Morning Brew Daily - Netflix Adds Over 9M Subscribers & Why Bitcoin's Price Might Get Even Higher

Episode Date: April 19, 2024

Episode 305: Neal and Toby recap Netflix’s monster earnings report with it adding 9 million more subscribers. Then, tech reviews are piling on Humane’s AI Pin. Next, the Bitcoin halving are getting crypto fanatics excited this weekend. And then the guys share their picks for stock and dog of the week. Meanwhile, brain data could be the next hot commodity in tech, but Colorado is making sure that doesn’t happen. Lastly, nature may have been around since the beginning of time, but now it’s decided to pursue a career in music. 00:00 - Intro 2:30 - Bitcoin halving time 7:00 - AI Pin reviews fair? 11:00 - Netflix beats Q1 14:30 - Stock/Dog of the week 19:30 - Brain data for sale? 22:40 - Nature sounds Get your Morning Brew Daily Merch HERE: https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Disclosures: Interest is earned on uninvested cash swept from your brokerage account to program banks. The cash sweep program is offered through Robinhood Financial LLC. Terms apply. Rate is subject to change. Robinhood is not a bank. Investors should consider the investment objectives, risks, and charges and expenses of any Exchange Traded Product (ETP) carefully before investing. The prospectus and, if available, the summary prospectus contain this and other information about the ETP and should be read carefully before investing. For a current prospectus, customers should visit the relevant ETP’s web page to access a link to the prospectus. Robinhood Financial LLC (member SIPC) is a registered broker dealer. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Good morning, Bird Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, have yourself a merry little Bitcoin. The crypto event of the decade is here. Then Spotify's hottest new artist isn't Taylor Swift or Neil. It's nature sounds. It's Friday, April 19. Let's ride.

A lot happened while you were sleeping. Let's get into it. Israel struck Iran in what appears to be its first military retaliation to Iran's attack last weekend. Oil prices jumped on the news but fell back down when Iran kind of shrugged it off as a limited response. Indians also began voting in the first phase of the biggest election in human history. That means 969 people are eligible to head to the polls. This election is an extravagance that would be held in seven phases starting today and lasting until June 1st. It comes as part of the so-called year of democracy where more than 2 billion people across 50 countries are expected

to vote. I think this is the year that Steve Kornacki goes. I think so, too. Finally, Taylor Swift released her new album, The Tortured Poets Department at Midnight Eastern. Spotify seems to be holding up pretty well, but Toby's mental state isn't. I was bumping it before the show today, and I'm feeling great. Now let's hear a word from our friends over at Robin Hood. Tax days in the rearview mirror for most of us, thank goodness. So now let's talk about what comes next. First of all, hope you had a nice little tax return. And if you did, boy, do we have the thing for you? You can invest in some stocks. Why let that return burn a hole in your pocket?

You can take the info you learn from this show or the Morningstar reports that are included with Robin Hood's gold subscription and put that knowledge to use. Even if you don't end up investing, you can still learn a lot about the sectors you look into or the market as a whole from Morningstar. Or if individual stocks aren't your thing, check out Robin Hood's selection of ETS for a more broad stroke play. Either way, don't let that tax return go to waste. even uninvested cash in your brokerage account can rack up 5% APY with Robin Hood Gold. Learn more about the Robin Hood app in the App Store or Google Play Store. Disclosures, investing is risky, and diversification does not ensure a profit or guarantee against a loss. Investors should consider the objectives, risks, and expenses of any ETFs carefully before investing.

Robin Hood Gold is offered through Robin Hood Financial LLC and is a subscription offering services for a fee. Terms apply to the APY. More info in the description of this podcast. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179 like the next grill three burner gas grill.

Or get $50 off a select Weber Spirit grill and bring big flavor to your backyard. Then set the scene with Hampton Bay string lights that bring it all together. Shop spring backyard days for seven days at the Home Depot. Now through May 6th. Exclusion supplies to homedipo.com slash price match for details. Some of the world's greatest events happen every four years, the World Cup, the Olympics, and the Bitcoin having. We don't have to wait long for that last one because the Bitcoin having is most likely happening today.

