Netflix Stock Price Crashes in After-Hours Trading
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That service definitely seems to be degrading, almost everything in my queue has become perpetually stuck on "very long wait," something rare for me of a couple years back. They're clearly winding things down.
I don't know what happens in a couple years for anyone who wants to see an old movie. The streaming libraries are still incredibly thin. New releases will be available somewhere, sure. But we're facing the death of access for film history buffs or hardcore genre fans.
Your local library? I've found some have a surprisingly good selection, and library networks probably make most movies available within a few days' wait.
I wonder what they could do better catering to a narrower market. I dropped Netflix DVD service, but I'd consider something better.
Maybe we should convince Icahn to buy some Netflix stock...
It obviously wouldn't work for new content but might solve the issue for rare or older movies which you cannot find elsewhere.
[1] Any movie that has been released more than 90 days ago, etc.
Netflix's DVD business has basically reached its point of exponential decline, and the only ones holding out seem to be the film buffs and aficionados. Even old folks are switching to streaming now.
It's an interesting time to be a film lover, and by "interesting," I mean it in the sense of that curse about living in interesting times.
My guess as to what happens next: we'll see the increasing breakout of streaming providers by genre or interest. Some genres will have big enough audiences to bear out the cost and logistics of running a business around them (for example, anime and Crunchyroll). Other genres might not be as lucky.
And then there's the black hole: titles only available on DVD, or even VHS, because the companies who made them went under. In a lot of these cases, nobody bothers acquiring the rights and remastering the films, because from a business standpoint, the payoff just isn't there.
Would love to read it if anyone can recall any search terms from the headline...
(I searched for "long wait" in comments from the last month since I remembered that that symptom was mentioned.)
When expectations are high, if expectations aren't met, the adjustment can be abrupt.
Time Warner (HBO + Warner Brothers + numerous cable channels) is in the same content/TV distribution business, $4.3b in profit, market cap of $62b.
Netflix, $0.2b in profit, $5b in REVENUE, market cap of $27b (well, now $20b).
Netflix is competing with Amazon streaming, Apple TV/iTunes, to a lesser extent Google, Hulu.
Also now HBO, they announced today they would start letting people subscribe over the Internet without a cable subscription, all the other channels are getting in the over-the-top streaming business.
Comcast + Time Warner Cable (different from Time Warner) are looking to merge and perform a cashectomy on Netflix via 'fast lanes', before TV subscriber losses from cord-cutting really start cutting into their flesh. (Can anyone doubt that's about to happen? Anyone who has compared the experience of e.g. Roku with a cable box can see over-the-top is a 10x improvement in UX at a lower price. And with even HBO available over-the-top, literally the only reason left to subscribe to cable is live sports.)
Growth is not a given. It's a tough landscape and no guarantee Netflix will be the last one standing.
$20b is still a lot of money for a company with no profits, in a fight for its life.
ESPN's attempt to block World Cup in USA if you didn't have a cable was pretty easily circumvented. And then there's the option of using a buddy's cable login.
I only have experience with NHL Center Ice, but I've heard similar things about mlb.tv; those services suck terribly, like so much that you're left wondering if it's a deliberate choice.
In the case of NHL and MLB, here's what happens: you buy a season pass to the service for 160 dollars, and it lets you stream (with okay quality) out of market games. So when I was living in Rochester NY with my fiancee and we had a subscription to watch the Red Wings, we could watch all of their games except the games which got broadcast in Rochester (so all the games that were against the Buffalo Sabres) and all the games that were broadcast on national TV.
So it sounds a little crappy that you're missing an entire matchup, but it's actually worse than that; the entire post season is in your media market, no matter where you are. So if the Red Wings make it to the playoffs, as they have for the past twenty-odd years in a row, guess what! You spent a hundred and sixty dollars, and it didn't get you a pass to watch the playoffs, the most exciting games of the season.
And next season, you have to spend another 160, and go without watching the playoffs (or do as we did and spend a lot of time in a local sports bar).
Finding sketchy live-streams of games online is always a possibility (that's how I watched a number of playoff games that my fiancee wasn't interested in), but you're correct that the quality is incredibly variable and some of those streams are pretty sketchy.
We still haven't caved and bought cable, but NHL center ice is barely more of an option now that we're living in Santa Clara; if I want to start getting invested in the local San Jose Sharks, I'm shit out of luck because all those games would be in my market, and that still doesn't address the playoff issue.
Sports are pretty much the only reason I consider buying a cable subscription because the alternatives are honestly just really crappy, and I can't wait for the day that the leagues finally manage to negotiate a contract with broadcasters that allows for a reasonable way to stream games online.
