Tooth,

Cant seem to quote your earlier post and format it in a easy to read response so just gonna address your post here.

1. You're right subs are not growing 50% Y/Y not sure where I got that from, I was probably referring to subs growth rate. Regardless subs are expected to hit 150m this year from 118 and 200m by end of 2020. Growing quite nicely and probably a low hurdle as they ramp up international product.

2. Your thesis that Disney will take away subs to make any significant impact is just plain wrong. Its pretty clear Disney is taking a slow turtle approach to streaming. What they are launching is a joke, a product for kids. Fox content is not going to be available when it launches.

3. Disney streaming has a launch date of Fall 2019, international based on everything I've seen is set to launch for a year after.

"The Disney streaming service is beginning to crystallize, and Deadline can provide some details of the initial slate. The studio has been conducting meetings within the creative community to give a sense of its new OTT service that will launch in fall 2019. Perhaps not surprisingly at this point, there was no mention of how the assets of 21st Century Fox will fit into the new service."

"Here’s how it will work. The OTT platform, whose price point wasn’t mentioned, will start with a domestic service only, and then expand overseas. There will be no R-rated films, and the programming will be consistent with the Disney brand. The R-rated stuff will go on Hulu. The plan now is to leave the various Marvel series where they are, which means Netflix will hang onto its superhero inventory."


4. Churn is always going to be there. Is 22% a high number? Maybe I really don't know. They're recent partnerships will bring this down a bit I imagine.

"Product and Partnerships
Last year, we launched bundle offers with Proximus (in Belgium), SFR Altice (France) and T-Mobile (US).They have proven to be very successful and we are now adding similar bundle offers with additional MVPD partners. Recently, we announced that we are bundling the Netflix service with packages from Sky which will begin later this year and with Comcast in the US, which are currently being rolled out.

These relationships allow our partners to attract more customers and to upsell existing subscribers to higher ARPU packages, while we benefit from more reach, awareness and often, less friction in the signup and payment process. We believe that the lower churn in these bundles offsets the lower Netflix ASP. We remain primarily a direct-to-consumer business, but we see our bundling initiative as an attractive supplemental channel."

To be clear I am not bullish on Netflix at current levels I just think your thesis to buy long term puts on this is lol bad based solely on Disney entering streaming which won't happen until fall 2019 and will be a joke. What's worse is you actually think they have a 50% shot of being 10x returns.

Sure, if you believe the above then of course the bear thesis has little strength. I'll let the NFLX (child?) CEO weigh in on Disney's content:

I give you facts you give me an out of context quote. I guess if Hastings is subscribing must mean Disney is going to take down Netflix. For those interested here's the full Q&A take from it what you will.

"Todd Juenger*--*AB Bernstein*--*Interviewer

You made it clear both in the letter and your opening remarks in terms of competition from the new Disney direct-to-consumer services. Your opinion on that is well understood, I think. Let me ask you this nuance. It seems like Disney might be considering more of a stratified type of consumer offering. We don't know for sure, but it seems maybe there would be sort of more of a kids' family type of service and then maybe a more adult type of service, maybe a sports type of service. Do you think that there's a market out there that is more interested in sort of a more narrow service at a lower price compared to Netflix, which is a more broad concept, I think? Is there anything about that that is informing how you think about the space?

Reed Hastings*--*Chief Executive Officer

Well, that's a great illustration of the benefits of competition. Everyone knows the costs of competition, but the benefits are your competitors are challenger brands. So, they don't tend to follow your strategy if you call us the leader in streaming. And then they'll try many things, you know, separate sports, other flavors, and if some of it works, then we get to learn from that. So, our view would be to let them try to innovate on those aspects and watch what they do and learn from consumers. Do they really love it? It doesn't change our strategy. So, think of us as our thing is working, and what we have to do is not get distracted. We have to do content at a scale very few people have ever done before. We have to do marketing and product at that, and if we do that, the reward should be very solid for us. So, we've got a path ahead. Everybody else in streaming is trying to find one, and, again, we have to watch them and learn. And I think in particular Disney with its strength of brand and unique content, we'll have some real success. And I know I'll be a subscriber of it for my own personal watching in the same way and as many Disney and Fox executives also subscribe to Netflix and watch our shows. So, you know what I see is we'll all learn from each other, and total streaming will grow faster because of the competition."


