NETFLIX STOCK CRASH AFTER HOURS
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Netflix stock is absolutely crashing after hours after Netflix earnings. Down more than 14% after missing subscriber additions in a huge way. I believe Netflix stock is still overvalued even after this decline.
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Just a short five days ago on this YouTube channel I posted a video called Amazon and Netflix stocks are overvalued. Here’s why. And I went into my bearish thesis on why I believe Amazon stock and Netflix stock are overvalued well here today after hours the first piece has fallen.
Netflix is down over 13% after hours down 52 plus dollars a share after hours they just reported numbers here. We’re going to look at all these guys. This is a company I just feel a severely overvalued right now and it’s kind of coming to fruition here.
So in the worst part is the my bearish thesis on this stock is not even a start coming true till 2019 and 2020. So we’re like early days in this one okay. Netflix plummets after missing big on subscriber growth.
Netflix missed its subscriber edition projections for the first time in five quarters, leading shares to tumble more than 13%. The company reported second quarter earnings after the market closed on Monday.
Despite meeting estimates on revenue. Netflix posted a huge mess on subscriber additions, the company only at 5.1 million subscribers, about 1 million less than forecasted domestic additions were only around half of what were expected.
Well at around 4.5 million subscribers internationally. So here are the numbers here. So Netflix reported revenue of 3.9 1 billion versus 3.94 was expected so nothing mess on revenue. Okay, it’s not a big mess, but it is a mess.
All right, domestic subscriber additions came in at 670,000. I can’t even believe how big of a mess this was. They were expected to what about 1.2 million? Okay, so what they did around half the number they did around half the number I can’t even like comprehend how big of a mess that is. All right.
International subscriber additions came in at 4.5 million versus 5.1 1 million was expected. APS came in from 85 cents, which is almost a joke, his company just did epcs of 85 cents.
And this is a stock that was 400 plus dollars, guys. 400 plus dollar stock ETS of 85 cents in the quarter. That’s absolutely unbelievable. It’s talking about competition here. We’ll go into competition here in just a minute.
I’ll break all that down. But Netflix also issued weaker guidance for the third quarter than expected saying that is expecting around 5 million subscriber addition, compared to around 6 million was expected is projecting 650,000 new subscribers in the US and 4.3 5 million new additions internationally.
Alright, real quick care. Before we get into the competition in my bearish thesis, Netflix stock, this is a stock that has a 268 trailing p on it is a company that has a 90 a 90 forward p on the stock, okay.
These type of companies you can’t slip up, you can’t make any type of mistake when you are priced at those type of P e ratios. Okay? When you got a 90 plus for P e ratio, it’s basically saying that you are the golden child.
You’re just going to grow like to infinity into the future and you’re going to continue to dominate in that’s gonna be that Okay, now it’s 2018 right now, my bearish thesis on the stock doesn’t even really start as far as you know, the real competitive threats.
Tell 2019 Alright, 2019 Up until now, Netflix has just kind of floated along and just kind of not had much competition. Alright, they’ve had, you know, a few little players like the hulu’s of the world, you could say, and some players like that.
But Netflix hasn’t had any major major competitors really come in their space yet. All right. What you have here is in 2019 and beyond, you have everybody getting in this space, you have Apple getting in this space.
Okay, you have Google McDougal coming in this space in a massive major way you have Amazon taking this space more and more serious with amazon prime video. You have Disney who is going to launch their streaming service in 2019. Okay.
Disney I don’t want to compete against those guys when it comes to content they own so much content it’s ridiculous Alright, and then you got all the the cable providers and all those guys trying to compete more in the streaming space.
You have so much competition right now coming into this space over the next couple years. That Netflix is not a stock that should be priced at a 94 pe Okay, they shouldn’t be at a somewhat of a premium to where the market is trade.
Now. I 100% agree with that because they have much bigger growth. However, when you are trading at a 90 forward p on this company, you’re basically saying there’s no competition you’re basically saying Disney stands no chance in the space you’re basically saying Amazon stands no chance.
Apple stands no chance. Google stands no chance any competitor out there and anybody that hasn’t even been thought of yet they all stand no chance. They all have no no possibility of expanding their businesses into the space and taking any real market share in Netflix is just going to dominate for forever and forever.
