Yes figured, thanks. Currently they do ~550k net income / ~1bn EBITDA at an ASP of slightly below $10/month. Every $ increase flows almost 1:1 to bottom line. When ASP hits $15 and with 120m users you then get to $7-8bn in net income or P/E of 16-19

Assuming they can properly use customer data and rationalize content spent vs current strategy of throwing **** at a wall to see what sticks, the current ~10bn a year spent on content is likely to be sufficient to continue a high quality programming in near future and you look at a company that still has room to grow (internationally mostly) and is not ridiculously valued.

Other than the probably too simple assumption that they can easily and swiftly increase ASP to $15, I don't really see the 'obvious short' story anymore.

But DISNEY!!!!!!!!!!!!! I joke I'm just curious how obvious smart guys like you and ahnuld who have done great work on this stock decide when it is time to throw in the towel? At some point whatever your position is on any investment is not working there must be a time when you discover that your initial read was either wrong or that something has changed. I know for me if something isn't working I just bail and look for better opportunities. Although I don't do the nuts and bolts analysis that you guys do. This helps me not get too personally invested in whatever my opinion was from the research.

I let the smart guys like you and ahnuld and Goldman and all of the hedge funds and analysts who do this full time figure that out. The I look at that big basket of the "wisdom of the crowd" that figures out what the current fair price is.

I am just curious at what point you give up? I'm guessing it depends as at some points it is a bail and some points a double down. But eventually there has to be a point of no return. Also I figure there are far easier and simpler types of investments to do this kind of work on than a hyper grower like Netflix which is basically a fairly new and disruptive industry.

Anyway thanks for you contribution as this is the kind of discussion and analysis that makes BFI worth reading.

Eventually I could see Netflix having tiers not just based on number of users but also on types of content. This would only be if they move into more exclusive event based content down the road...sports/concerts/blockbuster movies/etc

Out for $6.50

love it

just curious on why the exit today. Most of the gains today were market based more than anything specific about netflix. just a matter of locking in gains? New at this and just trying to learn....

Vol spiked on the market crash and I bottom picked it. My post at 3:12 is just where it ticks up a tiny bit at the bottom of that big spike down. The top of this is $258 and the bottom is $250.5:



NFLX and tech generally wasn't strongly market coupled (this was a finance, rate related selloff before it became pure fear, tech was strong relatively), so knowing that it was a strong rebound was likely on that spike and that much better prices could be had 10 minutes later, it was a no brainer to take it.

It was short term minima you'd be insane not to take the 130% profit on. Easy reenter later if you wanted to, far cheaper. 20 minutes later you could pick it up again for $4 if you wanted, locking in 100% profit AND still being in the trade.

That's just how you trade options. Two minutes can matter as much to your EV as two weeks.

No idea what's going to happen now but there are juicer spots than options on strong sector stocks with two weeks left on them. Apple's "cash going to zero" comment on their repatriated cash also put a bid under them - it raises the chances of an acquisition from minuscule to tiny in sane minds, and from possible to probable in NFLX fans. So even though it was going to deflate from it crazy post earnings rip, market or not (it was down 12% from its highs 4 days earlier, while the market was down 6%), it was already back to its post earnings price, and given the local short term minima it was an easy take profit. And indeed, that was the HOD by far.

Don't try to learn options. If you haven't figured it out yourself from first principles, it's not worth your time. Trade stocks if you want, small spread and easier to think about.

If the market keeps going down obviously Netflix will slide further, but there are way better ways to make that bet than two week NFLX puts now, given how the landscape has shifted today.

I was never short. I was just arguing why I wouldnt own it long despite loving the product and the business.

if you held a gun to my head to pick a position I would short it over long though. things basically need to go perfect from here on out to justify the stock price.

Loeb with a $500mm stake

Close to another ATH, not sure if this sticks by the close tomorrow but still incredible outperformance. Net adds way above consensus, street clearly is saying FOR NOW that they don't care about the content spend. Interesting survey they had last week where a decent portion of the user base said they would pay more if NFLX raised their prices. It's that kind of sticky user base & attention time that keeps it ahead of its competitors.

Another ATH, basically a triple since the stock split (July 2015). You cannot underestimate the power of brands in this economy especially among younger consumers that have grown up in the internet/social media age, they've had plenty of flops and yet the growth continues unabated. No rational analyst on planet earth thinks this is a reasonable valuation for now but the ability to raise prices especially when the economy eventually slows will be everything.

Until then I'm waiting for someone to correctly call a top, good luck.

