owner of real estate, Spotify is the renter who bring in a lot of customers. But at the end of the day, if Spotify doesn’t have a complete music catalog, another music streaming service such as apple and amazon with deep pockets would be more than willing to pay up for music rights to gain subscribers.
@@JosephCarlsonAfterHours lol if Spotify suddenly didn't have the artists I listen to, I would change to a service that did. UMG has the leverage here imo
@@9amir6 Don't forget Spotify gave UMG a percentage of the company to get a good licensing agreement in 2008. UMG has not sold any of its percentage which is estimated to be 3-4% of Spotify
PSTH is a complex SPAC, always was. I was initially disappointed to own just a 10% stake of UMG pricing it at $40B while the last player got 20% stake while valuing it at $30B. I'm not sure PSH's shareholders or board members will provide any value to the company in urging innovation either. I'd love to see what record label is first to enter the crypto space to award smart contracts that pay the original artist and the label for each play ever, no matter what platform, etc. But there's no indication that Ackman's team is filled with brilliant tech innovators looking to bring about such a new innovation to the company. I do like the catalog of artists, both classics like the Beatles and Bob Dylan to newer popular artists like Garth Brooks and Taylor Swift. I can't imagine a radio or streaming platform not carrying any of these artists, even in 10 years. So royalties will continue, in any economic environment, around the world. So it's at least a safe play for cash flow. And it gets PSTH off the ticking clock for the PSTH acquisition target deadline. If I understand the complicated SPAC filings correctly, shareholders who hold PSTH through the merger obtain 2 shares for every 9 shares of PSTH? Not entirely sure how that plays out with this "portion" of the SPAC acquisition not being the final termination of PSTH. With this in mind, I've always held that I want to own 90 shares of PSTH to eventually gain an easy 22% return, and then have 100 shares to be able to sell covered calls on in the future for even more passive cash flow. Where it gets even more complicated is that this deal doesn't use up all of PSTH's cash. It leaves new investment opportunities still open to PSTH shareholders. Bill Ackman has other SPAC acquisition companies on the radar as he filed for a 2nd spac earlier this spring and then guaranteed to PSTH shareholders that they would get the ability to get in on any subsequent deals as if they're venture capitalists before the rest of the public. I think being a PSTH shareholder gives me access to new M&A offers in the future, a team doing all that work for me and just offering compelling deals to me before the rest of the public. That's just a feather in the cap for the next 10 years that I've got a pool of Billions of dollars and a global, educated, well-known, talented financial team giving me their best deals for as long as these SPARs come up? Why not! If interest rates remain historically low, the next SPAC/SPAR/SPARC, whatever he wants to call it may have similar value to "buy in at NAV, accrue interest, at least able to redeem for that if you don't like the deal, and potentially have capital gains if a deal really goes wild" instead of just having that cash in a savings account, or MM account. If you could've bought PSTH at $20.00 and watched it run to $30.00 you had the option to take 50% return. And worst case scenario was you redeemed your position for $20.00 plus interest ahead of the merger. Essentially it's a savings account with potential to pop off. The way he structures his deals so as to benefit long-term shareholders instead of quick-deals to pay the venture capitalists is unique. I've got to give him credit for that. There are more fundamentals analysis folks breaking down profitability and cash flows of the new spin off company. I haven't had time to review it this week. But the intrinsic value of having early access to the next deals and the team and pool of capital to land another large player every so often has some extra value above some steady cash flow.
Hey Joseph, rookie investor here. I was looking at Spotify fundamentals and they’ve had very impressive sales and revenue growth over the years. However, I found that their ROIC was less than what I’d like (in fact, Spotify’s ROIC has always been negative since its IPO). I was looking to buy Spotify shares but this scares me. Now I know there’s still excellent potential with Spotify- I use Spotify and I think it’s better than Apple Music, all my friends have been moving to Spotify, but as long as their capital allocation is not up to the mark, does revenue growth matter? Or, is ROIC not a great indicator of long term growth? Would love to hear.
Also I was surprised to hear Twilio’s name. I’m somewhat of a coder and when I was learning there were many tutorials involving Twilio(not all were sponsored). Now that I think of it, that’s great marketing. Excellent choice I guess.
I have learned that SPACs are not a good idea. They drop fast after the announcement. I bought Richard Branson’s 23andme and I can’t wait to sell it when it goes up.
Just continuing to buy Microsoft shares regardless of inflation. They keep growing at a decent rate and something that forms a good percentage of my portfolio
The problem with music streaming services like Spotify is that they need to have more or less ALL of the music esp. the popular ones. Compare that to Netflix or Disney+ who just need to have some of the movies. Many people have multiple movie streaming apps but they only have one music streaming app.
Artists who really want to go big, still need labels to reach a wide distribution. Just a really few that go on their own end up having worldwide success. Royalties is an excellent business nowadays (~8% ROIC) with streaming music companies, and even better seeing that they will continue to grow for this decade. If you are long with Spotify, Apple Music or Tidal, you should also be long UMG, because they get income everytime someone is playing a song of any of those platforms. I bought more PSH shares after understanding the deal, so I think that Bill is giving good value to the shareholders, unlike others that just sell dreams and smoke.
Not trying to be rude and I enjoy your channel but I have a question. Why do you think you can beat the market? You trade a lot and every time you do you incur capital gains tax and trading costs. It’s also been proven that over long periods of time value will beat growth, especially for small caps. A very tiny percentage of active investors actually beat the market. What in your trading strategy are you doing to beat the increased costs and and value factors?
When I was doubling the returns of SPY I received comments that beating spy is easy, all you have to do is invest in tech. Now that I’m slightly underperforming I receive comments acting like it’s impossible to beat spy. I have explained this many times in previous videos and comments, I plan on beating spy by exposing my portfolio to a higher concentration of high quality technology companies with large addressable markets, superior economic billing relationships with customer, faster overall revenue growth, and stronger balance sheets. I think these factors give me a high probability of beating SPY over the next 5 years.
@@JosephCarlsonAfterHours beating the spy temporarily and beating it over a long period of time are extremely different. Most academic research points to growth and large cap underperforming small cap value over the long run. I was just wondering if you have a specific strategy of how you pick stocks or is it just popular tech companies that you feel are undervalued? Over the long run I don’t think investing in a bunch of companies with historically huge P/E ratios while inciting taxes and trading costs is going to beat the market. Especially when we enter a downturn. Even randomly chosen stocks will beat the SPY sometimes. Doing so temporarily does not mean you have a viable long term strategy.
@@JoelJoel321 makes sense. I just worry that people new to investing are going to see the channel and try to pick their own stocks causing them to lose money. I think a disclaimer about the odds of actually beating the S and P and the reality of picking your own stocks would be beneficial to everyone.
I listen to Joseph for the overview look of big cap stocks and popular platform stocks. I sometimes forget that big companies actually can grow fast, because the world is global and the market is expanding for companies that big enough to capitalize. That being said, one thing that I don't agree with here is picking any and all stocks that are dominant at any point in time. Some of the picks on this channel are at high valuations and even though they are poised to grow won't make for outperforming investments. There is a price point where all stocks will give a great return and Joseph never talks about this. But for a deeper dive I go to other channels, so it's not really a problem. And yes, I do pick my own stocks. Growing, stable companies with good management, ROIC and that are on discount will outperform the market if you diversify a little and have patience to let them run for years. The mistake many make (I do it all the time) is selling and buying too often, never letting the thesis play out. I miss out on a lot of microcap rockets but I also dodge the bankruptcies, and I stick to companies that will produce a conservatively estimated annual IRR of over 20%. That gives a generous margin of error. Examples are Trulieve Cannabis, Alibaba, JD.com, IBM and many more at current valuations.
