Disclosure:
- I do not own any stock or derivatives of the equities discussed
- I open to taking up a position as valuations change or gain new information with no set time horizon
- I did open and close a modest position in NFLX with week for a 6% gain.
I was thinking about this, this morning (I wake up really early to feed my rabbits, like 5am, so I have a few quiet hours in the morning).
GAMA (GOOG, AMZN, MSFT, APPL) beat earnings or at least were able to guide in a way that produce confidence. NSF (NFLX SPOT, FB) missed or disappointed in guidance.
As I think through the companies that hit and the companies that missed, it seems to me that the companies that hit earnings were fundamentally different than the companies that missed–
(I want to callout that I don't think I'm saying anything net new or deeply insightful, I'm just sorting out and aggregating what I've been reading as the week has gone on)
The companies that beat…
- Were generally more diversified (Edit – They have both commercial and consumer products and services)
- Had developed an ecosystem of some sort (Edit – In addition to having both commercial and consumer products, they also have their own hardware)
- Produced tangible assets or services
The companies that missed…
- Did not have a deep ecosystem and relied on the ecosystems of other companies
- Focused heavily on consumer content–they were almost pure data or advertising plays
I think back to what Warren Buffet said about pricing power and why he loved tole bridges. GAMA are toll bridges where you can hardly get around them in the modern world. NSF…they're content curators or creators and people can be fickle.
Would love to get some thoughts about anything I may have missed or additional ideas about how to analyze the relative moats that companies have.
Good luck today!
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