Does Netflix feel like a ticking time bomb to anyone else?
By - ShawnOttery
Short shitty companies at your own risk. Short FAANG stocks at your own peril.
Netflix shouldn’t really be part of FAANG though, Microsoft deserves that spot
FAANG as an acronym exists for salaries. Microsoft does not pay as well as those companies. Also, Netflix has contributed enormously to the open source enterprise world, pioneering a lot of the java cloud stuff currently used by other companies. Yes, Netflix only really has one product, but they are an engineering marvel.
Microsoft absolutely pays as well as those companies now.
You are right, but years ago when the acronym was gaining popularity, they didnt
I have professional developer friends and Netflix is still considered the ultimate employment opportunity.
It really doesn't. F/G/N pays 30%+ for similar levels.
HBO max has this annoying glitch where it narrates the whole movie in between character dialect. Really dumb and annoying.
You gotta have the wrong audio setting. Probably the one for the visually impaired so they describe everything.
Lol, agreed. That doesn’t sound right at all
Shorting is not really something that someone “new to investing” should be involved in.
"Hey I know I'm kind of new to this but do you think I should try the one thing in investing that can end up with unlimited losses?"
Hey thats exactly why I asked the question lol
And it's a great question too!
When a company does bad, like under performs bad (like Netflix), not corruption bad, then the stock goes sideways. Sideways doesn't mean perfectly horizontal, but that it under performs the market, still often going up in the long run.
This is why you shouldn't short a company like Netflix. Really what under performing says is it's probably not a good buy.
You short a company like Enron or Luckin Coffee or similar, one with an industry that is on its last leg but people don't realize it yet or a corruption scandal that you know to be true.
The thing is Netflix isn't doing bad. They had record revenue last quarter but there subscriptions were down. Makes sense that they'd be down post covid shutdown and right after a subscription price hike. Let's wait and see how they do in another quarter or two or three
It will be interesting to see how this plays out. I know it's annoying for customers to have a bunch of different subscriptions but I guess it's better than cable where you buy a bunch of stuff you don't want.
They weren't even down. Their subscription growth slowed down but still grew. I don't own Netflix, but they seem to be the last subscription their users give up
Very true. I tried HBO just so I can watch the Friends reunion and will cancel once the month is done. Netflix have more interesting movies and their app is really good too.
They also have kind of a first to market thing going on. I know Netflix was the first streaming service most people owned.
It is a great example of first mover advantage. Innovators, imitators, and idiots
Meh... There is still loads of trash shows on Netflix that I don't want. Frankly most streaming is turning into on demand with very little I want to watch or that I have not already seen.
I am very bearish on netflix
How intimately do you know their company though?
Pre-pandemic I went to [Product School’s](https://productschool.com/product-management-events/) annual conference and the final keynote Speaker was from Netflix.
Firstly he actually came from Disney and knows quite a bit about the industry and finding iconoclastic media. But I also heard a bit about how they’re developing film maker software and the “Netflix Original” aren’t just familiar because of the stories they buy. They’re being piped through project management software, color, editing, that’s organic to Netflix.
Think about YouTube’s original content and how it can never graduate to consistent storied content.
And now think about how legacy media only knows how to squeeze water from ancient rocks (constant remakes and rereleases).
Netflix stands to be the frontier of story telling. They can sign talent cheap, churn out original content, and they mine user data like crazy unlike the disconnect sordid mess that Network research did to find out what people like.
The thumbnails for each show are tested against different markets and age groups. The average watch time. They can pull live viewing metrics on when a director and an actor are paired together.
My larger point is… none of that is public facing in any significant way. Unless you sold and shot a show on Netflix you wouldn’t think twice about how they’re making shows compared to how NBC does.
Maybe you can be bearish on the majority of the business, but if you believe in the tech (streaming entertainment) and the appetite for it it’s easy to forget that as a retail investor you’re probably missing a lot so picking one company over another isn’t really as simple as Marketwatch or Reddit threads make it.
That's all well and good, but popular content is what made Netflix the giant that it was. From my experience, the story goes that you heard about some Netflix original, so you subscribed to the platform, and then found that they had a lot of content that you knew and wanted to watch. The question could have been "what's NOT on Netflix?". Now, the question became "what actually IS on Netflix?".
I'm bearish on all streaming platforms, because Netflix was a good reason for people to stop seeking out alternative means of access, such as piracy. You know, good service at a reasonable price. Now, if you want access to the same shows, you need 3 or 4 or 5 different service subscriptions, which is definitely not "reasonably priced" anymore.
As a result, people subscribe long enough to watch the original premiere or as soon as the show is out in full, and unsubscribe right after. They might as well sell it piecemeal, if it wasn't so bad for business optics. And so it seems to me that, much like cable, Netflix will stay relevant because of the B2B subscriptions that they have (hotels, ..) for a good while, but imo their growth days are over.
Your point of view is very USA centric.