You are not very informed about the music industry and need to do a little more research. Gotta dig a little deeper than surface level knowledge to understand why Spotify cannot ever replace UMG, WMG, and Sony. To start, you use Spotify because you want access to the music you like in one central location. Streaming destroyed piracy because it is super affordable and you get access to millions of artists on a single app. The most popular music generate the most value and if Spotify did not have artists like BTS, Justin Bieber, Taylor Swift and other such artists, their subscriptions would suffer tremendously. The same idea with Netflix. Nothing stops fans from immediately dropping Netflix subscriptions if they fail to generate new and good content. The ones who own the content are the ones who profit the most which is why you see Netflix come up with so many originals. UMG also does a lot of work in actually finding and developing talent. Although there are a lot of indie record labels and they are becoming more popular, as a no name artist, it would be difficult to get a career going in the music industry. Talent and content creation is done best by these large companies as they have the supporting staff to develop the talent. This is evident in the emergence of kpop. Originally there were 3 big companies YG, JYP, and SM entertainment but in one fell swoop, a relatively no name company named BigHit developed and trained the talent we know as BTS. This immediately catapulted their success from an obscure almost bankrupt company to a company that is bigger than the big 3 combined. Any content pushed out by the big 3 or bighit will do well. My point with this is that as an artist who is trying to make it big in the industry, signing to a big label is a huge deal and with this you sign away your rights to the music. With UMG's catalog of popular music and their up and coming talents like Olivia Rodrigo and collab with BIGHIT entertainment, they most definitely have a lot of leverage over Spotify. If Netflix one day stopped producing quality shows, everyone would flock to Disney plus and Amazon Prime in a heartbeat (which is also why they try to differentiate their catalog of shows). TLDR: Content is king, any platform can be replaced if the quality content they have is removed. Big music companies own rights to the content which cannot ever be replaced by a single content distributor. Would you pay for still Netflix if your favorite shows were removed permanently?
You say "spotify cannot ever replace UMG", but you fail to acknowledge that Spotify literally already is replacing UMG. Part of the value proposition with UMG is that they would offer distribution and promotion to hundreds of different markets so that listeners can find their music. Spotify has already completely replaced this entire aspect of UMG, it's gone, done with, over. Spotify has far more control over what listeners see and listen to than UMG's network. So why are you so confident that Spotify can't replace UMG? They've already replaced one major aspect of their business, what's to stop them from replacing another major aspect? Spotify is THE platform that customers go to to get their music. They control the and have the relationship. Netflix is a great example of a previous platform only replacing a content creator. Just like you, most cable companies assumed that Netflix was just a platform to easily and cheaply distribute their content. But Netflix realized that they're the ones with the growing revenue and the relationship with the customer, so they found a way to replace the cable companies by becoming a content creator. Now Netflix is the king of streaming while the same cable companies, assuming Netflix was never a threat, have been replaced. Platforms become content creators all the time - Roku is in the process of doing this right now, Apple is doing it, Google is doing it, Amazon is doing it. All started as a platform, now they're the content creator. What makes you so certain that Spotify can't start cutting deals with artists? You don't think that's exactly what they'll do once they're large, established, and have the free cash flow to do so? You say that I'm not very informed on this subject. But I have spent a considerable amount of time digging below surface level. And I'm not the only one that see's what's going on here. Even UMG has invested in Spotify. Here's an article from NYT outlining that music labels are actually scared by what Spotify is doing: www.nytimes.com/2018/09/06/business/media/spotify-music-industry-record-labels.html Here's an article on Spotify cutting direct deals with artists: www.vox.com/2018/6/8/17441544/spotify-daniel-ek-direct-deal-music-labels
@@JosephCarlsonAfterHours your example of the cable companies been taken over by Netflix is similar but not the same as what is happening here. The cable companies had little to no intellectual property of any kind - they were mainly a distribution medium and was completely replace because of the advancement of the internet. They also had the limitation of not being able to watch videos on demand which further perpetuated their downfall. The medium through which we consume content changed therefore rendering cable companies obsolete. Spotify can definitely try and compete with the big labels just as the big labels can try and start their own streaming service. Content creation is a completely separate business than offering a streaming platform. It really goes both ways. Spotify is ONE medium of distribution as well. There are other (much bigger) mediums such as CZcams, Tiktok, Peloton, Instagram, and many more. The royalties earned by the one time purchase of intellectual property are forever so it is really about who can produce and sign the biggest and best artists as all of the platforms are fighting for the intellectual property. I also do not believe in the slightest that Spotify's generated streaming revenue greatly exceeds that of other platforms. Our disagreement is over the value that UMG brings. You view them as a company that has no other value other than the fact it owns intellectual property. But really, I highly doubt they will sit idly by while ONE streaming platform comes and starts competing in the space - never mind the fact that UMG owns 4% of SPOT. In the VOX article you directly linked they state loud and clear that Spotify cant approach the big artists which will trigger an all out war with the record label companies. Again I'm a firm believer that the owners of the best intellectual property will win out in the end. At the end of the day a lot more goes into the creation of music than you think, which is why not any random hedge fund with billions of dollars can purchase the rights to music which they can simply make royalties off of. There is definitely more to this business and I feel you reduced it to exactly that in your video. You need to find and develop talent, find a good production team, and know the ins and outs of the music industry as a whole. I simply disagree with your statement that UMG adds no value in terms of content creation and that they simply buy music. Just do a bit of digging into kpop. Any group of artists put out by the big 3 or bighit (currently working on creating a new group) do extremely well. Just as any artist that Universal heavily invests in will generally have a high chance of success - another incentive to sign with the labels and make a name first before going independent but by then, the record labels will own some of your best music.
I'm a bit surprised you're this negative on the company. Ackman delivered on everything he wanted in a business. You mentioned "you don't really know what Universal Music does" - yeah, we can tell!
UMG is going to be a money printing machine and BA merging in before a traditional IPO will give the Tontards lots of value. BA also negotiated a valuation of 40B, when UMG goes public will probably be valued at 60B. Tontards must stay patient for this day, we will eat! PSTH
royalties Joseph, the more Spotify and streaming services grow, the more revenue UMG will make. Spotify will not become a record label for a long time imo. Artist do need record labels, all those rappers that blow up thanks to soundcloud, instagram and youtube end up sign it up with a record label either way..
I agree with you for the most part, but it's important to note that more and more artists are moving away from major labels like UMG and either going independent or creating their own label. Look at Kanye West for example, he has basically declared war on them and a lot of other artists are looking to have more control over their content. Rick Ross, Jay-Z, Big KRIT, Jorja Smith, Travis Scott and many others are either independent or building their own thing. I agree that UMG is still very strong and will continue to be, but as artists start to see how much these labels tend to do them dirty they start to look at other options. I believe that by having more independent artists we will see services like Spotify become to music artists what CZcams became to video content creators. People who review tech no longer need to signed by a TV channel to put out content, they are mostly independent and I see music trending the same way over time.