It's one of the most celebrated and holy moments in crypto because at its essence, the having is what makes Bitcoin Bitcoin. So what is the Bitcoin having and why does it matter? Don't read too much into it, it's literally a halving. Bitcoin miners who validate transactions on the Bitcoin blockchain will see their rewards cut in half. Whereas they used to get 6.25 Bitcoin for validating a transaction, they'll get 3.125 now. The idea of these periodic having events, which is written into Bitcoin's original code, is to reduce the supply of Bitcoin entering circulation so that it avoids inflation and keeps its value. Thanks to the invention of having the number of Bitcoin that will ever exist is capped at $21 million.

And that makes it distinct from fiat currency, which central banks like the Fed can print whenever they want and what crypto boosters are trying to get away from with Bitcoin. Toby, what do you think about that halftime speech? That was a good half-time speech. You did very well. So what is essentially happening around the world right now on the Bitcoin network? There are a bunch of computers set up where they're basically working to solve a essentially complex math problems where the reward, if you get them correct, is you get some Bitcoin.

There are thousands of devices running 24 hours a day. And this process takes up a lot of energy, which is the main cost of doing business if you want to become a crypto miner. So when the halving occurs, that reward is cut in a half, which makes it harder to make your money back, which makes Bitcoin even more scarce. So that's generally how the supply and demand aspect of this is working. Yeah. So the question is, does the halving boost your Bitcoin price? I'm sure a lot of people have some Bitcoin that are listening to this. They're wondering, so the supply is going to be reduced in half. Am I going to see the price go up?

And that is a matter of debate. There have been halvings in the past, obviously, in 2012, 2016. After 2020, after those halvings, Bitcoin's price has increased. There's just a question of, does it relate to the moment of the having itself, or are there external factors going on that have boosted Bitcoin's price? And obviously, Bitcoin's price has been going wild in the run-up to this particular halving. And yet that may owe itself more to the issuance of these new Bitcoin ETFs rather than the having of the supply itself.

Right. So it's possible that the actual mechanics of the having are less important than the narratives that the having inspires. But to that, remember the scene from Harry Potter when Dumbledore says, of course it's all happening in your head, Harry. But that doesn't make it any less real. I think that's one way to look at the having. as well with each having excitement grows around Bitcoin's potential, it leads more people to buy in,

that increase in demand causes the price to increase. So even if it's not the specific mechanics themselves, that doesn't mean that the price increase will or will not happen. I do think you're right though. This has been an interesting Bitcoin cycle because we've never seen Bitcoin peak before having. It usually comes after it, but given the hype around the ETFs, we're in a little bit of an uncharted territory where Bitcoin did reach an all-time high. in the lead-up. So we could see a sell-the-news-type event, which has never happened. We are certainly in a different Bitcoin environment than has been the case in the past. There are some losers from having, though, and that's the Bitcoin miners, because essentially they're seeing their

balance sheets, their overall market cut in half. And Bloomberg estimates that the entire Bitcoin mining industry, which has 14 U.S. publicly traded companies. This is a mature industry. We'll see $10 billion in losses. The smaller players might get squeezed out, while the bigger publicly traded ones might take up more market shares. So there will be some carnage in the Bitcoin mining industry. And the future there is cloudy because, as you said, the number one scarcity in this industry right now is access to electricity, access to the power grid, access to cheap electricity. And you're seeing the Bitcoin miners go up against the AI giants like Meta, Amazon, Nvidia, building out these data centers. And they're all competing for the same finite amount

of electricity. So that could drive prices higher for minors and have them go out. out of business. Meanwhile, let's look way into the future because I don't know if we'll still be podcasting in 2140, but that is when the Bitcoin mining, the Bitcoin halvings are supposed to end. There's going to be 60 more Bitcoin halving events, and then they'll end when Bitcoin hits $21 million in total supply. And we'll be there for every single one. For every Steve Jobs and Apple that comes out of Silicon Valley, there are thousands more products and founders that fade into oblivion, and it looks like Humane's AI pin is currently sitting at a crossroads between adoption or obscurity. Humane is the well-funded startup that's set out to replace your smartphone

