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The Entire Economy Is MoviePass Now

nytimes.com

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Re: The Entire Economy Is MoviePass Now

#131

Post by maoistinquisitr »

xkjkls wrote: post #124
mabbo wrote: post #16

> The king of money-losers, of course, is Amazon, which went years without turning a profit. Instead, it plowed billions of dollars back into its business The key difference with Amazon is that Amazon could choose to be profitable at any time- just raise prices ever so slightly, reducing growth in customer demand, and the stop building out its enormous logistics empire and new businesses. Amazon could have had profit…

Actually the biggest key is a distinction between profitability and cash flow. Amazon has been cash flow positive since 2001. Sure, it spent huge number of years burning cash building it's revenue from $2 billion in 2001 to $200 billion today, but because they have a structure where they don't have to pay their suppliers until close to 3-4 months after the collect from their customers, they can sustain that without n…

Amazon makes weird non-GAAP claims. In terms of GAAP, Amazon had negative free cash flow of $4.2 billion in Q1.

Re: The Entire Economy Is MoviePass Now

#132

Post by mjevans »

pwinnski wrote: post #87
djrogers wrote: post #70

Earlier quoted context omitted.

No, I think the key difference with Amazon is that they aren't losing money on each individual transaction - ie selling everything at a loss. Amazon's non-profits were due to aggressive reinvestment, not pricing.

Exactly! It's the difference between losing money on a macro-level and losing it on a micro-level. You can't lose money on every transaction and make it up in volume, as the old joke says. But you can make money on every transaction and choose to invest it in expansion, so that you lose money overall.

There's a key flaw in the wording that might lead to confusion if trying to explain this to someone new to investing.

Amazon stopped making /losses/ rather quickly. They /invested/ in the health of their business and future opportunities instead of delivering profits to outside investors.

Arguably, a better structure for incorporation does exactly that; it provides benefits to it's employees and the community it serves.

Re: The Entire Economy Is MoviePass Now

#133

Post by eldavido »

This is such a stupid and uninsightful analysis. You can tell just by the terms they use.

A company that isn't profitable isn't necessarily "losing money". Sure the amount of cash on hand can be declining, but if the business is building long-term assets such as a consumer brand, recurring transactions, differentiating IP, etc., that's hardly bad business management.

In order to really understand this you have to look company-by-company at what's really going on with the financials. If someone wants to give away for 75 cents something that costs a dollar, sure, that's a fast lane to bankruptcy. But there are tons of other cases, including aggressive new customer expansion, trying to create winner-take-all network effects, development of core IP, etc. that really will create long-term benefits for their owners.

Using "profit" as a metric is such bullshit. Ask Amazon. They focused on creating as much free cash flow as they could for two decades, and look where they are now. Why someone would insist a company earn an accounting profit, or even worse, pay cash dividends, in an environment with a sub-2% fed funds rate and near-zero returns on cash to investors is silly. I would much rather have a company with 10-15% return on equity "lose my money" than hand it back as relatively useless cash.

tl;dr read Ks and Qs, this stuff isn't amenable to sound bites.

Re: The Entire Economy Is MoviePass Now

#134

Post by irln »

arcbyte wrote: post #12
andrewjrangel wrote: post #4

I am curious if this will end with a "bubble-burst" or a slow burn like twitter has experienced. Surely the money has to dry up sometime? It is too bad that none of these companies create any kind of net good for society like a startup that pays you over minimum wage to clean up a park or sort recycling.

> Surely the money has to dry up sometime? Yup, this fall. By the close of 2018 all the world's central banks will be in quantitative tightening after having spent the past 10 years perpetuating an unprecedented level of quantitative easing.

Three data points:

Fed Balance Sheet https://fred.stlouisfed.org/series/WALCL Fed Balance Sheet hasn't been reduced in any meaningful way.

Bank credit: https://fred.stlouisfed.org/series/TOTBKCR Bank's have themselves continued increasing the money supply.

