In today’s briefing:
- TMT Left for Dead Long Ideas: Adobe
- TMT Left for Dead Long Ideas: Match
- Netflix AVOD Not Chill
TMT Left for Dead Long Ideas: Adobe
- Adobe is down 42% in 2022, and down 22% relative to the S&P.
- Valuation has been cut in half, and investors have voiced concerns and skepticism about its (incredibly) expensive acquisition of Figma in September.
- Adobe remains better positioned than most large cap software peers as it maintained its guidance from October Analyst Day, highlighting the secular tide behind digital transformation efforts remains strong.
TMT Left for Dead Long Ideas: Match
- Match is down 70% in 2022, and down 50% relative to the S&P.
- Despite impressive new CEO and a self help story, shares have continued to underperform rival Bumble and the market by wide margin on macro concerns.
- 13x Forward EBITDA for a company forecast to grow EBITDA at a 16% CAGR through 2025 (we think closer to 20%), has 35% EBITDA margins and $1B in annual FCF
Netflix AVOD Not Chill
- Multiple negative data points have come out reflecting limited initial uptake for Netflix’s ad-based tier.
- (We think) Netflix lack of AVOD uptake is due to it being fully saturated in its major markets wheras competing services starting from scratch have higher AVOD uptake.
- Lack of incremental subs from AVOD points towards a weaker than expected 4Q22 and downside to guidance…not good for a stock that has ripped since 2Q22 earnings.
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