Say No To Trading
Public Markets Investor, Opportunistic Buying & Cost-Basis Management
Netflix can't be valued as in the past because it is more capital-intensive and faces more competition, and it could revisit the $60s or even $50s before year-end amid tax-loss selling. Many consumers won't pay nearly $30 a month; YouTube Premium is the best deal around, and without series there's little point in Netflix. @European_DGI adds that many people are going back to torrent downloads. x.com x.comÂ
One reason Netflix has been tanking is that consumers, unlike enterprise buyers of compute, can hold back on spending. Individuals may delay an upgrade, while enterprise users of compute have no choice, which is all that matters for the hyperscalers. Per @StonkChris, people are not going to keep paying up regardless of what they are charged. x.comÂ
Netflix faces high costs to keep producing major hits, while live TV is expensive and competitive and viewing habits are changing rapidly. It remains a good business and the stock should eventually find support, but even after its decline it is not appealing at this level. x.comÂ
Netflix's earnings growth cannot keep relying on price increases or a one-time ad-tier rollout when future ad growth depends on impressions. The password-sharing crackdown, ad tier and repeated price hikes amid declining time spent signal a mature business; podcasts and live sports look like attempts to find another growth leg. There is no reason to own the stock beyond its discount to historical valuation, which it should command. x.com x.comÂ
Netflix's control of its own content keeps growth avenues open even as quality and popularity ebb and flow. Production is costly, but being able to make more is hugely underrated. YouTube pays creators more than double what Netflix spends; its content is not free. Ads need time to gain traction, with live sports where they should prove their worth. Solid earnings outweigh weak short-term guidance; Netflix should become one of Wall Street's hottest stocks again, with targets well into the $150s. … Show more
Netflix's slowing growth and weaker outlook make it unattractive for now. Revenue growth decelerated to 11.8%, U.S. TV viewing share fell 0.8 percentage points, advertising guidance was reduced 10%, and full-year free-cash-flow guidance was cut $500M, despite expanding operating margins and better subscriber retention. x.com x.comÂ
If Netflix's engagement keeps declining, it will be able to charge less over the long term even if reduced use has not stopped subscriptions yet. Netflix's discoverability is terrible; it keeps showing the same options. x.com x.comÂ
Netflix's ad tier can improve its long-run economics while the stock prices in decline. It is the second most-watched platform on US TV behind YouTube; ad-tier members pay subscriptions and generate ad revenue, with room to improve fill and pricing. Revenue growth, margins and buybacks underpin an Overweight rating and $103 target, 46% upside at the preview price. The quarter was solid, but the soft Q4 guide and ad forecast cut from $3B to ~$2.7B are setbacks the author sees as fixable. x.com … Show more
Netflix's stock and content quality look poor, pointing to a slow grind lower. x.comÂ
Netflix's revenue growth keeps slowing, with little sign yet that the trend will reverse. Third-quarter growth fell to 11.8% from 13.4% in the prior quarter; profit beat mainly on expense timing, while slower product rollouts held back revenue guidance. Competition remains the main concern: Apple, Amazon and Alphabet can spend heavily on streaming without relying on their libraries for profit. Nothing in the report was alarmingly bad, but there is little to get excited about. x.comÂ
Netflix's more reasonable valuation and efforts to get leaner make the stock tempting here. Its 18 P/E has come back down to earth and its forward valuation no longer trades at an expensive premium; Q3 earnings were solid, it laid off executives and 6% of staff, and it is significantly expanding live sports. Under $60 would be a smash buy. x.com x.comÂ
Netflix may take a while to win back investor comfort without Reed Hastings, while it also deals with viewers shifting to YouTube. Its chart looks almost identical to Robinhood's, and the gap up from $85 looks like a better entry, depending on holding period. Long term it is still one of the cheapest forms of entertainment. x.comÂ
