Subscriptions Gone Too Far and A Very Important Earnings Season

We are back with an episode talking about what we've been seeing in the business world lately. We talk about how subscription services are just getting way out of hand, how this is an important earnings season, and more! 

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Eddie Thomas: 0:01

Yo, what is going on guys? This is Ally finance in between podcast. I'm your host, Eddie Thomas. And you know, this is brought to you by wealth management services in Hershey, PA. What's going on? Hope everyone's having a good one. I hope everyone's staying cool. Honestly, this, this heat wave that's going through, I think 95 degrees outside right now feels like 97 feels like it's just too hot. I don't I hate, I hate the summer months. Because of this exact reason. I'd much rather be winter. I know a lot of people don't agree with that. But when it's 95 degrees outside, and I have a black car with leather with black interior, it gets a little toasty in there. And I'm not a fan. And I'm not a fan just walking outside and feeling like I already can't breathe because our heart is that's kinda what's happening right now my life is I'm just trying to stay cool. I'm just trying to stay cool came a little bit hard into this episode directly jumped into that. But honestly, I looked at my left and my computer and it said 92 degrees. So first thing that came to mind having been outside all day today, this is it's been in the office day, all day sending the AC so I don't really want to go outside and feel what it's like, last time I was outside was probably like 830 this morning. So that's kind of what my day has been. That's what my day has been. I hope everyone's having a good one. I'll be that a good week. So far, whenever you're listening to this is the weekend. Hope you having a good weekend. My weekend coming up my doing too much. Not doing too much my family might come to town. So that'll be nice, but not doing too much otherwise. And yeah, it's hanging out. But definitely have some things I want to talk about. And yeah, I wrote them down and just have some some stuff from the week that I think it's kind of funny want to talk about it and some other stuff finance related or not financial related. But let's dig into it. First thing this week is official. If we didn't already know now we do. The subscription service model is going too far. Where will it end? Nobody knows. What do I mean by this? BMW in the UK, Germany, New Zealand and South Africa, are starting a subscription service to have heated seats among other luxuries in the car. So if you equate it to American dollars, US dollars, it's roughly $12 a month to have heated seats. Otherwise you do not have heated seats. So the fact that cars, companies and I hope this is not a widespread thing, and I sincerely sincerely sincerely hope that we don't get to a point here in America where our car companies, or companies or cars that are sold here in the states are put on subscription service for some, I guess luxuries, services, if you will. I really hope it doesn't get to that because I'm not going to pay 12 bucks for heated seats. But I like heated seats. Ninth pay $12. But when you buy a car, especially BMW, especially BMW, when it's like 60 grand, I don't I'm not sure how much BMWs. But say it's like, somewhere between 50 grand and up, you'd have to think that's the floor. But you're telling me that you get a car for 50 grand, and you have to pay an additional 12 a month for the life of home owning that car to have your seats heated. That is that is a world I do not want to live in. As far as the description goes, I won't do it can't do it. It's like a principle thing at that point, right? Where it's like, come on, you spend so much for this car, especially like I said before, depending on the company, the charge another 12 bucks for heated seats. I think that should have just come with like it always has been. But I really hope this doesn't go down this line of of more of your luxury options getting tied up into the monthly subscriptions. Like if Apple CarPlay or Bluetooth or I mean you name it. If that stuff starts getting wrapped up in the monthly subscriptions, that's going to be some sad times, that's going to be some sad sad times. I'm not going to pay for any of them. There's not going to pay for any of them. They'll need them. Love them love having them do not need won't pay for it. So that that is some major news. Major news that potentially might impact all of us. I know it's a little bit on the it's not exactly serious news, but by not by all means that is this is something that we have to keep our eyes on as consumers because it kind of shows like a change in Companies mindsets and what they think consumers will pay for and how much they think they can make them pay for that, gosh, 12 bucks a month for years and years and years and years to heat your seats. That is that's something else that we'll keep our eyes on as consumers, I guess. Speaking of subscriptions, though, so earnings seasons now, and this is actually a pretty big earnings season, because it's the first kind of look we're getting at how companies are reacting and performing when inflation is higher at roughly 9%. So this is a, an interesting kind of look into how these companies are doing. And like I said, speaking of subscriptions, I'll start off with Netflix. Netflix had a terrible first quarter, terrible first quarter, I've talked about them in the past on this podcast, and I said they shouldn't get beat up for having a bad quarter. And I kind of stand by that. Still, but their first quarter was pretty bad. They showed subscriber loss. They showed that they weren't having as many eyeballs in their platform. And they blamed that on things like password sharing, and they blamed it on rising competition, of course, and some other factors. But I think the major, major, major reason that they are having subscriber loss at this point is yes, definitely competition like Disney plus, and HBO, Max, Apple, TV, Amazon, there's a million of them out there a million. And I talked about that, in the past a million the sleeping giant has also YouTube, there's a million of these streaming platforms out there. So they're not exactly the only player in town anymore. Secondly, Netflix has the issue that some of their content is really, really, really good. And some of their content sucks, horribly. And so when they don't have these really good shows, they lose subscribers because nobody wants to watch the stuff that isn't very good. So when you have a really good show that comes out once a year, people binge it in three days, that's really the end of what you need Netflix for. So in the second quarter, they lost another 970,000 subscribers. So in what's funny is that was actually a good quarter for them. They forecast that losing roughly 2 million, so the fact that they only lost 970,000 People took as an absolute win, and the stock popped like 6% on those earnings, which is funny because they got killed last quarter for losing subscribers. And of course, they didn't want to lose subscribers last quarter, so it was more of a shock that they lost on. But still, they lost nearly a million subscribers and they pop 6% up 6% Yes, why changing mindsets of investors and Netflix has gotten beat up so so bad this year that I think any sort of news that wasn't as bad as they forecasted, they were gonna go up on the fact that they lost only half of those subscribers that they forecasted losing. And they're showing that they're going to make some