The Million Dollar Way (The Bakken Oil Blog)

Wednesday, April 20, 2022

Demand Destruction? Oh, Give Me A Break -- April 20, 2022

Javier and I must be on the same page on this one.

Ah, The Irony And The Craziness -- April 20, 2022

Globally, everyone is getting hit with high energy bills.

The Biden administration backhandedly acknowledges that the Keystone XL would help lower gasoline prices at the pump but that it would now take too long to put that pipeline in to make any difference with current situation.

The Biden administration is thinking like the EU. This headline story popped up a few minutes ago:

For renewable energy to make any impact on energy prices will take years, and it's very likely renewable energy will have an opposite effect by raising energy prices. But whether renewable energy helps at the pump, it's all agree that it will take years.

But the Keystone XL? A year, at most. But that's too long for the Biden administration. Better to take even longer with wind turbines and solar panels.

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

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.

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.