In other many many other countries Netflix is king.
It’s a good theory, in practice it isn’t true.
The biggest issue in the space isn’t users that cycle through streaming platforms trying to find good shows. It’s that the cost of the content is absurdly high to either maintain a license or develop original content.
They address that with: more users, higher prices, cutting down on shared accounts, and lowering production costs and writing longer deals for established content.
Your question is imagining utopic version of streaming that transcended licenses: unified all content to a singular platform, unlimited DVR capacity (playback), available for a rate of $8 a month with practically unlimited users AND devices.
That was never going to happen.
Instead of trying to make enough money to buy every primary leading IP from every studio Netflix went a different way.
They produce content for you. It’s odd no, that there’s actually very little by way of promotion of lots of shows on Netflix but so many of the same type of people have heard of them.
Previously we’d all gather at the same time on the same night of the week to watch a show that has a chance to relate to us. It was scheduled around a generic idea of what your days were like: kids cartoons turned into soap operas that turned into news, then sports or prime time shows, followed by news and then nonsense.
Now a 30-40 year old is going be recommended 30 hours of television that’s essentially perfectly reflective of things you like in a film or tv show.
Also, at a certain point Netflix will eat up smaller studios and their IP. And at that point they’re the Whale not the big studios.
Everything you said here has nothing to do with content.
They're churning out the worst content it has seen in years. No tech is going to save them if their storytelling sucks and trying too hard.
Churning out crap originals is not going to bring subscribers or keep subscribers happy.
Why does everyone forget about Worldcom. Was I the only fool to invest in them?
Love this response
You could safely short it via the purchase of a put option, which is you betting that at some point in the future the stock’s price will be at some specific (reduced) point
Hahaha, that gave me a good chuckle
Yes, if you're bearish on a stock another way is to buy put options. That way your maximum loss is 100%. If you short a stock your maximum loss is infinite. Like if Netflix rockets.
That is something I've learned through this comment section haha, thank you and all basically for advice
Shorting in general leaves a funny taste in my mouth. Shorting a company because you think it'll go bust is just being a cunt!
Haha OK fair enough
How is that company still 7Billion market cap?
What about snorting?
If you don't think Netflix will thrive, relative to their competition, then don't short Netflix. Invest in Netflix's competition.
But what's their competition? Is it just a rival streaming service? Or is it some alternative to streaming itself?
Disney, AT&T, and Apple mostly.
Amazon is probably their biggest competitor considering AMZN has the 2nd highest # of subscribers, with NFLX being #1.
Amazon is a lie, are they separating out their prime subs from the people actually subscribing to their streaming? It's literally the worst streaming service (with commercials and bad content).
Some of their content is decent, but for an "add-on" service it's not too bad. If you want to watch their "premium" content, you have the option to, either with commercials or fees.
The big difference is if I want to watch a specific movie, I can pay extra to rent it on Amazon, or I don't even have an option with Netflix. It may be a charge or with commercials, but at least it's there.
Amazon and Paramount + too
oversold due to Archegos margin call and breaking into streaming.
They have thousands of their own movies which are soon out of contract to other companies and tv shows also. Lots of quality content stuff.
Worst case they get taken over for their content, probably at a premium too.
This doesn’t really make sense. It’s kind of like betting on the field in sports vs betting the favorite. That gives you terrible odds. Unless there is an index fund of Netflix competition, this isn’t really possible
Shorting a stock can be catastrophic, even if the analysis is correct. If the stock price falls a little bit later than anticipated, short sellers lose big.
On the other hand, if one believes a company is operating in a sector that is going to broadly be successful, but doesn't think that particular company is going to outperform its peers, it makes sense to invest in those peers. If Company A is going to underperform its sector, all other companies in the sector *must*, in the aggregate, have above average performance.
Are you suggesting you can't identify any of Netflix's competitors? Try Amazon, Apple, and Disney, to start.
Now, if we were talking about the buggy whip industry instead of the streaming industry, you'd have a great point, because the sector, as a whole, would not have great prospects.
A more sophisticated trade would be a pair trade where they short Netflix and long it’s competitors. As they’re in the same sector, this position hedged relative to the market, and so the trade payoff will payoff if the competitors outperform Netflix, regardless of whether the market and the sector is down or up overall.
Yep. That's a good point, but they're a new investor and I doubt they have portfolio margin, which let's face it, is a near requirement for that kind of trade.
Fair enough; just wanted to mention the trade for anyone else interested in this investment thesis who may actually have access to execute the pair trade.
> short Netflix and long it’s competitors.
Wouldn't that double your losses if netflix outperforms? How is that hedging?
Yes it’s a risky and complicated leveraged trade
The problem with the companies you listed (amazon, apple, disney) in this context is that streaming is almost 0% of their overall business value
Try a long dated put on netflix instead if you think it will go down but dont feel comfortable short selling
Except, well, Disney.