They've had no real competition yet. When they have competition, coming in a huge way in 2019 via Disney, which crushes them on content, the growth is dead, since

a) their growth is small (<1% of the US population/quarter, <1% of global viable population quarter) relative to the size of their user base
b) Some percentage of people will switch to the service with the best content
c) Even a tiny percentage switching per quarters kills their growth dead and puts them in decline
d) Disney can and will crush them on subscription prices
e) It's near impossible to charge a lot more than a competitor with the same content
f) They lose some popular content as the licensing deals expire and aren't renewed
g) They have to bid more for content with no money vs someone very well capitalized and highly profitable from other revenue streams already happy to compete for the best shows

Netflix is done for at these prices. The market is stupid though (just like it was with other .coms at the end of the last bull) and it seems they will need to see something concrete to credit the inevitable. Which means Q1 2019. In the meantime, these prices up here at $340 make it the best short on the market. I'd gladly double down on the (very underwater) $200/$180 short up here. You just have to hold it and make take a little pain until Disney arrives, then it's lights out.

In fact, NFLX is probably the best market hedge you could find. I think I'll buy some long dated puts very soon, +++++EV

Holy ****. Netflix $200 Jan 2020 puts are $4.60 now with this latest rip. That's a 50% 10 bagger at least in that time frame. Free money...going to do some research on what I think are the best timeframes and strikes and load up $100K or so of these this week.

Lol stop dude, DIS is really an amazing performer in this bull market huh? They've had Infinity War and Black Panther this year, where is the stock? They had three SW movies gross a ton of money and the parks do amazing yet where they actually make their money is struggling massively as people cut the cords to services like NFLX. Price is telling you this story, unless DIS is going to spin ESPN/ABC sometime soon there is no doubt of the two which you want to keep owning.

And I was someone who owned Disney for a long time btw, long before I became a trader. And someone who's been bearish NFLX in the past.

Your credibility on this and Amazon is laughably bad, you seem to not understand relative outperformance. Even during the weak periods over the past few months they've both held up remarkably well, have a neutral opinion but good luck continuing to advertise shorts you have no personal skin in.

Clown,
You're confusing Disney's market cap and performance with the potential effect their large scale streaming service would have on NFLX growth, which is what's at issue. This is a Netflix thread and I'm not talking about nor could I care about Disney's market cap.

Question for the slow (that means you) - how many subscribers per quarter does Disney's streaming service need to get to stop Netflix's growth in its tracks? To start them shrinking? What effect will that have on Netflix's absurd multiple? On the chance of them raising prices (the necessary bull case) while not losing subscribers?
Who gives a ****? You're missing the point spectacularly.
I called Amazon a bargain 6x lower against people who said it was overvalued, and advocated selling 2x lower. I'm certainly clear eyed about growth stocks.

It's the ultimate no brainer short at this time.

I had bad data on the put prices, they're $11 for the 200s for 2020, but still time to take a position after this rip, this is the closest thing to long term free money in this market and a solid hedge against a correction.

Lol at Disney trying to beat anyone on price.

Having said that this is still worth looking at as a short.

How are those year long shorts on AMZN/NFLX from $1k/$180-$200 going? I'm sure if the market does crash you'll break even bud (that's if you actually traded long term what you spew). No worries when you can write words on a forum and straddle both sides when convenient.

Hmm, who to believe, you or the Disney CEO?

Disney: We'll cost 'substantially' less than Netflix
This is the short of the decade at $342, and the LEAPS puts trade of the decade. And it's the perfect way to hedge the market as well. You just have to hold until Disney streaming comes online in 2019 and then stick around for a quarter for the carnage.

Amazing that something so obvious is going to happen, and with near certainty, and people are too stupid to see it even when the reasons why are laid out for them in detail.

The market really believes this will happen guys, that's why it's absolutely not a future looking mechanism at all. DIS long NFLX short ultimate pair trade of all time, LFG!!!

My actual real time Netflix trades were posted in this thread. I don't short as I've said before, only options, which I've made clear.

The recommendation to short is going terribly, but it was a long term short for the Disney release. Time frame matters, you know.

Clown,
You seem to have trouble parsing arguments. I have no interest in Disney long. I think it's probably not a long. I think the streaming service is probably a net negative for their balance sheet for quite a while given their interest in growing subscribers and having a price war involving 10s to 100s of millions of users, cannibalizing their own content sales.

Again, read and try to comprehend the argument. Once your brain has managed to parse the argument and reasons I gave, you might even have the sense to get some 2020 NFLX puts, and thank me later. Let us know when you do.

Lol you benefited from the market going south, even you admitted in the post after you "closed the trade" (which I have zero proof of IRL other than your words on here) it was holding up well. Do you want me to dig up all your posts so everyone can see exactly what you said?

You can keep staying bearish just don't try to act like because you made one trade (supposedly) your thesis hasn't been anything other than dead wrong.