Not comparing them other than the fact that people who were trying to use typical market valuations for Amazon in its earlier days got steamrolled just like those using the same approach with Netflix are getting steamrolled. Back in the 00's people couldn't fathom Amazons valuation and many went broke in the process trying to short.

If I were Netflix I would be more concerned with competition from Amazon than Disney. If Amazon ever really got serious and made streaming one of their main priorities they could hurt Netflix more than Disney could ever hope to. But Amazon streaming has clunky interface and minimal content although a lot of their content is very good.

But this is an industry in total disruption and I don't see the old guard winning it.

It's not the early days, so your comparison is pointless. If you want to compare 2009 Netflix with 2000 Amazon, sure, but comparing 2018 Netflix (>30% of the market cap of the entire industry) with 2000 Amazon (<1% market cap of the entire industry) as if that's meaningful is ****ing stupid and completely misses the point. You don't even have a point; you're just rambling.

No, just no.

And it shows you how hopeless Netflix's business model is that Amazon aren't bothering to do this. There's no profit in what Netflix does and it's always going to be a **** business model.

The difference would be that AMZN has had positive cash flow for a very long time and has self funded their operations from it. So even if you wanted to argue that AMZN was overvalued, it's a difficult short because they will never get hurt enough for people to be compelled to sell.

NFLX has never had positive cash flow, and that will eventually bite them.

I'm short NFLX, but more as a hedge to the market in general, as well as for personal reasons that I won't get into here.

I'll give you an Amazon comparison that is valid though - Amazon lost over 90% of its value from highs when the market bubble burst. That's below $40 at Netflix's current price, friend.

At that time we had cucks who claimed that Amazon was a bad short, and went long. The shorts who held in the 00s made a fortune; the longs got trampled.

Netflix will be the same. There's no reason for its lofty valuation. There certainly was one for Amazon, and it still lost 92% from highs.



Anyone who went long after '98, while being right at first, lost their ass...$106 to $8.70. All for one of the best long term companies in history.

And for what it's worth, I think the first red arrow is where we are now, and the second red arrow is mid 2019

Toothsayer's Big Money NFLX Investing Thesis:



Loading up on $100K NFLX puts soon. Waiting for my moment (timing is everything in options). Hopefully the market continues pulling up the ultra crap tech and it breaks $400 in the next few days.

I think the argument is, which I find compelling, that the lack of positive cash flow is artificial, and has been a result of them privileging growth. If they wanted to raise prices 50%, they probably could, and without too much loss.

The counterpoint to that is they spend $100/customer on acquisition costs for US customers, and it's been climbing. That's a lot for a month subscription service at $10/month.

Still. I find the "could raise prices" argument perfectly compelling. NFLX should properly be viewed as a company making a couple of billion dollars profit a year, which gets you to around a $50 billion market cap at 20x for growth (i.e. about $100 sans competition) in a rosy bull view.***

The first leg of the Disney thesis is that they'll steal enough subscribers to put Netflix in decline, destroying the inflated valuation (the market dumps shrinking revenues like hot potatoes, down to tiny multiples). But the second just as important leg is that Disney's super cheap pricing will undercut both NFLX's ability and willingness to raise prices, making your cash flow argument valid.

I remember recommending a short at $140 to you for an earnings season. Glad you covered that one a little higher. Up here at $400 however, long term puts are just pure free money. Even shorter term (months) puts have become very +EV.

*** edit: Actually nope, they're $2 billion/year in negative cash flow acquiring second rate content, so there goes that bull thesis. Even if they raised prices they'd just break even. What a giant turd. Maybe $70 valuation or so is appropriate in a no-new-competition, can-raise-prices bull case.

Tooth I suggest taking some time and doing some research,modeling out some numbers instead of just picking numbers out of your ass and cherry picking data points . Your posts are comical and have no merit. This is from someone who doesn't even own NFLX, you really come of as uninformed.

This from the esteemed gentleman who said this:
Sorry bro, unlike the above, all the numbers I've posted have been on point. What specific numbers do you disagree with? And how am I "cherry picking" when I'm arguing that profit should be considered 500% better than what it is now when doing a valuation?

