griezeman23

I'd be surprised if there's any hidden moats - unless you count their expansion into grove management services (think hotel management but for citurs groves). New CEO / CFO definitely get it. CEO is former Bear Sterns. 5-10 years from now, grove management services manages a similar acreage to Alico's today. Alico produces 10mn+ boxes annually. Not sure this is a buy and hold forever (biggest driver of earnings is citrus pricing, which is not really set by the FL producers - moreso by non-US based citrus producers). More a special situation given that land sales are accelerating and growth capex is over after this year allowing all excess FCF get returned to shareholders. Longer term, I do worry about int'l competition + citrus greening - if you want to hold 4ever. @Gregmal largely agree. Did I read it right on the Q2 call that management seemed to want to get most of the ranch land sold by year end? They did do a 15kish block just last month, which was ~1/3rd of the ranch land...

Seen a couple folks posting about this in other spots, so i thought I'd start a thread. Think this thing is quite cheap - both on an asset and profitability basis. On profitability: If the increase in fruit drop rate and lower fruit quality (and overall FL citrus market) is really just due to a poor bloom in spring 2020, then I think the stock's trading at ~5x FY22 EBITDA... post-debt paydown and sale of the 15k in ranch land. Nice to see them bump the div the other day...

Yikes. https://www.techradar.com/news/cyberpunk-2077-loses-over-75-of-players-on-steam

The company made a huge mistake by announcing on Dec 14th that console customers could "opt" for a refund. That was basically just a lie, since it, by its own admission, had not approached Sony or Microsoft to make any special arrangements, and Sony in particular has a refund policy that is quite strict. What happened yesterday was Sony basically saying, 'Fine, will we issue no questions asked refunds for anyone who purchased on PS Store, but we are also pulling it from the store altogether.' There is a certain logic to this, as it prevents gamers from.....'gaming'.....the system by purchasing the game, playing through the single player story, and then immediately requesting a refund. There is going to be a flood of refund requests by consumers who know that they will always have the option of buying the game next year after it has (hopefully) been fixed, and probably at a cheaper price given how quickly video games typically drop in price. There is also the question of whether Microsoft feels pressure to follow Sony's lead I would not be surprised if MSFT pulled it. I actually ended up speaking with a couple friends about Cyberpunk 2077 on Wednesday night and ended up punting my shares on Thursday (luckily). I did not realize that they had advertised the game more as an RPG like Red Dead Redemption 2 and it instead was more an action-adventure (like Star Wars: Jedi Fallen Order). Clearly, there were like more issues with Cyberpunk than I realized - and I got very lucky. There's probably a time to buy CDPR some time in the future but I doubt it's anytime soon. Feels to me like management has lost all credibility - so much hype and then released a broken (and deceiving) game.

Good call on this FT. Stock off 15% with Sony pulling it from PS store. Clearly, I had no idea what I was talking about...

No doubt it is an absolute shit show. But that is what brings about opportunity - and possibly a trade. I am not super interested in holding this business for an extended period of time given the hit-based nature of their big titles but I do think the move down is quite over done. Stock trades at 14x EBITDA now vs. ~12x in March, so I think it's worth a punt if they can fix the old gen issues, as they "promise" by February - don't have much credibility after this royal fuck-up.

Picked up some shares at $19.5 or so, stock is still down 30%+ since 12/4/20. Mostly a trade. Cyberpunk 2077 clearly has it's issues, but it is a GREAT game. They did just announce that they are working on fixing the graphics issues ( Cyberpunk 2077 run on a PS4 looks like a game from the mid-2000s). Despite that, the game still sold 8mn+ copies in pre-order. If they can clean up the graphics issues, I don't see why Cyberpunk doesn't do well in the longer term. That being said, I don't like this name as a set it and forget it name since there is so much risk tied into one release (like we've seen) but I think it has been pretty derisked at this point. Trading at 14x forward EBITDA or so, vs. 12x at the lows during COVID.

LOL had no idea! Just posted last week... https://www.linkedin.com/jobs/search/?currentJobId=1980737916&keywords=spotify%20audiobooks