Splitting hairs, but you forgot AT&T.
I feel like investing in their competition is a good path, but I seriously don't see Netflix thriving. If they keep losing their popular IP's I think they would be falling more than that
I believe you're too late. The time to short tech stocks was in February, March, April, up untli its last earnings. You're going to short a namebrand company after it already took a correction due to lowered expectations they gave in late April? Bold strategy.
Thats why I'm asking haha, I wanna know if my thought process was wrong and I've gotten a lot on informed information
Your thought process is not wrong but your timing could be, which is the same as being wrong
Exactly. Like people buying semiconductor companies today due to the chip shortage have the right idea but their idea has already been priced in
I call it the 'no strategy'.
I don't know much about streaming services but I'm wondering how profitable these companies are
If they end up price warring each other into the ground they'll all lose. But then with enough exclusive content there is pricing power for each. I guess it comes down to quality content pipeline
The risk in buying a stock is limited to your investment. The risk in shorting a stock is infinite. Just invest in the competition or a different sector.
I agree with you. Netflix is ducked long term. It’s poorly managed and getting steamrolled by Disney among others. But timing is key to shorts. If you short a stock, you’re saying it’ll tank SOON - but Netflix is not doomed in the short term. They still have lots of subscribers and they aren’t leaving in droves. They can languish a long time before it tanks. And in that time, they could also fix the problems- and you are naive if you think they aren’t working on it.
They could also get bought by a competitor, shooting the stock up 20%.
There are lots of risks in shorts….
>They could also get bought by a competitor, shooting the stock up 20%.
Honest question, who would both want to buy out NFLX and have the capital to?
Disney, Amazon, Apple? Apples not exactly competition but they have the Apple TV+ (kind of a waste of money in my opinion if you already have Netflix) but if they bought Netflix, I’d be watching Apple TV (at less than $15/monthish)
Ehh scratch Disney
Would buying a put be a more reasonable play then?
As a new investor, shorting for you should consist of not buying a stock or selling stocks you own in the first place (exiting a position). Nothing else.
No. Please don’t short if you’re new to investing man you could lose a ton of money
I also don't support shorting as 100% is the best and infinity losses are theoretically potential.
However, Netflix is a 300B market cap and I can't see it rising to the point where OP would be down 300%. I would never short a great CEO like Reed Hastings.
I don't own Netflix
Short NFLX. Get your market tuition paid early.
A lot of investors think Netflix is in trouble. So that has resulted in the stock getting oversold. The revenue and EPS are still moving upward. I'd start to worry about Netflix if the subscriber numbers drop below the nice round number of 200 million. But it looks like the stock price could correct back up to around $550 once people see it as oversold.
I know from working a bit for Netflix shows that they blow money on productions like Ive never seen in the tv world , just during the pandemic their costs skyrocketing and they kept cranking out shows. And then there’s the 300 million deal with Ryan Murphy which was a total disaster as far as the viewership and quality of the shows he put on there , millions more to letterman and chapelle, paying directors 400,000 an episode and on and on , I don’t see how that can be sustained.
Ouch. Well they are still quite profitable despite that. Hopefully they can optimize costs and quality, learn from their mistakes.
I mean the cost of production sky rocketed because of covid testing and creating a health / safety department. This will decrease at some point.
This. I've said it for years. The way Netflix runs their studio is crazy and utter destruction of money. They wildly overpay and do nothing to select for value or quality. Because they use other people's money, they do things that would have bankrupted any other studio a hundred times over.
It used to be one flop could bury a studio. They'd test and plan and pilot and test and predict. Not Netflix. Buy first, ask questions later... or never. At some point, the laws of physics will kick in and Netflix will no longer be able to act like gravity is turned off.
One way is they pay people below the line less, they are cheap with independent shows they buy, the finance everything themselves, they use a lot of analytics and AI, they are getting into merch, they lure the top talent from traditional studios, they don’t pay vendors for shit, they throw money at prestige projects for branding not so much for content: this attracts above the line names as they get their freedom, they have one of the highest flying stocks of the last 10 years, they are the creator and leader of pure play streaming, they work the hell out of most and are not shy about cutting the cord, they attract and retain causing traditional studios a bit of brain drain, they collect silos of info on subscribers, ever hear of faang...should I go on?
Mass unsubscriptions will bring their soaring giddy budgets down to earth. At some point, people will decide to go outside again
The competition isn't "outside", it's other platforms with less of the bullshit (stop with the auto-play, stop recommending me things you just want me to watch, etc) and more of the content.
More like decide to boot up the ole' piratebay.
Nah, most ordinary people aren't sophisticated enough to do Pirate Bay. A lot of people do like these Android boxes, though.
They said they wated to disrupt cable, but what they really did was disrupt the production environment in every market they produce in.
Suddenly local networks are priced out of ther own markets because talent would rather wait for the ext Nflix gig than work what local can pay.
