![]() ![]() Moreover, even ViacomCBS (NASDAQ: VIAC) - which has a similar market cap as Discovery, at $24.32 billion - has a lower FCF yield of 8.1%. Using its $1.71 trillion market cap, it has an FCF yield of 1.81%. In 2020, Amazon produced $31 billion in FCF. Even in 2019, its FCF was $3.3 billion, making for only 1.36% in FCF yield on today’s market cap. This represents just 0.78% of its $242 billion market capitalization. For example, last year Netflix reported that its FCF was $1.9 billion. ![]() Many other streaming technology companies, like Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN), have much lower FCF yields, being higher priced. $2.337 billion in FCF divided by the $23.13 billion market cap). That implies that Discovery’s FCF yield is 10.1% (i.e. 19 Discovery stock had a total market value of $23.13 billion with all classes of its shares outstanding, according to Seeking Alpha.īut last year, the company produced an astounding amount of FCF - $2.337 billion - according to its recent fourth-quarter earnings release. Here is the easiest way to handle this situation as a potential investor: determine the FCF yield of the stock in aggregate and then pick the cheapest class share.įor example, as of Apr. This is important because now those same shares look significantly undervalued, given the company’s huge free cash flow (FCF). When the banks liquidated Hwang’s position, the Class A shares got especially decimated. Numerous media sites described this situation, especially The Wall Street Journal and Bloomberg, which had extensive articles on his purchases of Discovery, especially Class A shares. There is another recent and temporary reason why the Discovery Class C shares look extra cheap.īill Hwang - the failed hedge-fund manager whose hedge fund, Archegos Capital, was liquidated recently by its bankers - held a huge stake in Discovery stock. Discovery Stock and the Hedge-Fund Fallout Therefore, it makes sense to buy the cheapest Discovery stock, Class C shares. So, it doesn’t really matter how many votes an individual shareholder owns. However, Discovery is still controlled by the Newhouse family, which has nearly 24% voting power (). One reason for this drastic price difference may be that Class B shares have 10 votes per share, whereas Class A has one vote and Class C shares have zero votes.
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