Heres another interesting quote from same call.


"All right, segueing on to a topic of industry consolidation and what's going on with Disney/Fox, which some investors are probably wondering why it took me so long to get to that, got several questions about that but maybe just start at the high level. I guess, maybe Reed just Disney is trying to acquire Fox. What are your thoughts?

Reed Hastings*--*Chief Executive Officer

Well, I was as surprised as anyone else that Fox was willing to sell, and to have all those cable networks together in one bundle gives them tremendous pricing power against MVPDs. So, I could see the attractiveness of it. And then they're also putting together a Disney direct to consumer service, which we think will be very successful because Disney has super strong brands. And so, we'll see. We don't see it as a threat to us any more than Hulu has been , but it's a great opportunity for them. And will it trigger a wave of consolidations? That's possible, but, honestly, we try as much as possible to focus on our own consumers. How do we do the shows that we can do and grow our business? And these kind of big, US media company mergers are pretty peripheral to us. So, you wouldn't expect us to be very involved in that."

You give me opinions, I give you the opinion of someone whose job it is to downplay the threat.

HULU has been a nightmare for Netflix in the US, costing it a large amount of growth and bringing subscriber growth numbers to a near standstill, while simultaneously increasing customer acquisition costs:





International subs are what's driven Netflix growth, as their US growth has slowed prematurely (and cost per acquisition soared) due to competition. If the Netflix CEO is even half right, exactly what I described in the bear thesis will come to pass.

Nice chart. What exactly is it showing? That Hulu has 17m unique subscribers that don't use Netflix? Nope. I'll save you some time Hulu is not eating anybodys lunch. The online streaming market is expanding Netflix will remain on top and people will subscribe to secondary services they find appealing.


https://www.recode.net/2017/10/23/16...hulu-subscribe

"Most people who pay for Netflix are loyal to Netflix, meaning they don’t subscribe to other streaming services like Hulu or HBO Now.

By contrast, a majority of HBO Now and Hulu subscribers — 62 percent and 61 percent, respectively — do pay for Netflix. Among Netflix subscribers, 80 percent pay just for Netflix, while 17 percent also pay for Hulu. And there’s very little overlap with HBO — less than 1 percent of Netflix buyers subscribe to HBO Now."

The chart is showing that Hulu has almost 10 million subscribers that aren't also subscribed to Netflix (as of today), who would otherwise probably have gone to Netflix.

That's >10% of Netflix's base in these markets despite starting 3 years behind, and growing as fast as Netflix. They're the key reason Netflix's US subscribers haven't' grown more.

You and other bulls think a third competitor with superior first-rate content that crushes NFLX's second and third rate content, AND lower prices, will have no impact on Netflix's numbers in the US. I think that's nuts given how HULU alone - an inferior service at a higher price ad-free - has eaten into NFLX's US share.

Again, how many users does Disney have to exclusively take to send Netflix into US decline, and the stock crashing? Work out that number and the case for a solid correction once Disney launches becomes clear.

One thing I noticed is that NFLX doesn't release numbers to the people they are buying content off of. As I understand it, they are essentially withholding the ratings. Comedy and Docu series seems to be popular segments and both have people talking about this. That's a really strong negotiation position/tactic for NFLX. It seems like competition could really escalate the cost of content.

NFLX is up almost 100% YTD. The market loves the global growth story and EM's. I have no clue how that will shake out but with the optimism and current P/E, it doesn't seem like there's much room for error to live up to these sky high expectations

The bears could easily be correct. I am not bullish or bearish on NFLX. Valuation is what is important but then again so is timing Fighting trends is a losing proposition hence the "excellent short" call from November which is close to 100% against at this point.

I think if someone wants to be a short seller they need some price confirmation rather than just get married to an idea and watching it skyrocket up their rectum. But this is an industry in disruption and massive growth and I personally see room for many players to succeed. Whether they are correctly priced I think time will tell but jumping in front of a freight train is usually a poor strategy.

One interesting thing I learned (I work with and against them on multiple projects) about NFLX is how they look at the content they acquire. When creating/acquiring content, they are almost wholly concerned with content for customers who have been on the service for <1 year. They basically don't care about people who have never signed up for their service or people who have been on the service for a while.