Hey Joe, I’m an artist and I’ve previously been signed to a universal label but now I’m happily independent. I do indeed produce my own music and your take regarding how much it’s possible for artists to do themselves these days is accurate. Thought I’d chime in because I’m in pretty much the exact situation you talked about haha. Cheers
Funny I just started adding twilio over the last week as well. I’m more of a growth at a reasonable price type investor but decided to add a very fast grower types and twilio, trade desk, lululemon etc all caught my eye. Fun to see a video update outlining the company I just spent weeks looking over 😂
Do you HAVE to pay up for great companies? Doesn't this reduce your overall return or leave you open to large downturns as valuations correct? I agree with many of the holdings in your portfolio but 25x sales for Twilio seems rich. Maybe in 10 years it will look super cheap. If losses were shrinking as top line grows, I could see the this making sense over time but losses are growing with top line.
Hey Joseph, I've been watching your videos for seven months now and really appreciate both of your channels and the work you put into it. I would like to ask for your opinion on Sentinelone IPO as you are invested in Crowdstrike. Keep up the good work. Pierre K
What about other cyber security stocks like Fortinet or Cloudflare? Also what do you think about Snowflake? I think Buffett has invested some money into them until now. Would love to know your thoughts
Joseph, i usually love your videos but let me tell you : i think this time you think you understand UMG business, but actually you don't really deeply understand it. It does not take "only a mic and a few tools" to produce professionnal quality music that millions of users will listen to on spotify, apple music or tencent music, though it sometimes happen. Music is talent and talent is not one person, it's a team. In movies industry it is the same, You own Netflix, you should know this. Producing high quality music does require a team, time and you rarely can do it only on your own because many artists need a producer to realise their full potential. Here is the real value of UMG, and of course in communication power, publishing business, royalties etc also. Btw, i agree with you when you say its a business of the past compared to spotify, for example, but spotify still doesnt earn money and UMG still does, actually i think they 're complementary, but i wouldnt necessarly buy UMG.
@Oh hi i agree but that does not mean that every artist can do it alone, even the most talentful. Because the best final products (not the demos) in music are often a team work, and not only a band but also working with producers, promotion, developping etc. Many artists are not producers. They need a team OR it gets even better with the team and then it can reach the top. Try to make a movie alone, you sometimes will make it but if you work with the best scenarist, caster, etc it will get much better. For an album it is the same. If U2 had not worked with their manager, or Brian Eno, they probably wouldnt have had this siuccess and been that good. If Pink was alone in a home studio, she probably wouldnt be Pink. I dont mean you cant do it, mean that you wont go that high. And you may not like Majors, they sometimes block artists, but most of the time their job is to make them reach the top, and not only with technical or producing help.
@Oh hi im not talking bout rappers and no, being an expert in singing and writing only does not mean you are talentless. Anyway you re always better when you work with talented people, this is the value of a good music label. And no i dont think it has not changed siince 20 years, i think you re always better with the right team, and it is a fact : many great artists are what they are thanks to a team work
Also, you should check out that Rick Beato guy here on CZcams. He just recently made a video that perfectly explains how companies like UMG make their money.
Joseph, while I too was confused and slightly off-put by this deal the more I think about it the more I like it. I’ve been thinking a lot about your main point of, “what is their value?” And disagree that they’re only around to sue copyright abusers. While I can’t tell you exactly what the value is, I believe they provide a value to the musicians which in turn grows the business. If they didn’t provide value to musicians, then Jay-z, post Malone, Eminem, lady gaga, Taylor swift, and Billie Eilish would not be signed with them. They have enough power in their own brand to do it alone or partner with Spotify, but they don’t. They continue to work for UMG. So UMG must provide value to the musicians. Furthermore, the margins of streaming are incredibly large because Apple, Amazon, CZcams, and spotify are paying for UMGs growth into new markets. Thanks for the videos, I’ll continue to watch 👍
The following is my take on UMG deal. UMG owns a lot of music records. They can continue to make money off it with almost nil extra cash deployed. Secondly, Bill's usual strategy is to buy stake in a firm and then push for changes which make the company more valuable. Obviously the deal is not yet done and he perhaps cannot comment on the details due to regulatory and other issues. In my opinion, Bill/UMG are going to make changes which are going to drive the company's valuations much beyond its current levels. What are those changes? Well, nobody knows as of now. I speculate that UMG can make a music app of their own. In today's age, it should not be too difficult to make an app. (I know Spotify has some AI assisted tech, and its not just a VLC media player for mobile. And, such AI tech should also be doable by UMG given the current state). Someone like UMG which has enormous resources, should be able to create a sophisticated app that replicates Apple Music and Spotify with a reasonable small investment. If/When that happens, all the reasons/arguments why Spotify is a good company, will also be applicable to UMG. Add on to it, the music UMG holds. Simply put, UMG can make an app to compete with Spotify in a matter of say 6 months. On the other hand, Spotify/Apple Music can never be able to create a stash of music similar to what UMG holds currently.
Could you do a video or just respond about why you chose ESPO over any of the other gaming etfs or why you chose an etf for gaming even though you generally prefer to pick your own stocks?
I don't have such a negative view of the attacks because they're ultimately beneficial when taking a long view. Neither companies nor the government would otherwise make the necessary foundational and process investments. And then, maybe a decade later, if there's a "cyber war," the devastation would be many times higher because the systems wouldn't be battle-tested. The current model of security for many companies is a lot like someone going to school but never having to take a test yet receiving passing marks purely for participation. Reality doesn't work like that.
The thought of being like "I own a certain tiny percent of the songs that are playing at this party right now" is just not nearly satisfying enough for me to still be in PSTH.
I don't know how you've done your benchmarking, but SPY has returned 35% since 1st July 2020, not 15% like you seem to be portraying. Your graph also shows a spike in May to 20%, which cannot be correct since SPY is making all time highs right now. Definitely something wrong with your data.
He’s showing us what his theoretical portfolio would like if he had invested in SPY, on those exact same days , and dollar amounts, that he instead chose to invest in his story fund. When you think about it, JC is being as honest and transparent as he can be. That it is really the only way to compare two types of portfolios.
He’s answered your question several times in previous videos. I’m summary, no matter what he compared his portfolio to, viewers would still find a way to complain that he didn’t compare it against [insert benchmark] . The SP500 is generally seen as the de facto index to compare to when we talk about how the “market” performs.
Can you clarify what you meant near the end of the video when you said Apple dropping Intel was bad do you think it really was bad that Apple dropped Intel?
Should look at UiPath too. Very similar business structure to Twilio, in software industry they're huge right now in implementation / development space. Newer tech but I work in the field and invest in the companies of the products that I use and I think are the best long term prospects and development systems.
I think you should re-evaluate your Door Dash holding. Food delivery platforms in general aren't very profitable businesses. You have other holdings that are far more promising and offer more value as an investor.
Funny how you don‘t know what UMG seems to do and how they make money, and telling us at 25:47 that people don‘t look at this enough „Hoe companies make money“ I would have loved the video to be released a day later, just so you can research what UMG actually does, instead of „ranting“ about how bad it is 🙈
The fact that Crowdstrike is in that business gives me no reason to believe they will somehow be able to prevent any of those problems. Just wait till it happens to one of their clients
Joseph, why buy Twilio that’s a 25x P/S and 50% revenue growth yoy, while Peloton is 9x P/S and 110% yoy growth? I would personally buy much more PTON than this stock, as it seems very expensive.
Just going to point out that it's going to be hard for you to outperform the major indices when companies like; GOOG, AMZN, AAPL, MSFT, etc account for most of the weighted influence in those indices. Not saying it isn't possible though. It happens everyday.
