Netflix Scores the NFL
In this podcast:
Motley Fool analyst Nick Sciple and host Ricky Mulvey discuss Netflix's play into live TV and the bundling of streaming services. Plus, they take a quick look at earnings from Walmart.
Motley Fool contributor Lou Whiteman joins host Mary Long to discuss how airlines and Airbnb are experiencing a cooldown in travel.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on May 16, 2024.
Ricky Mulvey: The NFL is now on Netflix. You're listening to Motley Fool Money. I'm Ricky Mulvey joined today by Motley Fool analyst and football fan Nick Sciple. Nick, thanks for being here.
Nick Sciple: Great to be here with you, Ricky. Always excited to talk about the NFL. We're talking about the NFL in May, I think that reminds you how much it dominates entertainment here in the US.
Ricky Mulvey: It's a huge story for Netflix to get this live sports deal. Netflix will now be the exclusive home of Christmas Day NFL games. Two games this year, at least one game for the next two years. We know Christmas is a big day for streaming and the NFL, a lot of people are home, a lot of people are with their families. So let's break it down. First, what does this deal mean for Netflix?
Nick Sciple: I think this is a huge boost to Netflix's live events repertoire. Netflix is getting access to the most popular entertainment property in the US. The NFL really stands apart when it comes to engagement with entertainment properties. Last year, over 90 of the top 100 TV programs in terms of ratings were NFL games. Moreover, this is a spotlight event for Netflix. Getting access to Christmas Day, I think this means Netflix is more or less going to own entertainment on Christmas even more though than they have previously. Also Netflix rapidly trying to grow its advertising tier of subscription, this gives them access to super valuable advertising inventory to sell to advertisers. I don't think it's a coincidence that this deal got announced the same day Netflix was holding its upfront for the upcoming year. That's the annual event where media companies will showcase their upcoming slate to advertisers, and this is super attractive inventory for Netflix to go out and market.
Ricky Mulvey: We're not exactly doing the NHL in August or July or the MLB in December as we hit the NFL off-season with this news. NFL knows they're pretty popular. They get a lot of money to show games, even from Amazon Prime for Thursday Night Football. Is this just a who writes the biggest check question or is there some more strategy in signing with Netflix?
Nick Sciple: I think there's a little bit more strategy than just the price paid at the end of the day. I think the amount paid is important. Obviously, the NFL likes to make money, but historically, the league has resisted moving its events to stream because they want their product to really be in front of as many eyeballs as possible. They proved the concept of moving to streaming last year with Peacock holding two exclusive games. The playoff game that was on Peacock last year between the Chiefs and Dolphins was the largest-ever event for Internet traffic in the US. But I think with the Netflix deal, NFL is really looking to audiences outside the United States. Commissioner Roger Goodell has emphasized the league's plans to become a global sport. They're increasing the number of games they're holding in London, games in Germany, Mexico City. With the relationship with Netflix, NFL immediately plugs in to worldwide distribution for these games which should boost its international audience, help it become an even bigger global property than it already is.
Ricky Mulvey: I'll concern show for a second as you mentioned Peacock and Amazon Prime. I wonder if this will become a scavenger hunt in terms of where can I watch the NFL as it moves to more streaming services that you have to pay for, and it's not as easy as flipping through channels between CBS, ABC, and ESPN to find a game. CBS, FOX, and ABC, they carried the Christmas games in 2023. What are these more legacy media companies thinking about this deal, you think?
Nick Sciple: Obviously, I think they would have liked to have this property. I think it's attractive having this spotlight game on Christmas that lots of folks are going to tune into it. But I don't think it's the end of the world missing out on two regular season games. It wasn't the end of the world for Amazon to get Thursday Night Football last year. But if I had to pick a company that should be concerned by this, I think Disney, the parent company of ABC and ESPN, probably not going to be happy with this. Traditionally they air the NBA's Christmas Day games, which is the NBA's historical spotlight time of the year. I think those ratings are going to be down meaningfully this year for the reason you just said. When you're watching a live event on Netflix, a lot harder to hop in and check on the NBA game at halftime or at quarter breaks than it is historically. I think it's going to hurt that NBA Christmas slate relative to what it's enjoyed historically.
