ResearchThree Things (1/24)

Three Things (1/24)

Jan 24, 2022

The below content and projections are the opinion of the authors. Any conclusions or takeaways are their own. This should not be considered as investment advice. Investing involves the risk of loss and returns are not guaranteed.

1) Netflix shares tumble after subscriber forecasts disappoint and management offers few answers

  • Netflix said its net paid subscriber additions in the first quarter will be around 2.5 million, less than the 6.5 million analysts expected.
  • The company said subscriber growth has not re-accelerated to pre-Covid levels following 2020’s pull forward of demand.
  • Netflix shares fell more than 20% during Friday’s trading session.

Titan’s Takeaway: Netflix remains a category leader in a streaming market that continues to gain share from linear video consumption. However, these results and management’s commentary on its earnings left a lot to be desired, in our view. Netflix management said they’re “trying to pinpoint” why subscriber growth hasn’t come back to pre-Covid levels; the market’s reaction on Friday showed this kind of answer isn’t good enough in the current environment.

2) Intel announces $20 billion investment in Ohio facility as chip shortage persists and the industry scrambles to meet demand

  • Construction at the facility will begin in late-2022 and production should come online by 2025.
  • Over the last year, Intel has pledged to make $100 billion worth of investments to expand its chip-making capabilities.
  • Intel CEO Pat Gelsinger said he expects the semiconductor industry to double in size by the end of the decade.

Titan’s Takeaway: Intel’s announcement and Titan Offshore holding TSMC's recent earnings release serve as additional data points to support our view that the semiconductor industry is transitioning from cyclical to secular growth. The global chip shortage has created a surge in investment plans from the industry’s biggest players, but this new capacity will take years to come online.

3) Twitter enables NFT avatar displays for subscribers, as brands race to incorporate NFTs into their platforms

  • Users who set NFTs — or non-fungible tokens — as their Twitter avatars will see them displayed as hexagons, rather than circles, on Twitter's feed.
  • Twitter Blue subscribers will have initial access to this feature.
  • This announcement comes alongside reports that Instagram and Facebook are exploring similar features to display NFTs owned by users.

Titan’s Takeaway: Collecting and displaying art may not end up being the best or biggest application of NFT technology, but it is certainly the most visible today. As social platforms formalize ways to use NFTs for credibility or style, it’s yet to be seen whether this use case will catch on with more than a devoted niche of users.

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