I will never understand why someone will say investing in tech is a bad idea. We all use it constantly throughout the day. Hell, you're reading this comment because of tech. Its engrained in our lives and its not going to go away. I know there's been Yahoo and stuff but The modern tech companies have learned from them. Also The tech companies have learned to be an oligopoly. Sure politicians can say they are monopolies but they wont do a damn thing. THey will make a show of the hearing and have no one under oath. Then everyone forgets , the politician gets paid afterwards and its business as usual
Hi Joseph… I have been watching your show for a couple months now everyday, watching new and old episodes to learn as much as possible! I’m 16 years old and I’m wondering if it is a good time to good time to invest in the stock market with the market being so high. Should I wait? Should I get in as soon as possible? If so how much should I be putting in? If you do see this, I would love to get your opinion on this. Thank you so much, have a great day🙏
Joseph - I would love to hear a video on Amazon and why it’s so undervalued. I did a discounted cash flow analysis over the next 5 years based on analyst estimates, and it’s showing a 20%+ CAGR. Anyways, would love to hear your thoughts!
Joseph, I think there’s more to PSTH than we know. NFTs. Imagine all the creators and their trusts getting instant direct royalties on the buying, selling and trading of their intellectual property. The label provides talent and shareholders with access to the technology and its benefits.
Really curious as to why you don't have Tesla in your story fund? Talk about long term potential and risk, feels like it will fit in quite nicely in this portfolio.
Bro the things this guys says... Just sell psth, you have no clue why youre holding it, you said it yourself... Buy ark invest youll "understand" why you own it 😂 gaslighted kid
You’re wrong about UMG and your assessment that it has no value shows that you know absolutely nothing about the music business. Please do some more research on the businesses that you speak of before giving uneducated opinions on them.
What do you think of the deal? Do you think UMG is a good business?
Have you heard of UWMC? I’m curious to hear your take on it seems like a solid Buisness that is undervalued due to being a spac. They pay a good dividend as well
Yeah I'm not thrilled. I have a handful of shares of PSTH, not sure what to do with here now, my avg cost is around $24 so im not down much. Think I'll just dump em and move on, waste of time holding for the last 6 months. I was thinking it would be a restaurant or convenience store...
Is it comparable to Warner Music Media Group? How have they been performing?
thank you Joseph, i asked you to talk about twilio in the previous.
Comparing Spotify and UMG is like comparing radio and a music label. Sure Spotify does have influence in what people listen to but it's still less influence than radio did back in its heyday. UMG OWNS a lot of famous artists, both classic ones and the newer ones. Would you rather own the platform or content? UMG is basically Disney without the parks and the streaming channel. Spotify doesn't have leverage over UMG. It's the other way around.
Comparing Spotify and UMG is like comparing radio and a music label. Sure, Spotify does have influence in what people listen to but it has less influence than radio did back in its heyday. UMG OWNS the rights to a lot of famous artists, both classic ones and the newer ones. Would you rather own the platform or content? UMG is basically Disney without the parks and the streaming channel. Spotify doesn't have leverage over UMG. It's the other way around.
THANK YOU!!!🙌🏽
"What do you think UMG does that's relevant today, aside from just owning a lot of music." - Joseph, this is called royalty. It's very similar to owning real estate. You can ask the same question: What does a real estate company does that's relevant today, aside from just owning a lot of real estates? Either I write a song, and I'm the owner (songwriter) and I own the rights until I die (and my children own it for 70 years after I die), OR I sell the song (and the rights) to someone. The same way, traditionally a record label financed the producing of a record, they own the recording, and get royalty. It's the same like owning real estate. So your argument is not really valid.
This is pretty much my concern. The only real thing you can point to that UMG does to provide value is “they own music”. That’s not value. Previously the value they would provide is, promotion, production, distribution, etc etc. now all they do is “well they still own the music”. It’s clear that their value they actually provide has declined. As value declined eventually the economics match. Value and economics only mismatch for so long. Apple Music, Spotify, and other streaming services have taken the wheel from UMG. They now have the relationship with the customer and the artist. It’s only a matter of time before they flex their muscles and compress margins for UMG.
On a side note. Owners of real estate have provided the same value they always have. They take care of property upkeep, taxes, improvements, anything breaks they fix it, etc etc. their value proposition had not been disrupted like UMGs with streaming.
@Oh hi Streaming, its why UMG went from being worth 3billion 10 years ago to 50-60 billion today.
@@JosephCarlsonAfterHours The value is in IP. Same thing with Disney. When u own something, you can do whatever u want with it. If there is a new way to consume music other than streaming services in 20 years, those new companies will have to pay UMG still to use its music while Spotify can be “out-innovated” for lack of a better word. There is no evidence that u can point to that says Spotify has pricing leverage over UMG as long as there are other music streaming services are competing with Spotify. There is almost no competition in music label business. It’s kinda like Disney in that it own it’s IP and can do whatever it wants with it.
@@JosephCarlsonAfterHours so you're telling me that Disney has no value other than its parks and its streaming service that they launched last year?
@@JosephCarlsonAfterHours I think that this is the first time that I completely disagree with an episode of yours. Royalties is an excellent business. ROIC of music royalties, in case that you have good songs in your catalog, is around 8-10% annually, and will get better with streaming services gaining traction. And some artists like The Beatles, can generate income forever. Second, artists still need promotion, producers, concerts, merchandising, etc. The label is exactly helping on this. I think that this is a good deal from Ackman and I indeed bought more PSH shares after understanding the deal.
Great content as always, just one point. At 26:23, she mentioned Uber because they were one of Twilio's most well known customers until 2017. It wasn't intended to be a comparison between their economic models.
Saying UMG doesn’t add any value is a bit extreme in my opinion. They own content which the likes of Spotify, Apple Music, etc… are nothing without. Most popular artists are still attached to a label. Granted, UMG is probably more of a value play with no crazy growth prospects but it is undervalued vs. Warner Music for example. They have recurring revenue and can keep bringing in cash with not much effort.
Spotify is actually the one investment that doesn’t get me excited. All those streaming platforms are easily interchangeable. The moat is limited in that they do not have exclusive content except for maybe a few podcasts (Video streaming is a different story because each platform has its own content attracting a specific audience and most people will end up with probably 3 video streaming services anyway). Pricing power is also very limited with giants in the game like Apple or even Amazon offering ad-free music on 2 million songs with a prime membership…
Overall neither UMG nor Spotify get me excited but UMG’s got my preference.
A much needed voice of reason during these trying AMC fueled times hahaha just the type of video I needed to bring me down to earth excellent content as usual! Thanks Joseph! Would it be possible for you to perhaps to a video on how you generated the cash flow required to fund your portfolios? sometime in the future perhaps? That would be really helpful!
At the Senate hearing on the Colonial Pipeline hack, the CEO of Colonial pipeline said that almost all of the employees who know how to manually operate the company's pipelines are either retired or dead, and newer employees don't know how. Perhaps we rely too much on computers.
Just sounds like a really bad business practice to not have safeguards in place
Notification Gang Joe let’s get it
Spotify has no leverage when UMG owns all the big name artists. Spotify doesn't own any music. They're just another marketing channel for UMG. If spotify gets big enough, they might be able to compete with UMG but it is very difficult to do so and it may never happen. UMG along with sony music and warner music group own the majority of music rights. Any famous artists that you know is owned by these three and combined, they have limitless pricing power. That said, this is not a growth company but very quality company that will continue grow single digits as far as the eye can see.