Ricky Mulvey: The NBA rights are also up for grabs, and I'm sure Netflix is thinking about that as well. Ted Sarandos, co-CEO of Netflix, in 2022, said, "We've not seen a profit path to renting big sports." Later, "We're not anti-sports, we're just pro-profit." These are very expensive, and Netflix has been home to series about the drama of sports. You think about Drive to Survive with the Formula 1. First they made a big splash with the WWE, which Nick, for the purposes of this conversation, we will call it a sport. You can argue with us at podcasts@fool.com. Now they've got a boxing match between Jake Paul and Mike Tyson, which is a heavily eventized event. Now you have the NFL at Christmas. What do you think has changed at Netflix with their thinking toward live entertainment?
Nick Sciple: I think there's a couple of things here. First, if you just look at the terms of the deal, it's really not the same multi-billion dollar deal you see a number of these other entertainment distributors paying. Reports indicate Netflix is paying about $75 million per game for these rights on a three-year deal. If you assume those numbers are right, all-in you're paying a grand total of $300 million for this, a lot smaller relative to some of these other deals. If you look at it on a per game base, it's maybe about 20% higher than Amazon chose to pay for Thursday Night Football, but I think it's also a much more attractive slot. I think NFL fans across the board like to say that the Thursday Night Football games are some of the worst football you will see during the week, and it's on a night where folks have to go to work the next day. I think this Christmas Day game you could argue is worth 20% more than Thursday Night Football. I think the other big thing that's changed though is Netflix's advertising ambitions. They're working to build an advertising platform. You need to have attractive inventory to sell to potential advertisers. Live sports historically have been the most appealing vehicle for advertising, and Netflix is working diligently to build up its inventory in that area. You mentioned the WWE, that's been historically one of the highest rated weekly programs on cable. The NFL by far the highest rated live programs in the US. I think this is really getting access to inventory at a price that I think Netflix feels comfortable with, especially for a three-year experiment.
Ricky Mulvey: I think there's also an elephant in the room with Netflix's movie ambitions, where they're making these high-budget original movies sometimes costing 50 million, 100 million. I think The Gray Man even got up to 200 million. Those are the numbers that are just reported. They're probably doing the math and saying, we can probably get more eyeballs on an NFL game for one night than we're going to get through the life of having the Will Smith movie Bright exclusively on Netflix. You mentioned the upfront earlier for Netflix. A couple of things happen, and we can talk about either of these. First is that their ad tier hit 40 million accounts worldwide. That's double from the start of just this year. It's now about 40% of all new sign-ups, and pricing is just seven bucks a month. The second, they're launching an in-house ad tech platform. It had Microsoft. It's a programmatic ad partner. Now it's also adding The Trade Desk, Google [Alphabet's], and Magnite to that mix. Seen Trade Desk get a little bit of a boost this morning. Either of those, there's one or two options or you can do both. Whatever you want, Nick.
Nick Sciple: I think that 40 million subscriber number on the advertising tier stood out to me. I really think this is just the beginning for Netflix as they add the NFL here at the end of the year, WWE starting next year. I think they're going to draw in a lot more of those ad tier subscribers, maybe even outside the US as well if you think about the appeal of these properties. I've said WWE has historically been one of the highest rated cable shows, so getting access to these properties I think are undercutting a lot of the last appeal of cable when it comes to live sports. I think it's remarkable that they're launching this in-house ad tech platform just two years into spinning up this business. I think it reflects Netflix's ability to innovate and be dynamic, and I think there are brighter days ahead for Netflix when it comes to advertising.
