Another sign of extremes…small companies with very small (but rapidly growing) sales and no profits garner the attention, and even fascination, of the investing public. High price-to-sales ratios, little-to-no-profits, and a perceived very large addressable market all get mixed in to drive tremendous demand for shares. When the demand dries up from these lofty and speculative expectations the stocks will drop to the intersection of cash flow and profitability – the resulting price action will not be favorable for current holders.

Discovery dwarfs Roku in profitability, has an international reach, streaming services world-wide and receives little interest from investors currently other than requests to sell the shares. This too shall pass and we believe Discovery will be rewarded for their tremendous profitability and the execution of their business plan.