Ahnuld already did a comprehensive analysis above, it gets you to around the same numbers that I come to, below $100 valuation in DCF in the best case scenario. Do you really want to argue this isn't absurdly overvalued even in the best case scenario? I'll even give you a big handicap - choose whatever valuation method you like. I'm all ears.

You willing to post any sort of trade confirmation? I highly doubt this ever actually happens. Would love to be proven wrong. I assume this will be in your little competition with Brian as well?

I'd like to open up a side market on betting whether TS actually ever makes this trade IRL, who's in?

1. Where is subscriber growth coming from US or International?
2. How much do they spend to acquire those international subs?
3. Should marketing costs in the US and international go up or down as the company matures and scales?

The best part is comparing a 90s internet pre revenue and business model like AMZN to a company like NFLX today. What a joke.

Are you refeering to Ahnuld DCF on the first page? I cant speak for him but to me he makes a bunch of assumptions that I just don't agree with. Netflix isn't a traditional media company so don't know why margins greater then 25% aren't doable. Regardless it doesn't make a dif to you because you think lol kiddie streaming Disney is gonna steal subs. For the fun of it here's some numbers.

The total pay tv market is 1.1b
In 5 years 250m subs paying average $15 a month= $45b revenue
How much will they be spending on content, probably more then today so lets triple it to $21b a year on content.
They're currently spending $3b a year on admin/tech/marketing lets double that to $6b. That gets you $18b in EBITDA. Their EV when you started claiming 10x return on those leaps was 160b so trading at 9x the number. Pretty cheap to me for a media behemoth with massive reach that's growing subs, has untapped pricing power, with potential to grow other businesses.

But of course Disney bro.

TS didn't even know Comcast was making a serious bid for FOX, he thought Disney already owned the assets. His knowledge in this space is comically bad so no wonder his calls here have followed suit. All of this M&A is because of Netflix, price is telling you everything. And as content gets bid up by its rivals, who becomes more valuable? The reaction the last few days is so telling, not just a short squeeze.

Morish you want to make a little side bet about NFLX debt? I just highly doubt they'd ever have trouble raising money even in a bear market especially with what we've seen with TSLA. There is a much larger institutional base under this with a lot less skepticism and resistance. Their cash flow seems to be pretty irrelevant given their clear pricing power right now and into the near and medium term future.

Both, more international
They're paying $110/sub in the US and $40/sub overseas.

They should go up substantially. Indeed, given that the US is years ahead of international, we can see what the future holds:

Netflix's 8.3 Million New Subscribers Didn't Come Cheap
The streamer plans to grow its marketing spending faster than revenue this year.



Agreed with you that mrbaseball's analysis comparing these two is a joke. Nice to find some common ground.
Wait, so you're saying that in 5 years under optimistic conditions with no recession or meaningful competition, if they can double their subscribers while raising prices 50% including in poor international markets with very price sensitive subs, Netflix at the current price will be around 9x EBITDA or 20x P/E?

So we actually agree that Netflix is overvalued - according to you it has the price now it should have in 5 years. Perfect. Even the sunny bull case agrees it's too expensive right now.

Anyway, nice to see a sane bull case that's reasonably put forward. I agree with you that without Disney your bull case is at least 50% likely - a recession will make a mess of those international growth numbers for a few years and kill their pricing increase power, non-Disney competitors could find their stride (look at HULU growth, or Amazon) - so Netflix around $160 discounted for 20% for lost safe returns and discounted for a recession/other competition would be a reasonable value in the non-Disney bull case. Awesome.

The secular trends that Netflix have rode to this point all the sudden dissapate because of a recession (that obviously will come at some point in the future)? Where is the proof there exactly?

As for the loopy notion that Disney won't affect Netflix at all that several have espoused, consider this recent survey:

42% of their subscribers actively do want what Netflix uniquely has to offer. And the esteemed gentlemen in this thread think that no meaningful number of these people will jump ship to Disney's objectively vastly superior catalog - which will come at a lower price and with blockbuster movies and hit TV series as well as an enormous top shelf back catalog, vs Netflix's very second rate content which 42% of their own subscribers do not want at all, despite billions spent.