Ricky Mulvey: At the upfront you also had Disney presenting, and now Disney is in an interesting position where they're the challenger. They're competing for these sports rights. They've even launched a new comedy brand to challenge Netflix. They have a streaming business that's almost profitable, and then you've got Bob Iger up there showing a chart, for the most eyeballs on TV, it's Disney. We're the clear leader here. What do you think? Is Disney still the leader in the entertainment space or is it now in this challenger position in Netflix?
Nick Sciple: Well, it all depends on how you define the market, right? If you look at entertainment or more broadly, clearly doesn't. He's gonna get a few more eyeballs given that they have the movie division, they have a number of cable networks that are going to get a little bit more time you spend. I think if you look at the streaming business, Netflix is really the clear leader. They're profitable, they have the most engaged audience. They're able to squeeze more engagement out of the same content than other platforms and the really big thing for me is there. They've really dictated the terms of competition to the other folks in the industry when Netflix went for scale and we're spending all out on those movies, you talked about. They were able to induce the other folks to follow along right behind them. Now, in the past year-and-a-half, couple of years, Netflix has worked toward showing profit and driving the bottom line. And the whole rest of the industry has had to follow behind them. David Gardner likes to say that if you're the lead husky, the view never changes. I don't think Netflix's view has changed that much. But I think lots of other companies are being forced to follow along.
Ricky Mulvey: You're also seeing bundling, which Netflix was a part of before Disney. Netflix with this Comcast deal, having Netflix, Apple TV, and Peacock. Now you have Disney in HBO Max joining up together with, I guess it's Disney, Hulu, and HBO Max into these packaged bundles, we're just becoming cable again, Nick, let's start. What do you think of these bundle offerings from these streamers, choosing sides and offering these larger channel package offers
Nick Sciple: Yes, I mean, there's an old joke, I forget who said it, but there's two business models out there in the world. There's bundling and unbundling. Clearly the past seven, eight years, we've gone full-in on unbundling with all these various streaming services. Now we're moving back to bundling. I think the motivation there as to scale up and reduce churn. There's some studies out there that say, folks don't really like to have more than three subscription services. So if you can tie these together, perhaps folks turnout less, they're not going to cancel when their favorite show leaves Disney Plus in between seasons, maybe they'll stick around because contents available on Warner Brothers Discovery, and some of these others. I also think you've got other operators, I think Warner Bros. Is a great example, is the parent company of HBO Max, where they're in a tough position where there have lots of leverage and they need to find a way to cut costs and drive profits. They licensed the whole bunch of HBO content out to Netflix. Now they're partnering up with Disney for this bundle. I think you have some of these media businesses that they thought they were going to be meaningful, meaningful competitors in streaming. And now we're realizing a more attractive business model for them is what they've done historically, which just to produce content and license it out to other folks. So I think it's an opportunity for Disney to get some scale which they would like to have. They've already begun integrating Hulu and with Disney Plus. So this gives them even more inventory to distribute and hopefully, it will reduce churn for them. I do think it puts Disney in an interesting spot, is kinda the center of this hub. You mentioned Comcast trying to run a similar strategy. Comcast earlier this month announced that they're going to launch a streaming bundle with Netflix, Apple TV Plus, and Peacock. I think you mentioned it, is Disney nipping at the heels of Netflix? I think the real, the two folks that are really butting heads here, or Comcast and Disney, both of them trying to become this hub for streaming content. They've been at odds going back a number of years for when, when Comcast really bid up Disney's opportunity or Disney's, what does he finally ended up acquiring Fox? I think both of these companies are trying to become the hub of a number of these other streaming services. While I think Netflix is just over here running their playbook and easy as they please.
Ricky Mulvey: You have a couple of interesting relationships. You have the rivalry between Disney and Comcast with their bundling. And you also have this frenemy relationship with Disney and Warner Brothers discovery, maybe in the whole streaming pack, Netflix is the clear leader there. But I would say Disney is proving to be the Alpha in that Disney HBO Max relationship. You've got to streaming services and plus, you know, not for nothing. The Disney brand name is mentioned first is Warner Brothers is really trying to cut costs and as you said, become an arms dealer.