with a small wearable device powered by AI that cost $700. It's founded by two former Apple engineers, and it made its debut this past week and promptly got roasted. The Verge called it so totally broken in so many unacceptable ways. And Joanna Stern from the Wall Street Journal said it was simply not cool, but not all tech reviewers are created equal and everyone was waiting with bated breath to see what the final boss of tech reviewers had to say the YouTuber Marquez Brownlee. Marquez released his video on Tuesday

and declared the pin to be the worst product he had ever reviewed. Dot dot dot for now, which set off an internet firestorm. One viral tweet called Brownley's review, specifically the title, almost unethical given how much sway he commands and how much damage he could do to a company.

it reached such a fever pitch that Marquez recorded another video called Do Bad Reviews Kill Companies, where he digs into this question as it relates to Humane, as well as Fisker, a car company he gave a similarly bad review to. Neal, what do you make about the discourse around Reviewgate? Let's take a step back and look at how one person is being able to consider to tank a single company. He's not even affiliated with any big media property. He's not a reviewer for the New York Times or the Wall Street Journal or the Verge or any big tech publication. He's literally by himself. He's built this empire.

He's 18 million YouTube subscribers. And people say that he is the ability to tank an entire company that has raised $230 million in venture funding. So I just want to take a step back and say, this is absolutely incredible. We are in uncharted waters. We're a single YouTuber. And you can debate whether that he actually has this power. But a lot of people do seem to think that what he says has so much weight. carries so much power that it could tank an entire company that has raised a quarter of a billion

dollars. I think all we have to do is look at the top comment on the video that he released about the reviews. And it says, without bad reviews, bad products just live longer and disappoint more people than they should, which I think sums it up very nicely. Like, again, and Marquez finishes his video about product reviews saying a product review, an honest review, all it really does is accelerate what's already going on in the company. He says, listen, people, take a step back. Even though I am one person with a large following, there's hundreds of reviewers out there.

I'm not the one that's actually controlling what's going on with the company. So I think that's the most level-headed take to this. Even we on this show were talking about when we were talking about the Fisker situation, we were digging into, did he cause Fisker to go out of business? And Marquez, like, no, people.

I'm not the sole purpose. There's other YouTubers out there. There's also way other problems within Fisker itself. So he was trying to take a more level-headed approach to this discourse. Yeah, I think the main criticism of MKBHD, which is what his account is called, was the click-baity title, the worst product I've ever reviewed. But in the actual video, he does repeat that and says, this is the worst product he ever reviewed. So I could see a criticism evolving that you have a very click-bady YouTube, Mr. Beast-type thumbnail image,

where you say, this is the worst product I ever reviewed. and then the actual review itself is kind of a lukewarm, but he does back up the title with the actual content. So I think he dotted his eyes, crossed his tease with the actual review itself. So I think he's okay there. After a shaky few years, Netflix has reestablished itself as the creme de la creme of the streaming world. And in its earnings report yesterday, it kept the good times rolling. Netflix posted its best start to a year since 2020, bringing in 9.3 million subscribers in the first quarter, nearly double what anyone expected. The company has been deploying two strategies to drive user growth, one, cracking down on password sharing, RIP or parents' account,

and two, a cheaper tier with advertising. Both of those have been very successful, driving Netflix stock to a 31% gain this year, outpacing competitors. But what the company is not leaning into is transparency. Starting next year, you won't hear me saying things like Netflix added 9.3 million subscribers because Netflix will no longer disclose quarterly membership numbers. And that shocked Wall Street because the metric of how many subscribers Netflix has is the only one anyone has ever cared about in Netflix's history. It's been the North Star for decades in this entire industry. Soon though, investors will have to rely on more traditional things like profit and revenue to gauge the financial health of one of the world's largest media companies.

