LionTree

Earnings season left as quickly as it came, and what remained abundantly clear within our LionTree TMT/Consumer Universe of ~150 stocks with $1bn+ mkt cap is that companies pushed the pedal a lot harder on profitability than Wall Street was expecting. This was deja vue from Q1 results as well. More specifically, the vast majority of companies that report adj. EBITDA beat consensus expectations, and a huge 45% of those beat by over 10%+. In contrast, only 3% of all companies beat sales estimates by over 10%+. These are just a few of the several key takeaways from our analysis of Q2 earnings season which we dove into this past Friday in our LT Weekly Top TMT Themes Report – see below for the full list of themes and you can request access to future reports here: LionTree.com/ltweekly - Earnings Wrap: Companies Are Still Pushing Hard On The Bottom Line - The NFL Isn’t The Only Big Sports Game In Town… The Paris Olympics Hits Record Viewership - Investor Positioning…AT&T, Meta, & Liberty Global Are Hedge Fund “Hot Stocks” - China Tech Contends With Weakening Domestic Spending Trends - Grab-Bag: DraftKings Reverses Course On Surcharges/Another Suitor Reportedly Emerges For Paramount/Venu’s Launch Was Blocked By A Judge #TMTEarnings #LTWeekly

Last week, we celebrated twelve years of growth, innovation, and partnership. While much has changed since 2012, our commitment to our relationships has only deepened, and together, we’ve achieved some incredible milestones. But we’re just getting started. Cheers to twelve years of LionTree! Hear us roar! 🦁🌳♾️

In the face of growing viewership largely driven by big talent and big personalities, an important question has emerged: Should college athletes be paid? LionTree’s Alex Michael sat down with MOGL Co-Founder and CEO Ayden Syal to see just how these athletes are navigating growing #NIL opportunities. Ayden shares his insights on MOGL’s mission, the monetization of student athletes' name, image, and likeness (NIL), college sports’ evolving audience, the collective efforts of athletes, schools, and companies in adapting to new NIL regulations, and using MOGL’s tech to open new doors for student athletes. 📺 Watch now on YouTube: https://lnkd.in/emkrET-3

It has been an extremely volatile earnings season in the sector with 15% companies in our LionTree TMT Universe trading up double digits in reaction to their reports and 14% companies trading down double digits. I’d highlight the following top 5 fundamental themes so far… 1) Investors expressing increasing impatience regarding the huge levels of AI spend, but I think two key quotes say it all regarding where we will go from here in the foreseeable future: ◾ “The risk of underinvesting is dramatically greater than the risk of overinvesting” - Alphabet Inc. CEO Sundar Pichai ◾ “I’d rather risk building capacity before it is needed rather than too late” - Meta CEO Mark Zuckerberg 2) Questions raised regarding the total addressable market for paid music subscribers ◾ Spotify’s better than consensus Q3 margins and premium subscriber adds…and the stock traded up double digits ◾ Versus Universal Music Group’s surprise Q3 miss on subscription revenues…and the stock traded down more than 20% 3) Bifurcations regarding consumer appetite to spend on experiences ◾ Live Nation Entertainment’s concert “boom” is expected to continue, with YTD ticket sales up y/y and cancellation rates for N. America concerts tracking lower than 2023 levels  ◾ Versus Comcast’s NBCUniversal theme parks Q3 revenue missed consensus by -11% and adj EBITDA missed by -19%...low attendance at domestic parks was the main driver 4) Divergence in digital advertising spend is back…Search & Direct Response are doing well, while Brand is seeing a pull-back especially in Consumer/CPG ◾ Alphabet Inc.: Seeing “tremendous ongoing momentum in Search” ◾ Meta: “We have seen healthy global advertising demand on our platform…and we expect that generally to continue into Q3” ◾ Snap Inc.: “Brand-oriented advertising revenue declined 1% y-over-y, driven by particularly weak demand from certain consumer discretionary verticals including retail, technology, and entertainment, as well as the timing impact of holidays shifting out of Q2 in the current year”  ◾ Pinterest: “Growth was partially offset by softness within CPG, specifically food and beverage advertisers, who are navigating broader headwinds within that category” 5) More signs that the consumer is trading down ◾ Amazon: “We’re seeing a lot of the same consumer trends that we have been talking about for the last year, consumers being careful with their spend, trading down, looking for lower ASP products, looking for deals that continued into Q2, and we expect it to continue into Q3” We delved into each of those in our Top TMT Themes Reports on Friday night. If you are a corporate executive or financial investor, you can request access to our weekly report here: liontree.com/ltweekly/ #LTWeekly #Magnificent7 #TMTEarnings