Are all likely affecting the stock. However when it's all said in done who else is competing with against netflix?
1. Very high P/E ratio. Thus strong future growth is baked into price. So, a buyer of the stock today is already paying for strong growth.
2. Based on #1, the risk is higher as you're prepaying for future growth. And the future is uncertain.
3. Institutional ownership is already high, so you're more likely to see outflows than strong inflows. I don't like investing on this metric, but it does affect price during market fluctuations.
4. Price/Sales is high.
5. Low margin
I don't trade much, but if I did I'd stay away due to the lack of shorts, thus no short squeeze to play.
Of course, on the positive side it dominates its market, has strong growth, and generates free cash flow.
Again, I did not do a genuine analysis so I could be way off on some of the above.
Well, HBO, Amazon and Hulu in the US. In my country (the UK), there are several local competitors; Now TV, Sky, BT, 4oD, BBC iPlayer (sort of), Amazon. I would assume it's a fairly similar situation in most of the markets they operate in (e.g. HBO Nordic in Scandinavia).
HBO won't be available to non-cable/satellite subscribers until next year, has limited content, and at this point unknown pricing. (Seems unlikely to be less than Netflix, might end up being 2x Netflix.)
Amazon has limited content, a crappy UX, and a pricing perception problem (your only option is $99 up-front).
Hulu has very limited content, ads even for paying customers, and a crappy UX, all while charging the same amount as Netflix.
A cord-cutter is almost certainly going to be paying Netflix. They might pay some of the others, too, but maybe not, and probably not all of them. It seems unlikely they'd pay any of the others without paying Netflix.
Is it really competition when your competitor's customers are your customers?
I agree to your points to a certain extent. However, you're forgetting that Netflix also has deficits to the other three. HBO, as I understand it, would most likely have up-to-date recent films, something Netflix severely lacks and people actually want. Amazon is bundled with Prime, a big draw for a lot of people which makes it's offering look more desirable in many ways. Hulu is free (except Hulu Plus). Probably most importantly, all three have unique content which is not available on Netflix (especially true of HBO).
> It seems unlikely they'd pay any of the others without paying Netflix.
I don't think this is necessarily true. With VoD services like these, people will use the ones which have the content they want to watch. As the 'incumbant', Netflix will have certain first mover advantages in terms of brand recognition, but this won't last forever and the market still has lots of room for growth.
This is a pretty good point. I subscribe to both Hulu and Netflix, and I feel like they provide very different services. Netflix provides a large back-catalogue of movies and TV shows, while Hulu is more for watching things which are currently airing. If netflix was able to get episodes of shows on a real-time basis, instead seasons at a time the season after the season is over, it might be competing on a more direct basis with Hulu. As it stands, I feel like they are for different markets, and somebody who wants a Hulu subscription isn't going to be satisfied with Netflix.
I'm not saying the other services don't have content people want that Netflix does not have, I'm saying they're going to want the content Netflix has, too.
Amazon already with Prime. With HBO announcement, that's another big threat -- and if it means that more of the existing content producers (on whom Netflix relies for much of its library) are also going to take the same route, its a big problem for Netflix. Once it got real streaming competition (and thus, competitors for titles and exclusivity) and stopped even trying to big a universal library (because that wouldn't work anymore), Netflix -- and its competitors -- were essentially limited to being HBO but without the burden of cable (and without having yet built up the library of first-party content HBO has). But once HBO gets into that game, the opportunities got a lot narrower.
On another note: I might be reading it wrong but if netflix made 60 million USD with 53 million users that would be $4 per user per year which seems little.
Due to its size, Amazon can also expect to extract an better selection of streaming titles from media companies.
Netflix should be terrified.
On the other hand, people do seem to just watch whatever is on Netflix. So, maybe they can get away with licensing a less-expensive mix of content plus of course their in-house stuff.
HBO ran into the same problem (with a different delivery platform) once they ran into competition as a premium cable movie channel, and they responded much the same way Netflix is -- transitioning to increasingly prioritize first-party content. OTOH, when HBO didn't, there wasn't anyone doing basically the same thing on a different tech platform around -- which makes HBO Go being made available independently of cable a big threat to Netflix.
> On the other hand, people do seem to just watch whatever is on Netflix. So, maybe they can get away with licensing a less-expensive mix of content plus of course their in-house stuff.
Netflix being one of many "internet channels" with a limited library of mixed first- and third-party content is clearly where things are heading, the question is how they grow a subscriber base with more and more entrance to that space, some of which, like HBO, have a lot more experience in pretty much every aspect of that kind of operation except the internet delivery end.
Sounds like HBO and Netflix could be good merger partners?
Netflix makes ~$5.6 billion per year.
