It wasn’t that long ago that the Netflix earnings report was one of the biggest events of the earnings season, almost right up there with the likes of Apple. Having lost 77% of its value (!!!) in a matter of months, Netflix has gone from hero to almost-zero. All the same, it’s the biggest item on tonight’s earnings docket.
Looking at the lifetime chart above, you can see why it would be tempting for people to buy the proverbial dip, since it seems that Netflix is just about as cheap as it’s going to get, assuming that long-term trendline holds.
As for why Netflix has been slashed so horribly, well, setting aside the fact it was preposterously and laughably overvalued beforehand (currently the p/e is 17.3), there is a general theory that the woke culture at the company turned off a lot of folks. From my own point of view, Netflix is one of those things that my family subscribes to, and I’m not even sure why. I never watch it, personally. I suspect a meaningful percentage of the subscriber base could have their subscription suddenly cease, and they wouldn’t even notice. Thus, the company depends on these zombie revenues.
Looking at the chart closely, what needs to happen for NFLX longs to win is for it to conquer that horizontal that I’ve highlighted below. Do that, and one can plausibly declare the bottom is in. Otherwise, this thing is just going to keep flopping around like a fish on the floor of a bass boat.
The irony is that the little bit of television I actually do watch tends to be on HBO Max, which we get for free (by virtue of being fiber optic subscribers). One example of which is Ten Year Old Tom, whose opening theme has been a recent obsession of mine.