Right. It's definitely a different era for Netflix. It's going from targeting subscriber growth at all costs to focusing on products and look no further than the levers that they're pulling right now. That crackdown on password sharing is about increasing profitability. It's not about growing the total pie necessarily. And then that adds supported tier to boost revenue as well is something is a lever that's being pulled with a, pulled with a focus on revenue. It's not like subscribers are lagging either, though. That's the crazy part because Netflix is growing at its fastest rate since the early days of the pandemic. And a lot of that is because of the success of its password sharing crackdown. But it is interesting to see Netflix trying to say, we are a real

company. Let's be judged like other companies are judged on profit, on revenue, not on these subscriber metrics. And I think it's trying to become the trendsetter in the industry in that regard. Yeah, but investors aren't so happy with it, which is why the stock actually fell 4% after hours, despite that positive, those positive earnings report. But I got to say, Netflix is really in a sweet spot right now as this one-stop shop for really any. anything you ever want to watch. It has a lot of license content from other shows for reruns. Suits was the number one watched show last year and everyone was watching it. So you can go, you know, sit on your couch, not really pay attention, zoom out to suits or Seinfeld or any sort

of old legacy, a TV show. It has a bunch of these high glossy original content, like three body problem. So if you want to really dive into an epic drama, it has that. And also it has reality TV, Love Island or Love is Blind. Sorry, I got those mixed up. So if you want to go for reality TV, it has that as well. And it has all these different price points. If you want to spend, if you don't want ads, you can spend $15 a month. If you do want ads, you can spend $7 a month. So it's really offering a huge suite of options for anyone who just wants to plop down from the TV.

And then, of course, let's look ahead to its new programming that it's adding, which is investing heavily in live entertainment. It's signed that huge deal with the WWE. It's broadcasting these upcoming boxing matches. So it's truly becoming the one-stop shop. And it was interesting, too, because I saw some people comparing their ad tier to YouTube, which is not a comparison you normally make. But if you look at their ad-supported tier, it's still a fraction of the size of YouTube's eye.

And so there potentially is a lot more room to grow in this area, in this area of ad-supported content. So even though that Wall Street's a little mad that they're not getting the insight in the subscriber numbers anymore, I do think Netflix is still a darling going forward and still has a lot more room to run. Up next, stock of the week, dog of the week. Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Buckslot machine by Aristocrat Gaming,

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Details at Yamava.com must be 21-20. responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion. You said this place was steps from the water. We just haven't found the steps yet. How much did we save? Enough. Enough to get lost. Or you could book a stay with Hilton. Welcome to your ocean front room. Just steps from the water. The Hilton sale is on now. Book on Hilton.com or the Hilton app and save up to 20% to get the stay you expected. When you want savings, Not surprises. It matters where you stay. Hilton, for this day. Oh, would you look at the time? It's Stock of the Week. Dog of the Week time this beautiful Friday morning, where Neil and I bring you one stock that left a positive review on Apple Podcasts for Morning Brew Daily, and one stock that didn't.

Neil, the people can't believe it, but you won the pre-show game of Wackamol. Those hands were moving. So you're up first. What's our stock of the week? My Stock of the Week is Jane Street, the biggest and most powerful Wall Street firm you've never heard of. feel bad. Jane Street is a notoriously secretive company, but the financial times got its hands on the company's financials, and it outperforms some of the top banks in the entire country. Jane Street's net trading revenue was roughly $4.4.4 billion in the first quarter, up 35% from the previous Q4, and its net income was $2.7 billion. Yes, that is a profit margin of more than 60%. So what even is Jane Street and how to get so huge? Well, it's what what's known as a market maker, a type of behind-the-scenes financial company that provides liquidity