Spotify has no leverage? So if Spotify were to kick all of UMG music off, and all those artists streaming revenue declined by 40%, you think the artists and UMG wouldn’t care?
Every new subscriber that Spotify gains, the more leverage they gain. The economics do not reward these companies proportionate to the value they provide. Spotify and Apple Music prove the value, UMG benefits. This relationship won’t stay this same way forever. Eventually margins will compress and the economics will match the value being provided.
@@JosephCarlsonAfterHours If spotify kicks of UMG’s music, they lose half of their subscribers with that. All the other streaming music companies would literally pay UMG to kick its music off of spotify. Leverage is in the artist not the marketing channel. Content is always king. There is also no evidence that the music labels are losing their leverage because all the big time artists have the resources to own their own content or buy it out right but they don’t.( Taylor swift tried to own all of her content library before signing with Sony music). This goes to show that there is tremendous leverage/moat around their business.
Spotify has more to lose than UMG if the relationship goes sour between the two. UMG is like the owner of real estate, Spotify is the renter who bring in a lot of customers. But at the end of the day, if Spotify doesn’t have a complete music catalog, another music streaming service such as apple and amazon with deep pockets would be more than willing to pay up for music rights to gain subscribers.
@@JosephCarlsonAfterHours lol if Spotify suddenly didn't have the artists I listen to, I would change to a service that did. UMG has the leverage here imo
@@9amir6 Don't forget Spotify gave UMG a percentage of the company to get a good licensing agreement in 2008. UMG has not sold any of its percentage which is estimated to be 3-4% of Spotify
UMG will do well with the ability to use nft's for music in terms of concerts as well as the direct selling of music
thats assuming this NFT trend will continue, and it certainly hasn't recently
This aged poorly
PSTH is a complex SPAC, always was. I was initially disappointed to own just a 10% stake of UMG pricing it at $40B while the last player got 20% stake while valuing it at $30B. I'm not sure PSH's shareholders or board members will provide any value to the company in urging innovation either.
I'd love to see what record label is first to enter the crypto space to award smart contracts that pay the original artist and the label for each play ever, no matter what platform, etc. But there's no indication that Ackman's team is filled with brilliant tech innovators looking to bring about such a new innovation to the company.
I do like the catalog of artists, both classics like the Beatles and Bob Dylan to newer popular artists like Garth Brooks and Taylor Swift. I can't imagine a radio or streaming platform not carrying any of these artists, even in 10 years. So royalties will continue, in any economic environment, around the world. So it's at least a safe play for cash flow. And it gets PSTH off the ticking clock for the PSTH acquisition target deadline.
If I understand the complicated SPAC filings correctly, shareholders who hold PSTH through the merger obtain 2 shares for every 9 shares of PSTH? Not entirely sure how that plays out with this "portion" of the SPAC acquisition not being the final termination of PSTH. With this in mind, I've always held that I want to own 90 shares of PSTH to eventually gain an easy 22% return, and then have 100 shares to be able to sell covered calls on in the future for even more passive cash flow.
Where it gets even more complicated is that this deal doesn't use up all of PSTH's cash. It leaves new investment opportunities still open to PSTH shareholders. Bill Ackman has other SPAC acquisition companies on the radar as he filed for a 2nd spac earlier this spring and then guaranteed to PSTH shareholders that they would get the ability to get in on any subsequent deals as if they're venture capitalists before the rest of the public. I think being a PSTH shareholder gives me access to new M&A offers in the future, a team doing all that work for me and just offering compelling deals to me before the rest of the public. That's just a feather in the cap for the next 10 years that I've got a pool of Billions of dollars and a global, educated, well-known, talented financial team giving me their best deals for as long as these SPARs come up? Why not!
If interest rates remain historically low, the next SPAC/SPAR/SPARC, whatever he wants to call it may have similar value to "buy in at NAV, accrue interest, at least able to redeem for that if you don't like the deal, and potentially have capital gains if a deal really goes wild" instead of just having that cash in a savings account, or MM account. If you could've bought PSTH at $20.00 and watched it run to $30.00 you had the option to take 50% return. And worst case scenario was you redeemed your position for $20.00 plus interest ahead of the merger. Essentially it's a savings account with potential to pop off.
The way he structures his deals so as to benefit long-term shareholders instead of quick-deals to pay the venture capitalists is unique. I've got to give him credit for that.
There are more fundamentals analysis folks breaking down profitability and cash flows of the new spin off company. I haven't had time to review it this week. But the intrinsic value of having early access to the next deals and the team and pool of capital to land another large player every so often has some extra value above some steady cash flow.
Hey Joseph, rookie investor here. I was looking at Spotify fundamentals and they’ve had very impressive sales and revenue growth over the years. However, I found that their ROIC was less than what I’d like (in fact, Spotify’s ROIC has always been negative since its IPO). I was looking to buy Spotify shares but this scares me.
Now I know there’s still excellent potential with Spotify- I use Spotify and I think it’s better than Apple Music, all my friends have been moving to Spotify, but as long as their capital allocation is not up to the mark, does revenue growth matter? Or, is ROIC not a great indicator of long term growth?
Would love to hear.
Also I was surprised to hear Twilio’s name. I’m somewhat of a coder and when I was learning there were many tutorials involving Twilio(not all were sponsored).
Now that I think of it, that’s great marketing. Excellent choice I guess.
I have learned that SPACs are not a good idea. They drop fast after the announcement. I bought Richard Branson’s 23andme and I can’t wait to sell it when it goes up.
I have 5 bad ideas like that in my portfolio, that I could have avoided..if u stayed off you tube..
@@gigid9606 yes hype stocks should be avoided for long term outperformance.
Just continuing to buy Microsoft shares regardless of inflation. They keep growing at a decent rate and something that forms a good percentage of my portfolio
The problem with music streaming services like Spotify is that they need to have more or less ALL of the music esp. the popular ones. Compare that to Netflix or Disney+ who just need to have some of the movies. Many people have multiple movie streaming apps but they only have one music streaming app.
Artists who really want to go big, still need labels to reach a wide distribution. Just a really few that go on their own end up having worldwide success. Royalties is an excellent business nowadays (~8% ROIC) with streaming music companies, and even better seeing that they will continue to grow for this decade. If you are long with Spotify, Apple Music or Tidal, you should also be long UMG, because they get income everytime someone is playing a song of any of those platforms. I bought more PSH shares after understanding the deal, so I think that Bill is giving good value to the shareholders, unlike others that just sell dreams and smoke.
Not trying to be rude and I enjoy your channel but I have a question.
Why do you think you can beat the market? You trade a lot and every time you do you incur capital gains tax and trading costs. It’s also been proven that over long periods of time value will beat growth, especially for small caps. A very tiny percentage of active investors actually beat the market. What in your trading strategy are you doing to beat the increased costs and and value factors?
When I was doubling the returns of SPY I received comments that beating spy is easy, all you have to do is invest in tech. Now that I’m slightly underperforming I receive comments acting like it’s impossible to beat spy.
I have explained this many times in previous videos and comments, I plan on beating spy by exposing my portfolio to a higher concentration of high quality technology companies with large addressable markets, superior economic billing relationships with customer, faster overall revenue growth, and stronger balance sheets. I think these factors give me a high probability of beating SPY over the next 5 years.