Netflix will thrive as a company; yet stock price ran up into the overvalued realm. I believe company will do well, but stock price gains will lag behind.
I think that overvalued-ness IS a Fox/Disney standing behind them producing content.
The stock is fairly valued imo. It will stay here for the next few years atleast.
Sell before it crashes gosh why didn’t I think of that
Yeah... I could've worded that better. As I said in the post im new at investing so I need to figure out not to say the obvious 😅
I’m just giving you shit man
Yeah I know, but it did bring up a good point haha
stopped touching it in 2020, wont buy the competitors cause overall growth is diluted, imagine buying toyota stock now, makes no sense
Except buying Toyota stock *does* make sense lol.
Been seeing these kinda posts for years. About Netflix. Amazon. Apple. Microsoft. These companies aren’t going anywhere because some people don’t like/use their products. That will always be the case, what matters is long term growth and the offering of a product that keeps iterating positively. Not to mention growth in foreign markets outside of the US…which people seem to forget is a thing.
I agree with you, netflix is getting in a more mature stage and growth expectations will get tempered in the next decade probably gonna see some consolidation and failures with streaming services. In any case there is way better valuation available right now in the market
Every time I try to pick up a different streaming service I create a new account for a free trial of the new service ie: hulu, Prime, dis+, hbo etc and end up binge watching everything I’d care to see before the trial period is up.
All the other streaming services that claim to have great content really only have a few shows, then overpriced disappointment. Or they charge more on top of the sub for “newer content”, see recent theater releases on streaming services.
At $70/month for hulu+live tv, that’s $840/year for “commercial free” tv that still has commercials…
Then in the end I go back to Netflix. <$15/month <$200/year. Actively creating tons of new content. Best of all, no commercials.
Netflix has the best business model….. for the customer…. Whether or not that will allow them to topple giants like hbo/dis remains to be seen.
Netflix is a cash machine that continues to grow internationally and add subscribers every month. They have better AI than all their competition as well.
Absolutely, their analytics is very refined and it also has the best user interface out of all the streaming services.
But every time a new streaming service comes up or a series like The Office leaves they lose more of their moat. Apart from the original series they really don't offer much that you can't get elsewhere. I think as more and more people cut the cord and start picking up 4-5 streaming services they'll look to cut the fat on their subscription bills and Netflix might be on the chopping block for a lot of people that prefer shows that aren't on Netflix. Netflix isn't that expensive when it's your only streaming service on top of cable. But when you cut the cord and pick up a couple streaming apps, it becomes easier to justify canceling
It's still the best streaming service right now. Their original content is quite good on average. I would honestly say Netflix has more shows I want to watch than HBO Now. It's also miles ahead of Amazon Prime in terms of content lineup. IMO, if people are picking 4-5 streaming services, Netflix is going to be at the top of the list of the ones to keep.
Unlike many tech companies, they are quite profitable, and as they keep gaining subscribers, they have more and more budget to produce content, and they get better and better at it because they have the right talent and expertise.
"In the first quarter of 2021, Netflix generated total revenue of over 7.16 billion U.S. dollars"
Just think, if they can produce movies for 10 to 50 million dollars a pop, how many movies could Netflix produce for a billion dollars? Probably about 20 to 50 per quarter.
Another point is that they dont need anything near the level of advertising dollars per film that the traditional film industry did. So they can spend more money on the production and wind up with quality stuff for cheaper overall budget. You know who is still pumping out ads all over for theatrical releases? Everyone else.
Nah you’re not the only one. This is basically the bear case for Netflix. I’m on this side tho, which is why I’m not interested in NFLX. Maybe you might want to invest in something like ROKU to capitalise on the streaming wars since they’re basically platform neutral meaning regardless of which content producer ‘wins’ the streaming wars, they’re likely to profit.
Yeah, this is the bear case indeed. The bull case is they've invested heavily in their own IPs and are a force to reckon with in TV and movies regardless of what other networks do with their own content.
Roku is my favorite stock. Best stock in growth because they've already dominated the growth part, it's just their industry that will keep growing as rural and emerging countries gets broadband, cable cutting continues, etc.
ROKU has a P/E over 400. The only one I’ve seen that’s worse is Tesla at over 600. These make Amazon look like a value stock at around 60.
Focusing on p/e is a common mistake made by many investors when it comes to newer growth stocks. Roku has a revenue growth rate of over 50%, a number which is currently accelerating. Their platform growth rate is 70-100% YoY, with 60%+ profit margins.
When a company like Roku is teetering so close to profitability and has +50% YoY revenue growth their earnings potential can grow exponentially, especially since cost-reduction and efficiency is not a priority for them right now - growth is.
This is also why Amazon had such a ridiculously high P/E in the past decade. They put all their earnings into growth and brand-building, avoiding billions in income taxes via R&D write-offs and re-investing those savings into growth. Anyone who thought Amazon was a money-losing business over the past decade never bothered to look at what Amazon was doing with their money.
