Thanks for this content, great head-to-head comparison. It appears your term of "operating leverage" is the reinvestment of excess earnings into fixed "cost of goods/services sold" that have a high incremental return (new Netflix original movies, and new licensing deals if they are one-time costs, or are per-viewer).
I believe the term operating leverage was more related to the fact that businesses with a fixed cost and minimal variable costs can see “leveraged earnings” as the business grows. By leveraged earnings, I am referring to an increased level of earnings on a per unit basis, rather than maintaining a profit margin. This is more so the fact that more revenue is spread over the same fixed cost (or at least close to the same) while the earnings keep rising. So rather than operating leverage being reinvesting in fixed costs… the fixed costs remain, and the revenues and earnings continue to gain.
Moved some of my RIG common back into LEAPS recently (not a recommendation for peeps, my basis is sub 2.28 from trading around so I've got wiggle room) and it's more than doubled the move in the common. Also added back Tidewater 2024 warrants at 2.76 again. Of course, like always when it works you always wish ya did it bigger. I'll take some luck every now and then. Think the next 5 years is gonna be good. Wish I had another crack at huge discounts to replacement cost like last October but I guess half the book in offshore will suffice 😅
Thanks for the video! However, I’m a bit of a sceptic on these streamers as an investment. Netflix’s fixed cost? Don’t they have to increase their spending on new content indefinitely. And there is extreme competition- where’s Netflix’s moat in the end? Yes netflix was probably the first streaming service, yes they have a lot of content, but the last years they face high competition from other money-loosing companies (Disney plus fex). Content war between money loosing companies until the end of time 😅Not my cup of tea.
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Thanks for this content, great head-to-head comparison. It appears your term of "operating leverage" is the reinvestment of excess earnings into fixed "cost of goods/services sold" that have a high incremental return (new Netflix original movies, and new licensing deals if they are one-time costs, or are per-viewer).
I believe the term operating leverage was more related to the fact that businesses with a fixed cost and minimal variable costs can see “leveraged earnings” as the business grows. By leveraged earnings, I am referring to an increased level of earnings on a per unit basis, rather than maintaining a profit margin. This is more so the fact that more revenue is spread over the same fixed cost (or at least close to the same) while the earnings keep rising. So rather than operating leverage being reinvesting in fixed costs… the fixed costs remain, and the revenues and earnings continue to gain.
Exactly :)
Really helpful content! Thanks Tom :)
Thanks - glad to hear!
Great content, Tom! Thanks for sharing a great lesson on operating leverage!
Glad you liked it!
This is great!
Thanks :)
Offshore energy be like - operating leverage? Hold my beer Netflix 🤑
Haha this is true!
Moved some of my RIG common back into LEAPS recently (not a recommendation for peeps, my basis is sub 2.28 from trading around so I've got wiggle room) and it's more than doubled the move in the common. Also added back Tidewater 2024 warrants at 2.76 again.
Of course, like always when it works you always wish ya did it bigger. I'll take some luck every now and then.
Think the next 5 years is gonna be good. Wish I had another crack at huge discounts to replacement cost like last October but I guess half the book in offshore will suffice 😅
Sky Box reveal?
Stolen from the depths of the internet haha
Thanks for the video! However, I’m a bit of a sceptic on these streamers as an investment. Netflix’s fixed cost? Don’t they have to increase their spending on new content indefinitely. And there is extreme competition- where’s Netflix’s moat in the end? Yes netflix was probably the first streaming service, yes they have a lot of content, but the last years they face high competition from other money-loosing companies (Disney plus fex). Content war between money loosing companies until the end of time 😅Not my cup of tea.
Time will tell how it all plays out, but content spend has certainly flattened out in the last couple of years
@@InvestingwithTom At least we all know who the winner is, we the viewers, subscribers who have all these companies bidding on us for our attention :)
"promosm" 👇