Okay. When you’re trading at 90 p because let’s think about that some great growth companies, what do some great growth companies that you look out in the future like man that company’s going to continue to grow easily in the future.
What are some great growth companies we can think about Nvidia Nvidia is at a 31 Nvidia okay the ones that are in front of everybody and when it comes to artificial intelligence self driving cars in videos out of 31 Okay, in Do you think who who’s who’s more dominant their space and video or Netflix.
Come on, okay? Facebook, Facebook’s going to grow long in the future because ad rates will continue to go up more and more people will advertise on Facebook platform, Instagram platform, WhatsApp, their messenger features.
Facebook’s at a 22 Ford p All right. 22. Apples got one of the safest business models out there when you think about their their whole entire business model. Right. And they’re going to continue to grow throughout the future.
Apple right now despite their services growing at 30% plus clip right now, Apple is trading that somewhere around a 14 All right, Google McDougal has huge growth in front of it’s trading at somewhere around a 21 for PE Okay, these type of companies you know.
Disney’s priced at somewhere I think around a 15 or 16 for p these companies you know, even great growth companies are very low for Pease compared to a company like Netflix. Its company is priced to perfection.
And when you’re priced to perfection, you need to hit all your numbers and when you come in and you do 670,000 domestic additions when over 1.2 million was expected. That’s beyond a massive mess.
Okay, I can’t even explain to you guys how big of a mess that is. That’s like I couldn’t even believe the number when I thought I thought it was a typo. Like literally when I saw the numbers when I first looked at I’m like that must be a typo.
That can’t be correct Kennet. 670,001.2 plus million was expected. You can’t You can’t come up with those type of shortfalls when you’re at a 94 p okay. And like I said, so many people have just totally disregarded all these companies coming in their space.
Our eyeballs are commodity we only have so much time to consume content. Okay. There’s only so much time in a day that we have to consume content. Maybe it’s 30 minutes a day, maybe for some people is several hours maybe for some people they have no time in a day to consume content.
Whether it be YouTube, Netflix, the television, cable satellite, I don’t care what it is Apple, Google all these different things. your eyeballs are commodity there’s only so much time and when there’s only so much time and your price that 94 p you better be the best thing better be like no no competition.
You better just be knocking numbers out of ballpark. Netflix just missed in a massive way I think is a first part and I’m sticking by my bearish thesis on on Amazon as well I believe that company is definitely overvalued right now.
It’s not that I don’t believe in Netflix It’s not that I don’t believe in Amazon These are companies I definitely believe in for the future. But the fact is you can’t have a ridiculous p e ratio on your company okay.
You can’t trade it these on these these parabolic p you know, valuations. Amazon’s approaching a trillion dollar market cap. In my opinion. It should not be there right now. Okay, it should not be approaching a trillion dollar market cap.
Netflix was approaching a $200 billion market cap. In my opinion, this company should not be trading near a $200 billion market cap Okay, so I believe in some great companies, but when you start trading at ridiculous ridiculous valuations.
It just doesn’t make sense to be in those type of stocks they’re just they just get to a point where some of these stocks are way overvalued. Okay, it’s either these other stocks are way undervalued or these stocks are overvalued.
What do you say? I wouldn’t necessarily say all these stocks are massively undervalued, some of them are undervalued. But I would just say, you know, this one in particular way overvalued.
So I would love to hear your guy’s opinion on Netflix in that comment section. Also, Amazon, you want to give me your opinion on Amazon. I know everybody’s bullish on Amazon.
I just did pulls on my, my Instagram yesterday I did polls on if people were more if people thought Tesla stock or Amazon stock would go up more than next five years. Amazon one I did. Amazon versus Nvidia.
Amazon have been one big time and that poll they want I think like 63 to 37% or whatever. So people I know is a huge amount of the population that believes Amazon stock is going to be you know, multi trillion dollar market cap it could be someday could be but in my opinion.
Does it deserve near $900 billion market cap right now or 800 plus billion dollar market cap? No, absolutely not in my opinion, but I want to hear your guy’s opinion down there in that comment section.
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