Nebula is now worth more than curiosity stream!
It’s been about 5 months since I last talked about CURI. Just a short update to comment on Q1 2023, recent updates right before Q2.
Financials are largely within the negative expectations set in Q4 2022.
Direct Subs only grew by 3%
The cash flow margin is at -50%, spending 6M on operations in Q1 2023
Nebula is now bigger than CURI. As of writing:
Nebula is worth 150M in the private markets (difficult to tell if this would hold up in public markets)
CURI is worth 50M
It is important to note that Nebula is wholly owned by the creators - outside VCs and private equity could not own a piece of Nebula. CURI is the only outside stakeholder that has a stake in Nebula.
Nebula's growth is slowing, growing at 250% in 2021 to 30% in 2023. However, going forward, Nebula’s valuation will likely continue to increase. If we simply consider the tangible book value + the nebula stake. We’re approaching the point where CURI’s stake in Nebula might be worth more than the whole of CURI. There is potentially a margin of safety of 50% at current prices.
However, CURI is still spending cash, and there is no end in sight for becoming cash flow positive. So, the tangible-book value will continue to decrease. Secondly, it is still being determined when CURI can liquidate its stake in Nebula - potentially in secondaries, acquisition or IPO.
Speculative Acquisition and combination
In Q1 - Clint mentioned
"We believe that our direct subscriber base, content library, multi-year distribution agreements, strong cash position and lack of debt are favorable business and strategic attributes that provide us with exceptional flexibility. As such, we will continue to consider opportunities that we believe are in the best interests of our shareholders, including share repurchases, potential business combinations and scale partnerships"
The analyst followed up and asked:
Great. Thanks. So for my follow on question, Clint, I can't let you off the hook. So can you get more high level thoughts on business combinations and scale partnerships with two juicy statements just to let it sit there?
Clint Stinchcomb:
I guess what I would say, Tom, is it's no secret that Wall Street today has limited affection for small companies. We're unique in the media ecosystem and what I mean by that is we have considerable cash, no debt, clear path to positive adjusted free cash flow. We have a wide, deep and evergreen content library. We have direct subscribers in 178 countries, multi-year bundled agreements in over 100 countries, programming in 11 languages, demonstrated global appeal. Considerable dry powder and a public currency, so that's a unique profile.
And I think one that is attractive to a broad set of combination partners, including companies who may not be obvious in the media landscape. And so as I said, it's no secret that, that Wall Street has limited affection for small companies, I think like many people. We want to do what's in the best interest of our shareholders and certainly it appears to today that we need to be larger. So where those opportunities exist, we're happy to have conversations with people and again, I think in light of our content, in light of our profile, we have the ability to have conversations with I think companies that might not be as obvious as they would be for other media companies, Peter?
There might be a chance that CURI will get acquired or combine with another company. I agree that CURI’s assets are attractive, but they don’t have enough scale to monetize them.
The bottom line
If one is to buy CURI now, it's a speculative bet that it will get acquired or get to liquidate its Nebula stake, which is not difficult to imagine. I think this most models after an option trade
On the other hand, its fundamental operations are still deteriorating and have a lack of growth & profitability.
I personally want to see improving fundamentals before jumping in.
Hi,
What did you think of the last quarter results. There was improvement and more of an emphasis on partnerships. Was that your impression?