Netflix Stockpicking

[tooqk4u22]

Got to be honest, when NFLX dropped from its peak of 700 back down to a prepandemic range of 350-380 range I found it intriguing.  Totally believed that there was pull forward and then some during pandemic and sure some of that would be lost.  So thinking that a prepandemic number being set basically meant that it did nothing for 2+ years.   Btw I strongly feel that most individual stocks/index funds/markets should be at about 2019 high + 20-23% (or SP500 3900-4000). 

Didn't buy so that's good, buuuuutttt now it's blown completely out for something that should have been expected.   2019 max x 20% is around $400/sh..   

Heck even 2019 low x 20% is 315/sh.....so now 30% below 2019 low.   

Anyway,going back to sleep bc I still won't do anything more than thinking about stock picking but not actually doing it
 

[Dibbels81]

Very intriguing development. I wonder if part of the huge drop is due to Elon Mask shading the stock on Twitter. For funsies, let's say this morning I cashed out 100k of my portfolio and dumped it into Netflix ($219 premarket). Let's see if I can buy my pretend yacht in six months.

[theoverlook]

Sure seems to me like an opportunity to be greedy while others are fearful.

[mistymoney]

I think a drop was expected after the earning calls, but 30%? and down a bit lower today.

Seems like the market is getting increasingly volatile, big swings, over not so big events.

[maizefolk]

Very intriguing development. I wonder if part of the huge drop is due to Elon Mask shading the stock on Twitter. For funsies, let's say this morning I cashed out 100k of my portfolio and dumped it into Netflix ($219 premarket). Let's see if I can buy my pretend yacht in six months.

If playing for fun and the imaginary yacht is six months out, perhaps put that $100k into out of the money six month call options instead? If it works you can buy a bigger imaginary yacht, and if it fails it was imaginary money anyway.

[HPstache]

I wonder how many other tech companies will experience drops like this as soon as any whiff of bad quarters/meeting expectations comes along.  Wow... 40%+ drop

[FIPurpose]

Today, Netflix's stock down to a PE ~19. Basically, this is just resetting the expectations on Netflix. There is no big money coming to Netflix and they have no plans to fix their growth problem. They've also stated they expect more subscriber losses going forward. Basically signalling that they will not have growing profits in Q2.

Basically, Netflix is now priced like a blue chip. Solid profits, but no to low expected growth. This is not a solid buy imo.

[maizefolk]

I wonder how many other tech companies will experience drops like this as soon as any whiff of bad quarters/meeting expectations comes along.  Wow... 40%+ drop

Netflix still has genuine competitors in the exact same market of video streaming (Hulu, Disney, Hbomax, Amazon prime, whatever-CBS's offering is called now, etc) and I've heard a bunch of talking heads pushing the idea that right now there are too many companies spending too much on original content chasing not enough dollars to keep them all in business long term.

So I think the market is more sensitive to any sign that Netflix might not be one streaming companies that survives in the end. Compare that to an Apple or an Amazon where even if revenue grow slower (or ran in reverse for a few quarters) there's no clear set of peer companies that might take over their existing market niche entirely.

[reeshau]

Basically, Netflix is now priced like a blue chip. Solid profits, but no to low expected growth. This is not a solid buy imo.

This is where I am, too.  As you said, further subscriber losses ahead, near term.  No new markets or product areas (sports?) to entice subscribers.  A lower-priced, ad-driven tier may actually cannibalize current subscribers.

Meanwhile, now that AT&T is done, you have smart ownership of back catalogs looking to exploit them, rather than farm it out.

I think the whole streaming industry has matured greatly over the pandemic.  It's not surprising such an extreme case open up a lot of eyes.  Disney is still holding on to 230M by 2024.  If Netflix doesn't grow before then, then they even aren't the biggest anymore.

Certainly, a good company.  First mover advantage is officially retiring.  Now they have to earn their stock price...literally.

