THB #123: Netflix Day, 2 of 4: Charts

Down 200k subs worldwide.

If Russia wasn’t shut down, still a disaster with just 500k sub growth worldwide.

There is nothing to be hysterical about here… stock has been wildly overvalued for years. It is not a tech business. It is an entertainment business. Always has been. A grocery story doesn’t become a tech business because they buy the newest cash registers. Amazon is a tech business. Why? They make most of their revenue and profit selling their tech.

$270 a share - which is where Netflix is after-market as I write - is closer to a reasonable evaluation. $120 billion market cap… which also makes the company within the range of a buyer coming in and still not getting a value, but becoming the instant market leader.

Asia is the only market where subs were not lost… but still not good.

And just to keep people scared, the company itself, which projected adding 2.5 million subs this quarter (which led to that plunge) is projecting another down sub quarter, losing 2 million more.

Is that a strategy, neant to inspire the market when Netflix does better than that kind of loss of subs in 3 months… or is it just ugly?

And if you aren’t a sub fetishist, they also missed on Revenues.

“In addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households, including over 30m in the UCAN region.”

Waaaaaaa!!! Does this mean we are going to get a breakout of how many hours of our shows that we posted about were viewed by all of those scofflaws?

As Netflix boasts about still being, by their measure, the #1 streaming service, they don’t point out that streaming is still - in the US - even with 70%+ saturation (without the cheats counted), just 28.6% of television viewing… which makes dying, worthless, horrible linear 71.4%.

I’m going to stop now. I don’t think Netflix is anywhere near a grave, so I am not dancing as a long-time stock-price bear. But this shareholder letter reads very, very sad and defensive.

I will keep writing about what has always been obvious… Streaming is not all open road. It is not a singular revenue base for a company that will ever (next 20 years) expect to be past $40 billion in revenues. Taking over the world’s TV sets is a long-term project.

Time for the Netflix Peter Pans to wake up from their fantasy. It’s a remarkable, hugely successful company. But even if there was a Tinkerbelle, you couldn’t call it that on Netflix in 2022.

Until a couple hours…