Nick Sciple: Yeah, that's right. I think Disney is well-positioned to kinda become the hub here if anybody is going to Comcast working to do that as well, they already have some of these bundle offerings. You can bundle up your, your cable relationships. So I think we'll see these two battle it out. I think both of them are going to be around here at the end, but I think we're seeing where our strategies are headed and it's more partnering up together than being on an island with their own streaming service.
Ricky Mulvey: Let's hit Walmart quickly before the end of the segment. Walmart reported this morning, it's investors are, are enjoying a 6% jump as the nation's largest private employer. Retailer beat revenue and earnings estimates. The headline Nick seems to be that Walmart is getting more high-income shoppers and people are getting annoyed with the cost of eating out, which is a benefit for the largest grocery chain. Any big takeaways for you from the quarter?
Nick Sciple: Yeah. I think that's just indicative of Walmart's positioning in the market. There's a lot of folks that say, hey, I would never shop at Walmart and then when they get into an inflationary environment, those low prices start looking attractive. You know, one of the things you highlighted for me from the report is Walmart is now doing more same-day and next-day delivery than Amazon Prime in the U.S. I think Walmart's ability to offer pick-up in-store and delivery is attracting some of those customers who wouldn't traditionally be Walmart shoppers to take advantage of some of those services and some of those low prices. I think it reminds you that Walmart is really entrenched in the retail business and really hard to disrupt them even if you're Amazon or some of these others.
Ricky Mulvey: Yeah, they mentioned the inflation story. And really trying to say, Hey, this is not an inflation story at Walmart and in fact, there was mid-single-digit deflation for general merchandise over at Walmart. Nick, I'm going to give you a question that might be unfair. Who does more to control inflation? We've got two groups. We've got the Federal Reserve, and we've got Costco and Walmart, who's doing more to control inflation in the United States?
Nick Sciple: Well, I guess it really comes down to, are you a believer in microeconomics or macroeconomics. I am of the bucket that the folks on the micro side, the retailers are, have the ability to have a little bit more, more impact that the feds tools or crude, right? They can either cut interest rates are kinda do open market purchases. While these retailers can shake up their supply chains are after Costco, you can start a chicken farm to keep your, keep your chicken costs low. So I really think the ability to make cost cuts at a micro level or more influential to people's day-to-day purchases and the prices they actually see there in the grocery store. So if you made me pick one, I'd pick the retailer but the Fed there, no slouches.
Ricky Mulvey: There you go. Nick Sciple, thanks for coming on. I appreciate your time here.
Nick Sciple: Anytime happy to be here.
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Ricky Mulvey: So travel is cooling down just to bid from that post pandemic boom. My colleague Mary Long caught up with Motley Fool contributor Lou Whiteman to talk through the implications on Airlines and Airbnb.
Mary Long: Lou, summer shockingly is right around the corner and with that comes peak travel season. I wanted to grab you and kind of check in on the state of things, because it's been an interesting few years for travel. The height of COVID obviously brought the industry to a screeching halt. But about two years out, we started to hear about and see the effects of a post-pandemic travel boom, for events travel, if you will. The idea being that people after having been cooped up, were eager to get back out into the world. Now it's 2024, broadly speaking, where do we stand today? Was that post-COVID boom and travel demand a blip or more of a lasting trend.
Lou Whiteman: I'll say yes and no. I'm going to throw an analogy at you. We just took the kettle off of the stove. It may no longer be boiling, but the water is still really darn hot. Technically we're cooling, but we're still red hot, and that's sort of where we are with airlines right now and with the whole travel industry. Just to use the airlines their trade group put out an estimate that the industry will carry 271 million passengers this summer. That's up 6% from last year. And as you say, last year was crazy. Where's the cooling talk coming from? There's some data to suggest that we're not splurging quite as much. Maybe that family that went to Europe last summer, they're going domestic this year, things like that. Maybe we're just coming down slightly, but it's red hot and globally it is a trend. It will always be cyclical to some extent, but backing it out, there's a clear line up into the right people want to go places.