to markets and facilitates the transactions of securities, hence it makes markets. Maybe you've heard of Citadel Securities, the company run by Ken Griffin. It's one of Jane Street's rivals. Jane Street also makes money through trading thousands of products on its own, involving including currencies, ETFs, and options, which apparently it's pretty good at, Toby. Jane Street, wow. Jane Street, you introduce it as a company that you may not have heard of, but some people may have heard of it because that is actually where SBF of FTX fame or shame cut his teeth. He also met his girlfriend or whatever you want to call it business partner, Caroline Ellison there. So maybe that's

why Jane Street would have been on your radar, but you're right. This is a rare glimpse into a notoriously very secretive firm. It's very interesting to get a look into their financials. And it is just such an extremely profitable business. I mean, you mentioned their EBITA margin is 72%. It's just an insanely big and profitable industry. Jane Street accounted for 10.4% of equities market activity in North America last year. So you are right to dub it as maybe the biggest financial firm you haven't heard of. Meanwhile, if you're really good at technology, you might want to work there.

Tech researchers account for 40% of the entire workforce. And starting compensation reportedly comes in at 400. 125k. And if you're just an intern there, 16.5k a month. Oh my good Lord. Why did SBF ever leave? Just chill at Jane Street. He probably wouldn't be in jail right now. My dog of the week is red lobster. The seafood restaurant chain is considering filing for Chapter 11 bankruptcy, given its cash flows look more rancid than a crustacean left out in the hot sun. Among the issues weighing on cash flow are bad leases, high labor costs, and ill-advised restaurant promotions that have all led to a mountain of debt. Red Lobster's largest investor Thai union group is actively seeking an exit route.

It's CEO said in February that Red Lobster is done and over with. We're just waiting for the sale to happen, but we do not expect any significant value to be gained. Perhaps the funniest misstep of all was it's all you can eat shrimp promotion gone wrong. It's $20, ultimate endless shrimp deal cost the company $11 million in its third quarter alone. Neil, guess it's delicious cheddar biscuits weren't enough to offset. The pounds and pounds of shrimp that people were putting down. Luckily, it doesn't look like Red Lobster is actually going anywhere, but this is a tactic that a lot of restaurants are real estate companies that have these leases, these bad leases used to go into Chapter 11, and then it allows, it frees you up, gives you a little more wiggle room to renegotiate leases or back out of them. We saw what WeWork did. It went to Chapter 11 because it allows it a little more, you know, negotiating power in terms of its bad leases.

So it looks like Red Lobster is just in its stagnation era. It's not really moving the needle one way or another. And as rent costs go up, it needs to figure out what it's doing with all its real estate. I do want to dig into the shrimp fiasco just a little bit, though, because it's been running this ultimate endless shrimp deal for more than 18 years. It was $20. Go buck wild. But then last summer, it decided to offer the promotion every single day instead of once a week. And it worked way too well.

The chain said it wildly underestimated the response to the ultra-teep deal. they eventually raised prices to $22, then $25. But analysts were covering this and looking at the $11 million loss. They're like, I don't think an extra $5 is really going to offset this for you guys. And the funniest thing, too, is they're still offering similar deals. Red Lobster is doing this unlimited lobster experience, but there are caveats this time where it's only 150 winning customers nationwide. And also, you're only allowed to eat a maximum of 12 and a quarter pounds of Maine lobster

before switching over to Caribbean Rockdale Lobster. So they're definitely learned their lesson this time around and they're trying to provide some guidance. How many pounds of lobster do you think you could eat in a single set? I think I could definitely put down 12 in a quarter as long as there's enough butter socks and cheddar biscuits nearby. Okay, moving on. Being alone with your thoughts can be scary.

But having your thoughts sold by a tech company to advertisers, possibly scarier. That's why Colorado Governor Jared Polis just signed a bill, the first of its kind in the U.S., that aims to ensure your brain activity. stays private. The Colorado law expands what's considered sensitive data in the state's privacy law to include data generated by the brain, the spinal cord, and the nerves that relay messages throughout the body. This is a real concern because these days, what happens inside your brain, those electrical signals underlying your feelings, thoughts, and tensions don't necessarily stay in your brain. Neurrelink is perhaps the most famous example of a company that hopes to

read brain signals and transmit them to a computer. requires an implant, but there already exist dozens of companies that are selling non-invasive tech like headbands for meditation that collect data from your brain. The Colorado bill is a big win for advocates who warn that brain data represents a far more severe privacy risk than anything we put on social media. Toby, I'd ask you what you think about this, but I already know because I just brought your brain data for the past 60 seconds. And boy, is it active.

