Investors should keep buying, here’s why
Summary
Joseph begins the video by addressing the geopolitical tensions between the U.S. and Iran, citing experts like Steve Eisman and Tom Lee who believe the conflict will not impact long-term market fundamentals. Joseph agrees, noting that his investment strategy already accounts for global instability and that he will continue to hold high-quality assets. The core of the episode focuses on the starkly different performances of two portfolio holdings: Netflix and Duolingo.
Netflix saw a massive surge after management decided to walk away from acquiring Warner Bros. Discovery. Joseph praises this as a display of extreme financial discipline, as the company chose to collect a $2.8 billion breakup fee rather than overpay for an asset. This capital will be returned to shareholders via buybacks, which Joseph views as a superior outcome to a risky, debt-heavy integration. He mentions he recently added to his Netflix position at $85 per share during the period of market uncertainty.
Conversely, Duolingo's stock dropped significantly following its earnings report, primarily due to decelerating growth guidance. However, Joseph maintains a positive outlook on the company's competitive moat, noting that it still holds 85% of the daily active user market share in language learning. He highlights the CEO's goal of reaching 100 million daily active users by 2028 and the transition of the app into a personalized AI tutor. Joseph also briefly touches on a 'fail of the week' involving the CEO of McDonald's, criticizing his overly corporate delivery during a burger review.
Mentioned Stocks
Reasoning: Despite a 20% drop following weak guidance and decelerating daily active user growth, Joseph is holding his position. He believes the 'AI disruption' narrative is false because the company maintains 85% market share and users who quit usually stop learning altogether rather than switching to competitors. He sees potential if the company can hit its target of 100 million DAUs and $700 million in EBITDA by 2028.
Reasoning: Joseph is very bullish on Netflix due to management's discipline in walking away from the Warner Bros. Discovery deal. He notes that receiving a $2.8 billion breakup fee (equivalent to a $0.65 per share dividend) is a major win that avoids regulatory risk and debt. He explicitly stated that he took advantage of the recent price drop to buy more shares at $85 per share.