Mary Long: We're starting to see some companies talk about this in their earnings calls and address these changing trends. Disney last week, management talked a lot about this, especially in regards to the parks business. They called out a normalization of post-COVID demand in that parks business. But also said that they're seeing a record level of demand. This drills down a bit more into what you were just saying, but how can both of those things be true?
Lou Whiteman: Yeah. I think there is generally speaking, maybe it was because the pandemic as you say, revenge [inaudible]. But people do seem to want to travel more, even as inflation has risen, even as all these warning signs we have seen more. So what Disney is talking about, it's like, yeah, we're not seeing that spike anymore. We're not seeing just this crazy travel no matter what. But that doesn't mean we're seeing what we typically see when costs get high. Look if a family's feeling the impact of inflation, they're not going to stop eating, they might not go to Disneyworld. Normally, that's what we see. There's something to suggest that know people still want these experiences. Yeah, we can still normalize at a high level. Maybe.
Mary Long: I want to take us down a little bit of a rabbit hole because I think this lends itself to an interesting conversation, but Disney attributed higher guest spending at the resorts and cruise lines to higher ticket prices, so they're raising their ticket prices. At places like Starbucks, this earning season, we've seen this interesting story play out about pricing power and like how much a company can flex that pricing power without aggravating the consumer. And at Starbucks, it seems like that's backfired a little bit. They've seen slower traffic across their stores. A seven dollar latte I know is quite different than $95 Disneyworld admission ticket. But I'm curious, do you foresee Disney hitting a similar ceiling as we're seeing with Starbucks now, is there one day when the consumer wakes up and says, no more, too much?
Lou Whiteman: I think you hinted at a very important thing to separate out here, the onetime thing versus the day-to-day purchase. And I do think consumers are a lot more price sensitive about the coffee they drink every day than say, the families dream trip once in a lifetime to Disneyworld. I think that sort of explains the difference. Where this onetime thing, we are less price sensitive. But yeah, there are probably limits. I think the limits come more, the risk is too much too fast. I think there are limits to how fast you can escalate pricing. But when consumers pullback, they tend to get more picky. And Disney, thanks to the magic of what they offer, they will hold up a lot better than say, splurging for that cup of coffee. And I don't think we should be surprised by that. I think that is sustainable.
Mary Long: Disney's commentary offers a glimpse into the mind of one kind of consumer, in traveler. Right? You mentioned airlines at the top. I want to swing over there. In that sector, you've kind of got two different stories playing out. And when we were prepping for this segment, you mentioned that it's a bit of a story of the haves and the have nots. The big four carriers, American, Delta, United, Southwest. They've reported record revenues since the pandemic. Meanwhile, you've got ultra low-cost carriers like Spirit and Frontier that have struggled to return to profitability. Why are these ultra low-cost carriers struggling so much if we're seeing this continued high demand in travel.
Lou Whiteman: There's a term in airlines and all the low-cost carriers hate it, but there is some truth to it. Where they are just so-called spill carriers. And what that means is a lot of their business is what spills over to them after the airline that you wanted to book is full. So you go, you try and book one place and then you end up on them, and that's how they get a majority of their business. Back to what we talked about the top where [inaudible] just this slight cooling, I think part of what is going on is, is that there is still plenty of demand. The Uniteds, the Deltas of the world they are filling their seats. They're much better than they used to be on competing on price so they can match on price. And if the price's the same, that's where people go. Where we're seeing softness if there is softness, is the spill carriers where there just isn't so much business, especially these, right now, everybody with vacation there were all flying to the same places, so you have ample choice. It's the same idea of back to a slight cooling. We're still filling planes. These carriers are the ones that are feeling what is going on probably a little more than the big guys who can offer more to customer.
