@saintexYou aren't missing anything.
There are quite a few negatives that have led to this current price, however.
1. Historically, the board has not been closely aligned with shareholders (not much in way of equity being held).
2. There has been a fundamental business model change- from satellite to streaming. Because it is difficult to know where the bottom will be for satellite, and streaming has not really reached critical mass yet, it makes it difficult to evaluate exactly what the business will look like. The ARPU of satellite subscribers is about 4x that of streaming providers.
3. Historically, there has been a large amount due to bondholders, that will come to an end shortly- this fundamentally led to the cut price capital raise during Covid. Given that a lot of new shares were issued at a price lower than the current one, it will take some time to revalue.
4. The business direction of the new CEO (IMO only) was going well, so that sudden departure increases uncertainty.
There are some tailwinds that you have to dig a little bit to find, however, but they do exist:
1. New capex is going to be less than historical with the change in distribution, so FCF will be running ahead of reported profits for a while yet while the old capex is being depreciated.
2. There has been significant investment in the product- as far as I can tell the new neon is substantially improved and is at least a clear #2 in the market. As the success (revenue and profitability) of Stan under NEC shows, content is a natural oligopoly (lots of content providers are not keen to deal with Netflix, so there is a tendency for them to deal with the #2...which is historically the incumbent), so you can reliably guess how this is going to turn out.
3. Netflix has just started raising prices...ie the land grab phase under internet distribution is nearing the close- this will improve profitability for the surviving players
4. There is a role for satellite- peak demand leads to poorer quality end product for the end-user and having satellite substantially mitigates against this
5. Broadband bundling is a proven business model (eg UK), so it is likely that this will be a successful endeavour.
Anyway, as far as I can see, there isn't really any significant downside to this business apart from opportunity cost relating to the timing of the eventual rerate- it could still be a number of years before the accounts still start looking good. I bought because I saw a cycle of upgrades that don't appear to have been priced in, but I appear to have been wrong so far. I will be waiting for results before making any firm decisions as to whether this position stays or goes on the chopping block .
