Why Tesla, Netflix, Mastercard are now 'loser' stocks - David Barse on tech, COVID 'false alarm'
(Kitco News) - A wave of technological innovations in the automotive, entertainment, and consumer finance sectors have for now, dethroned Tesla, Netflix, and Mastercard in their respective spaces, said David Barse, CEO of XOUT Capital.
The XOUT ETF excludes "loser" stocks from the broad market index and includes only stocks that have the highest score based on seven quantitative metrics, including revenue growth, hiring growth, capital deployment, and profitability.
Speaking to David Lin, anchor for Kitco News, Barse said that these companies, once the "disruptors" in their sectors, are now being "disrupted" by advancing competitors.
"Tesla has been the disruptor and our thesis here is that it's much easier to exclude the companies that are being disrupted than identify the disruptors. Those will take care of themselves over time. As Tesla continues to report earnings quarter over quarter, we'll monitor its growth rates and other metrics that go into the seven metrics we use to score a company," Barse said.
Netflix continues to face challenges with licensing agreements and the slow rate at which it produces new, original content.
"Everyone used to watch Netflix. People got tired of the fact that Netflix wasn't introducing content at at rate fast enough to keep their viewers. So what have [consumers] done? They've gone gone to alternative streaming services," Barse said.
Credit card companies like Visa and Mastercard face an onslaught of competition from new payment type services in the technology space. Mastercard was recently removed from XOUT Capital's holdings while Visa has remained, owing to superior metrics from Visa versus its rival.
The industry, as a whole, faces an existential threat from the move to a cashless society, Barse said.
"I remember being at a conference, not too long ago before the pandemic, where someone told the story of walking down the streets of one of the main cities in China and one of the homeless persons was asking for support, and held out their cell phone, and you tapped it to make a contribution," he said.
On the Delta Variant of COVID, Barse said that it would have minimal market impact.
"Again, another false alarm over how serious and severe this Delta Variant can be to re-shutting down the global economies over COVID. There's no question that there's some concerns about it," he said. "If I were a smart global, political leader, I would use this as a tactic to get more people vaccinated. As a long-term optimistic, I feel like the markets are going to continue to perform."
For more information on Barse's market outlook, watch the video above. Follow David Lin on Twitter: @davidlin_TV.