That’s a great summary, thanks for taking the time to share that. I’m going to investigate this more. I was always afraid of AMZN because of their low profitability, but eventually I saw what they were doing, just lost out on several years of growth (and a few hundred percent gains).
Something people miss all the time about Amazon is their AWS is a bigger value to the company than the delivery goods stuff. If AWS goes away, the share price will drop to $1500 in no time. Aws is a bigger value to the stock than than the food but not by a lot.
Exactly this. Without AWS amazon is basically UPS/FedEx that won’t make as much money.
Good comment but dangerous to assume that every company can pull off what Amazon did
Lots of companies in the 90s aggressively reinvested operating profits into growth, most of them are footnotes of history now
Their growth and reinvestment makes the pe less relevant tbh. Better to look at
1) topline and operating profit growth
2) returns on capital and reinvestment rate
You do realize Amazon was the former until it wasn't?
You got me to look at this, and you are right: Amazon topped 3700 at one point in the last decade. Even considering their many lines of business, that seems absurd. I’ve learned something today.
You’re only looking at this through your own view and judging content based on your opinions. As you’re new to investing, the most important lesson to learn is being able to separate your own judgment and the market’s.
I’m not a Netflix owner/bull but their overseas growth is incredibly impressive. They’re growing rapidly in markets that others haven’t even started to tap into.
No its not
I mean personally yeah I have my Disney,HBO etc niches. But Netflix has some pretty damn good OG originals to where I’ll never stop paying. Also their movie and show licensing selection is great to IMO .
Netflix is expanding into gaming best watch yo ass or you'll get rekt
Netflix is producing their own content now, this train ain't stopping anytime soon
Most of those other streaming services aren't available outside the US. Netflix is still king internationally and it's libraries in some areas, like mine, is much better than the US library.
Thats one of the biggest things I've learned here, I'm looking too small (just US market) im glad im learning that lesson early haha
I agree. Some Americans here miss certain shows in Netflix' portfolio that are popular in the US, but often, they are not popular in other countries. Netflix has everything.
I'm German, I keep Netflix because I love the Korean movies and series they have.
Netflix does have significant brand loyalty.
All of your bearish points are sound, but many people have Netflix, like Netflix, and aren't going to switch anytime soon.
Ape. Crayons. Not financial advice.
Also like to add personal note we signed up for almost all the services at one point but after watching what we wanted we cut all of them except for Netflix and prime. Reason is Netflix has a lot of Netflix made foreign shows which we like. Something else to keep in theres a part of the market that thinks like that
Thanks for the comment! Very true, the brand loyalty to it is pretty big, I've had my subscription for years and feel like I'm using it less and less but I'm still paying despite the price increases :/
I hear what your saying, but the reason you see less bought content on Netflix is because they have invested in making their own and it seems to be a better roi than renting content. I totally agree that there will be consolidation in the stream service area, but see it is more likey that the hbo max and discovery of the world will fail not netflix, they just have less content that people actually want to watch. Now is netflix overpriced probably, but what technology, that has a chance of really growing, isn’t overpriced. This is not investing advice.
No offense but a lot of new investors have ideas like this and they are 99% going to be wrong.
They try to rationalize the market as common sense which doesn't work as everyone else already knows what you know and don't care or there is another factor involved
If they're wrong 99% of the time, that means you can literally just do the opposite and make tons of money. There's no way the percentage is anywhere close to that much.
They are trying to add games by 2022. That will probably send them up again for a while. I would add the link but not sure how to do it right n don't want to get deleted
Netflix has a *lot* of data and knows exactly what consumers want to watch. They’re much more than a company that licences content and then streams it to customers.
I have Netflix, Prime, Hulu, and HBO. I probably spend 90% of my viewing time on Netflix. When I’m browsing and don’t know what to watch, they just seem way better at putting content I’m interested in front of me. Speaking of which, I really should cancel HBO.
I have the same 4 but I use Hulu, HBO, Netflix, Prime
Hulu and HBO Max have WAY more of my shows on them.
I feel like there must be better stuff to watch on HBO and that’s probably why I keep it. The new HBO max interface just doesn’t speak to me.
I definitely see where you are coming from
No. Just you. I swear to god i saw this kind of thread about netflix every 6 months. It's not going to blew up, it's not going anywhere, and they just started expanding to movie sector. Covid also help making people realize they don't need to go to movie theatre to watch new high quality movie and this can become permanent in the future.
But hey man, Google+ launched, serious competition is coming, because they're Google, they really know what they're doing. Facebook is going to be completely toast soon. FB stock is going to tank. Any minute now...
