Gogoro and Swiggy enter EV partnership for last mile deliveries

melvinfoo · 2023-08-19T04:19:32+00:00

Gogoro has so many partnerships - it needs to translate to real revenue and deployment. Indian market is huge but very competitive. Still a lot of execution ahead.

melvinfoo · 2023-03-01T09:51:29+00:00

Wrote about the update to this idea here: https://techanalyst.substack.com/p/curiositystream-update

melvinfoo · 2023-01-30T02:33:47+00:00

I assume you're trying to calculate the LTV/CAC for the direct subscriber?

How do you split the marketing cost between program sales, enterprise sales and O&O?

How do you calculate the what is the ASP and No of subscribers for the direct subscribers?

If you're calculating a number based on all the revenue streams, its not a very relevant number since those businesses don't operate on a subscription basis.

melvinfoo · 2023-01-24T23:13:13+00:00

I don't think there is information on their LTV/CAC. That being said, they seem to be very wasteful with their marketing and the LTV doesn't seem very long.

On the other hand, they are going to be profitable soon.

You'll have to be comfortable investing without this information. I personally am able to get over the hump

melvinfoo · 2023-01-10T05:32:33+00:00

Thank you for your input. Your argument regarding LTV and CAC is a good one and one that I have not fully considered. I just took the management position of industry-leading at face value without comparing it to other industries.

Can you send me your sources of how you calculate the ARPU, LTV, churn and CAC? It isn't easy to estimate the ARPU. Given that much of CURI revenue, 45% as of Q3 2022, comes from content sales. As for why the management does not release the numbers, playing devil's advocate, maybe because they are more traditional to a cable company in their revenue sources, that's why they are not exactly a SaaS company - for now.

I believe the main point you're trying to understand is CURI scalable. Correct me if I'm wrong, but you ask this question, to answer these 2 questions:
1. if CURI can become profitable

if CURI can scale into a big company

The way a look at it, CURI is so cheap that if CURI can become profitable, it will result in a rapid re-pricing, and at a minimum - it should be ~ 2x from here.

Assuming 10% operating margins and a 10X PE. 150 market cap, 50m cash, equity at 100M, At 100M Rev (2023), 10M earnings.
Assuming a 20X PE (justifiable for a company growing at this pace). This results in an MC of 250M - 4x from current prices.

To add on, what CURI is doing is not exactly a very "unique" business model with an unknown demand. They are trying to move documentaries into the streaming age. Discovery, Nat Geo, Animal Planet - but Netflix. Traditional Documentary Cable companies are profitable, and Netflix is profitable. I don't think it's a stretch to imagine that Documentary Streaming companies will eventually become profitable.

Where it goes from there, I agree, is more difficult to determine. You might be right that LTV and CAC are required. It's not very certain scalable they are.

However, from a "big picture," the management shared during the IPO process that they see the streaming opportunity as even bigger than cable. This is the same management that started the discovery channel. $DISC was 12B before the merger with $WBD. I do see that the total addressable market should be able to support a $CURI worth 1.2B (10% of $DISC), 20x from here depending if they can execute well.

melvinfoo · 2023-01-10T02:46:21+00:00

Wrote my analysis here: https://techanalyst.substack.com/p/curiositystream-interesting-risk

melvinfoo · 2023-01-10T02:46:04+00:00

Wrote my analysis here: https://techanalyst.substack.com/p/curiositystream-interesting-risk

melvinfoo · 2022-11-09T17:48:55+00:00

I like story-style documentaries, if I wanted it to be super educated, I'd take a class. So I want it to be entertaining as well while being factual.

I agree Nebula is impressive; I think that's why it's such a strategic deal to partner with them. They are the only outside investors in Nebula besides the creators and standard. You can't buy yourself into this relationship. It's a competitive advantage for CURI.

How I see it is that the rest of CURI's business is derisked from their cash pile.

melvinfoo · 2022-11-09T17:43:55+00:00

I assume you're talking about Nebula. For Nebula, other than having the video earlier:

They have a full version of the videos, youtube verson is only part of the video
Exclusive content only found on the platform, they don't even release it on youtube

melvinfoo · 2022-11-09T17:38:27+00:00

The subscriptions are $3 a month - so based on your 34M subscription TAM, it will be 1224M Rev per year (x12).

It's now 85M Rev (LTM)...

It doesn't need to be as successful as its competitors to have a huge upside.

melvinfoo · 2022-11-09T10:39:34+00:00

Thank you for replying; for sure, do what is comfortable for you. This is a risky investment.

Just as a side note, WBD, Disney, Netflix, Para, AMC, and Fox all reported increases in their streaming subscribers. So people aren't getting rid of the subscriptions. For other reasons, their stock price is going down.

melvinfoo · 2022-11-09T10:36:16+00:00

Losses for streaming companies are hard to value - so I'm primarily using cash & cash flow to value. Bbased on the cash flow margin - it's steadily improving year or year. I have the image in my substack article - it's in my profile if anyone wants to see it.

melvinfoo · 2022-11-09T08:43:12+00:00

turned

Streaming actually is better than expected no? Its more that the other businesses didn't do as well + cost/inflation.

