🎥 Streaming is Changing Forever

MARKET UPDATE

Good Morning Investor! Stocks across the market rallied at the open of the market off the back of the latest CPI inflation print which came in at 3.3% year-over-year, below the 3.4% widely expected. Additionally, the market rallied into the close thanks to the Fed’s forecast of at least one rate cut by the end of the year.

TODAY’S BIG HEADLINES

Warner Brothers Secures the French Open

Spotify is Squeezing Everyone for More Profits

A Solana Spot ETF Could Be on the Horizon

MEDIA & STREAMING

Warner Brothers Secures the French Open🎾

Streaming Wars: In a move that’s more dramatic than a telenovela finale, Warner Bros. Discovery ($WBD) has snagged the exclusive rights to broadcast the French Open tennis tournament, adding another twist in the streaming saga against Comcast’s NBC. This epic battle for sports dominance began when NBC swiped Warner Bros.’ prized NBA broadcast rights. Warner Bros. counterpunched by signing a decade-long deal to air the French Open in the US, swiping the tournament from NBC’s grasp.

Golden Streaming: Live sports remains the streaming industry's holy grail, evidenced by the NBA’s upcoming media rights deals worth an eye-watering $76 billion over the next decade. This would represent roughly three times as much annual revenue as it’s generating on its current deals.

• NBC’s successful bid for the NBA rights—at $2.5 billion per season—outbid Warner Bros., who had long held these rights on TNT.

• Despite Warner Bros.’ triumph with the French Open, they’re grappling with a hefty $40 billion debt load, making their victory a bit bittersweet.

• WBD already held the rights to stream the French Open in over 55 different countries, however under the newly negotiated deal, this will now include the US in a ten-year deal worth $65 million annually.

Power in Collaboration: Warner Bros. isn’t going it alone, though. They’re teaming up with streaming rivals through various collaborations, including a five-year sublicensing deal with Disney’s ESPN for a slice of College Football Playoff games. This fall, Warner Bros., Disney, and Fox are launching Venu Sports, a joint venture to stream all three companies’ live sports broadcasts, proving that even fierce competitors can be frenemies when there’s money to be made.

Opportunities Galore: The sports streaming battlefield is teeming with opportunities. With viewership driving valuations sky-high, there’s gold to be mined. Motorsports, in particular, are revving up with massive audience growth in both MotoGP and Formula 1, offering juicy prospects for investors looking to cash in on the high-speed excitement.

MEDIA & STREAMING

Spotify is Squeezing Everyone for More Profits🎸

Profit-Oriented Moves: Spotify ($SPOT) has claimed the throne in the audio streaming kingdom, boasting a massive 239 million premium subscribers and 376 million ad-supported users spread across more than 180 countries. This has led to a classic dicotomy, reminiscent of social media behemoth Meta ($META): keep growing the user base despite slowing growth rates, or find innovative ways to wring more profits out of the existing users. Spoiler alert: Spotify’s chosen to squeeze that lemon for all it’s worth.

Experimentation: Unlike some social media giants, Spotify's profitability isn't as robust, thanks to the tricky business of revenue sharing with artists and record labels. To diversify its revenue streams, Spotify has dipped its toes into various forms of audio streaming, including podcasts and audiobooks.

• These ventures, however, have led to substantial financial losses, and now Spotify is resorting to a classic move—raising subscription prices, a strategy it’s employed multiple times over the past year.

• While this has led to a profit-fueled surge in stock price by 105% over the past year, it could risk alienating its userbase. For context, Spotify is now officially more expensive than Apple music, a precarious situation for the streaming giant to find itself in. The same can be said for other streaming services TIDAL ($SQ), and Deezer.

See You in Court: The biggest thorn in Spotify’s side right now is creators and labels. This is because Spotify have been delaying higher royalty rates for years by exploiting loopholes in music law. Additionally, the company claims its premium subscriptions are now effectively a bundle package, which could allow the streaming service to pay songwriters $150M less this year. However, these moves could backfire, resulting in hefty legal costs.

CRYPTOCURRENCY

A Solana Spot ETF Could Be on the Horizon👀

Step-By-Step: Big things are shaking up in the crypto realm, with the SEC recently giving the thumbs-up to the Spot Ethereum ETF. We're now on the edge of our seats, just waiting for those S-1 documents to get the final stamp of approval so the ETFs can hit the trading floor. The buzz is that the next big crypto to get a Blackrock-backed spot ETF could be Solana.

SOL Rumours: The rumor mill is in overdrive, suggesting that Blackrock has started the application for a Solana Spot ETF. If true, this would be a game-changer for the SOL token, which currently boasts a market cap just shy of $100 billion. But let’s not get ahead of ourselves—these whispers are still just that: rumors.

The Unlikely Event: Not everyone’s buying the hype. Crypto experts are casting doubt on a Solana ETF’s imminent arrival, pointing out a few stumbling blocks.

• Historically, Bitcoin and Ethereum had to roll out futures ETFs before getting the green light for spot ETFs, with a good two-year gap to ensure market stability and prevent manipulation.

• Legal Quicksand: Adding to Solana’s woes is the SEC’s current crackdown on exchanges like Coinbase ($COIN) and Kraken, arguing that Solana and similar cryptocurrencies are securities—a headache that Bitcoin and Ethereum managed to sidestep.

MORE NEWS

Additional market-moving events🌎

FedEx Layoffs in Europe: Logistics giant FedEx ($FDX) has announced its plans to cut between 1,700 and 2,000 back-office jobs in its European offices over the next 18 months due to weak freight demand. (Reuters)

AI Mistral Raises Again: AI French AI start-up Mistral, founded by ex-Meta and Google employees, raised $640 million, valuing it at €5.8 billion. This funding round included General Catalyst, Andreessen Horowitz, Salesforce, and Nvidia. (NYTimes)

BNPL Comes to Iphone: Apple will be integrating Affirm's buy now, pay later loans into Apple Pay on iPhones and iPads later this year, expanding payment options. Affirm's shares rose 11%, while Apple's increased by 7.3%. (CNBC)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500. Then on the 10th of June we released our next stock selection.

Here’s how the three stocks have performed since:

• Evolution AB: 1,105.50 SEK (📉-15.80%)

• Hims & Hers Health: $23.68 (📈+63.65%)

• PayPal: $63.43 (📉-5.51%)

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