This implies that following trends is very +EV (transactions are near zero cost, and trends are pure +- delta), and yet you did not recommend this. Why?
No one cares about your dopey technical analysis, which has zero edge and at which you have no strategy and no history of success in equities. Netflix ripped post November on a crazy Trump tax bull market and excellent subscriber numbers; the fundamental case was wrong, not the technical one, which is pure nonsense. The crap usually does rip when the market rips; morons were saying the same about Valeant and Enron (in fact all the insane P/E.com stocks) as they ripped to highs. If there was an edge in momentum then you should be recommending long on Netflix at $365 as the momentum is strong right now. But you don't really believe your own thesis, hence why you were not a bull or bear at $200 and hence why you are not a bull or bear now.

If momentum following did work, its contribution would necessarily be very small, or everyone would be getting rich and there would 100% annualized momentum funds. They don't exist.

So that leaves us the fundamental parts, which is what matters and what the adults are trying to discuss. trade2win is doing a good job of attacking my bear thesis, which is what we're here for - getting to the most rational position possible. That doesn't include tea leaf reading even if tea leaf reading works to the maximum extent it could.

Reminder: the same person saying technicals are bs is the same guy who said NFLX would never get to $150 and that AMZN/NFLX were great year long shorts at $1k/$180-200. Oh and that same person rarely has on the positions he shills but sure you are right to tell Mrbaseball no one cares.

I imagine TS telling imaginary people that he thinks follow his plays, "but... But... I still recommended Microsoft over Apple." lmao.

Why do you mention these and not Tesla, which was part of the same short package post? Is it because you're a dishonest loser/stalker?

Why do you not mention NFLX crashed after that bet about $150, down from $125 to $80 in no time, making a small fortune if you followed along? In my posted closed trades here on 2p2 on NFLX are super +EV overall even with the rip against on the 1 year short. Why do you not mention that?

And what does any of this have to do with discussing Netflix fundamentals in the Netflix thread? No one cares about your personality disorder or obsession with me, dude.

If anyone followed you on that bundle of trades, they are still getting destroyed. Imagine being a fund manager telling your clients you weren't just neutral on those two names (amzn/nflx not TSLA) but was actually shorting it (like you advised but everyone knows you clearly are full of bs in terms of actually using real money on these proclamations). Congrats buddy on guiding the imaginary members that followed you in.

Of course, but why mention AMZN and not TSLA? Part of the same package of trades.

Again, what is your point? If technicals predicted a 60-80% move against, why didn't mrbaseball recommend long and not have no opinion? If you have no opinion, you don't think there's strong EV either way. You're contradicting yourself and trying to have it both ways. As for now, mrbaseball and you recommend no short at $365, on any time frame. Noted for posterity.

It's not a case of "full of BS" - I have said multiple times I don't short, only play options. There is an options post in this thread which I opened and closed in real time for 140%. Hilariously, you followed (not wanting to look like an idiot) but never posted a close.
Unfortunately in this case, quite a few people follow my trades. They've posted as such in the yearly trading thread (ROKU, VRX, TWTR, MU long, etc). No one posted that they followed my recommendation on this, so I'm hoping you're right and no one did.

Regardless, I'm not sure what your point is again. Is it that:

- Technicals are validated because Netflix ripped on blowout (fundamnetal) numbers, even though the technical indicator guys explicitly said no opinion on going long? I'm laughing dude.

- My calls suck overall? (this clearly isn't true, I have a strong track record of good calls, even on NFLX - my closed NFLX picks are all very very green (200+%) and the one open one is -80%)

- My calls suck sometimes? No argument there.

Again, how does this advance anything? I'm putting forward and trying to discuss a long term fundamental thesis on Netflix, and a LEAPS position as a result. "lol bro but your short so far worked out badly" doesn't really have anything to do with anything.

Have you been short AMZN, NFLX, & TSLA since you said they were year long shorts? It's a pretty simple question given your enthusiasm on that bundle. You keep bringing up that one trade you posted as if it means anything to what we're taking about lol. I didn't follow you at all, it was a hedge to my longer term call spreads and I kept prodding because I wanted to hold you accountable. What a shocker you posted you closed after it was profitable and not before, I'm sure you have trade confirmations you could verify that it actually happened and prove me wrong .

There's that maybe fake Twain quote that is displayed at the beginning of The Big Short, "It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so."

