Why I Am Short Netflix
* Netflix's first mover advantage is likely to be challenged in the years ahead
* The company's growth rate will likely moderate relative to expectations as the streaming market grows more crowded
The best days, from a rate of change viewpoint - in subscribers and in revenues, is probably behind Netflix ($NFLX) and I expect a rerating - lower - in the company's shares.
Netflix has had first mover advantage in the streaming business for quite a long time.
Though the company's market dominance will likely continue there are accumulating signposts that demand has been pulled forward and that its leadership in the marketplace will be now be challenged by numerous other players. That, through mergers and combinations, will have
substantial financial resources to compete in the streaming business.
As a result, I expect the company will likely face higher churn rates in the U.S and disappointing domestic and global subscriber adds over the next few years. Thus, the company's total global subscribers may
fail to reach analyst projections over the intermediate term. And, importantly, the expected penetration of the addressable market of broadband homes may be a difficult accomplishment.
A failure to scale means that Netflix will be unable to leverage (expensive) content
investments, ARPU growth may disappoint and EBIT margins could fall relative to consensus expectations.
Possibly in reaction to a possible maturation process, the company has announced its intention to leverage its current business and customer base into a new content vertical
(gaming), aimed at a younger demographic. The development of gaming as a new venture will take some time. Moreover, the technological and execution challenges of offering gaming over an all-in-one app is formidable and complex.
I would be skeptical of management's forecast
for a "back end of year" hockey stick. Though management voiced optimism for late in 2021, as Netflix's content offerings strengthen, second quarter sub adds and sub guidance showed evidence of the headwind of re-openings as well as the risks associated with working through t
Sep 29, 2021 | 01:03 PM EDT DOUG KASS
My Stock of the Year for 2022 (By Far!) Is ViacomCBS $VIAC
* VIAC trades at only $40/share compared to a 'sum of the parts' value of $75/share
* Viacom's operating results in 2022-23 will likely exceed consensus expectations
* With a 12-month downside of only about -$3/share and upside of at least +$25/share, Viacom is a very compelling investment on a reward vs. risk basis
* I expect that there will be multiple suitors for Viacom -- including Comcast, Apple, Amazon and Google $CMCSA $AAPL $AMZN
I invest based on the notion of "margin of safety" and reward vs. risk. As such, Viacom (VIAC) easily qualifies as my Stock of the Year over the next 12 months and through 2022 based on these factors... @cnbcfastmoney@SquawkCNBC@jimcramer@tomkeene@ferrotv@lizclaman
@realmoney
Sell Growth
This morning the yield on the ten year US note rose by another three basis points to 1.491%.
Meanwhile the price of crude oil is +$1.05/barrell and is closing in on $80.
And the prices of nearly everything has risen dramatically.
With rates rising and cost pressures persistent (and not likely transitory) it is time to sell/short the growth segment of the market - which typically behaves poorly under a higher inflation and interest rate backdrop.
I suspect that the most growth elements - large cap tech (FAANG plus M) will be under pressure and it is difficult for me to see (particularly after the magnitude of the rally from last Monday) the overall market (read: S and P Index) perform very well under these circumstances.
@realmoney Sep 23, 2021 | 08:25 AM EDT DOUG KASS
Our World, and Welcome to It!
Uber ($UBER) and Lyft ($LYFT) have no cars.
General Motors ($GM) has no chips.
Airbnb ($ABNB) has no real estate.
Evergrande has no money.
Robinhood ($HOOD) has no shareholders equity.
Bitcoin has no intrinsic value.
Tesla ($TSLA) has no auto-based profits.
Zoom ($ZM) and Peloton ($PTON) have no physical plant.
Precious metals have no friends.
Ark Invest ($ARKK) may soon have less liquidity.
Congress and The Fed have no discipline.
Clip art of a rock just sold for 400 ether, or about $1.3 million… The transaction marks the latest sale of EtherRock, a brand of crypto collectible that’s been around since 2017 – making it one of the oldest non-fungible tokens (NFTs) on the block.
EtherRock is, as the name implies, a JPEG of a cartoon rock, built and sold on the ethereum blockchain. There are only 100 out there, and that scarcity is part of what’s driving up its value. So, what are these rock pics good for?
According to the EtherRock website, “These virtual rocks serve NO PURPOSE beyond being able to be bought and sold, and giving you a strong sense of pride in being an owner of 1 of the only 100 rocks in the game :)”
Fear and Loathing On Wall Street
* We remain in a 'Bull Market In Complacency'
* There is certainty and precision of the bullish consensus despite a wide range of possible market and economic outcomes - many of which are adverse and market unfriendly
* A deeper than expected (and "inconceivable") market drawdown may be growing more likely
* Many make the case that stocks are inexpensive to an another, overvalued asset class (bonds) - that makes little sense to me (particularly at current equity valuations)
* Legacy financials, asset gatherers and retailers are among the most vulnerable market sectors
“No sympathy for the devil; keep that in mind. Buy the ticket, take the ride...and if it occasionally gets a little heavier than what you had in mind, well...
@CNBCFastMoney In the entire conversation on $NFLX there is no discussion of fundamentals @MelissaLeeCNBC
Just a bunch of technicals and glittering generalities...
Why I Am Short Netflix
* Netflix's first mover advantage is likely to be challenged in the years ahead
* The company's growth rate will likely moderate relative to expectations as the streaming market grows more crowded
The best days, from a rate of change viewpoint - in subscribers and in revenues, is probably behind Netflix (NFLX) and I expect a rerating - lower - in the
company's shares.
Netflix has had first mover advantage in the streaming business for quite a long time.
Though the company's market dominance will likely continue there are accumulating signposts that demand has been pulled forward and that its leadership in the marketplace