Your thought process that Netflix’s days of high growth are over could be right. I tend to agree with it (not that my opinion holds weight). But even if you’re right Netflix might still hold its value. I don’t see Netflix having a decrease in revenue or profit just a decrease in growth. And that gives the stock two opportunities. 1. Recognize that it is priced for high growth and fall in price to lower growth expectations. Or 2. Trade sideways for a long time until it slowly grows into an appropriate valuation. Because there are three possibilities (those two and the possibility your wrong). I would avoid betting on a downfall. I’d look for a company I believe is a better value for my projected growth.
I think Netflix main strategy is to buy up all the content and they have the money to do it. As long as they nab a hit or two a year they’ll make a hefty profit. They have been buying tons of stuff from film festivals and they out bid major studios. I would not bet against Netflix.
I don't know man...but their number are pretty high up there in terms of subscriptions.
Your thesis is correct but the problem is you are focusing too much on what you see in America. People are still going to sub to Netflix even though it will be a slower rate in America. However, there is a huge untapped global market. Next time you log into Netflix see how many foreign shows are being added. They even have different catalogs for different countries. Until that market begins to slow down, I would not bet against Netflix. They recently even are contemplating getting into gaming as well as experimenting with a shop with merch on their properties. I’ll leave those for another day tho. Yes they missed expectations for subscribers this past quarter however the pandemic really did pull forward a lot of numbers. The underlying trend of growth is still intact. Saying you are thinking about shorting a company without knowing all the details is going to be a disaster. I advice you to further research the company on a global scale before you short the stock especially when you say you are new. Best of luck bro hope this helps shed some light on things you might not have considered.
Edit: do not own Netflix stock
Don‘t bet against a stock whose name has become part of everyday language. Just Netflix & chill!
Apple, Tesla, Netflix, Airbnb, Uber are there more?
How about Google? 🤯 My point is: They won‘t go away so soon.
Bro...have you not seen Netflix’s Wish Dragon? Netflix comes out with some good movies.
They just put stranger things in the game SMITE, decent player base in north america but kind of huge in asia.
He doesn't have to *short* the stock to place bearish bets. Buy a couple puts and you know your max loss.
Everyone beating up on OP because of verbiage...
dont short! thr thing abt markets, and it has become even more apparent now is that sometimes fundamentals matter less compared to sentiment, which can cause effects like gme and amc. if u short netflix, the possibility of blowing up your whole account is increased. if anything, when new, stay away from stocks you dont like. when u get more experienced u can learn options and buy puts, which limit ur losses unlike naked shorting. but im just a 18yo investor with 8 months of experience and just starting to learn options, so heres my 2 cents
Incredible Korean shows.. misaeng .. hotel del Luna ... so many incredible shows on Netflix
The advice you need is to focus on finding good companies and not to worry about bad ones.
The reason for this is because the time element of put options or short selling. It’s a far more complicated bet as you have to get both the direction and timing correct. Of course it pays much better when you hit both of these correctly, but again, so much harder.
Most new investors get really engulfed by bad companies, just ignore them and buy good ones, for now.
I felt like Facebook was shitty because all I have in my mind is the social media page, but aside from it actually thriving and doing amazing they expanded heavily.
Ask me a week earlier, and I might have had the same view on Netflix and BAM they go into ECommerce. Signs like these are critical to see that a company is not just idling in hopes everything stays as it is, but they are moving. That doesn't always mean it's a great direction every time, but it means they will most likely hold their position.
There’s nothing on Netflix that is interesting to me anymore and they seem to spend a lot of money on their originals only for it to be canceled a season later. Like Jupiter Ascending.
They really should just buy popular shows like how Amazon bought the expanse
Short answer- no.
Netflix won't go anywhere unless it implodes itself.
It's far from perfect of course.
But for every cuties there's a Witcher.
For cancelling shows like Jupiter's Legacy, even when it's the most popular show across all streaming platforms at the time, there's a renewal such as Stranger Things.
For every woke crap they try to shove down our throats there's a Kobra Kai.
Not to mention it's incredibly cheap for what you get. Disney plus by comparison is a joke when it comes to new content.
If anything every time Netflix fuck up they're basically giving you a dip buying opportunity.
I agree, Netflix used to have a moat, now it has none
I think the term for this is that they lost their moat and are not as insulated from competition. I generally do agree - I don't think they're going away anytime soon but I also think that their growth is going to be shot compared to the past decade
I think they will be around for a long time. But they won’t grow like they were growing anymore. I think the stock price will keep trading sideways for a long time.
They are almost saturated in US market although they are investing a lot to increase their international experience but It’s tough to compete with local competitors.
Classic mistake of extrapolating recent history into the future. Netflix will be a massive compounder over the next 10 years. Watch.
It's a stay-at-home stock. I don't see it Going higher It might start to trend down Since the economy is back open and a lot of people are starting to go to work. I am barish On it. Same with the marijuana stocks. But that's just my opinion I may be wrong do your own DD.
Yes. I chose to invest in Disney because of this.
Yes, but speaking from experience it will probably take a lot longer than you expect
I wouldn’t count them out yet. I remember when they mailed dvds, thought it was dumb. Then I remember when they stopped mailing dvds.. I thought that was dumb too.
