Not-Ready-For-Prime-Time Rambling Re: Netflix -- From Investment Point Of View -- April 20, 2022

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Updates

April 22, 2022: The train wreck in slow motion -- today --

Original Post 

I have not kept up with the "streaming wars" but after the Netflix debacle yesterday, I thought it time to sort some things out.

Background: tracked here at "streaming wars."

Then, after the Netflix debacle yesterday, that was updated here. 

Now, from an investment -- not a trading -- point of view.

Definition of investment:

• long horizon; for me 30 years
• accumulation on regular basis
• it takes a major change in the company for me to consider selling shares once bought

So, not-ready-for-prime-time:

1. It's quite ironic. Bill Ackman shorted the wrong stock. He should have shorted Netflix. 

2. I think these stand-alone streaming content companies like Netflix will have challenges going forward. It's possible someone -- like Google -- will buy them.  But what's to buy? How many stand-alone streaming companies are there and who are they?

3. Reminder:

• Google market cap: 1.697 trillion.
• Netflix market cap: 97 billion
• 97 billion / 1,697 billion = 6% and Google could use cheap money to make the deal.
  

4. Since I'm focusing on Netflix in this note, I will look at streaming companies with new, original, content.

5. The big ones with new, temporary, current, original content:

• HBO is now owned by Warner Bros Discovery (which I'm accumulating).
• I don't think Google owns anything with original content. Google owns YouTube but YouTube is getting out of the original content business (too expensive; too risky; I suppose). Is Google getting out of original programming altogether or might it buy Netflix for original programming?
• Apple TV+ is into original content; very expensive but doing well ... so far.
• Disney, of course, with original content (owns ABC, and jointly owns ESPN with Hearst)
• Paramount is owned by Viacom. Paramount has lots of original programming but it's mostly old stuff; not much new stuff yet.
• Amazon, of course.  But so far, I'm not impressed with its original programming.
• So, of the big ones without a parent company with deep pockets, does Netflix stand alone?

Original new content:

• Netflix
• Apple
• HBO
• Amazon
• others?

Sports:

• Amazon
• Apple
• Disney (ESPN)

Documentaries, histories, mysteries, fads, medical?

• Warner Bros Discovery

Metaverse

• FB
• the rest will follow

7. Big, parent companies, deep pockets with subsidiaries or divisions involved with hardware, software, content, etc, and market cap:

• Viacom: $24 billion
• WBD: $56 billion
• Disney: $230 billion
• Facebook: $547 billion
• Amazon: $1,580 billion
• Google: $1,700 billion
• Apple: $2,720 billion
• others?

 

8. When I look at all that, for long-horizon investing, say ten years, I think Netflix has the most challenges simply because it's a stand-alone without a parent company with deep pockets.

• It can either, long-term, plateau, some ups and downs, but its glory years are behind it or get lucky.

• I'm not talking about trading taking advantage of what happened yesterday. I'm talking about investing, see above.
  

9. But long term accumulation, as an investment, I am constantly reminded by why happened to Samuel Adams. No wide moat. Netflix has no wide moat. Pays no dividend. Huge competition from those with deep pockets. Original content very, very expensive, very risky. On top of that there seems to be an in-bred "who knows whom" feeling with regard to original programming. Right now the Hollywood big names are flocking to Apple.

This is not-ready-for-prime-time.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.