Value Investing The Ultimate Guide to Inflation |
- The Ultimate Guide to Inflation
- Vizio Holding Corp (NASDAQ: VZIO): for those who missed the $ROKU run
- Options: The Untold Story (Pt1)
| The Ultimate Guide to Inflation Posted: 10 May 2021 06:45 AM PDT |
| Vizio Holding Corp (NASDAQ: VZIO): for those who missed the $ROKU run Posted: 10 May 2021 08:51 AM PDT Vizio is the 2nd largest manufacturer of televisions in North America over the last 3 years and the largest for soundbars with $2 billion in annual revenue. The company had the unfortunate luck of going public at the end of March 2021 and faced a very tough tech IPO market to say the least. Nonetheless, Vizio's reputation as a hardware company masks its small, but rapidly growing and extremely profitable advertising business that has grown at over 100% a year since it was established in 2018. Taking advantage of its large market share in TVs, the company is finally ramping up its ability to monetize the millions of daily users of its SmartCast operating system (found on every Vizio television). Essentially, Vizio is getting paid every time a user turns on the TV (and more) and is following a template already established by Roku. Vizio sold 17.1 million smart TVs between 2018 and 2020 and grew its active SmartCast accounts from 3.6 to 12.2 million accounts over that same time frame (a strong 70% conversion rate). To put the contrasting economics into perspective, in 2020, Vizio's hardware business had 10% gross margins, contributed to 93% of total sales and 62% of total gross profit, and grew 7% YoY. Meanwhile, its SmartCast platform/advertising business had 76% gross margins (up from 60% in 2018), contributed to only 7% of total sales but 38% of total gross profit, and grew at 132% YoY. The growth in the high margin platform/ad business propelled total net income to expand more than 4x from $23 million in 2019 to $103 million in 2020 ($41 million of which was in Q4 2020 alone). Growth should remain strong for years to come, as the company has barely scratched the surface with monetizing its SmartCast platform. At its current market cap of $4.6 billion (~$25 a share), Vizio trades at 2x sales, 20x forward earnings, and has over $300 million in cash with no debt. As investor awareness improves regarding the high growth software platform, the stock's multiple should expand significantly and narrow the valuation gap with peers like Roku. Shares are easily worth 2x to 4x the current price. The company offers investors a compelling opportunity to gain exposure to the connected TV advertising market, which is projected to grow from $9 billion to $28 billion between 2020 and 2025. For a little preview of what VZIO could become (but on a smaller scale), take a look at a 5-year graph of ROKU ($18 → $300+). [link] [comments]  |
| Options: The Untold Story (Pt1) Posted: 10 May 2021 09:10 AM PDT |
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