You can buy puts or you can invest in competitors easily and not be open to infinite losses. Shorting stock isn't something you should get in a habit of doing.
NFLX financial statements are a shit show. However it’s not going anywhere until Disney starts consolidating competitors. First to market is sometimes an interesting advantage that’s hard to overcome
I agree with the broad strokes of this, which is why I have no interest in NFLX. I'm also skeptical of any stock for a company that sells things no one actually needs because I don't understand what makes such a stock move.
Problem with shorting is you don't know when it's gonna fall. it's not like going long, where you can just wait forever for it to go up. Short is essentially a time-limited leveraged investment because you need to borrow that stock and short it by a certain time. And I'm pretty sure retail investors can't naked short. On top of that you are exposed to infinite risk, because the price can go up to infinity.
If you think the price will fall, you can buy put options. But even then you still need to know when and how far you think the price will fall. However your risk is limited to 100% of the price + option premium.
Like other people said, shorting is tremendously risky. It's something only reserved for hedge funds and other institutions that have teams of analysts feeding them information faster than humanely possible for anyone else. Even for the hedgies, they don't short stock because they think "oh netflix is overvalued, I think it will go down" they do it because they know for a fact that it will go down, via insider or regular info.
So basically, if you found out that there was some really bad news about to released on Netflix that nobody else knew about yet, then maybe, MAYBE, you could consider shorting it. But all the things you said about Netflix, well, it's been going down for a while now, so it's probably already priced in.
As other's mentioned, you can also buy puts, but honestly, I wouldn't touch any of that unless you are the type who sits there and looks at spread sheets and numbers about their stocks for hours a day. The fact is, for us average joe's, we have no idea what stocks are going to do in the short term. But what we can do a decent job of finding good long term plays with a little bit of research and intuition. So if you think Netflix is going down the toilet, maybe find a better streaming company that will grow instead and buy it?
Netflix is still super dominant. I don't spend any time on any other streaming service or know anyone else who does. For example, I didn't even know Apple had a streaming service and they spent the most $ out of all the companies last year to produce original shows. Yes there is a boom of streaming services and there will definitely be a bust because after a while people are going to get tired of signing up for a new service for every new show. I am 98% positive Netflix will still be here in 10-20 years. I can't say the same for any other streaming service. So no I do not think Netflix is a ticking time bomb
With shorting, you mean buying puts, sure - consider that.
But given that you’re new to investing, do not short by selling calls, your losses could be infinite, theoretically.
Do you even know how to short a stock?
Gave up on netflix a few years ago when the streaming services started to saturate the market.
Unfortunately, I cant watch all the shows I like on one streaming service, and I sure as hell cant afford 10 subscriptions to different services, so I went back to torrents and emby home server.
Streaming services are like cable tv now. huge turn off.
TBH youtube and twitch are my main sources of entertainment besides the odd torrent of a movie.
I dont own any NFLX
Here is my opinion. Its probably time to put to rest the idea that any platform will dominate. It wont. I think we need to start talking about them like they are "tv channels" not like "cable providers."
Think back to the days when we had only 10-20 channels on tv. Later, we had 200-300. Did the new channels hurt the old ones? The answer is, not really. What hurt them was their own programming, not someone elses.
The other providers wont slow them because none of them will provide enough new content on their own to keep people satisfied regardless. I mean seriously... even if Netflix suddenly had 10 big hit shows, that barely 120-200 hours a year of content. Pretty sure people spend more than 2-4 hours a week on tv... they will need more than 1 content provider and who has 10 shows worth watching? LoL.
So forget competition.
Does Netflix have enough exclusive content to hold and gain new customers at $9-$14/mo? I would say yes. For me its Witcher, Umbrella Academy and Stranger Things.
Is their stock priced high? Well I dont own any for a reason...
yea I think its a bit too high because I am not really sure how many more subs hey can actually get. So given their high PE, I dont want to be stuck with a company that may very well hit their cap in a 2-3 years. The PE will likely still be 30 or so on current basis so to me, thats not so great. They will need to start raising prices to keep the rev growth going up which is fine but it will likely decay to 15 PE pretty quickly from there. Pass for now. Id rather hold Amazon because they have more avenues of growth as crazy as that sounds. Then again, maybe sub growth will be much higher than that. Maybe they can get into China or maybe India skyrockets. Dunno. They might have capped the USA and other English speaking nations but no idea about the others.
I don’t think they’ll do well
Short netflix buy disney.
Disney plus is a free addon to an existing company’s strength that only recently started getting valued properly
TLDR Buy Disney
No way are you kidding? Netflix is 100% success story, they aren't going anywhere but up.