Mary Long: It also seems to me like there's an increasing focus on the premium traveler. Deltas revenues for premium seating were up 10% compared to the same time last year. Delta and American last year rolled out changes to their loyalty programs that made it harder to achieve and reap the benefits of certain loyalty statuses. Southwest announced recently that it might ditch it's one cabin open seating plan that would probably allow them to start charging for seat upgrades. Again, with this kind of premium focus. It seems like maybe we were not so long ago and a golden age for smooth travel for the masses. Or like a spot where people could status hack a little bit. Is that coming to an end?
Lou Whiteman: I think it is. And I'll tell you, generally speaking, the story of the past decade has been what I said before. The legacy airlines are much better at flying profitably. There was a while when deregulation happened that airlines like Southwest, they were just smarter. They did a better job pricing and the other, they benefited, and everybody else suffered. Delta, United, American, they've caught up. They know how to price profitably, and part of that is charging you for what you want. And that's where you get to this economy plus or all this. What they're really doing is saying, I'm going to match the discounter on price if you want it. And then I'm going to upsell you a better seat, a window, whatever it is. So yeah, the era of outsmarting the airlines and getting a great deal, that is probably gone. The good news is, that's great news for investors. It's not so great for customers. I think that is where we are with this business, where it's much safer to be an investor, but you're also not getting that hack your airfare that you could 10-15 years ago.
Mary Long: What do you put it that way, outsmarting the airlines. It makes it sound to have ever believed that that would have lasted forever.
Lou Whiteman: I will say too, I'm generally always been undermined with these mileage things. If it was such a great deal, they wouldn't give it to you. These people who said they were, I don't know, maybe some. But no, I think they've caught up with the customer, if nothing else.
Mary Long: I wonder with the mileage and the loyalty thing if there's a world in which if I was really rewarded for always flying Delta. Now that it's harder for me to reach that same level of loyalty, if now I lose that loyalty to Delta and it just becomes anyone's game. But that goes back to the pricing point that you mentioned earlier. While we're talking travel, I also want to touch on Airbnb. Management in their recent earnings called out some similar trends to what we saw at Disney. Nights and experiences booked in Q1 increased almost 10% year over year despite, "A hard comp for this time last year." Basically they're still growing demand for leisure travel, but not at the same growth rates that we saw closer to COVID. Do you have any other major takeaways from that report or anything that stuck out to you?
Lou Whiteman: We talked in the prep about emerging markets and where they're going. With Airbnb, it's so important we take it for granted now. But to think of what they've accomplished is basically creating this market, creating the customer who's willing to go into someone's house for their vacation. But the question for them now is how do you grow from here? For most of us who are going to be customers were there, so they've maxed out on the US customer. You can grow by adding inventory. We're trying to get more people on the platform. You can also grow international and grow where you don't have a presence. I think what you see with Airbnb right now, that's where this natural evolution of the business. It's hard work growing your inventory in San Francisco or Washington where most people who want to do this or doing it. But you have plenty of international markets today that were where San Francisco was, what, 2008 when the Airbnb founders started renting out their couch. You're seeing the business maybe mature and if not level off, but just the growth is getting more of a mature company in the West where it started. But they haven't even tapped the international opportunity where we're still in the early days with this.
Mary Long: Brian Chesky on that earnings call is really excited about Asia in particular it seems and he called out that there's a lot of younger travelers going there that are not as predisposed to hotels as maybe an older demographic is. You mentioned earlier that everyone seems to be flying to the same place, going to the same place. Is Asia that place? Is there another expansion market that maybe a lot of travelers seem to have interest in?