@@JosephCarlsonAfterHours beating the spy temporarily and beating it over a long period of time are extremely different. Most academic research points to growth and large cap underperforming small cap value over the long run. I was just wondering if you have a specific strategy of how you pick stocks or is it just popular tech companies that you feel are undervalued? Over the long run I don’t think investing in a bunch of companies with historically huge P/E ratios while inciting taxes and trading costs is going to beat the market. Especially when we enter a downturn. Even randomly chosen stocks will beat the SPY sometimes. Doing so temporarily does not mean you have a viable long term strategy.
@@JoelJoel321 makes sense. I just worry that people new to investing are going to see the channel and try to pick their own stocks causing them to lose money. I think a disclaimer about the odds of actually beating the S and P and the reality of picking your own stocks would be beneficial to everyone.
I listen to Joseph for the overview look of big cap stocks and popular platform stocks. I sometimes forget that big companies actually can grow fast, because the world is global and the market is expanding for companies that big enough to capitalize. That being said, one thing that I don't agree with here is picking any and all stocks that are dominant at any point in time. Some of the picks on this channel are at high valuations and even though they are poised to grow won't make for outperforming investments. There is a price point where all stocks will give a great return and Joseph never talks about this. But for a deeper dive I go to other channels, so it's not really a problem. And yes, I do pick my own stocks. Growing, stable companies with good management, ROIC and that are on discount will outperform the market if you diversify a little and have patience to let them run for years. The mistake many make (I do it all the time) is selling and buying too often, never letting the thesis play out. I miss out on a lot of microcap rockets but I also dodge the bankruptcies, and I stick to companies that will produce a conservatively estimated annual IRR of over 20%. That gives a generous margin of error.
Examples are Trulieve Cannabis, Alibaba, JD.com, IBM and many more at current valuations.
Thought Twilio was a real estate company but realize I was thinking of Trulia lol
You are not very informed about the music industry and need to do a little more research. Gotta dig a little deeper than surface level knowledge to understand why Spotify cannot ever replace UMG, WMG, and Sony. To start, you use Spotify because you want access to the music you like in one central location. Streaming destroyed piracy because it is super affordable and you get access to millions of artists on a single app.
The most popular music generate the most value and if Spotify did not have artists like BTS, Justin Bieber, Taylor Swift and other such artists, their subscriptions would suffer tremendously. The same idea with Netflix. Nothing stops fans from immediately dropping Netflix subscriptions if they fail to generate new and good content. The ones who own the content are the ones who profit the most which is why you see Netflix come up with so many originals.
UMG also does a lot of work in actually finding and developing talent. Although there are a lot of indie record labels and they are becoming more popular, as a no name artist, it would be difficult to get a career going in the music industry. Talent and content creation is done best by these large companies as they have the supporting staff to develop the talent. This is evident in the emergence of kpop. Originally there were 3 big companies YG, JYP, and SM entertainment but in one fell swoop, a relatively no name company named BigHit developed and trained the talent we know as BTS. This immediately catapulted their success from an obscure almost bankrupt company to a company that is bigger than the big 3 combined. Any content pushed out by the big 3 or bighit will do well.
My point with this is that as an artist who is trying to make it big in the industry, signing to a big label is a huge deal and with this you sign away your rights to the music. With UMG's catalog of popular music and their up and coming talents like Olivia Rodrigo and collab with BIGHIT entertainment, they most definitely have a lot of leverage over Spotify. If Netflix one day stopped producing quality shows, everyone would flock to Disney plus and Amazon Prime in a heartbeat (which is also why they try to differentiate their catalog of shows).
TLDR: Content is king, any platform can be replaced if the quality content they have is removed. Big music companies own rights to the content which cannot ever be replaced by a single content distributor. Would you pay for still Netflix if your favorite shows were removed permanently?
You say "spotify cannot ever replace UMG", but you fail to acknowledge that Spotify literally already is replacing UMG. Part of the value proposition with UMG is that they would offer distribution and promotion to hundreds of different markets so that listeners can find their music. Spotify has already completely replaced this entire aspect of UMG, it's gone, done with, over. Spotify has far more control over what listeners see and listen to than UMG's network.
So why are you so confident that Spotify can't replace UMG? They've already replaced one major aspect of their business, what's to stop them from replacing another major aspect? Spotify is THE platform that customers go to to get their music. They control the and have the relationship.
Netflix is a great example of a previous platform only replacing a content creator. Just like you, most cable companies assumed that Netflix was just a platform to easily and cheaply distribute their content. But Netflix realized that they're the ones with the growing revenue and the relationship with the customer, so they found a way to replace the cable companies by becoming a content creator. Now Netflix is the king of streaming while the same cable companies, assuming Netflix was never a threat, have been replaced. Platforms become content creators all the time - Roku is in the process of doing this right now, Apple is doing it, Google is doing it, Amazon is doing it. All started as a platform, now they're the content creator.
What makes you so certain that Spotify can't start cutting deals with artists? You don't think that's exactly what they'll do once they're large, established, and have the free cash flow to do so?
You say that I'm not very informed on this subject. But I have spent a considerable amount of time digging below surface level. And I'm not the only one that see's what's going on here. Even UMG has invested in Spotify. Here's an article from NYT outlining that music labels are actually scared by what Spotify is doing: www.nytimes.com/2018/09/06/business/media/spotify-music-industry-record-labels.html
Here's an article on Spotify cutting direct deals with artists: www.vox.com/2018/6/8/17441544/spotify-daniel-ek-direct-deal-music-labels
@@JosephCarlsonAfterHours your example of the cable companies been taken over by Netflix is similar but not the same as what is happening here. The cable companies had little to no intellectual property of any kind - they were mainly a distribution medium and was completely replace because of the advancement of the internet. They also had the limitation of not being able to watch videos on demand which further perpetuated their downfall. The medium through which we consume content changed therefore rendering cable companies obsolete.
Spotify can definitely try and compete with the big labels just as the big labels can try and start their own streaming service. Content creation is a completely separate business than offering a streaming platform. It really goes both ways. Spotify is ONE medium of distribution as well. There are other (much bigger) mediums such as CZcams, Tiktok, Peloton, Instagram, and many more. The royalties earned by the one time purchase of intellectual property are forever so it is really about who can produce and sign the biggest and best artists as all of the platforms are fighting for the intellectual property. I also do not believe in the slightest that Spotify's generated streaming revenue greatly exceeds that of other platforms.
Our disagreement is over the value that UMG brings. You view them as a company that has no other value other than the fact it owns intellectual property. But really, I highly doubt they will sit idly by while ONE streaming platform comes and starts competing in the space - never mind the fact that UMG owns 4% of SPOT. In the VOX article you directly linked they state loud and clear that Spotify cant approach the big artists which will trigger an all out war with the record label companies. Again I'm a firm believer that the owners of the best intellectual property will win out in the end.
At the end of the day a lot more goes into the creation of music than you think, which is why not any random hedge fund with billions of dollars can purchase the rights to music which they can simply make royalties off of. There is definitely more to this business and I feel you reduced it to exactly that in your video. You need to find and develop talent, find a good production team, and know the ins and outs of the music industry as a whole. I simply disagree with your statement that UMG adds no value in terms of content creation and that they simply buy music. Just do a bit of digging into kpop. Any group of artists put out by the big 3 or bighit (currently working on creating a new group) do extremely well. Just as any artist that Universal heavily invests in will generally have a high chance of success - another incentive to sign with the labels and make a name first before going independent but by then, the record labels will own some of your best music.
Yesss a long episode
I'm a bit surprised you're this negative on the company. Ackman delivered on everything he wanted in a business.
You mentioned "you don't really know what Universal Music does" - yeah, we can tell!