big, big changes with some of the content that they make and having an ad supported tier to their platform. People love the idea. They're up 6% We'll see if it sticks. We'll see if that sticks on that end of it. Because Disney plus and HBO Max are coming and they are coming fast. Disney plus has like 138 million subscribers. Netflix has 220 million subscribers. The difference between the two platforms is Netflix started streaming in 2007. Disney plus started streaming and 2019. You have a 12 year Headstart, I feel like you should have a little bit more of a gap. But Disney Plus is a monster. And they have yet to announce those numbers. But they are a monster. And I'll be looking out for them because streaming whether we want to or not streaming is the absolute future of how we're going to take in content. The NFL is moving towards streaming with Amazon. Apple TV just picked up MLB on Friday nights and they have an MLS package streaming platforms Apple Amazon, I think I don't know who else but someone else is lobbying or making their pitches to have the rest of the NFL Sunday package that is currently I believe DirecTV has it. So streaming is the absolute future and Netflix had a huge head star and everyone else was catching up. I'm gonna make a full episode dedicated to streaming at some point though, so I'm not gonna dive too much into it other than that right now. So really all we need to know is Netflix had I guess, okay, quarter last only a million subscribers and they're up on that news kind of shows the kind of craziness that goes on earnings season. Tesla killed it though. Tesla, I think the revenues are up 42%. So they're showing that they're still growing. Their margins are narrowing, though. And what I mean is they just have more expenses at this point because they built a couple huge factories. Obviously keeping those factors going are huge money machines. And even though they're selling more cars are making more money, they're also spending way more money but the the kind of shutdown and China didn't impact them as much as I thought It would, which is good, which is really good for them. They show they're showing resilience on that end of it, still not buying an electric car anytime soon. And especially if it has a subscription model, I'm definitely not buying one then, which actually Tesla does their self driving as a subscription model, which I understand that part. If you want self driving, and you want to pay a subscription to that, totally understand heated seats, not so much. But I'll get off that topic. I'll let that go. And then the other earning season so far, we're very early into it. But banks and energy stocks, we knew energy stocks were going to do well, because energy costs are up. Banks, they typically tend to do well and rising interest rates environments, because they're getting pretty much a higher interest rate on the loans. They're providing the people so they're making more money that way. So both banks and energy stocks are performing pretty well. In general, of course, you're gonna have your losers every so often, and a couple of them, but for the most part, they're performing pretty well. So that's kind of what we're taking a look at this earnings season. It's it's more so how are companies, both service based and product based? How are they coping with inflation? And how are their consumers coping with inflation. So far, so good. Fingers crossed, I think this quarter is going to show us a little bit of under the hood of what that looks like. I think Quarter Three, though, where we are now will when these earnings come out in the future, a couple months from now will be a real telltale sign of how consumers are acting. And responding. People are still spending a ton of money, but I'm curious to see how companies do as well throughout this time. So really cool to see now, definitely something I want to keep our eye on. More important. When we get to quarter three results, months from now, as we see these play out over the next couple of months here. That's really all I had on that end of it, just keep your eyes on those things. And then anything else that I kind of wanted to talk about Amazon's bringing back drones, which they tried in like 2015. Now they're gonna try and at Texas a&m, and around that area. So I don't know, I don't think we'll see drones flying around anytime soon with our products, but they're trying they really are. There's obviously a lot that goes into it. But it's one of those things that we see a ton on the vans, now drones are going to be a huge kind of shifting point. But we'll get things way quicker. And if anyone's going to figure it out, it's going to be Amazon on that end of it. And then finally, another running and I'll keep this episode shorter. Another running kind of theme of what we've been talking about the past couple months, because it's hard not to is the housing market, and sales are down. I think sales are down like 14%, year over year from June 21 to June 22. But prices of existing homes are up. And there's a couple of reasons, I believe why. And I don't think it's going to stay this way for a very long time. But for right now, I think they're up because of two reasons. One, they're still very much a lack of supply in the homes market. So when people are still searching for homes, there's still a lack of supply to buy from. So if you are selling your home, you can charge a premium. And then two, there's a lot of people that selling wise that might have felt like they missed the boat in the past two years, and now they're trying to recoup some of that and just charge a higher price for the home. So I think those are the two factors that are affecting the housing market at the moment and having higher priced average price of homes throughout the United States, even though sales are down 14%, or they're roughly there about year over a year. So you're starting to see the impact of higher mortgages. You're really you really are. I think what I'm going to do in the next week or so is I'm going to have a couple questions. I'm going to gather some questions that I've I've gotten over the past couple of weeks, and that I've just heard just about in general, and I'm going to answer them. So it's going to be definitely more of like a personal finance, breaking down some questions, some answers. And diving into some specific topics that I haven't really done yet. In one of these podcasts, I'm kinda I'm kind of excited to dive into different things. Whether it's 401, K's, or emergency funds or investing, IRAs, whatever it is, I'm going to get four to five questions, answered them. And I might do that. I might make that a running theme here. I don't know. We'll see. But that's real. That's really all it is for today kind of all over the place, but just wanted to come on here and say what's up to you guys see how everyone's doing. Hope you guys are all doing well. And yeah, that's pretty much it. I just want to give a little update of what I've been seeing and kind of comment on something so I'll catch you guys on the next one. Until then stay happy, stay healthy, and I'll see ya. Securities offered through securities America Inc. Member FINRA slash SIPC. advisory services offered Through securities America advisors Inc. Wealth Management Services and securities America are separate entities. The opinions and forecasts expressed are those of the author and may not actually come to pass. This information is subject to change at anytime based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. 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