TMTB Mid-day Wrap

Good afternoon. On my way to a little day trip at Yosemite so getting this one out on the early side...

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QQQs +20bps holding up ok as investors hold out hope for some type of deescalation/offramp on Iran (Trump press conference starting as I write this so it might feel dated very shortly) as Trump shifted back his latet deadline 24hours to Tues at 8pm est.

Let’s dive straight into the good stuff…

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INTERNET

• NFLX flat as GS upgraded to Buy saying they see sustained revenue growth driven by paid subs, ARPU expansion, and scaling ad revenue, alongside ~250bps annual margin expansion and strong FCF conversion (~70–75%). We wrote a little about stock in our EOD wrap on Friday. After pulling out of the WBD withdrawal, hearing more investors getting more interested again in what used to be one of internet’s darlings. Ad checks have been good but likely need to see engagement improve — which has been main overhang on the stock outside of WBD deal — to get stock back above $110+ range (25x+ $4 CY 25 EPS). Range prob $90-$110 right now, so r/r for us balanced around $100. Low 90s we find it interesting.