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Netflix loses 1M subs (and celebrates) + More “good” fear
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Netflix loses 1M subs (and celebrates) + More “good” fear

A quick fix of the latest financial happenings.

Carter Kilmann
Jul 22
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Netflix loses 1M subs (and celebrates) + More “good” fear
www.stockduediligence.com

Good morning, investors!

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Without further ado…


One Million Fewer Subscribers: Not a Problem

Netflix lost a million global subscribers in Q2.

Actually 970,000, but who’s counting? 

Netflix’s standard subscription is almost twice as expensive as it was a decade ago. Considering the company’s massive investment in original content, maybe that’s understandable. Still, raising your prices is practically guaranteed to drive subs away on principle alone. 

Yet, investors breathed a sigh of relief when Netflix reported that subscribers fled the platform in droves — management expected to lose about two million subscribers in Q2. So, in a way, only losing one million was a success. Moreover, they also now project to gain back these losses in Q3. 

But how will Netflix’s subscriber base hold up if we enter a recession? Here’s Spencer Wang’s, VP of IR and corporate development, commentary during the latest earnings call:

“If you zoom out a bit and look at past economic cycles, at least in the U.S. most forms of entertainment have been fairly resilient to downturns. There's a level of escapism, I think, that entertainment provides. Also, if you look at the Pay TV business over the economic cycle, it tends to be a bit more resilient as well, just because the value of in-home entertainment increases as folks perhaps don't go out as much.”

Netflix remains the king of streaming — but the gap between it and other platforms has narrowed during the company’s slump/stagnation.  


Two Charts (And a Table): Time to Buy?

“Be fearful when others are greedy, and greedy when others are fearful.” — Warren Buffett 

If we subscribe to Buffett’s motto about fear and greed, then it might be time to get greedy. According to Bank of America’s most recent Global Fund Manager Survey — a survey of approximately 300 institutional, mutual, and hedge fund managers around the world — recession expectations are the highest they’ve been since May 2020. 

Along the same lines, BofA’s Bull & Bear Indicator illustrates that the market is extremely bearish — and that now is the time to buy. 


Three Eye-Opening Tweets

And finally, we close with three eye-opening tweets. 

An “invisible” recession? A strong job market could support it.

Twitter avatar for @ecommercesharesWasteland Capital @ecommerceshares
As long as the employment gap persists (the light blue shading on the chart), there will be no real economy recession. Consumers who have jobs & get raises spend money (gas bills or not). The US still has 7m more job vacancies than unemployed, which is an insane backlog to fill.
Image

July 19th 2022

7 Retweets36 Likes

No M&A deals = low IB revenues = no bonuses 

Twitter avatar for @litcapitallitquidity @litcapital
Bonus szn gonna be light this year
Image

July 19th 2022

188 Retweets2,725 Likes

That checks out.

Twitter avatar for @paulcerroPaul Cerro @paulcerro
The average $AMZN prime member spends $1,400/year vs non-members $600 for non-members @themotleyfool predicts there will be 176.2 million Amazon Prime users in the US by 2025, representing nearly two-thirds of the population.

July 15th 2022

2 Likes

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Jiten Chablani
Writes Jiten’s Newsletter Aug 1

Interesting thoughts. I'd argue they still have a growth problem. They're getting away with it in the short term by scaling in Apac + Latam, and hiking prices in more mature markets NA + EU. But their long-term bets in cloud gaming (and recently, advertising), won't go down well. Here's why:

https://twitter.com/Jiten95/status/1554156502457487360

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