What’s Motley Fool’s “Netflix Killer” Stock?

Checking up on the latest Motley Fool Stock Advisor ads...

By Travis Johnson, Stock Gumshoe, March 27, 2020

I’ve had a bunch of new questions about this almost evergreen Motley Fool ad for their Stock Advisor service, so I thought I’d share some answers with you here — partly because this is a stock that I write about a lot for our paying members, since it’s a substantial part of my portfolio, but I haven’t shared my thoughts on it for “free” members in a while.

So what’s the stock?

This has been pitched in the Fool’s “home run,” “ultimate buy” or “double down” alerts many times over the years — the latest ad is not dated, but makes the point that the relatively few stocks that get recommended by both of the Gardner brothers at the Motley Fool are unusually great stocks (the brothers are David and Tom, who together founded the Fool and run both the company and the flagship Motley Fool Stock Advisor). This is what they say about that “indicator”:

“It’s rare that David and Tom formally agree on the exact same stock – it’s only happened 23 times over the entire history of Motley Fool Stock Advisor.

“But when it has happened, the results have been spectacular:

“Netflix is up 11,720% since Tom agreed with David on it in June 2007

“Tesla, which received the “Home Run Buy” sign in November 2012, is up 1,243%

So what’s the latest “home run” stock?

Here are the clues, including the latest “Netflix Killer” twist they’ve added to the ad:

“… a rare and historically very profitable stock buy signal is flashing right now. Because just like they uncovered Netflix while you were still paying late fees at Blockbuster, they have found the one ‘Netflix Killer’ stock that just might give Netflix a run for its money.”

And what about some numbers?

“… neither David or Tom would ever describe this stock as a ‘sure thing,’ but the details behind this tiny little internet company are impressive:

“It’s smaller than 1/100th the size of Google.

“Each one of David’s and Tom’s recommendations of its stock is crushing the market.
Its young CEO has already banked $575 million on this stock since its IPO.”

That’s a poor choice of words, I’d say — “banked” implies that you’ve made a ton of money and put it in, well, a bank, at least metaphorically. That’s not what this “young CEO” has done, he just owns a lot of the stock because he founded the company, and has seen it increase in value dramatically as the stock has risen. He’s “betting on” the company to the extent that he hasn’t sold all those shares, but he also isn’t buying — and has, in fact, sold thousands of shares that he’s been granted by the company as compensation over the years.

What does the company do?

“This company stands to profit as more and more people ditch cable for streaming TV. And in fact, David and Tom believe this company’s crucial technology could represent the final nail in the coffin for traditional cable.

“Now this isn’t some competitor to Netflix, Hulu, or Amazon Prime Video, as you might expect. Instead, this company sits in the middle of the advertising market, which is more than 10x bigger than the online streaming industry.

“And their intrepid CEO is betting his fortune – $575,715,640 to be exact – on what he’s calling cable TV’s ‘ticking time bomb.'”

So yes, this is, of course, good ol’ The Trade Desk (TTD).

And we’ve seen the Motley Fool recommend and re-recommend this stock many times over the past couple years, with extremely similar teaser ads touting the stock running every few months — I first nibbled on the shares back in the fall of 2017 when Tom Gardner was pitching the shares, and it was the best-performing teaser stock of 2018.

The Trade Desk provides a data-fueled programmatic ad-buying software and access to purchasing (and monitoring) ads for the “open internet” (as opposed to the “walled gardens” of Google and Facebook), and they’re growing in all the areas that other advertising folks are growing, with huge volume in things like in-app advertising and mobile video, but they are also growing very fast in streaming — placing ads in services like Hulu, which they think is a major growth area (the argument being that advertising dollars will grow in importance for streaming services as they compete and as customer acceptance of higher and higher subscription fees to fuel content creation will be limited).

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