đź’¨ Meep Meep

WBD speeds past the competition — right off a cliff. Plus, the $2T AI pick-and-shovel play.

Author

Brooks Dyroff
February 23, 2024

TGIF Zingers! There’s nothing quite like going out on a high note. A rally set off by the $2T AI pick-and-shovel play better known as NVIDIA helped the S&P 500 and Dow Jones Industrial Average end the week at new all-time highs.

Please excuse me while I rest comfortably on my laurels for the next couple of days. And by “my” laurels, I mean I was repping the NVIDIA SHIELD tablet back in 2013, so yeah. Go ahead. Thank me.

Today’s Price Action:

$SPY: +0.07%
$QQQ: -0.29%
$DIA: +0.19%

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TOP STORY

Briefly: Warner Bros. Discovery hit a major streaming milestone in Q4 2023 — but it wasn’t enough to keep its stock from free-falling more than 10% today.

So Basically: WBD’s earnings report this morning showed its streaming service Max reached profitability, which might just sound like competent business operations, but in the streaming industry happens to be a huge deal.

So Then: The only other profitable major streamer to date is Netflix. Disney+, Paramount+, Peacock, and more are essentially fitfully entertaining branding exercises — not to mention money dumps.

But Still: In a Wile E. Coyote-esque reversal of fortune, WBD’s competitive edge didn’t save it from running off the edge of a cliff. A slump in advertising revenue, coupled with a top- and bottom-line miss, were like TNT to the stock.

So What? It’s not all bad news for the media giant. On the conference call, the company mentioned it is on track to achieve $1 billion EBITDA by 2025. “We have an attack plan for 2024,'“ said CEO David Zaslav, including “a more robust creative pipeline across our film and TV studios.”

Then Again: Said plan presumably involves True Detective Season 5. So maybe don’t get your hopes too high.

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ONE FOR THE ROAD (PUN INTENDED)

Briefly: Rivian stock was like a car crash this week: So bad you couldn’t look away. And, according to one fund manager, you shouldn’t.

Back Up: Rivian shares tanked more than 25% in Thursday’s session and another 12% today on the back of dismal 2024 production guidance.

But Then: Future Fund co-founder Gary Black defended the company, saying it has the potential to become the #2 EV maker behind Tesla, in which Black is heavily invested.

Back It Up: The fund manager said Rivian has a high quality product, brand recognition, execution skills, lack of legacy ICE baggage and competitive conditioning. Black also said Rivian competes in just pickups and SUVs, the auto industry's two most profitable segments.

Better Than: General Motors, Ford, VW and BYD, according to Black, who maintains none of the legacy players have it in them to be a credible #2.

Big Question: Is this one of those buy-the-dip moment?

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