Timing is everything, no matter how right you maybe on the fundamentals. It's ok to have a strong opinion and not have a real feel for the price action, it happens with most names you come across. You don't short this or Amazon until they give you a reason to, if valuation hasn't mattered for up to a couple decades what is the catalyst that changes that? This is where relative strength is so important, it's simply a gauge of where money is going compared to the alternative. You short when they start to underperform on any reasonable time frame, it's ok to be late. Timing is everything, who cares if you end up being right after it doubled in your face?

An interesting snapshot

https://twitter.com/charliebilello/s...08524295409669

this

Shorting suits people with gloomy disposition and this bias then leads to irrational theses.
Then again, the reverse could be said about perma bulls.

Either way as Keynes said: The market can remain irrational longer than you can remain solvent.

I wouldn't dare to short NFLX. I looked at it extensively in 2014-15'ish and looking at my assumptions back then I can say that subsequent domestic sub growth was roughly in line with my bull scenario but intl sub growth far outgrew even my most optimistic assumption. Somehow these types of companies are always underestimated by the street and will eventually grow into their valuation. Didn't invest back then because I thought they couldn't outearn their content spent. Less certain about that now.

what if the current marketcap was 1 trillion, would you short it then?

Again, this is half an argument. you are leaving out the valuation aspect

There's no scenario they could grow into 1 trillion cap. There are scenario's, even in the vision of skeptics ("Priced as if everything goes right") that would see them grow into current valuation. My experience with these companies is that ex-post the most optimistic scenario's weren't all that aggressive (hence the '14-15 anecdote)

Sachs upgrade today, and also ripping with the crap as the market goes to multi month highs. Both are conspiring to give one of the best long term put buys ever.
For me this is purely a play on Disney, so there's time to let it run (since I don't short) and get the best put price possible. I'll post when I enter. I'll probably enter at least a large position if VIX starts climbing again on genuine fear. A simple tech correction will give you 100-200% on those long term puts at this point, you don't even need Disney to be +EV.

Or maybe they will do a 10 for 1 split. That would get it to 40 or so

Actually though I don't think anyone really understands this stock or industry right now. Like Amazon over the past 20 years this stock just defies "normal" valuation. It seems with the Time Warner ATT news all of these guys want to be the "next" Netflix and Netflix just dgaf. Disney is absolutely no threat to Netflix. In fact in a way it may enhance Netflix. Cable dies and people get Netflix, Disney, Amazon and Hulu instead for less cost. There is plenty of room for all and Netflix in a huge leadership position. The bigger older school players like Comcast, Disney, and ATT are striving for closed end systems to control media just like Netflix has. Instead of 4 major networks will have 4 major streamers. Everybody will want and likely have all of them. Streaming video has evolved from a cool new oddity to mainstream must have.

I wouldn't touch this one with a 10 foot pole either way as there are just easier ways to skin a cat.

Netflix will likely be $40 again. Perhaps it will get acquired for more than that ($100?) for its customers, but that's the only path, and more likely it just bleeds down to where it's no longer valuable.

I never understood the negativity on Amazon. It makes total sense - what is likely to be the world's flagship online retailer potentially selling trillions, with strong network effects and a very smart leader, already cutting it against cutthroat competition. In case you think I'm making this up, here's me at $100 billion (now $800 billion, would have sold at $500 billion).

If I'm wrong about something it's estimating how how big the bubble stocks grow in an up market before crashing down to reality. I don't think I'm wrong about Netflix's business. Netflix are in a crap industry with with a low total sales cap and no enduring business advantages.

Their streaming model is such that, if priced long term at a content price match, they make no money and lose half their customers besides. They've grown in an area with little competition to date. They don't own the premium studios or the best talent. They have no intellectual property, no diversification. In short, they have **** all.

The maximum upside is incredibly small - all the world's entertainment firms that could potentially relate to streaming media are worth what - maybe 500 billion? That's then maximum size of Netflix if they captured the entire lot.

Amazon in contrast could easily be worth $5 trillion one day. Total value of all retail sales is $27 trillion, plus more again for B2B. They have their finger in the pie of the entire global economy. They're diversified and no one can really compete. Add cloud onto that and whatever other genius they come up, you can see why they make sense at a lofty valuation.

Comparing Netflix with Amazon is just really dumb. The businesses aren't comparable in any way. In fact I can't think of any big cap business (bigger than Netflix is now) that is comparable. There just isn't big money in entertainment.