Comment by kumarvvr | Hacker News Reader

Comment by kumarvvr | Hacker News Reader

The netflix story is beginning to turn, and not just because of Elon or password sharing crackdowns.

Anyone can see that the other players have caught up, and their brand does not seem to have that pull anymore, especially when paired against the likes of Disney, Marvel, DC, HBO, etc.

Their content has a lot more competition, and the pandemic has altered the dynamics of streaming.

I guess most households have at least a couple of streaming subscriptions if not more, and dropping off NF is easier, especially against rising prices and restrictions on sharing.

Now, they have to fight head on with the big studios who have a whole ecosystem with them.

I frankly wonder why anyone would invest in NF at this juncture. I would expect subscriber growth to taper off, and their pricing flexibility is limited due to competition. Also, price sensitivity for streaming seems to be particularly high, perhaps amplified by social media.

Atleast with the cable TV, you get hundreds of channels. Now, the fatigue of selecting content is very real. Also, the algorithms are crap on NF.

Netflix's core competency was the best distribution (DVD by mail then streaming) and not the best content. Their competitors can beat them on content because that's their competency, distribution is commoditized at this point.

This is an example where they were ahead of the industry with distribution and now that their competitors have invested in infrastructure/distribution, supply chain (movie/show production takes time), marketing, and have competing products the competition is fierce when your price is the highest.

Now replace Netflix with Tesla and this could be the same case in the automobile market in a 3-5 year span. Market leader because they lead the industry in one element but once that tech (batteries/EV/charging network) is commoditized, the market leader could suffer.

Here’s the difference I think between the Netflix and Tesla story.

Netflix was in a new market. No one had serious streaming. They had content, but didn’t use the internet to sell it. They borrowed content and did the stream thing. The “moat” was “could NBC etc figure out how to put pictures on the internet”. The answer is apparently yes, and then they yanked their content back. Now Netflix has to reproduce Disney / marvel / all the bug content makers to compete.

Tesla is much more an established market. Yes battery car is new. But ford etc have huge huge legacy commitments. A culture of outsourcing. Software as a frill not a core feature. A legacy method of distribution (dealers). Ford can’t just drop their dealers network.ford can’t just fire their pension obligations. They are very much “stuck” in their direction.

If Tesla is topped, I very much expect it to come form a rival startup and not legacy auto. 12 years in and I see no signs the legacy automakers are doing the right things. Still no OTA updates with regular frequency. You still have to argue with dealer over price and deal with scummery.

I think Tesla is extremely overvalued, very curious to see how it plays out

If you think it's overvalued then you should be short the stock. We've seen how that played out for other shorts.

And the market will stay irrational longer that somebody can stay solvent...

Another way to say that you don't want to put your money where your mouth is.

But I do. I put my money somewhere else when I see a Tulip run.

Another way of saying that they have identified better investment opportunities.

It is quite childish to insist that someone who questions the value of Tesla must put their money on it. It’s akin to lame-ass playground bullying: “You don’t like that, so I dare you to eat it!”

No, not really. I'm just explaining how a real trading desk works. If you express an opinion without putting a trade on, that opinion is worthless.

I am putting a trade on. The stock is overvalued but I am not shorting because Tesla is a cult. I put a trade instead on another stock.

This isn't a trading desk, this is an internet forum where opinions are worth points, and the points don't matter.

Setting up an account with a broker to do options trading requires a lot more capital or margin and requires a lot of research to understand puts/calls, hedges, etc. Buying stocks of other companies you believe will grow is a perfectly fine approach.

One can have an opinion about a company and not do anything with the stock. One can also have opinions about laws, political candidates and ice cream flavors and not do anything about them as well (at least in the US, other countries may silence political opinions).

No it doesn't, you just need a decent credit score and enough bravery/foolishness to click the "I know what I'm doing" box. Usually they'll have a higher level for margin trading and certain strategies that requires something extra but just writing secured contracts and buying options requires almost nothing.

Tesla would crush it if they had an offering outside the luxury market segment. They have 2.5% of US sales and operate completely in the luxury segment which is 5% of US sales altogether. Model 3 starts at $46k, a BMW 3 series is cheaper.

If they built a lower range, no frills, compact commuter car with lower margins (their margins are insane - like 20%+) and higher quantity produced they would end up so far ahead of anyone else because they could be in that market segment now-ish. The traditional car companies are probably 1-3 years away from mass producing EVs, maybe longer. How many households have a primary "family car" and a secondary commuter/small trip car? That 2nd car could easily be an EV with a smaller range (200mi). Its a much larger market segment than luxury.

If Tesla just sticks to luxury segment, their story could be similar to Netflix or maybe close to the betamax vs VHS story (betamax was better technically but lost).

Right. And they want to but need more batteries. If they can ramp that up, they can totally sell a stripped down model3 for a good price and get a huge % of the market.

>Now replace Netflix with Tesla and this could be the same case in the automobile market in a 3-5 year span. Market leader because they lead the industry in one element but once that tech (batteries/EV/charging network) is commoditized, the market leader could suffer.

Nobody chooses their streaming service based on the image it projects. Tesla "won" some demographics and that's gonna be hard to shake.

Is it really surprising that a service that gained tons of subscribers due to lockdowns loses a lot of them again once the lockdowns end?

They didn't even really lose them, Netflix gained subscribers if you exclude Russia.

Not accounting for Russia they'd still have been 2 million subscribers short of the forecast of 2.5 million subscribers.

And they're forecasting a loss of 2 million more in Q2, which makes the loss of 200k in Q1 look small.

Every time Netflix raises their price, it hits the news, and people think "hmm, maybe I should cancel Netflix." This is antithetical to their success so far, which has been a cheap enough subscription that people stay subscribed because it's easier than unsubscribing when they aren't using it. It is insane to me. Absolutely insane. That they have been raising prices as frequently as they have. This isn't a rent controlled apartment, guys. If you need more money, fine, raise the prices once, and if that doesn't work, find another approach. Or at least grandfather in existing subscriptions so you aren't making your entire customer base reconsider their subscription every six months.

(As an example, I was grandfathered in to Google Music's two-dollar-cheaper plan for a few years, and that alone was the only reason I continued paying for Google Music).

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