Two Plus Two Publishing LLC
Two Plus Two Publishing LLC
 

Go Back   Two Plus Two Poker Forums > >

Notices

Business, Finance, and Investing Making money, investing in markets, and running businesses

Reply
 
Thread Tools Display Modes
Old 05-25-2020, 07:27 PM   #501
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by chytry View Post
We are talking about the business rather than stock price.
Either way, Amazon has been saved by AWS. Without it, it might have been gone or just one of many retailers priced as a retailer.
Why would Amazon be gone without AWS? AWS is an extremely important part of the overall valuation of the Amazon corporate now, but Amazon retail's success has nothing to do with AWS (on the contrary, the development of AWS was funded with FCF from retail). If you do a sum-of-the-parts:

https://www.morningstar.com/articles...ding-into-2020

It would still be the most valuable retailer in the US (especially if you count advertising as part of retail, since that's where the value comes from). Amazon always traded at a super-high valuation, long before AWS was a big part of the valuation.
candybar is offline   Reply With Quote
Old 05-25-2020, 07:40 PM   #502
Mr Spyutastic
Carpal \'Tunnel
 
Mr Spyutastic's Avatar
 
Join Date: May 2012
Location: Bay Area
Posts: 9,325
Re: Netflix (NFLX) - The Future of TV

Yeah people seem to often forget about AWS. It's a huge money maker.

Personally I'm long on Nflx. I think they can hit 1k within 2yrs.

But I'm long on most of the tech sector.
Mr Spyutastic is offline   Reply With Quote
Old 05-26-2020, 10:25 AM   #503
chytry
Pooh-Bah
 
chytry's Avatar
 
Join Date: Feb 2010
Posts: 3,847
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by candybar View Post
Why would Amazon be gone without AWS? AWS is an extremely important part of the overall valuation of the Amazon corporate now, but Amazon retail's success has nothing to do with AWS (on the contrary, the development of AWS was funded with FCF from retail). If you do a sum-of-the-parts:

https://www.morningstar.com/articles...ding-into-2020

It would still be the most valuable retailer in the US (especially if you count advertising as part of retail, since that's where the value comes from). Amazon always traded at a super-high valuation, long before AWS was a big part of the valuation.
Amazon without AWS loses money.
chytry is offline   Reply With Quote
Old 05-26-2020, 10:33 AM   #504
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by chytry View Post
Amazon without AWS loses money.
This isn't the right way to think about things:

https://www.ben-evans.com/benedictev...amazon-machine

Quote:
Meanwhile, when AWS launched the general consensus was that this must be burning cash and that it was another example of the idea that the company operates by buying market share at breakeven or a loss. At a certain point, though, AWS became big enough that financial regulations required Amazon to split it out in its reporting, and we discovered that it was profitable - it now has a 25% operating margin. Then the narrative inverted - the cash from AWS was supposedly subsidizing the loss-making purchase of market share elsewhere in the business.

In my view, both narratives were based on a false premise. As I discussed in detail in this post a few years ago (written before AWS was broken out), those atomised teams are all at varying stages of development - some are large and some small, some old and very profitable, some new and making startup losses. The net income and free cash flow numbers you see are the aggregate of all of those hundreds of teams, and so donít really tell you anything much - Amazon invests cash from profitable units into the creation of new, unprofitable units, and you have no real idea what the distribution looks like. This, I think, is how we should see both AWS and the marketplace business: Amazon is uniquely obliged to disclose the profitability of AWS, but itís not the only profitable part of the company.
candybar is offline   Reply With Quote
Old 05-26-2020, 12:19 PM   #505
chytry
Pooh-Bah
 
chytry's Avatar
 
Join Date: Feb 2010
Posts: 3,847
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by candybar View Post
This isn't the right way to think about things:

https://www.ben-evans.com/benedictev...amazon-machine
good mix of survival bias & circular logic
chytry is offline   Reply With Quote
Old 05-26-2020, 01:29 PM   #506
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by chytry View Post
good mix of survival bias & circular logic
No, this is something people have been talking about for a long long time specifically about Amazon. Amazon had no real profits for a long time and the investor community was okay with this because they understood this:

https://www.ben-evans.com/benedictev...d-why-it-works

The famous Amazon flywheel (illustrating the long-term strategy of reinvesting profits to fuel a virtuous cycle) is from 2001:

http://www.samseely.com/blog/2016/5/...lywheel-part-1

Even if you don't understand anything about the business, you should understand that growth is both 1) expensive and 2) valuable. Hence, a high growth rate is often a sign that the underlying business is substantially more profitable than is reported.
candybar is offline   Reply With Quote
Old 05-27-2020, 04:54 AM   #507
chytry
Pooh-Bah
 
chytry's Avatar
 
Join Date: Feb 2010
Posts: 3,847
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by candybar View Post
No, this is something people have been talking about for a long long time specifically about Amazon. Amazon had no real profits for a long time and the investor community was okay with this because they understood this:

https://www.ben-evans.com/benedictev...d-why-it-works

The famous Amazon flywheel (illustrating the long-term strategy of reinvesting profits to fuel a virtuous cycle) is from 2001:

http://www.samseely.com/blog/2016/5/...lywheel-part-1

Even if you don't understand anything about the business, you should understand that growth is both 1) expensive and 2) valuable. Hence, a high growth rate is often a sign that the underlying business is substantially more profitable than is reported.
More circular logic and survival bias won't do it.

The 'no real profits for a long time and the investor community was okay with this because they understood this' applies to almost every tech and wannabe tech growth company, and it's nothing new.

Wework and Tesla have been making the same case for themselves. Same for Yahoo and all the other failures.
chytry is offline   Reply With Quote
Old 05-27-2020, 10:20 AM   #508
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by chytry View Post
The 'no real profits for a long time and the investor community was okay with this because they understood this' applies to almost every tech and wannabe tech growth company, and it's nothing new.
Any growth company is going to have a high valuation if they show the ability to grow revenue organically at a higher rate without additional capital.

Quote:
Wework and Tesla have been making the same case for themselves.
These companies have neither shown the consistent growth, nor were they able to finance that growth with operating cashflow alone.

Quote:
Same for Yahoo and all the other failures.
Yahoo was very profitable relative to the valuation - it's the tech company that value investors that who cared about profits but not growth invested in.

The fact that you can't distinguish these makes it obvious that you don't understand the industry at all - why even bother looking at these names? If you don't know what drives these stocks, you shouldn't trade them.
candybar is offline   Reply With Quote
Old 05-28-2020, 05:09 AM   #509
chytry
Pooh-Bah
 
chytry's Avatar
 
Join Date: Feb 2010
Posts: 3,847
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by candybar View Post
Any growth company is going to have a high valuation if they show the ability to grow revenue organically at a higher rate without additional capital.



These companies have neither shown the consistent growth, nor were they able to finance that growth with operating cashflow alone.



Yahoo was very profitable relative to the valuation - it's the tech company that value investors that who cared about profits but not growth invested in.

The fact that you can't distinguish these makes it obvious that you don't understand the industry at all - why even bother looking at these names? If you don't know what drives these stocks, you shouldn't trade them.
Then tell me which names are at least 10 baggers from here since you allegedly have this wisdom.
chytry is offline   Reply With Quote
Old 05-28-2020, 08:31 PM   #510
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by chytry View Post
Then tell me which names are at least 10 baggers from here since you allegedly have this wisdom.
You're missing the point. The point is that these types of companies are valued based on their long-term future. Thus, to trade them successfully, you need to disagree with the market on their long-term future and the market has to move closer to your perspective within a specific time frame. If your view is: I don't know how to predict the long-term future of companies like this, but how could anyone possibly know, no one should be this optimistic in light of the level of uncertainty and I refuse to invest in a total crapshoot, that's a fair perspective. But that's a reason not to get involved - that's not a reason to get involved on the short side. If you insist on assuming that these stocks will do poorly relative to the market, it's not enough to be sure that the risk/reward trade-off isn't good enough for you personally because you're only comfortable looking a few years out and there's no way these companies will reach their potential in the next few years. To make money on the short side, you have to be sure that things go from looking like they will work out to not looking like they will work out. This requires an understanding of how their future is being projected in the first place. If you have to understand what it is that other people are seeing, even if you disagree.

