Netflix and other high PS stocks

Investing Strategies Falling Knives
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Here are some metrics that Netflix reported during the summer of 2018
Global subscribers: 130 million
Twelve-month revenue: $14 billion
Twelve-month net income: $900 million

Here’s what Netflix reported yesterday
Global subscribers: 222 million
Twelve-month revenue: $30 billion
Twelve-month net income: $5.1 billion

70% more subscribers. Twice as much revenue. More than five times as much income. Same market cap.

This story is playing out all over the place. Shopify was at an all-time high in November. In 43 sessions, it lost 48% of its value.

If the ARKK names don’t stabilize, they’ll trade at a discount to the Nasdaq 100, based on price-to-sales.

https://theirrelevantinvestor.com/2022/01/22/the-market-is-a…

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Netflix is not my usual cup of tea in terms of investing style.
But I have to agree, under $360 it doesn’t look too bad.

The growth figures are of course nice, but more impressive is that they have shown that the business model can make some money.
Producing your own shows is very expensive, but the nice thing is that there is no incremental cost for one more subscriber watching it.
It now appears they’ve made that always difficult transition from story to business.

Jim

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Ackman beat you to it.

https://seekingalpha.com/news/3792207-netflix-jumps-4-as-per…

Still like it 375-380?

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Producing your own shows is very expensive, but the nice thing is that there is no incremental cost for one more subscriber watching it.

This is why I like DIS a bit better; one their business is a bit more diverse; but more importantly they are able to get more leverage from their content. I wouldn’t be surprised if the Disney+ service becomes more valuable than Netflix - and then you also get all the other assets (such as ESPN, the Parks, etc…)

Being greedy, I have been waiting for a price in the $120s - maybe I missed my chance (or maybe I should just bite the bullet like I did with COST last year when it didn’t quite get to my buy level but I still pulled the trigger and it turned out well).

tecmo
…

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Still like it 375-380?

Sure.
Five years from now it will look like rounding error. (whether good or bad)

But hey, there might be even better prices coming soon to a screen near you.
I don’t own any yet. Sitting on my hands this week.

Jim

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I don’t own any yet. Sitting on my hands this week.

I tend to sit on my hands too long, but nothing looks exactly cheap right now. Have you had a look at your bottom detector recently?

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Have you had a look at your bottom detector recently?

My short term bottom detector signal will have triggered today, based on results so far.
First time since end Nov / start Dec.
It’s “short term” because it’s a sign of (average) bullishness for time frames out to about a month, average and median S&P index CAGR 28%-30% rate.
It’s not trying to spot major turning points.

It’s not as good as my major bottom detector, which is far from triggering.

Jim

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