Then please explain what is the great value of UMG?
Exactly!
UMG is going to be a money printing machine and BA merging in before a traditional IPO will give the Tontards lots of value. BA also negotiated a valuation of 40B, when UMG goes public will probably be valued at 60B. Tontards must stay patient for this day, we will eat! PSTH
I’m curious to know why crowdstrike might be considered better than could flare for example. Would love to see a peer comparison review
Both are 100% corolated to interest rates. But ark invest while youre at it
After your video on the main channel regarding undervalued stocks I was thinking you might have begun a position in BABA
🤑🤑👍👍Long Baba. I think Joseph thinks the political risks in China are too high
royalties Joseph, the more Spotify and streaming services grow, the more revenue UMG will make. Spotify will not become a record label for a long time imo. Artist do need record labels, all those rappers that blow up thanks to soundcloud, instagram and youtube end up sign it up with a record label either way..
I agree with you for the most part, but it's important to note that more and more artists are moving away from major labels like UMG and either going independent or creating their own label. Look at Kanye West for example, he has basically declared war on them and a lot of other artists are looking to have more control over their content. Rick Ross, Jay-Z, Big KRIT, Jorja Smith, Travis Scott and many others are either independent or building their own thing.
I agree that UMG is still very strong and will continue to be, but as artists start to see how much these labels tend to do them dirty they start to look at other options. I believe that by having more independent artists we will see services like Spotify become to music artists what CZcams became to video content creators. People who review tech no longer need to signed by a TV channel to put out content, they are mostly independent and I see music trending the same way over time.
A lot of independent artists are popping up, they don't need UMG anymore. What you're saying is true for now, but we're talking about the future here.
Hey Joe,
I’m an artist and I’ve previously been signed to a universal label but now I’m happily independent. I do indeed produce my own music and your take regarding how much it’s possible for artists to do themselves these days is accurate.
Thought I’d chime in because I’m in pretty much the exact situation you talked about haha.
Cheers
Funny I just started adding twilio over the last week as well. I’m more of a growth at a reasonable price type investor but decided to add a very fast grower types and twilio, trade desk, lululemon etc all caught my eye. Fun to see a video update outlining the company I just spent weeks looking over 😂
Do you HAVE to pay up for great companies? Doesn't this reduce your overall return or leave you open to large downturns as valuations correct? I agree with many of the holdings in your portfolio but 25x sales for Twilio seems rich. Maybe in 10 years it will look super cheap. If losses were shrinking as top line grows, I could see the this making sense over time but losses are growing with top line.
Hey Joseph,
I've been watching your videos for seven months now and really appreciate both of your channels and the work you put into it.
I would like to ask for your opinion on Sentinelone IPO as you are invested in Crowdstrike.
Keep up the good work.
Pierre K
What about other cyber security stocks like Fortinet or Cloudflare? Also what do you think about Snowflake? I think Buffett has invested some money into them until now. Would love to know your thoughts
Joseph, i usually love your videos but let me tell you : i think this time you think you understand UMG business, but actually you don't really deeply understand it. It does not take "only a mic and a few tools" to produce professionnal quality music that millions of users will listen to on spotify, apple music or tencent music, though it sometimes happen. Music is talent and talent is not one person, it's a team. In movies industry it is the same, You own Netflix, you should know this. Producing high quality music does require a team, time and you rarely can do it only on your own because many artists need a producer to realise their full potential. Here is the real value of UMG, and of course in communication power, publishing business, royalties etc also. Btw, i agree with you when you say its a business of the past compared to spotify, for example, but spotify still doesnt earn money and UMG still does, actually i think they 're complementary, but i wouldnt necessarly buy UMG.
@Oh hi i agree but that does not mean that every artist can do it alone, even the most talentful. Because the best final products (not the demos) in music are often a team work, and not only a band but also working with producers, promotion, developping etc. Many artists are not producers. They need a team OR it gets even better with the team and then it can reach the top. Try to make a movie alone, you sometimes will make it but if you work with the best scenarist, caster, etc it will get much better. For an album it is the same. If U2 had not worked with their manager, or Brian Eno, they probably wouldnt have had this siuccess and been that good. If Pink was alone in a home studio, she probably wouldnt be Pink. I dont mean you cant do it, mean that you wont go that high. And you may not like Majors, they sometimes block artists, but most of the time their job is to make them reach the top, and not only with technical or producing help.
@Oh hi im not talking bout rappers and no, being an expert in singing and writing only does not mean you are talentless. Anyway you re always better when you work with talented people, this is the value of a good music label. And no i dont think it has not changed siince 20 years, i think you re always better with the right team, and it is a fact : many great artists are what they are thanks to a team work
Also, you should check out that Rick Beato guy here on CZcams. He just recently made a video that perfectly explains how companies like UMG make their money.
Joseph, while I too was confused and slightly off-put by this deal the more I think about it the more I like it. I’ve been thinking a lot about your main point of, “what is their value?” And disagree that they’re only around to sue copyright abusers. While I can’t tell you exactly what the value is, I believe they provide a value to the musicians which in turn grows the business. If they didn’t provide value to musicians, then Jay-z, post Malone, Eminem, lady gaga, Taylor swift, and Billie Eilish would not be signed with them. They have enough power in their own brand to do it alone or partner with Spotify, but they don’t. They continue to work for UMG. So UMG must provide value to the musicians. Furthermore, the margins of streaming are incredibly large because Apple, Amazon, CZcams, and spotify are paying for UMGs growth into new markets. Thanks for the videos, I’ll continue to watch 👍
The following is my take on UMG deal.
UMG owns a lot of music records.
They can continue to make money off it with almost nil extra cash deployed.
Secondly, Bill's usual strategy is to buy stake in a firm and then push for changes which make the company more valuable.
Obviously the deal is not yet done and he perhaps cannot comment on the details due to regulatory and other issues.
In my opinion, Bill/UMG are going to make changes which are going to drive the company's valuations much beyond its current levels.
What are those changes? Well, nobody knows as of now.
I speculate that UMG can make a music app of their own. In today's age, it should not be too difficult to make an app. (I know Spotify has some AI assisted tech, and its not just a VLC media player for mobile. And, such AI tech should also be doable by UMG given the current state).
Someone like UMG which has enormous resources, should be able to create a sophisticated app that replicates Apple Music and Spotify with a reasonable small investment.
If/When that happens, all the reasons/arguments why Spotify is a good company, will also be applicable to UMG.
Add on to it, the music UMG holds.
Simply put, UMG can make an app to compete with Spotify in a matter of say 6 months.
On the other hand, Spotify/Apple Music can never be able to create a stash of music similar to what UMG holds currently.
Could you do a video or just respond about why you chose ESPO over any of the other gaming etfs or why you chose an etf for gaming even though you generally prefer to pick your own stocks?
Why not benchmark against QQQ instead? Thank you.
He’s covered this before. Basically he compares his portfolio against “The Market”, a.k.a. SP500.
My problem with Twilio is their marketing spend is growing at a much faster rate than their revenue growth. They are a cash burning machine
What is on the monitor to the left of the twilio CEO at 29:13?
Was excited for PSTH but glad I didnt stay with it. Kind of seemed like he picked something to pick something so that he didn't have to return money.
Did I miss something or did you decrease your Netflix position?
What's a fair price for Twilio? Are you willing to pay anything because it's growing a lot?
I wish he talked more about valuation. It tends to be more about the business and less about the price.