Also, the stock market doesn't owe you a high return - super high-growth companies generally won't even IPO unless they think the market is valuing that growth fairly, because there's practically infinite amounts of private capital they can tap into instead. As the competition is fierce - there's lots of capital out there just happy to earn slightly more than the risk-free rate, you should assume that there are no easy bargains. I don't think the Buffet/Graham approach works particularly well in today's world - a company with a consistent track record of financial success isn't going to be cheap and if it is (as Yahoo seemed to be), it's because investors know something bad is about to happen.
candybar is offline   Reply With Quote
Old 05-29-2020, 02:14 AM   #511
snowie963
grinder
 
Join Date: Sep 2019
Posts: 609
Re: Netflix (NFLX) - The Future of TV

I will be surprised if Netflix has as many subscribers in 10 years as they do today. Everyone has it because they used to be a good option but most people I talk to are disappointed. Out of maybe 20 people I have asked nobody is really happy with it. I don't believe I'm getting any value and will be cancelling my part of a shared account next year. Way too much dubbed garbage. The shared account family member will have trouble paying for theirs if we cancel, but I'm not throwing away money on it anymore.
snowie963 is offline   Reply With Quote
Old 05-29-2020, 06:02 AM   #512
chytry
Pooh-Bah
 
chytry's Avatar
 
Join Date: Feb 2010
Posts: 3,847
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by candybar View Post
You're missing the point. The point is that these types of companies are valued based on their long-term future. Thus, to trade them successfully, you need to disagree with the market on their long-term future and the market has to move closer to your perspective within a specific time frame. If your view is: I don't know how to predict the long-term future of companies like this, but how could anyone possibly know, no one should be this optimistic in light of the level of uncertainty and I refuse to invest in a total crapshoot, that's a fair perspective. But that's a reason not to get involved - that's not a reason to get involved on the short side. If you insist on assuming that these stocks will do poorly relative to the market, it's not enough to be sure that the risk/reward trade-off isn't good enough for you personally because you're only comfortable looking a few years out and there's no way these companies will reach their potential in the next few years. To make money on the short side, you have to be sure that things go from looking like they will work out to not looking like they will work out. This requires an understanding of how their future is being projected in the first place. If you have to understand what it is that other people are seeing, even if you disagree.

Also, the stock market doesn't owe you a high return - super high-growth companies generally won't even IPO unless they think the market is valuing that growth fairly, because there's practically infinite amounts of private capital they can tap into instead. As the competition is fierce - there's lots of capital out there just happy to earn slightly more than the risk-free rate, you should assume that there are no easy bargains. I don't think the Buffet/Graham approach works particularly well in today's world - a company with a consistent track record of financial success isn't going to be cheap and if it is (as Yahoo seemed to be), it's because investors know something bad is about to happen.
My hindsight is perfect too. Give us those names.
chytry is offline   Reply With Quote
Old 05-29-2020, 12:03 PM   #513
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by snowie963 View Post
I will be surprised if Netflix has as many subscribers in 10 years as they do today. Everyone has it because they used to be a good option but most people I talk to are disappointed. Out of maybe 20 people I have asked nobody is really happy with it. I don't believe I'm getting any value and will be cancelling my part of a shared account next year. Way too much dubbed garbage. The shared account family member will have trouble paying for theirs if we cancel, but I'm not throwing away money on it anymore.
The churn rate is definitely something you need to consider if you're investing in NFLX:

https://www.videonuze.com/article/ne...-than-forecast

It's been trending up before going down more recently, likely as a result of widespread lockdowns. With that said, we should expect a slight increase as the market is saturated and they must be acquiring more price-sensitive, lower-value users.

Also for your "it's not worth the money for me and some friends" heuristic - anecdotes are fine as a starting point for analysis but you should be able to verify them through more objective measures.
candybar is offline   Reply With Quote
Old 05-29-2020, 08:42 PM   #514
de captain
Pooh-Bah
 
de captain's Avatar
 
Join Date: Mar 2008
Location: Social distancing since I was 4
Posts: 4,870
Re: Netflix (NFLX) - The Future of TV

That seems at odds with the thought that whether they bring new subscribers forward, or delay them, doesn't really matter. The subscribers they've been gaining since March are very possibly worth less than nothing.
de captain is offline   Reply With Quote
Old 05-29-2020, 09:09 PM   #515
Mr Spyutastic
Carpal \'Tunnel
 
Mr Spyutastic's Avatar
 
Join Date: May 2012
Location: Bay Area
Posts: 9,325
Re: Netflix (NFLX) - The Future of TV

So if someone is quitting Netflix because they are not good enough what's the alternative?

