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$NFLX Q1 2019
Options implied an 8% move so today's price action is mostly just noise. The important takeaway...
... $NFLX is pumping out subscribers like clock work. The scale advantage feels very similar to $AMZN in 2015 versus the encumbents.
The misunderstanding of their financials also rhymes with $AMZN. @IntrinsicInv did a great thread on that today.
The misunderstanding of their financials also rhymes with $AMZN. @IntrinsicInv did a great thread on that today.
They added ~10 million (!) subscribers in Q1/2019. If the $DIS release last week + the $NFLX release today demonstrated anything it is the sheer scale at which $NFLX is operating.
$NFLX needs subscribers and price increases to get the current valuation to work. To get those you need content spend, the correlation here is the story. Keep going until this doesn't hold, even Reed Hastings doesn't know when it will stop. 
Jeff Bezos suggested in his 2000 Letter to Shareholders "we believe online retail can eventually make up 15% of retail sales"... He was not optimistic enough. But the decision to keep reinvesting in their business was "simple."
Reed Hastings also has a "simple" path... everything back into more and more content until subscriber saturation.
Reminds me of piece from @a16z which changed my mind on $AMZN and made me a tremendous amount from 2014 until today "Amazon has No Profits And Why it Works" a16z.com/2014/09/05/why…
For the record this was the furthest thing from consensus at the time.
"The irony is the faster we grow, and the faster we grow owned originals, the more drawn on free cash flow that will be. In some sense negative free cash flow will be an indicator of enormous success" - Reed Hastings
Understanding when a companies valuation is KPI versus FCF driven is extremely important to successful investing. This doesn't mean the fundamentals of value creation are thrown out the window, but that your best estimate of future FCF and value creation stem from a KPI
Not everything is Pets.com because you lost your shirt in the technology bubble.
$NFLX a global business with a decade long history (in streaming) gives us plenty of case studies re competition + licensing + geographical expansion. If these have had any real effect on the growth of the business they aren't obvious to me...
The short-interest decline and tripling of the stock price since 2016 I view as the market understanding $NFLX "won" (i.e. nobody can catch them) after the death star didn't slow them down. $DIS won't either.
Final note.
A friend of mine told me to buy Netflix in 2012 I told him they wouldn't be successful internationally and they made no money.
A friend of mine told me to buy Netflix in 2012 I told him they wouldn't be successful internationally and they made no money.
