Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why I changed my mind on Netflix

Companies / Investing 2022 Mar 03, 2022 - 12:06 PM GMT

By: Stephen_McBride

Companies Remember the streaming wars?

A few years ago, every news outlet was having a field day debating which company would conquer American TV.

Netflix… Disney… Amazon… Apple… and a slew of other firms are still battling it out for streaming supremacy.

With over half a billion paying subscribers between them, you could say they all “won.”

  • But there’s been one big loser in the war…

Investors.

Despite all the hype surrounding the streaming wars… streaming stocks have gone nowhere for three years. Take a look at the performance of Netflix (NFLX)Disney (DIS), and Discovery (DISCA)



Longtime RiskHedge readers will remember I wrote a series of essays in 2018 warning investors to avoid Netflix. My most controversial one was published on June 5 that year, titled “The Market Is Dead Wrong on Netflix.”

Some folks thought I’d lost it. Netflix was a stock market darling back then. It had surged 8,900% over the previous nine years.

But Netflix was hyped to the moon. And it was obvious the stock was headed for trouble.

As a quick recap, Netflix pioneered streaming over the internet. And for years, it was the only game in town. This allowed the disruptor to grow uninterrupted for almost a decade.

But then rivals finally jumped into streaming. Suddenly, we had HBO Max… Disney+… Peacock… Apple TV… CBS All Access… and Discovery+ to choose from.

Just as competition heated up, Netflix’s stock began to fizzle out.

  • Wall Street has thrown in the towel on streaming stocks.

Netflix announced earnings last month.

Compared to expectations, they were awful.

Its stock plunged 30% after reporting its worst subscriber growth since 2015. In other words, $69 billion of shareholder value went “poof” in a matter of hours.

Hype around the streaming wars has turned to despair.

Google “streaming wars” these days and you’ll mostly find negative stories. Take this recent headline from The Economist.



Source: The Economist

Back when Netflix stock was at $700, nearly every analyst on Wall Street was buying.

Now it’s trading below $400, and nobody wants to touch it.

  • I’m starting to see an opportunity.

Streaming stocks are 30%… 40%… 50% off their highs.

But the underlying businesses have never been stronger.

Netflix now has 222 million paying subscribers, up 100 million since 2018.

When Disney jumped into streaming in 2019, it hoped to attract 60 million subscribers within five years. It hit that target within 12 months and now boasts 130 million users.

And the megatrend of streaming has never been stronger.

In 2019, just 14% of TV viewing time was spent watching streaming apps, according to top research firm Nielsen. That doubled to 28% last month.

Streaming continues to disrupt America’s favorite pastime. In fact, over Christmas, Nielsen estimates Americans watched a total of 183 billion minutes of shows and movies on streaming platforms in the last week of 2021. A record high.

Here’s what’s going on…

A few years ago, streaming giants were priced like they were going to take over the world. When these giants failed to live up to those impossibly high expectations, their stocks plunged.

Today, the exact opposite is happening.

Almost everyone who bought these stocks in the past three years has lost money. Expectations have sunk to zero.

Yet, the underlying businesses are as strong as ever.

Prices are once again detached from fundamentals… but this time, it’s working in favor of these stocks.

  • Every business has its price…

Three years ago, I warned you to avoid Netflix stock like the plague.

But the stock is starting to look attractive.

It’s crashed 45% since November… yet Netflix still offers tremendous value. For the price of a burrito a month, you get access to thousands of shows and movies.

And it’s still the largest streaming service… with the most loyal subscribers.

Data from media firm Ampere Analysis shows roughly 10% of Apple TV subscribers hit the cancel button each month.

Despite having way more subscribers, Netflix’s “churn” is just 2%, the lowest of any streaming app.

After being stuck in the mud for three and a half years, Netflix stock is worth a small investment if it can stay above its recent post-earnings low of $350.

  • There’s another streaming stock to keep your eye on.

We all love HBO. It’s made many of the best shows ever, like The WireThe Sopranos, and Game of Thrones. And longtime RiskHedge readers know content is king when it comes to streaming.

HBO’s streaming service, HBO Max, has been enjoying fast growth. It added seven million new users in the US alone last year.

The problem for investors was… you couldn’t invest in HBO directly. Its parent company, WarnerMedia, was owned by AT&T.

That’s set to change later this year. AT&T is spinning off WarnerMedia in a $43 billion merger with Discovery. In other words, investors will soon be able to bet on HBO’s world-class studio.

Keep an eye out for the stock, which is set to debut on the market later this year.

3 Breakthrough Stocks Set to Double Your Money in 2022

Get our latest report where we reveal our three favorite stocks that can hand you 100% gains as they disrupt whole industries. Get your free copy here.

By Stephen McBride

http://www.riskhedge.com

© 2022 Copyright Stephen McBride - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in