Investors can be fickle and while last quarter, Big Tech mostly got a pass regarding escalating spend going into AI infrastructure (see my quick video commentary on that below), this quarter has started out on slightly shakier ground (i.e., Alphabet Inc. was down -5% on the back of its results which, among other things, saw even higher capx levels on top of last qtr’s increase) and leading Big Tech stocks have felt some heat (i.e., NVIDIA shares have fallen about -20% from its peak).  All eyes will be on Microsoft, Meta, Amazon, and Apple’s results + forward commentary on AI investment and returns this week. We will be delving into this theme plus results across other digital media players (Pinterest/Snap Inc.), Entertainment (Live Nation Entertainment/Roku), Videogames (Electronic Arts (EA)/Roblox), Online Travel (Booking.com), amongst others. It will be a busy week in the markets! For reference, our focus in last week’s Top TMT Themes Update included: 1. Earnings Scorecard - Week 1 & 2 2. Alphabet Says It’s Better To Over-Invest In AI, Than Under-Invest… 3. Connectivity - Part 1: Verizon & AT&T Somewhat Diverge In Q2 4. Connectivity - Part II: Cable Companies Are Weathering The ACP Storm Better Than Expected 5. Investors Cheer Spotify’s Year Of Monetization + Better Paid Subscription Growth 6. UMG’S Results Were Impacted By Varied DSP Performance, But Its “Entire Mentality Is To Grow The Pie” 7. A First Look At Media Entertainment Trends Raised Concern On Theme Parks 8. Grab Bag: Reddit Strikes Sports Partnerships / Apple Cuts Content Spend / Prop 22 Is Upheld If you are a corporate executive or financial investor and would like to request access to our LT Weekly Top TMT Themes reports, click here: liontree.com/ltweekly #LTWeekly #Media #TechCapex

The TMT earnings storm is heating up this week. A couple of quick perspectives/snippets are below relative to Wall Street consensus expectations (per FactSet estimates) but we’ll be diving into Verizon, Spotify, Comcast, AT&T, Alphabet Inc., Universal Music Group, and Charter Communications Q2 earnings results, among other key updates, in our LT Weekly Top TMT Themes report this Friday.   🎵 Spotify’s margins were much better than expectations, along with better Premium subscriber adds. This was viewed by investors as a big deal and more than offset the continued MAU variability   🎢 Comcast theme parks and studio disappointed investors, but mgmt. believes that new attractions and the H2 film slate provide clear paths to improvements looking ahead; Broadband and video losses were not as negative as consensus forecasts, and wireless adds trended ahead of expectations   📱 Verizon’s overall results were a little mixed relative to Street expectations with revs a bit light but margins a bit better. On the plus side, Consumer postpaid handset losses were lower than expected and should be positive for the full year, but the impact of ACP was worse than expected in their prepaid business   If you are a company executive or financial investor, you can contact me to request access to our Weekly Top TMT Themes reports via liontree.com/ltweekly/ #TMTEarnings #Media #Connectivity #LTWeekly

75% -> that’s how much Apple Vision Pro's (VR headset) domestic sales are expected to drop this qtr vs last qtr, according to new estimates from IDC 59% -> that’s how much LESS likely Disney’s Disney+/Hulu/ESPN+ bundle resubscribers are to churn within a year relative to those who just subscribed to Disney+ (i.e., the bundle is working), per Ampere Analysis These were just two of the key stats we highlighted in last week’s Weekly Top TMT Themes Report.    We also analyzed where short sellers have been focused within TMT, and one stock in particular has been the most shorted in our LionTree Universe for a third quarter in a row. Which one was it? See below for all the key themes we covered last week…if you are an industry executive or financial investor, you can request access to our Top Themes Weekly Update report here: liontree.com/ltweekly/   1) Paramount Just Greenlit A New Season Premiere… 2) Short Sellers Take Interest In Cable One & Reddit… 3) The NBA Scores Big With New TV Rights Deals + Other Sports Media Updates 4) Wall Street Analysts Warm Up To Omnicom, GoodRx, And Duolingo… 5) China Clears The Road For More Driverless Cars 6) Early Datapoints Point To The Power Of The Streaming Bundle 7) Interactive Entertainment Joins The TMT Price Hike Parade 8) Grab Bag: Apple Vision Pro Sales Outlook / AT&T Data Breach / Amazon Pushes Further Into Digital Advertising

At our most recent Lioness event, we brought together women from our LionTree community for an incredible basketball game where the New York Liberty faced off against the Chicago Sky. We look forward to hosting this amazing group again soon!

One of the key messages from the Paramount / Skydance deal is that bundling will be critical element of the “New Paramount”. While specific details about potential bundling partners or what a future bundle might look like are still unknown, per mgmt’s comments on the investor conference call, “If you’re in that bundle, you’re going to win and if you’re not in that bundle, you’re in real trouble.” We touched upon this broader bundling theme in our latest “LionTree’s Lens: Sector Insights & A Look Ahead, Summer 2024” update and expect to see the streaming industry continue to move in this direction - see clip below for more. We’ll also be doing a deep-dive into the Paramount / Skydance deal in this week’s LionTree Weekly Top TMT Themes, which you can request access to here: liontree.com/ltweekly/  #Paramount #Media #LTWeekly

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