NFLX just another pumped up junk bond machine. The originals are mostly public access quality. One person pays for a password and shares it around. Flawed business model, mostly terrible content, lots of growing competition...

Besides, it won't be long before Elon Musk announces he will directly beam content to your brain

More nonsense and cherry picked articles from you.

"All of this said, it should be noted that 7Park Data gathered this data without official numbers from Netflix. Desktop viewing is the only type of viewing taken into account, which means viewing via mobile devices and connected-TV platforms is not part of the calculations. The analysis firm also hasn't specified what the margin of error is for the study that produced these numbers or how many of its 2 million panel members are based in the U.S. rather than international markets. It's also possible that the numbers would be significantly different if a different 12-month period was taken into account."

Netflix and Netflix alone know what people are watching. They don't release those numbers to anyone and in the past other companies have come out with similar nonsense that Netflix just laughed at. Regardless your notion that armed with the data they have they're sinking billion of dollars inefficiently is idiotic.

Apart from the last line (everyone has already heard of Netflix in most key markets), the above would be my intuition as well.

Now explain to me why US acquisition costs have soared in direct contradiction of the narrative you're putting forward above? You couldn't get a stronger contrary data point to your claims than the graph above - Netflix are paying more and more to acquire each user as a market saturates - yet you double down on your claims like you didn't even understand the concept that this is a strong contrary data point.



trade2win: Acquisition costs will come down as they get more subsribers! Just because! Don't look up!
In that post I was mocking mrbaseball's silly analysis comparing the two, not suggesting that a comparison somehow shows it's going to crash as much as Amazon did in the tech bubble.

Wait, they're still paying 20x EBIDTA (higher than that P/E) as growth slows down? lol?
They're not "calls" they a discussion of numbers. Your constant missing of context doesn't bode well for putting forward a sane bull thesis.



So you just throw out a reliable data point that 42% barely watch original content because it was done on computers? Is it your thesis that they somehow watch original content on the TV but then switch to licensed content on computers? That it changed a ton in the last six months compared to 2017? A standard data disclaimer doesn't mean anything - there's no rational basis to think that these numbers are anything but roughly accurate. They're not even survey numbers - they're direct measurements of viewer activity, as reliable as you can get.

The survey is just fine, you're just salty that your absolutely indefensible claim that Disney will have NO impact looks absurd given the data we have.

What other choice do they have? If 60% of people like/use that original content, then it's the only sane investment they can make. A lot of the content they pay for is international as well. The licensing model is dead for them - they'll never turn a meaningful profit and are always at the whims of content holders - so they've taken the only path open to them, paying top dollar for second rate content that they at least own.

They're truly awful and cringeworthy. As in, I cannot believe how awful Netflix original content is. It's B and C movie level.

I guess there's a percentage of dumb people who think Netflix has good original content, and i guess it's those who Netflix targets because they can be targeted formulaicly. But for the thesis that Disney is going to rape them, it seems that 42% of Netflix's own users - it has to be higher in the remaining public - think the same as we do. If 1 in 10 of those switch, Netflix is in terminal decline.

I subscribe to Netflix because it's 9.99 and is ok for an occasional watch, but I'm constantly amazed at how small the range is and how bad the quality - licensed as well as original. I'd drop it in a heartbeat if Disney was available. Netflix's hardcore fans won't, but they aren't where the growth is and they're only about 18% of current subscribers, it seems. 42% actively avoid it like dog vomit, 40% tolerate it/watch a bit, the rest are fans.

Once again you totally missed my point. I wasn't comparing the companies but the idea of a tech disrupter that is making waves with a strongly rallying stock that has absurd valuations. This is where NFLX is now (or at least was 4-5 years ago) and where AMZN was 15 years ago.

But the Disney question? They could do damage but they likely won't. Disney is and wants to stay the status quo. They own ABC and ESPN and want to protect those entities even though they are both dying. If Disney does a lot of things right they could take a lot of share but I am not convinced they will take it from NFLX. They will take their share from the ever growing pie that streaming is.