I don't have such a negative view of the attacks because they're ultimately beneficial when taking a long view. Neither companies nor the government would otherwise make the necessary foundational and process investments. And then, maybe a decade later, if there's a "cyber war," the devastation would be many times higher because the systems wouldn't be battle-tested. The current model of security for many companies is a lot like someone going to school but never having to take a test yet receiving passing marks purely for participation. Reality doesn't work like that.
The thought of being like "I own a certain tiny percent of the songs that are playing at this party right now" is just not nearly satisfying enough for me to still be in PSTH.
Streaming platforms still have a lot of room to grow. Getting money through royalties everytime some song is playing is a great business imho.
I don't know how you've done your benchmarking, but SPY has returned 35% since 1st July 2020, not 15% like you seem to be portraying. Your graph also shows a spike in May to 20%, which cannot be correct since SPY is making all time highs right now. Definitely something wrong with your data.
He’s showing us what his theoretical portfolio would like if he had invested in SPY, on those exact same days , and dollar amounts, that he instead chose to invest in his story fund.
When you think about it, JC is being as honest and transparent as he can be. That it is really the only way to compare two types of portfolios.
I was also holding PSTH since last year. Once I heard the news 1) dumped it 2) thought "can't wait for Joseph's reaction".
Im suprised you are not in Net - cloudfare as they are the reference in website protection and performance and that was your area.
Wouldn't a better comparison for your portifolio be QQQ instead of SPY?
He’s answered your question several times in previous videos.
I’m summary, no matter what he compared his portfolio to, viewers would still find a way to complain that he didn’t compare it against [insert benchmark] . The SP500 is generally seen as the de facto index to compare to when we talk about how the “market” performs.
Yea but qqq is all tech though.
Can you clarify what you meant near the end of the video when you said Apple dropping Intel was bad do you think it really was bad that Apple dropped Intel?
What about mercadolibre, pinduoduo?
Companies are always going to pay ransoms. A few million is cheap compared to being denied the ability to operate for any extended period of time
Fully agreed. Huge disappointment. I sold half of my position on umg news and keep the other half to give the benefit of the doubt to Ackmann.
Twilio is 5% of my Roth IRA so I'm glad to see the Joseph seal of approval! Great video all around, cheers
That's exactly what I see. Companies that will navigate thru inflation and still thrive.
Should look at UiPath too. Very similar business structure to Twilio, in software industry they're huge right now in implementation / development space. Newer tech but I work in the field and invest in the companies of the products that I use and I think are the best long term prospects and development systems.
Totally agree. Very underwhelming.
I think you should re-evaluate your Door Dash holding. Food delivery platforms in general aren't very profitable businesses. You have other holdings that are far more promising and offer more value as an investor.
Joseph, did you not see the sock puppet video?
It's a safe deal given the circumstances...but I understand your "disappointment".
Ackman's SPAC doesn't move me to dump any money his way regardless.
On an whim and purely as a speculation, I bought 22 shares. Let's see where this goes on the coming years. :-)
Did you create that story fund metric graph? I want something like that to track my progress. I just have no clue how
Looks like it might be in google sheets I’m not sure
What do you think about #VERTEX? Is it worth it to buy downturn?
Funny how you don‘t know what UMG seems to do and how they make money, and telling us at 25:47 that people don‘t look at this enough „Hoe companies make money“
I would have loved the video to be released a day later, just so you can research what UMG actually does, instead of „ranting“ about how bad it is 🙈
Lots of bot powered calls like about your car warranty is made using Twilio. I have had some experience using it. Its very powerful.
The fact that Crowdstrike is in that business gives me no reason to believe they will somehow be able to prevent any of those problems. Just wait till it happens to one of their clients
Spotify???
What’s going to stop these companies from in sourcing what twilio does?
Joseph, why buy Twilio that’s a 25x P/S and 50% revenue growth yoy, while Peloton is 9x P/S and 110% yoy growth?
I would personally buy much more PTON than this stock, as it seems very expensive.
great content
Just going to point out that it's going to be hard for you to outperform the major indices when companies like; GOOG, AMZN, AAPL, MSFT, etc account for most of the weighted influence in those indices. Not saying it isn't possible though. It happens everyday.
Bill Ackman kick ass my friend ... he will teach all others a lesson
Do u think the banking industry will suffer during an inflation?
Do you think this purchase of UMG will take value away from your bullish position with Spotify?
I will never understand why someone will say investing in tech is a bad idea. We all use it constantly throughout the day. Hell, you're reading this comment because of tech. Its engrained in our lives and its not going to go away. I know there's been Yahoo and stuff but The modern tech companies have learned from them.
Also The tech companies have learned to be an oligopoly. Sure politicians can say they are monopolies but they wont do a damn thing. THey will make a show of the hearing and have no one under oath. Then everyone forgets , the politician gets paid afterwards and its business as usual
Hi Joseph…
I have been watching your show for a couple months now everyday, watching new and old episodes to learn as much as possible!
I’m 16 years old and I’m wondering if it is a good time to good time to invest in the stock market with the market being so high. Should I wait? Should I get in as soon as possible? If so how much should I be putting in?
If you do see this, I would love to get your opinion on this. Thank you so much, have a great day🙏
Time to get Bill Ackmann in here to explain this further
Take a drink every time he says “riding on their coattails”
Would love to get your opinion on NVIDIA :)
another great episode!
Joseph - I would love to hear a video on Amazon and why it’s so undervalued. I did a discounted cash flow analysis over the next 5 years based on analyst estimates, and it’s showing a 20%+ CAGR. Anyways, would love to hear your thoughts!
Nice sneaky plug
i just heard on cnbc that netflix are going to sell merchandise; i was hoping you were going to address this.
Lol😁😂
expectations: stripe
reality: umg
this could be a meme
Maybe Ackman wants to stop licensing UMG’s music to others and start selling it by himself with some sort of online service too.
Yea Bill likes actively investing, so he may look to make changes in the company. I’m sold, I think this will be great.
Joseph.
Have you evaluated the amount of holdings you hold? Geez you must have more than 50 companies. Thinking about starting a Carlson fund ?
😂🤝
Joseph, I think there’s more to PSTH than we know. NFTs. Imagine all the creators and their trusts getting instant direct royalties on the buying, selling and trading of their intellectual property. The label provides talent and shareholders with access to the technology and its benefits.
And use. Could open an opportunity for CZcams creators to access copyrighted songs.
Lame
Umg is the patent troll of music. An extortionist, a pipeline hacker holding content hostage. ...sounds profitable.
I have PSTH warrants. It dropped 40 percent lol.
Rule #1 you never pay ransomware
Really curious as to why you don't have Tesla in your story fund? Talk about long term potential and risk, feels like it will fit in quite nicely in this portfolio.
I saw coke on the background so im buying coke XD
So maybe stop copying what investors do and instead think for yourselves?
The more stocks you own the harder it will be to manage and less likely to beat the market. It's hard to beat the market because it is the market.
Tell us how you really feel Joe lol
Tencent keeps buying UMG as well... I am not seeing the value.
check ur inbox :)
Bro the things this guys says... Just sell psth, you have no clue why youre holding it, you said it yourself... Buy ark invest youll "understand" why you own it 😂 gaslighted kid
I do not trust Bill Ackman is the bottom line.
UMG = Boomer stock
First to comment
You’re wrong about UMG and your assessment that it has no value shows that you know absolutely nothing about the music business. Please do some more research on the businesses that you speak of before giving uneducated opinions on them.