Happy Sunday.
Quick shoutout to my friend Jessica Inskip for including me as a Top 10 Financial Educator in 2023 — as published to investor.com! Humbled to be in the same ranking as Josh Brown, Humphrey Yang, and Steve Chen.
You can check her out on TikTok and X — she also has an awesome podcast I love listening to!
Additionally, Robert Croak and I will be co-hosting a FREE webinar on February 7 at 4p ET sharing how we’ve been able to generate passive income through covered call option contracts.
You all probably remember (detailed post below) I’ve been selling covered call option contracts against my Tesla position for quite some time — these contracts have generated me $4,050 in passive income since mid-September.
During this webinar, I’ll be walking everyone through my own experience with covered calls, share examples of other stocks to use for yourself, as well a have covered call experts Troy Cates and Garrett Paolella join us to give their expert advice.
To register for the FREE webinar, Click HERE!
There’s only 1,000 seats — so be sure to save your spot.
Portfolio Updates:
The Dividend Growth Portfolio has been off to a great start in 2024 — with names like Palo Alto Networks, Crowdstrike, Monday.com, and Uber all delivering double-digit returns YTD.
As you all can see, I only deployed $2,300 into this portfolio in January — and honestly, I’m not sure how much more I’ll deploy in February. I should have ~$19K of fresh capital to deploy next month, and I’m leaning toward using that money to buy another 100 shares of Tesla stock (now trading at a discount, in my opinion) in efforts to write more covered calls.
With these new shares, I’ll be able to consistently generate between $1,500 — $2,000 per month in passive income. Heck, that’s my mortgage.
Haha, something funny I also wanted to mention is how comical my “timing” of the market really is. As you all know, a few weeks ago I finally pulled the trigger and sold my shares of ASML Holdings (ASML) for Nvidia (NVDA).
Of course, right after I sold my shares their stock price jumped +12% — part of the game I guess. This is just another reminder that automating your investing is the absolute best way to build wealth over the long haul. By taking emotion out of the equation and instead dollar cost averaging — math is on your side.
And the math tells us the stock market averages +8.5% annually — something I get very excited about!
Bitcoin is in a slump, not worried about it.
Week in Review — Too Long, Didn’t Read:
Netflix generated $7B in FCF for their shareholders, Tesla views 2024 as a “transition year,” Visa is on shaky ground, Intel’s guidance is below expectations, Apple’s car might not make it to production until 2028, Microsoft’s fired 9% of their gaming division, GDP was higher than expected, and PCE was healthy.
Key Earnings Announcements:
Netflix generated $7B in FCF for their shareholders, Tesla views 2024 as a “transition year,” and Visa is on shaky ground.
Netflix (NFLX)
Key Metrics
Revenue: $8.8 billion, an increase of +13% YoY
Operating Income: $1.5 billion, an increase of +17% YoY
Profits: $938.0 million, an increase of 1,605% YoY
Earnings Release Callout
“We enter 2024 with good momentum. We expect healthy double digit revenue growth for the full year 2024 driven by continued membership growth as well as improvement in ARM as we adjust prices.
We’ll also continue to invest in and build our ads business; we expect strong growth in 2024 but off a small base so it’s not yet a primary driver of our overall revenue growth. Our aim is to make ads a more substantial revenue stream that contributes to sustained, healthy revenue growth in 2025 and beyond.”
My Takeaway
Geez! Did I call this one or what? Below is my quote from July 23rd’s Week in Review when analyzing Netflix…
“Another massive takeaway I saw this quarter is the company’s immense focus now on profitability and generating free cash flow… I think if Netflix is about to reach the right formula for its global content and is able to balance the costs of generating that content — they’ll be positioning themselves in a great come 2024.”
Their Stock price is up +33% since then — wow! Quick reminder — it’s one thing to have a “hunch,” like I did in this analysis. It’s another thing for that hunch to come to fruition — which Netflix has just proven to us in this quarter’s earnings.
Let’s dive in.
Netflix is entering 2024 with immense momentum following a record Q4 net new subscriber add of +13.1 million, revenue growth of +13%, and $7B of free cash flow in 2023. The company guided to Q1 revenue of $9.2B, in-line with Wall Street’s expectations — while also guiding to a 26.2% operating margin (much higher than Q4’s 16.9%), catalyzed by lower marketing / technology spend.
Netflix also inked a deal with the WWE, is actively investing into gaming, and has a $17B content budget to spend — all drivers of net new subscribers in 2024 and beyond. Wall Street is modeling $11B in annual free cash flow by 2027, +50% higher than 2024’s figure.
I will be adding Netflix to my portfolio — I believe this company is going to 1) continue to print FCF for their shareholders, 2) venture further into the “scripted live TV” space, and 3) make waves in the gaming world over the next 3-5 years.
Tesla (TSLA)