Worldwide debt: https://www.iif.com/publication/global-debt-monitor/global-d... Random snippet from Q32017

Re: The Entire Economy Is MoviePass Now

#135

Post by maoistinquisitr »

ironjunkie wrote: post #128
vinhboy wrote: post #9

> Enjoy It While You Can I love the conclusion of this article. As someone who has participated in the online "deals" community for 10+ years, I have definitely benefitted from many of the opportunities. However, I do spend a considerable amount of time wondering what will happen when this house of cards comes falling down. But you know, I think that for every one person like me taking advantage of these "arbitrage"…

I don't think the house of cards is going to fall. In this case what is happening is that the money made in a few lucky startups (Facebook, Gogole etc) are reinvested into those trials. In the end, it is the circle of life, A few mega winners are subsidizing those losing experiments. We should be there to take advantages of those as we are usually paying the price to the huge winning ones (indirectly, but still)

It's not reinvested capital. It's highly leveraged funny money from a decade of ZIRP.

And this isn't really a "tech" problem at this point. The "real" economy is full of huge companies that are barely making any money, but are racking up debt and revenue. This article goes into how the same thing is playing out in the agriculture sector.

http://archive.dailywealth.com/3602/the-real-trouble-with-bi...

Re: The Entire Economy Is MoviePass Now

#136

Post by xkjkls »

maoistinquisitr wrote: post #131
xkjkls wrote: post #124

Earlier quoted context omitted.

Actually the biggest key is a distinction between profitability and cash flow. Amazon has been cash flow positive since 2001. Sure, it spent huge number of years burning cash building it's revenue from $2 billion in 2001 to $200 billion today, but because they have a structure where they don't have to pay their suppliers until close to 3-4 months after the collect from their customers, they can sustain that without n…

Amazon makes weird non-GAAP claims. In terms of GAAP, Amazon had negative free cash flow of $4.2 billion in Q1.

I'm talking on a yearly basis, not a quarterly basis. Due to the seasonal nature of their business, I'm sure the quarterly numbers are more choppy. I think the general point, that they've been able to self-finance this enormous growth (save for some certain real estate purchases or acquisitions), stands.

Re: The Entire Economy Is MoviePass Now

#137

Post by xkjkls »

product50 wrote: post #17
empath75 wrote: post #8

Earlier quoted context omitted.

There will eventually be a pets.com of the tech bubble. Something like Tesla or Uber or Blue Apron going belly up.

Blue Apron going belly up won't even create ripples. They are not in the same league as the other 2 companies you mentioned. Just saying..

Also, if you look at the bleak bleak picture of Blue Apron's stock price since IPO, them going bankrupt wouldn't even be close to shocking.

Re: The Entire Economy Is MoviePass Now

#138

Post by twostorytower »

lozenge wrote: post #125
blueyes wrote: post #112

Joel Spolsky addressed this, much more insightfully, in one of his early strategy letters: https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-... There are real reasons why companies like MoviePass exist, why companies like Snap lose money, and why investors back them. It's just a land grab where you have to move fast to establish dominance.

Snap I can understand, but MoviePass not. People can easily switch to another subscription.

People can easily switch to another social video app, too. Instagram Stories stunted Snap pretty heavily.

Re: The Entire Economy Is MoviePass Now

#139

Post by ironjunkie »

pwinnski wrote: post #92
bonestamp2 wrote: post #26

Earlier quoted context omitted.

Tesla and Uber aren't going anywhere. There's way too much invested for them not to secure another tiny drop in the bucket to keep going. That doesn't necessarily mean it's a good idea ("throwing good money after bad"), but that's the reality of what will happen, especially since it will probably be someone else's money as they dilute.

There's a chance Tesla will not exist as an operating company this time next year. Given their published financials, it wouldn't take much at all. There's a chance Tesla will last a century, and people will point and say see! I told you they weren't going anywhere!

You got it exactly right.

What is beautiful with this is that whatever happens next year, the "winning" camps will say that they knew this would happen.

It is a game of Statistics and chance at this point. Both outcomes are possible, but once the outcome is clear, the ones that got it right will dismiss it is based on luck and chance at this point.

Re: The Entire Economy Is MoviePass Now

#140

Post by the_cat_kittles »

so i guess the first thing i think is: where does the money go? i think it mostly goes to employees and contractors of the company, who get paid a lot usually. it doesnt go to the consumers of the product, they just get a better deal on things- not the same as getting money. in movie pass' case, i guess it goes to the theaters? i guess its just interesting to try and pin down where the money ends up going in lots of the these vc backed money losing endeavors. seems like the kind of article pricenomics would do a really good job on- taking 10 or so big money losers that ultimately kicked the bucket, and seeing where the cash all ultimately went.
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