Welcome back Simeon McMillan to the Rigatoni Capital Podcast! Simeon writes the Accrued Interest newsletter on Substack and is one of the best stock analysts I know in the media and advertising space. Luckily, we got to get inside his brain right before earnings season kicks off and dove deep into stocks I'm most interested in like META, Netflix, and AppLovin. These are also three stocks I think are flashing value, but it seems the market is punishing them for the time being due to macro and investor sentiment.
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This podcast was recorded on April 7th, before the news of President Trump agreeing to suspend attacks on Iran for two weeks.
META: Reading the Form 4 and What Management Is Actually Telling You
As Simeon explains in simple terms, a Form 4 is a legally required document that must be filed with the SEC to disclose how management is being compensated. What Simeon found buried in the tables of CFO Susan Li’s filing was compensation structured to a specific stock price ladder. For example, the floor target of $1,116 per share has to be hit by February 2028 for the first tranche to pay out. There is a mid-case in the neighborhood of $2,500 to $2,600 per share, and then an upside case somewhere above $3,000 per share, all of which need to be achieved before a 2031 expiration. Of course, this would all be stock split adjusted, but the headlines have really focused on the upside case and the fact that it would imply almost a $10 trillion market cap by 2031.
From where the stock is sitting right now, in the mid-$500 per share, a double from here gets you close to the floor target. Simeon’s point is that when these grants were being structured, the executives were looking at a much higher stock price (in the $700 range), which means the bar looked even more achievable at the time. He was also clear that hitting anything in the $2,000 to $3,000 range mathematically requires workforce cuts that go well beyond the 20% figure that has been widely reported.
On the new revenue buckets, I wanted his opinion on WhatsApp, one that I have been skeptical about for ad monetization. His answer was that Click-to-WhatsApp ads already did something in the range of $12 billion in revenue in 2025, which is enormous for something that most of the market treats as untapped white space. The pitch is that for thousands of small and medium businesses that already run their entire presence through a Facebook or Instagram landing page, adding a click-to-WhatsApp button is one or two steps inside a platform they are already buying ads on. Advertisers do not like learning new dashboards. And when Meta rolls out a new ad format, the CPMs start low to drive adoption, which historically has meant the early buyers see outsized returns. Simeon’s framing was that WhatsApp ad inventory could be some of the most underpriced digital inventory we have seen since the original Facebook ad platform launched.
Netflix: Price Increases, the WBD Decision, and the Surgical Sports Play
I immediately wanted Simeon’s thoughts on the back-to-back price increases from Netflix. Simeon’s take was that “the price increases are going to keep coming, and Netflix can get away with it in a way that no other streaming service can.” He noted that if you measure entertainment value on a cost-per-hour-watched basis, Netflix is actually cheaper than most of its competitors, including some that charge less on paper. He cited survey data showing that Netflix is now the anchor entertainment package for most households, meaning it is the one subscription people are not opportunistically canceling every few months when their show runs out. The churn metrics internally back this up, and management would not be pushing price increases if those numbers were flashing red.
On live sports and the NFL specifically, Simeon made a point I thought was underappreciated. He does not think Netflix wants a full regular season NFL package, and he actually believes them when they say so. The Christmas Day games are smart because they get the cultural event and the ad surge without inheriting a 17-week fixed cost commitment. The rumored play is more around international games, playoff games, and other sports entirely. There are other live sporting events where Netflix can move surgically without getting into ruinous bidding wars against Fox or CBS for domestic packages those networks just need to survive.
AppLovin: The Meta Ceiling, the E-Commerce Rollout, and the Replication Question
I hold AppLovin as one of my top positions, so I lean on Simeon here because he covers it better than almost anyone I read.
His Meta Ceiling concept is not about Meta as a direct competitive threat to AppLovin’s business model, although that risk exists too. It is primarily a valuation observation. When Meta is trading at 16 or 17 times forward earnings during a sell-off, the market is not going to sustain a 30 to 40x multiple on AppLovin for long, regardless of how good the business actually is. The ceiling compresses because institutional investors look at relative multiples across the ad-tech complex and reprice accordingly. AppLovin gets dragged down with the broader category even when nothing has changed operationally.
On the replication or AI disruption risk, I asked him directly whether someone could build a competing platform in a basement and eat into Axon. His answer was that the doomsday scenario is overrated and the more mundane competitive risk is underrated. The catastrophic version, where someone uses AI to clone Axon and take meaningful share, he thinks is low probability. The more realistic version is just that Meta or Google decides to be more aggressive in the mobile gaming advertising space and takes some market share through normal blocking and tackling.
The e-commerce rollout question was one I pushed on because there are rumblings from some advertisers that results have been disappointing. Simeon’s response was essentially: you are asking this question in April. Small and medium businesses, retailers, and DTC brands make the overwhelming majority of their money in Q3 and Q4. You are not going to get a clean read on AppLovin’s e-commerce momentum until the second half of the year. He also pointed out that AppLovin has been deliberately throttling their own rollout, which they have said explicitly on earnings calls. They have been slowing down how quickly new advertisers can join the platform. 2026 is also the beginning of their international expansion, which adds another layer of ramp time. The auction-based pricing model also means that if early advertisers have mixed results, pricing adjusts down and better-matched buyers come in.
Amazon and a Quick Word on Google
I asked Simeon whether the Amazon advertising business interests him, given that it has grown into what I think is a genuinely underappreciated segment of the overall company. His answer was honest about his blind spots. He does not cover AWS, and he said it is probably impossible to consider yourself a smart Amazon investor without forming a real view on AWS. Since he does not have one, he stays away from the stock. But he is bullish on Amazon advertising in the abstract because their first-party purchase data is genuinely unmatched.
On Google, his coverage focuses on search and YouTube rather than Google Cloud. But the broader point from this conversation is that Google and Meta are the two names AppLovin has to watch as competitors, and right now the valuation disconnect between all three is the market’s way of processing a lot of macro uncertainty that may or may not be fundamental.
Conclusion
Simeon publishes at https://www.accruedint.com/ and on Substack under Accrued Interest. If anything in this recap made you want to go deeper, his Meta and Netflix deep dives are the place to start. He is one of the few people writing about these names who actually does the work rather than just summarizing the earnings call. As I told Simeon offline, he’s firing on all cylinders right now with his newsletter, and it’s an honor to have him on the Rigatoni Capital Podcast.
Thank you for watching, listening, and reading.
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Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions.