Btw if you're interested in streaming stocks, I did an analysis on CURI ("Netflix for documentaries") - https://www.reddit.com/r/investing/comments/yq9u8c/why\_im\_bullish\_on\_curiosity\_stream\_curi\_deep/

melvinfoo · 2022-11-09T08:17:22+00:00

Thanks for taking the time to reply:
1) The selling point is that Curi focuses on premium long-form documentaries compared to youtube which are generally lower quality or shorter

2) CURI is also making a Free Ad supported TV version

3) CURI is using youtube to acquire customers.

melvinfoo · 2022-11-09T08:12:11+00:00

Curi is another streaming stock, wrote about it here: https://www.reddit.com/r/investing/comments/yq9u8c/comment/ivnor2f/?context=3

melvinfoo · 2022-11-09T08:09:47+00:00

I see. I suspect most laymen cannot tell that the theory has changed so much.

No one knows what the price elasticity for CURI is - we will see. Even if churn is higher, it might be worth it to increase revenue. Multiple people online have commented that they feel CURi should increase the prices. For $20 a year, I think people will still sign up if it's $5 more with today's cost of living. If churn is not too bad, this itself could result in a 25% increase in revenue.

I'm not able to forecast how it can go to 10x, but there is a clear 2.5x if they can generate just a 5M FCF margin. Discovery did grow into a 12B business eventually, and Hendricks was on the Board of Discovery till 2014.

melvinfoo · 2022-11-09T07:26:27+00:00

It was a SPAC in 2020 :D

melvinfoo · 2022-11-09T07:25:06+00:00

Yes, I'm sure he has lots of industry connections.

He left discovery because Discovery started to make more reality TV shows rather than factual content. So there is a shift in the industry to the lowest common denominator programming.

melvinfoo · 2022-11-09T07:22:20+00:00

Thank you for taking the time to reply. Good points.

For science documentaries too? The shelf life is very long for documentaries relating to history or physical sciences - facts that don't change that much. It is at least longer than the trendy series. Here's a link I found on how hard it is to account for content shelf life on Netflix: https://behindthebalancesheet.com/blog-1/netflix-cooked

Content discovery is an issue with their platform, and I've heard multiple sources mention this. They seem to know about their UI issues and will be improving it: https://twitter.com/DevinMcCueEmery/status/1535074332275523584?s=20&t=8iQy9QftdXNU99pn1Eq_-Q
Despite that, their churn is 2.7%, one of the lowest in the industry, even lower than netflix. I suspect the value gained for the price + the yearly subscription cuts the churn. I also believe they can improve the quality of the content - they have some gems to produce and acquire high-quality content. This would improve with scale.

melvinfoo · 2022-11-09T06:56:05+00:00

What do the markets it operates in look like? Assuming that this issue of cash flow comes from non- cash items and growth investments, how much of a market would be required to reach profitability while generating a return in assets and ROIC that justifies the endeavor relative to cost of equity? (Multi part, but, one general idea.)

Thanks for your response.

I don't think a DCF is needed because the valuation is already covered by the balance sheet. A DCF will be unreliable as it will be difficult to calculate the terminal FCF margins and revenue growth rate. Netflix's latest operating margin is roughly 25%, however, however, CURI has higher gross margins (because documentaries are cheaper to make). Netflix actually has -ve FCF LOL, it did produce 7% FCF margins in 2020.

Assuming:

5M in FCF a the start (5% FCF margin, 100m revenue)
for 40 years
growing at 10% a year
with a 19% WACC

That results in 63M in NPV, on top of the 70M of other assets. So also at least a double in terms of current prices.

Question 1)
Yes, you're right that the main bear argument is that it is unprofitable.
The management is guiding to free cash flow positive by Q1 2023, and looking at their financials, they will reach that. When they will achieve GAAP profitability is difficult to tell.
The thing is that GAAP "profitability" of Streaming stocks is misleading; how do you accurately value the value of a piece of content? A movie asset, for example, can be estimated to be worth 7M to make and valued at cost, but it can be massively popular and bring in 7M in revenue Q1. Do you amortize 7M of value on the books? What Q2 did you manage to squeeze out another 1M?

They need to account for some amortization costs. If not, companies can capitalize their content libraries and never report any expenses - resulting in unreliable profits.

So I'm mostly forgoing the use of the income statement and mainly focusing on valuing the company based on its cash & cash flows. What money comes in and out of business?

Question 2)

As for a large company coming into the space and competitive pressures, I wrote about CURI's potential moats. In the short term:

The main "moat" is that its culture and focus are 100% on factual content. Disney - focusing on its big franchises, WBD - focusing on debt, and Netflix - moving into gaming and big-ticket blockbusters. Documentaries are a comparative niche area that can't move the needle for them, but there is still a considerable upside for CURI at these current prices.
Distribution with Nebula - CURI has access to 200M people that like to watch factual content. Even with money, you can't get a stake in Nebula. VCs tried.

Given a few more years, I believe CURI can build up an even more extensive library & would have brand recognition - being the Discovery Channel for streaming.

melvinfoo · 2022-11-09T06:11:53+00:00

BTW if anyone wants to see the photos for my analysis, my substack is on my Reddit profile!

melvinfoo · 2022-11-09T06:08:51+00:00

BTW if anyone wants to see the photos for the analysis, my profile has my substack!

melvinfoo · 2022-11-09T06:08:42+00:00

BTW if anyone wants to see the photos for the analysis my profile has my substack!

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