Personally I don't think there's any stand alone that I feel is adequate by themselves. I'm always flipping between Netflix, Prime, Hulu and HBO with Youtube fulfilling a somewhat different area. Even all of those together is still less than what my cable bill was 10yrs ago which was the last time I had cable.
Mr Spyutastic is offline   Reply With Quote
Old 05-29-2020, 09:48 PM   #516
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by de captain View Post
That seems at odds with the thought that whether they bring new subscribers forward, or delay them, doesn't really matter. The subscribers they've been gaining since March are very possibly worth less than nothing.
I'm not sure where you're getting this. It's almost always going to be positive to bring new subscribers forward and it's almost always going to be negative to delay them. You need a very convoluted scenario, which is virtually impossible at scale, for this not to be true - i.e. someone who would be a happy subscriber, if they signed up a year from now, tries the service now, doesn't like and never comes back. There's very little marginal cost involved in having additional subscribers.
candybar is offline   Reply With Quote
Old 05-29-2020, 10:04 PM   #517
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by Mr Spyutastic View Post
So if someone is quitting Netflix because they are not good enough what's the alternative?

Personally I don't think there's any stand alone that I feel is adequate by themselves. I'm always flipping between Netflix, Prime, Hulu and HBO with Youtube fulfilling a somewhat different area. Even all of those together is still less than what my cable bill was 10yrs ago which was the last time I had cable.
Well Netflix isn't that essential, you don't need an alternative to quit. I assume most quitters 1) don't care for the type of content Netflix has, 2) rotate between services, or 3) are really broke or cheap.
candybar is offline   Reply With Quote
Old 05-29-2020, 10:35 PM   #518
Mr Spyutastic
Carpal \'Tunnel
 
Mr Spyutastic's Avatar
 
Join Date: May 2012
Location: Bay Area
Posts: 9,325
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by candybar View Post
Well Netflix isn't that essential, you don't need an alternative to quit. I assume most quitters 1) don't care for the type of content Netflix has, 2) rotate between services, or 3) are really broke or cheap.
Yeah I'm really surprised people are hung up on the price vs what they get. Like really? It's what $10-$12 a month?

Pretty sure there are probably plenty of worse uses of $10/month one could find in most people's spending habits. Mine for sure. But of course it all depends on the user. For me the cost is pretty negligible at where it is now.
Mr Spyutastic is offline   Reply With Quote
Old 05-29-2020, 11:03 PM   #519
candybar
veteran
 
Join Date: Aug 2011
Posts: 2,487
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by Mr Spyutastic View Post
Yeah I'm really surprised people are hung up on the price vs what they get. Like really? It's what $10-$12 a month?

Pretty sure there are probably plenty of worse uses of $10/month one could find in most people's spending habits. Mine for sure. But of course it all depends on the user. For me the cost is pretty negligible at where it is now.
This is how I feel about it too - it's like 2 cups of coffee and doesn't even buy a movie ticket - but I guess there's a lot of broke people and free entertainment.
candybar is offline   Reply With Quote
Old 05-29-2020, 11:20 PM   #520
snowie963
grinder
 
Join Date: Sep 2019
Posts: 609
Re: Netflix (NFLX) - The Future of TV

I don't know about broke, but if I'm not getting 2-3 hours of enjoyable content in a month, it simply isn't worth it. I'll hand out $50 a week in tips to employees of various suppliers I deal with who don't normally get tips, because they are worth it.

I wouldn't classify myself as cheap or broke, just can't stand a bad deal with any services or products I use.

Obviously its great until you've had it for 2 years and have gone through all the good content, then you realize it isn't replenished fast enough to justify staying subscribed.
snowie963 is offline   Reply With Quote
Old 05-29-2020, 11:34 PM   #521
Mr Spyutastic
Carpal \'Tunnel
 
Mr Spyutastic's Avatar
 
Join Date: May 2012
Location: Bay Area
Posts: 9,325
Re: Netflix (NFLX) - The Future of TV

Quote:
Originally Posted by snowie963 View Post
I don't know about broke, but if I'm not getting 2-3 hours of enjoyable content in a month, it simply isn't worth it. I'll hand out $50 a week in tips to employees of various suppliers I deal with who don't normally get tips, because they are worth it.

I wouldn't classify myself as cheap or broke, just can't stand a bad deal with any services or products I use.

Obviously its great until you've had it for 2 years and have gone through all the good content, then you realize it isn't replenished fast enough to justify staying subscribed.
Yeah I guess it depends on what you watch. For me I watch a lot of Korean movies and dramas so I've kind of always found something and I've had it for 10yrs now.
Mr Spyutastic is offline   Reply With Quote

Reply
      

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Forum Jump


All times are GMT -4. The time now is 02:50 PM.


Powered by vBulletin®
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
Copyright © 2008-2017, Two Plus Two Interactive
 
 
Poker Players - Streaming Live Online