Consumers are so used to this at this point, but this definitely takes it another step further. Your personal data, when that comes to mind, you think about your email addresses, social contacts, browsing history, even genetic ancestry. These are all things that over time have just become less private and you know that companies are buying and selling this data. But then when you think about your brain activity, like that does seem like another step too far. There's things that you can glean from someone's brain activity that are extremely, yeah, personal. You can see if someone maybe has a disorder like epilepsy or something like that. You can get insight into that.

We've also seen these health data be used in legal cases before. There was one where this Ohio man was accused of burning his house down and they looked at his pacemaker data of his heart to corroborate his story. He said that he packed up his stuff and leave. But then a health official said, wait a second, his heart data isn't backing up his story. So it is just a Pandora's box when you get into this very intimate health data. Yeah. And this might seem like it is something that's happening in the far out future with Neurilink.

But there are a lot of companies just doing this right now. They have devices that you can wear that read your brain data. Apple has patented AirPods in the future that would scan your brain activity through your ears. And there are 30 companies that were analyzed, these consumer neurotech companies. There was this analysis by the nonprofit NeuroRights Foundation about, out what their privacy situation was, what they're doing with the data they're collecting, and this nonprofit found that almost two-thirds could, under certain circumstances, share brain data, with third parties.

And two companies have applied that they already sold such data. So your neural activity is now not just the domain of your skull. I am going to work on going completely brain neutral, no brainwaves whatsoever. I think I can reach that state. Okay, for our last story, I want you to imagine my voice as a sound of running water babbling in a crisp, clear mountain stream, or a light drizzle of rain on an early summer thunderstorm. Well, you better pay up as well because a new initiative from music streamers like Spotify and Apple recognizes Mother Nature as an artist to be credited in music. Lots of famous songs from history feature sounds of ocean waves or wind or bird calls. So now nature itself will be added to tracks as a featured artist in an effort to raise money and aware.

for global conservation efforts. That means nature has its own Spotify page now with songs featuring it from artists like David Bowie and Ellie Golding. Any royalties accrued from songs featuring nature will be collected by a nonprofit called Earth Percent then distributed to various conservation efforts around the world. It's a pretty cool idea.

It is a cool idea. I don't know if it's going to move the needle. They say they can raise $40 million from these royalties, but the goal is to have people reflect on the contributions of nature, not just to overall ecosystems, health, but to our overall well-being and art and things like when we wake up in the morning and hear a bird chirping or you go for a hike and you hear all of the sounds of nature that that is actually music as well. And to appreciate that and develop a love

and appreciation for nature beyond just maybe that's maybe more effective than an artist, you know, preaching to you that we need to save the ecosystems. Right. And what's ironic, though, is that Spotify also made a change last year to pay less for white noise tracks and what is a lot of white noise, nature sounds. So rain noises, whale sounds, recording of winds rustling the leaves. Those songs now generate about a fifth of the royalties generated when you play a musical track. So it is a little bit ironic that Spotify changed the rules around nature sounds and white noise and then granted nature artist royalties. So they are not quite the same exact thing, but it is just funny to see those things happen back to back from Spotify. Absolutely. Let's wrap.

it up there. Thanks so much for listening and have a wonderful Friday and an even better weekend. 420 is tomorrow. Toby, have any plans? Absolutely not. I'm going to be sitting there with no brainwaves. All right. As always, you can write in to our email, Morning Brew Daily at Morningbrew.com with any feedback, comments, questions, et cetera. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer. Isabel Wynn is our technical director. Billy Menino is on audio, the tortured hair and makeup department. Devin Emery is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. I wish you all well.