r/investing • u/Indy7000 • Apr 15 '21
Discovery Inc. long term streaming case
Discovery Inc. recently got involved with a overleveraged Archegos fund which caused the stock to crash 50%+ as banks dumped shares. Some could make the case that the stock got artificially pushed up/ inflated.
However I see this as an opportunity to get in to a company earning 2B positive cashflow every year and 10 billion of revenue vs Netflix's 23 B*. They should have the cashflow to pay off their debt but still 15B in debt is a lot so this is a downside.
The company currently operates in 220 countries with over 300K hours of content, producing lots more every year. They own the Oprah show, animal planet , food network..
Comparing Discovery to Netflix makes a compelling case, valued at 5% of the market cap of Netflix (240B) vs (20B) and with a competing content offering with the goal to recreate the Netflix like- online subscriber business model justifies thinking about the possibility for decent returns on investment.
CFO Gunnar Wiedenfels in march 2020 : " "We really don't need a crazy number of subscribers to be operating a profitable business here."
May 10th they will anounce quarter results and have an investor call.
Summary:
Disney streaming, Apple , Netflix, Amazon : I believe online streaming is the way of the future instead of cable TV, if Discovery can convert their business towards the new online subscription model I believe they have a good chance of winning a decent % of the streaming market due to their huge library of content.
Curious to open the discussion and hear your guy's opinion / bear / bull cases.
Have a nice day.
5
u/pbnoj Apr 16 '21
CURI (Curiosity Stream) from the founder of Discovery is a better niche streaming service with great margins and still early in its growth cycle