So, on your inability to see the bull case for Spotify: I think it stems from two facts: 1. It is a commodity competing against big tech; 2. It is only about music and the labels will always control content. Please correct me if I am wrong. 1) My reasoning on why Spotify is not a commodity music player: Today, music listening is still relatively akin to broadcast TV. We know the largest artists make a disproportionate amount of all streams / money in the industry. I think one of the key things Coho picked up on was that last year, the top 90% of all streams were from 16k artists. Now, 32k artists account for the top 90% of streams. I imagine that music will become more and more niche, as discovery becomes an even bigger part of folks lives. This is not to say that there won't be big winners in music, there always will, but I imagine that their importance or share of the music industry revenues and mind share will decline. Who's driving this? Spotify. Look at mature streaming markets: https://twitter.com/compound100x/status/1294530406297948160/photo/1. https://www.digitalmusicnews.com/2017/08/14/spotify-youtube-sweden-norway-streaming/ (last two charts). Now, if these markets were widely distributed in terms of DMPs, then I'd think this would point to your argument that Spotify is a commodity. But that is not the case. I think this is because Spotify has more data on listening than anyone. On average, Spotify listeners listen to 2x the music that Apple Music listeners do, and Spotify is more than twice as large (per last Apple Music update). More data means a better recommendation algorithm. And that is what is driving users to listen to more (and new) music. I think the algorithm then means that Spotify is not a commodity. But the key thing is to continue making music and listening social in order to create network effects. Which they are doing with the ability to make "live" playlists with friends, as well as follow each other's playlists. They also have hugely influential playlists like Rap Caviar that dictates what's popular in today's music. https://www.vulture.com/2017/09/spotify-rapcaviar-most-influential-playlist-in-music.html. This is showing up in continually improving engagement (https://www.edisonresearch.com/the-infinite-dial-2020/). Amazon Music is seemingly the only other DMP making meaningful gains outside of Spotify. So, I don't think Spotify is a commodity. Is the overwhelming in my favor? No. This is why this a heavily debated stock and on an EV / EBITDA per user basis, trades nowhere near NFLX. 2) My reasoning on why Spotify is not just beholden to the label: So, if Spotify is driving what people want to listen to and knows what type of music each person wants to listen to, I think this erodes the power of the labels. They'll be able to help these labels figure out how popular an artist may be. I think this is a key part of the two-sided marketplace. Compared to other DMPs (I am assuming this means Apple Music, etc.), right now, it seems unlikely that Spotify should have a better take rate than the others. But, if they own say, 70%+ of listeners (at about 50% and anecdotally more folks I know are switching to Spotify away from other DMPs), when the business is mature and they are "dictating" what folks are listening to relative to peers because of better (and more) data, then I do think it is possible they improve the take rate. To do this, they need to have network effects and take a larger share of listeners (and this is where podcasts help). On content: agree on music. This is why podcasts are an important piece of the pie. I don't think the opportunity is as large as some may think but I do think it is a meaningful and important business for Spotify. I think the importance of podcasts are both the ability to grow the business but hold power over the labels. I am not sure how the contracts with the labels are written, but I would be suprised if the labels can take 70% of the subscription fee, when say, a 50% of a user's time is spent listening to podcasts. Even if this is the case, I think this may have been how Spotify signed up UMG for the two-sided marketplace: i.e. ignore podcasts from listening and keep the pay rate the same. I believe this is the power of diversifying away from music. I believe this is the point of the two-sided marketplace is that it is a hedge against an inability to improve their take rate. So, the story is no longer just about music. Music is the most important piece, but I believe that podcasts and other forms of audio (I imagine they'll get to audio books at some point) will become a large portion of the business (30% of the value).

I am guessing the labels are going to pressure all the distributors to raise prices once they have reached a certain level of penetration. Likely the days of $3 / month for 3 months or free for 6 months days will end. But the more important sticking point for Spotify (and other distributors) to the labels since the start is that the labels were overcharging customers in the pre-Internet days. They were only attracting the high-end customers. While it was more profitable per unit, the total $ amount of profits captured was far lower as it excluded a whole class of customers who chose to listen to music for free (via ads). So, while assuming ARPU is doubled and subscribers go to 600mn may seem unreasonable, the bigger thing that Spotify is able to do is aggregate audio listeners... Meaning that the big money to be made (on monetization) is not on the paid subscriber side but rather the ad-supported side. This is the whole reason for the push into podcasts, because there is a huge chance to aggregate the podcast space akin to the early internet days (h/t Stratechery). Plus, with more data, the better targeting gets, prices rise and the flywheel begins to churn. After this last call, I am becoming increasingly confident that Spotify is going to look to somehow enter the audiobook space as well. Well, Spotify is roughly 20% of Warner music's revenues (30% b/w Apple and Spotify per their K, and Spotify's subscriber base is 2x that of Apple Music) and roughly 30% of UMG's revenues (based on Dec 2019 investor presentation and 50% share). So, I'd think for financial reasons it would be hard to argue that they pull their music plus the most active music listeners (users spend 2x as much time on average listening to Spotify than they do at Apple Music) are on Spotify so there would likely be HUGE backlash against the labels if this happened. As Spotify scales and their market share continues to grow (I am guessing Apple Music has gone nowhere fast since they disclosed 60mn subscribers in 2Q19 and anecdotally, all my friends are switching to Spotify because of the social integration), then they'll be able to extract a better seat at the negotiating table. Personally, I don't bake in any upside to GMs for label negotiations but I'd say it is more likely that Spotify continues to gain power over the labels rather than the other way around. While Spotify has doubled, the stock still trades 2x lower than Netflix does and the pathway to GMs in the 30s seems clearer today than a year ago.

