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Netflix and Tesla Play With Pricing

Fri Jul 21 2023
NetflixJohnson & JohnsonTeslaAirlinesAmerican ExpressDiscoverThe Grateful DeadHubSpotToroMueller Industries


The episode covers updates on Netflix, Johnson & Johnson, Tesla, American Airlines, United Airlines, American Express, Discover, The Grateful Dead, HubSpot, Toro, and Mueller Industries. It discusses financial performance, market trends, customer behavior, and business strategies.


Netflix's Q2 performance

Netflix reported 6 million new customers during Q2 but had lower than expected Q3 forecasts, causing a drop in shares.

Tesla's concerns

While Tesla beat expectations, shrinking margins are a concern due to cost reduction efforts.

Airlines' performance and consumer concerns

American Airlines and United reported record earnings, but expensive flights and poor customer service may lead to consumer backlash.

American Express and Discover's credit loss provisions

Both American Express and Discover are increasing provisions for credit losses, impacting their stock prices.

The Grateful Dead's freemium business model

The Grateful Dead allowed fans to tape their concerts, creating a freemium model that involved sharing tapes as a form of marketing.

HubSpot's content strategy

HubSpot took inspiration from The Grateful Dead and built a fan base through content marketing, eventually converting them into customers.

Enterprise customers and Toro/Mueller Industries

Some enterprise customers are delaying orders, impacting growth rates. Toro and Mueller Industries are experiencing growth in their respective markets.


  1. Netflix and Johnson & Johnson
  2. Tesla and Airlines
  3. Airlines and American Express
  4. The Grateful Dead and HubSpot
  5. Enterprise Customers and Toro/Mueller Industries

Netflix and Johnson & Johnson

00:05 - 07:10

  • Netflix reported 6 million new customers during Q2, but Q3 forecasts were lower than expected, causing shares to drop nearly 10%.
  • Revenue growth was below estimates due to investments in the advertising business, but operating income and profits were strong.
  • Netflix is investing in ad-supported content and removing its least expensive basic plan to push people towards the ad market.
  • Johnson & Johnson's MedTech division saw strong growth, contributing to a 15% year-over-year revenue increase.
  • Pharmaceuticals remain the largest segment for Johnson & Johnson, but MedTech is surging as people resume elective surgeries.

Tesla and Airlines

06:45 - 13:56

  • Tesla beat expectations on the top and bottom line, but shrinking margins are a concern.
  • Tesla's success in lowering cost per vehicle is attractive, but margin compression is worrisome.
  • Robotaxi ambitions and Cybertruck factor into Tesla's valuation.
  • American Airlines and United reported record quarterly earnings with strong international travel demand.
  • Cargo revenues dropped for both airlines, but international passenger revenues were up significantly.

Airlines and American Express

13:38 - 20:50

  • United and American Airlines stocks have performed well, with United up more than 54% year to date.
  • Consumer backlash may occur due to expensive flights and poor customer service.
  • International travel remains strong for airlines, while domestic prices are starting to go down.
  • American Express reported revenue of $15 billion thanks to high consumer spending.
  • Both American Express and Discover are increasing provisions for credit losses, causing their stocks to decline.
  • Millennial and Gen Z consumers are the fastest growing customer cohort for American Express.
  • Discover faced a probe from FDIC regarding misclassification of credit card accounts, impacting their stock price.
  • The health of the consumer is uncertain due to travel spending increase and rising loan loss provisions.
  • There are also concerns about the student loan issue affecting the consumer.

The Grateful Dead and HubSpot

20:21 - 27:58

  • The Grateful Dead broke industry rules by allowing fans to tape their concerts, creating a freemium business model.
  • They created a taper section for recording devices and sold taper seats.
  • Cassette tapes of shows were traded among fans, serving as an early social network.
  • Sharing the tapes with others became a form of marketing for the band.
  • The band prioritized their fans by valuing their community and experiences together.
  • They allowed small-scale fan merchandise sales but required licensing for larger businesses.
  • The band's approach to partnerships and affiliate merchandise has been emulated by other businesses.
  • HubSpot took inspiration from the Grateful Dead by carving out a new niche in the software space and marketing through content.
  • HubSpot's content strategy, including blogs, YouTube videos, and free courses, built a fan base that eventually converted into customers.
  • Creating free content for interested individuals is an effective marketing strategy.

Enterprise Customers and Toro/Mueller Industries

27:31 - 34:57

  • Some enterprise customers are lengthening their sales cycle and pushing out orders, impacting forward growth rates.
  • Large clients can provide profitable growth for companies in sectors like cybersecurity.
  • Looking for commentary on whether there is increased interest in the pipeline and if previously pushed out activity is now cautious.
  • Toro (TTC) is a leading outdoor equipment company serving residential and professional markets.
  • Toro's net sales have tripled over the last decade, with selected acquisitions contributing to growth.
  • The business is less seasonal now, and government spending programs will support future growth.
  • Toro has strong operating cash flow, has raised dividends for 14 consecutive years, and offers a 1.3% yield that should continue to grow.
  • Mueller Industries (MLI) is a $5 billion industrial manufacturer of copper, brass, aluminum, and plastic products targeting plumbing, air conditioning, heating, and refrigeration markets.
  • Mueller Industries provides building solutions for refrigeration markets and air conditioning markets.
  • The company has been around since 1917 and has grown revenues by an average of 11% per year over the past five years.
  • Mueller Industries generates high returns on capital and recently boosted its dividend by 20%, now yielding at 1.3%.