[EvenSteven]

I heard on the radio this morning that Netflix was going to start cracking down on account sharing as a way to try and increase subscriptions.

[tooqk4u22]

I heard on the radio this morning that Netflix was going to start cracking down on account sharing as a way to try and increase subscriptions.

There is no reason why they shouldn't and what happens to the 100 million people that are sharing logins from someone else?   Some might convert. 

Personally, I think content across all platforms sucks in general but in aggregate its not bad....kind of like cable.   The ability to hop in and out on monthly basis is what keeps me going to them.....if they went to annual agreements I probably wouldn't stream anything

[ChpBstrd]

Don't miss the forest because you're checking out one tree.

TWTR: -24.5% in 6mos
CRM: -36.2% in 6mos
CHWY: -40.5% in 6mos
FB: -41.4% in 6mos
PLTR: -48.24% in 6mos
BABA: -48.7% in 6mos
RBLX: -53.26% in 6mos
TDOC: -59% in 6 mos
SNAP: -60.75% in 6mos
NFLX: -65.5% in 6mos

This event exists in the context of a tech correction that may end up rivaling 2000, another era when astronomical tech stock prices collided with a 2.5% rate hike expectation. If history is a guide, people are going to start looking at PE ratios a lot more closely, and we could have a lot farther to fall, especially if the market raises its expectations for rate hikes.

What's weird to me is how compartmentalized this tech correction is. FB and NFLX plummeted the day after people realized they were no longer growth companies, as if no one could have foreseen this event and as if these results don't imply something about other companies. But other tech companies with sky-high valuations like TSLA (PE=204 !) are holding up for now. "Value tech" companies that started with reasonable PE ratios are holding up OK, with MSFT down 3.7%, GOOG down 8.7%, TXN down 4.5%, and VGT as a whole down only 5.1% in 6mos. The discounting of future, potential earnings is brutal.

Whether or not to catch these knives depends on whether you think inflation and interest rate expectations have peaked.

[habanero]

Don't miss the forest because you're checking out one tree.

This tech crash is quite interesting as it doesnt really show up in the index due to the big share of the index being heavyweights who still make an abseloute fuckton of moeny and have a sold business even if valuations are quite lofty. There has been plenty of carnage in the tech space and much of it not far from the bursting of the .com - bubble, but the biggest companies are holding up pretty ok (still).

One thing is making money the way AAPL, MSFT and AMZN are - I mean they sell shit and services folks buy and "need" but some valuation based on numbers of paying subscribers growing ad infinitum is a completely different story. Any company can tank at any given time of course, but the vast ammount of hot air out there isn't equally distributed.

[Dibbels81]

1 year+ update:

Netflix is now trading at $441, and my imaginary investment of 100k at $219 has now officially doubled. I have cashed out and after taxes, I will be purchasing a brand new Regal 28 Express for about 80k and will be spending the next few weeks taking leisure boat rides in my mind. Thank you tooqk4u22 for the insight into this investment opportunity.

[ChpBstrd]

Lol. I will take a ride on your yacht. Perhaps I’m rude for not asking first, but because it is imaginary I didn’t think permission would be required.

[Heckler]

Don't miss the forest because you're checking out one tree.

TWTR: -24.5% in 6mos
CRM: -36.2% in 6mos
CHWY: -40.5% in 6mos
FB: -41.4% in 6mos
PLTR: -48.24% in 6mos
BABA: -48.7% in 6mos
/snip

well then...

The NYSE:BABA @ChpBstrd Bull Run started April 21, 2022 at $85.99 each for Alibaba.

At $117.62 June 17, 2022 FOMO kicked in and they sold half their portfolio of VTI, all in BABA to the moon at $500k.  4250 shares.

July 1, 2023 sold at $78.78 at a $165,185 loss and still working at the desk today, buying more VTI one paycheck at a time.  What hurts more is the week the sale went through, BABA started its liftoff again!