Lou Whiteman: I think right now, Asia's on a lot of people's radar because you have so much saturation in the Caribbean, for example. You have probably 10 or 12 different airlines fly into some of these routes. Hawaii, when COVID hit and no one could fly international, all the airlines just dumped all their capacity on the one nice place that Americans could still get to. That was Hawaii. You are seeing them look to, I'd say South America to a less extent, but you have currency issues there, and Asia as a place where you can grow. It is whack-a-mole too, because for the cruise lines, for example, it's the opposite. They're trying to find places other than the Caribbean. But you might not want to go to all the way to Asia. You always see an evolving trying to get away from where the competition is too intense.
Mary Long: When we think about growth for Airbnb, obviously expansion markets are a big opportunity there. The company also hits a lot on this experiences segment. Most recently they've rolled out Icons, a new category of, "Extraordinary experiences by the greatest names in music, film, sports, and more." I'm less interested in this specific launch and more curious to hear what you think about Airbnb's experiences offering in general, is this a way to stabilize demand for bookings, even in down travel cycles and offer something that's appealing to people closer to home. That's still feels like a trip but isn't quite the cost of a trip, or is there potential beyond that?
Lou Whiteman: Well, I think we talked about avenues for growth and this is certainly, I think one of them not just the domestic as an alternative, but also it's just very simple. But the add-on. Not only can we sell you the place that you stay in the Caribbean, but your snorkeling trip, you're going to do there too. I do think that's how they do it. I don't think it necessarily shields them from the cyclicality to comes to travel. Because inevitably, the cyclicality comes through whether or not the consumer wants to spend their dollars on experiences, travel, all of these things. But the more revenue sources you have in good times and bad, the more stable your business is going to be. I do think that's the logic and it makes a lot of sense to take more of the wallet share of that vacation or of that experience the more of that money goes through you instead of going to someone else. That's going to help you in good times or bad.
Mary Long: We started this segment talking a lot about multiyear cycles in travel and following up with where things are now post-COVID. Airbnb had a lot of mentions about the annual travel calendar and the cycles that are inherent in that. But typical boom time is summer, many people have vacation, there's a lot of events, et cetera. If the calendar year includes natural dips in the travel cycle, how can investors that are interested in this space, already in this space, parse out what's just a regular dip versus something that's actually maybe a bit more worrisome?
Lou Whiteman: Sure. I do think the calendar is what it is. We are still, worked from home and change this, but family vacations are still at the mercy of the school calendar, for example, just to use an obvious example. You are going to see the first quarter is always terrible on travel. You're coming off the December holiday season, everybody's worn out. It's cold, it's disgusting in most places. It's always a terrible time to travel. That's just the way it is. The way an investor can look at that you do, this is a business where definitely year-to-year comparisons compare more than quarter-to-quarter. You have to know this. But also, I think this is where again, you have to look at the cycle and where you are, what you're looking for is the future demand. You're looking at where the booking is, what the consumer is spending their money on. The first-quarter earnings calls for most of these companies, what we're really interested in is what they are seeing for the summer. It's a good industry to listen to management because management will telegraph how things are going and few of us book a vacation the day before. In April, you have a pretty good idea of what people are doing this summer. You got to listen to the calls, you've got to hear that and hear the commentary and listen for fear on the voices.
Ricky Mulvey: As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell anything based solely on what you hear. I'm Ricky Mulvey. Thanks for listening. We'll be back tomorrow.
JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Ally is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Lou Whiteman has positions in Ally Financial, Amazon, Microsoft, The Trade Desk, Walmart, and Walt Disney. Mary Long has positions in Airbnb. Nick Sciple has no position in any of the stocks mentioned. Ricky Mulvey has positions in Netflix, The Trade Desk, and Walt Disney. The Motley Fool has positions in and recommends Airbnb, Alphabet, Amazon, Apple, Bank of America, Costco Wholesale, JPMorgan Chase, Magnite, Microsoft, Netflix, Starbucks, The Trade Desk, Walmart, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Barclays Plc, Comcast, Delta Air Lines, and Southwest Airlines and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