Anyone have a sense of what SPOT looks like in 10 years? My conservative guess would be $4 / month per subscriber * 12 months * 25% GMs = $12 in GP per subscriber. I assume $4 / month per subscriber b/c the tilt will become more international. I think the SS has talked about a TAM of 1bn for music streaming... There were 278mn in 2018. SPOT had ~100mn at YE18. So let's assume 35% market share at maturity. Could be higher as SPOT flywheel begins to turn plus the fact that no. 2, Apple Music, is basically constrained to the iPhone ecosystem. That puts SPOT at 350mn subscribers. So subscription GPs come out to $4.2bn. Average revenue per ad-supported user is roughly $5 / year ($0.45 per month). Let's assume we see that grow 50% in 10 years (it grew 30% from $0.34 to $0.45 from 2016 to 2019 and this was pre-podcasts). Let's assume then that ad-supported users end up at 350mn in 10 years as well (I know that ad-supported is 20% to 30% larger today but I have a tough time conceptualizing how big ad-supported could really be). Let's assume GMs run at 20% (a bit higher than today which is in the high teens.). That's $7.5 * 350 * 20% = $500mn in GPs. So we have a business in 10 years at $5bn or so in GPs. IIRC, they think they can run the rest of the business at 10% to 15% of revenues - please correct me. So with a biz @ ~22.5% GMs, this means operating income would be somewhere b/w $2.5bn & $1.5bn. Let's assume a FB / GOOGL multiple on the ad-supported business of ~12x. Then assume the subscription business is worth closer to 20x - this will depend more on what rates look like in 20 years but I am not betting on what that looks like. Biz is split roughly 85/15 in terms of profits so a multiple in the mid- to high-teens seems right. Let's call it 17x. 17x * $2bn = $34bn business. This is where we are today. Inclusive of dilution then this looks worse. But this would be offset by accumulated cash flows plus the TME position plus current cash. Just trying to get some rough number sdown. Of course, my numbers can be wrong: both lower or higher. I'd think the P() is skewed towards the upside but of course the market is discounting that today. Then you also have to account for all the implicit options in the business. How successful will podcasts be? Will they pivot into video? How much can they flex GMs? Will artists go towards more independent labels as supposed by the above inpractise interview? What other new businesses will they add? You can certainly say the valuation looks frothy on what the business looks like today relative to where it will be in the future. However, I would think this type of thinking fails to recognize the optionality the business has (which is probably what the market is discounting). Of course, that could be some confirmation bias on my part. Am I racing out to buy shares today? Certainly not but I would not to be on the other side of the trade right now. I am pretty neutral on shares today at $180ish.

It's a smart deal. Jio is effectively a legal monopoly, and Zuckerberg gets to piggyback and monetize on the back of Mukesh Ambani. Jio Mart can easily be a business worth more than $50B+, while allowing Zuckerberg increasing revenues per user in India by a considerable margin. However all this is conjecture at this point, and I have no evidence to support this - as opposed to their track record and learning something from Mukesh's and Zuckerberg's business journey. With that being said, the margin of safety presented, I think many can get great returns from at this entry point on a valuation basis alone. I think it's trading around 15-20x fcf net cash. Putting the valuation to the side (which is of course an important part of the deal), the deal strikes me as very Malone-y.... but in reverse. Malone owned the rails and moved into the content space via minority purchases because he realized the power of the "rails" (cable) working in conjunction with what's being transported (content). FB owns the content (well, they own the space the content is created in) and lack the rails... Jio gives them the rails. In the Social Network, Mark was portrayed as adamant that the service "cannot fail". Most developed markets don't have too many issues with network reliability and FB has purposefully pushed to lighter-weight apps (the blue to white FB conversion last year, Messenger rewrite) so that they need not worry about these networks failing to provide FB users with the highest quality XP i.e. they eat up minimal bandwidth to reduce likelihood of slow loading / failure to load. FB used to go down far more often ten years ago.... I think I can count on my hands it has been down in the last five. That being said, in India, the country is huge, and networks are likely much, much worse. Many users don't have smartphones. Jio Reliance provides the cheapest cellphone plans. I think this means that even FB's lightweight apps will likely given preference in the network in the future - after FB organizes some sort of favorable deal with Jio. I also imagine this is a way for FB via WhatsApp / FB / Messenger to penetrate the next billion users (1.3bn pop, 300mn smartphone users) to assure these network effects. While FB has probably failed with payments and other ventures domestically, they have chance to capture that in India. Thus, the deal allows them to become THE app for Indian consumers and ride the tailwinds of this quickly growing country.

Anyone have data (or know) what occupancy rates declined to in the months after 9/11? Thanks. I am seeing some hotels have occupancy sub-50% already in SFO, but am curious what a reasonable WCS is so I can model liquidity situations.

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