A big chunk of that goes to content licensing so they spend several billion dollars a year on content.
That revenue is pure profit for content companies.
If you're a CEO of content company and e.g. Netflix is willing $100 million a year for, say, license all seasons of "Friends", you can't simply say "I want $110 million" and expect Netflix to pay it.
If you're not willing to license for $100 million/year, then you're loosing $100 million/year of pure profit and shareholders like profit.
The more money Netflix has to spend, the more they can shop around so content companies don't have as strong of a negotiation position as many seem to believe.
And Netflix is being very smart by investing aggressively in their own content, which they'll own forever, which is an always growing asset.
Amazon sent me snail mail a few months ago to remind me I got Amazon Instant Video with my prime membership and that I should use it some time, so I'm thinking you're probably right.
I do agree that Amazon needs a real name for the service, though.
http://bgr.com/2014/07/01/android-market-share-2014/
TL/DR; Android market share in US = 61.9%/iPhone US market share in US = 32.5%.
Predicting whether or not AIV will gain consumer awareness is a completely different matter, and I don't think that comparisons between iOS and Android have any place there, since the markets are completely different.
I avoid Amazon unless the content is exclusive to that service. Even then, I rarely bother to search on Amazon for that exclusive content as Netflix provides more watchable material than my time budget anyway.
The video compression and streaming is also better.
This strikes me as a poor decision, as Fire TV is akin to the "razor" with Amazon Prime memberships being the "blades" that should bring in the recurring revenue.
I've been a long time subscriber to Netflix however, from back when it was DVDs only, and their service used to be pretty terrible. Amazon is behind right now, but they will iterate and improve.
I really believe that Amazon in the long run will come out ahead of Netflix, but I'm not sure if that is a good thing. Amazon is becoming such a huge monopoly in so many ways that I don't see this as turning out well for consumers in the long run.
I'm going to pay $7-10 bucks a month for 3-4 services (I currently pay for Netflix, Amazon Prime, and Hulu) - there is plenty of crossover, but for < $30 a month, I'm getting plenty of what I miss w/o a $50 cable TV subscription -
Now if only someone could do something legally about live sports...
Which is what, exactly? A la carte programs? Netflix isn't that. A la carte channels? Netflix isn't quite that either.
Netflix is positioning itself as something between a streaming TV network (producing original content) and a streaming Time Warner (bundle all the content, acting as gatekeeper to the end consumer). I like Netflix, but I doubt it's long-term intent is to be the streaming utopia we've dreamt of.
In that context, Netflix currently enjoys the advantage of being one of the few popular streaming networks/content providers right now (along with Amazon Prime, and perhaps Hulu Plus in the U.S.). Moving forward, they could swallow up or crush new competition, consolidating their power and pushing them more into the Time Warner category. That would be very good for them, financially. Or competition could build up around them, relegating them to the streaming network category.
https://www.google.com/finance?q=NASDAQ%3ANFLX
The story reported it was at 339. Looks like it's currently at 448.
Edit: Nevermind, didn't notice the "After Hours" price in tiny-text above the graph which shows similar numbers to those reported in the story.
Taking a look at their financials [0] their PE was 139 pre-announcement. It's still north of 100. Compare that with 27 of Google. Very high growth assumptions.
Another way to look at it is they are still up ~250% over the past year and a half.
When you're this highly priced, there is no room for mistakes or missing Wall Street expectations.
One other note... There is a lot of hedge fund activity on Netflix, which can increase the immediate pop before or after a hit.
That said... Speaking as a subscriber... I'm still paying, but I'm not using nearly as much as I used to, and I'm using Amazon Prime more and more.
Now you'd just refer to those time periods as "Asian hours" and "European hours." Also, remember there is not 1 stock market. There are somewhere around 50-60 exchanges where a company's stock may be traded (counting dark pools), and each of those may have different rules/open periods/etc.
This is different from options or margin trading, where only registered accounts can use it.
If you want to get stupider than this article, I've seen some stocks trade down 50% after hours but open normal the next day.
Besides, the whole market took a nosedive today.
Means nothing.
Note that, while you agree what I said is true for most cases, I was downvoted. What is this? Reddit?
https://www.google.com/finance?q=NFLX
At the top left of the chart set zoom to 1d. At the bottom left of the chart click settings and tick the box for "Extended Hours". That gets you volume data for the post market session. I didn't downvote you, but I do see these kinds of comments ("hey don't trust the post-market session") after earnings announcements a lot, and I usually try to cross-check the chart to see whether they're on point or not.
> Buy Bitcoin while it's cheap!
It has a P/E of over 130, and just reported slower than expected subscriber growth. Of what specific fundamentals do you speak?