I wouldn’t say its a ticking time bomb at all! Netflix is doing great imo. They changed the entire movie biz imo… i think if your looking for the next blockbuster then you need to look at companies that are failing adapt to any innovative and rapidly changing tech… id look for a financial system that was refusing to get into blockchains
Nflix is pushing a huge dept in front of them taking up more loans on growth projections, when growth slows down they go down
I think Amazon and NETFLIX will underperform as the competition is mostly caught up at this point. Neither has a clear advantage anymore.
Netflix has significant advantages in software, international growth and support, and custom content. While other companies have been sleeping and sticking to old models, Netflix steadily grew its own content farm and became a big player in custom content, paying new and buzzing creators big payouts and building a reputation of creative freedom and quality similar to what HBO and AMC networks were able to build. In addition, Netflix has really found out the international game, creating quality custom content for other countries. The custom new content will only grow, with hits such as Stranger Things, Queen's Gambit, Tiger King, and Bridgerton.
Netflix also has superior data tracking, allowing them to find out exactly what you like and gear content creation where the audience is better than any competition other than maybe Disney. Disney is limited by its brand however, and can't stray too far from the Disney principles, similar to how Nintendo can't stray too far from their style of content.
Netflix is still the leader with over 200 million subscribers, Disney with over 100 million and HBO and Huly with only about 40 million. Other services straggle with far less than 40 million subscribers. Killer content like The Office isn't enough to combat this. By being an early player, with superior tech, Netflix is poised to be a market leader for years to come. In addition, other companies will find the costs of getting into the battle too high and they may fold. In order to compete with the established players, they have to offer a competing price point, which means they have a higher price for content per subscriber.
I believe Netflix will continue to be able to produce content that can capture audiences, while the other companies to compete will have deep pockets like Amazon, Disney and Apple, and we may see some companies give up and realize licensing their content is the way to go to be profitable, instead of having to get into the business of technology which is an expensive business to run. Also, it's been shown that users have a higher threshold of acceptance for being subscribed to multiple services. Most people will probably have a combination of Netflix, Hulu, HBO and Disney and find this totally acceptable. I feel that shorting Netflix would be a foolish thing to do, as they are still in a long term trend of adding subscribers and while the trend is slowing, they show no signs of declining, even with competition.
My prediction on Netflix was to go short on them when they hit 420$/share. I didn't have the balls to go for it with all the other buying opportunities there was back then. Needless to say I've been watching it anyway to see if my prediction ever becomes right. Still waiting.
I have a lot in Netflix. Got in at like 70. I saw it to go to 500 and almost 600. I probably sell at 500, I kinda agree with you. The competition will creep up. I do trust their management but just having unique content might not do it.
Anyone else think there's a chance they will ban multiple users from using 1 account (or limit the number of users) and their revenues will skyrocket?
You compare Netflix originals to others, things like stranger things, sex education and the crown have been massive hits while I'm struggling to think of anything original i watch on prime or Disney...
If Netflix can keep delivering that content why would it not grow I know plenty of people who still do not have subscriptions. Not to mention letting multiple people share accounts is losing them a lot of money.
A group of friends in four different houses can share one account if they fix that then they'll get a massive cash boost
In the US, maybe they'll probably stay at their current size and make money on price increases over time.
Netflix's real strategy is overseas though, they're developing a lot of international content as well so they'll get there before the others, there's plenty of growth left there.
Netflix is killing it overseas
Yes short it now, before Seinfeld makes an appearance on 25th of June for 5 years straight, see how that works for you
The way I see it. Streaming service started off strong with Netflix being the pioneer, with their personalised suggestion based on users' interest.
However, machine learning algorithm is no longer unique anymore and practically any tech company can do it now.
Streaming service nowadays is a game of quantity, whoever can produce lots of content in shortest time can attract more eyeballs (and hopefully high retention of subscribers). If there's no constant new catalogue of shows, there's no reason for a user to continue paying. I'll stay out of streaming services sector.
Case in point, AMZN acquired MGM studios. Disney have tons of IP under their belt. HBO, Hulu etc. Man, this is all out war.
If you're bearish on the company I would go with puts man. Borrowing shares is just too risky on a company with solid financials.
I'm not the best at reading financial statements, but yahoo finance says that their trailing twelve months free cash flow is at about $2.4 billion, which gives it lots of opportunity to expand in not only their streaming platform, but other sectors as well.
There also have been talks about Netflix expanding into different industries, such as e-commerce [https://finance.yahoo.com/news/netflix-nflx-pushes-e-commerce-130001293.html](https://finance.yahoo.com/news/netflix-nflx-pushes-e-commerce-130001293.html), and cloud gaming [https://www.businessinsider.com/microsoft-e3-2021-xbox-game-pass-2021-6](https://www.businessinsider.com/microsoft-e3-2021-xbox-game-pass-2021-6).
I definitely agree with you that Netflix faces lots of competition on its streaming services, but they've done so well these past 10 years it's pretty hard to bet against them.
I will probably buy Netflix stock if the price drops, they are still the best and and most diverse streaming network