Disney is involved with a lot of businesses and Netflix just one. Netflix dominates the one they are in and are the clear king of the mountain. But if Disney really embraces their streaming platform with their very strong franchises like Marvel and Star Wars and Pixar they will make a lot of noise. If they use ABC and ESPN to stream live sports on this platform they will be revolutionary. But it doesn't appear Disney will do any of this. They plan to stream a version of the Disney channel which is geared towards 8 year olds. They will have plenty of old Disney movies from the 60's.

But … but if Disney put up a new release like Black Panther 2 exclusively on stream? Or a new Star Wars segment? Or the only outlet for some major sporting event? The they would surpass NFLX. But they won't because they are too old school. And even if they did all this forward thinking streaming programming NFLX wouldn't lose anything to them. The only thing that can kill NFLX is NFLX and right now they seem to be clicking all of the right buttons doing what they do better than anyone else. This of course doesn't mean they are worth their current valuation. But competition is not what will hurt NFLX and especially the clownish plan that Disney currently has. The pie is growing and NFLX is the leader.

.

trade2win: International costs are flat, not going down. US costs were flat too for a long time until the market got fuller, then they soared. Such is the point.

Your view that costs will go down as Netflix gets more subscribers is contradicted by the data we have. I don't think that's even debatable. And common business experience. Generally as markets fill up and you pick the low hanging fruit, and as competitors ramp up, acquisition costs go up. Just as we saw in the US.

[quote]No I'm throwing out a data point that simply has no merit and cant be counted on to be accurate. As I said no one has numbers besides NFLX./quote]
Your assertion that hard data on what people view, collected directly from two million computers of people actually watching Netflix, is not only unreliable but "has no merit", means there's no point talking with you. The data they collect on viewership is as good what Netflix collects, for that sample. The only claim you could make is that that sample somehow is vastly unrepresentative of the population. I find that unlikely. Even if it's off my 50%, my point still stands that your thesis on Netflix stickiness is badly undermined by the lack of enjoyment of original content.

If you were making the post 5 years ago, then sure, you have a point. Netflix were still in their infancy and had a lot of room to grow relative to the industry, although still not as much in their infancy as to justify an AMZN 2003 comparison.

And is Netflix now like Amazon 2000 (run up exponentially for years without a crash, and now 100% in 6 months), or more like Amazon in 2003 (slowly recovering from lows after crashing 90+%).

Your Amazon comparison ironically helps my position, that's how bad it is.

trade2win: here's some data from 2017 that backs up the data above:

Clearly, people think Netflix Originals are crap if not one of the top 10 most watched program were any of the heavily promoted originals.

I'm think you're in fruity loop lala land if you're denying this hard data is in any way real at this point.

Forget for a sec that I already made it clear that NFLX is the only person with reliable numbers, forget that for a sec.

data from 2017?

lol

You are being disingenuous in this discussion to the point where you are making **** up and lying.I'll just point out for people reading this discussion how desperate you come across to paint a narrative that simple isn't there.

The title of this article is

"Why Was Viewership Down for Netflix Originals in July?"

Yet you go and post 'here's data from 2017'

The article goes on to state

"Blame may go to the lack of major titles debuting on the streaming service this summer. Last year, Season 3 of BoJack Horseman and Season 4 of Orange is the New Black debuted in June and July."

It further states

"This will be the last month we review Netflix viewership using this particular methodology, so look out for our post in September to see how and why we’re changing our approach." Why is something wrong with the methodology?

Here's something that factual, comes straight from the company and shows original series are paying off.

http://www.businessinsider.com/netfl...-movies-2017-4

"But on Netflix's earnings call this week, Netflix content boss Ted Sarandos made comments that should, on that front, give investors a boost of confidence. Sarandos said the amount of money Netflix is investing in originals is "pretty consistent" with the amount of hours people spend watching them.

"That's why we've said before that the investment in original programming has been efficient," Sarandos said. "That's what we mean: Relative to what else you'd spend the money on, versus the hours of viewing."

So, broadly speaking, every dollar Netflix spends on original programming gets it the same amount of watching hours that a dollar spent on licensed content would. And that's why Sarandos later said Netflix isn't driving toward a specific percentage of original programming."

I really don't have time to go back and forth with you when you present nothing of substance and just straight up lie. gl with those puts.