Wednesday, June 19, 2024


Dhaka Tribune

Netflix jumps 9% on growth hopes and paid sharing news

A reasonable way to view Netflix stock is through a lens of simple and basic economic analysis

Update : 24 Mar 2023, 05:42 PM

A reasonable way to view Netflix (NASDAQ: NFLX) stock is through a lens of simple and basic economic analysis. Forget the details of the company for a moment and think really basically. Capitalists are lazy, stupid and greedy. Finding the new big thing is a difficult task. Therefore, when someone does find something new and interesting - say, streaming - then it is the very existence of the profits to be made which convinces everyone else to have a go at this new big thing. 

 Which is indeed what has been happening, at first Netflix shows that streaming works on a large scale, money is to be made, then everyone else and their grandmother launch streaming services. The CNN one died within days of launch, The Disney one continues to compete with Netflix. Well, OK, that's just what happens in markets given our very basic level of analysis here/ What then matters is how the management of that pioneer reacts and so tries to beat off this new competition.

Netflix stock price from NASDAQ

 As we can see there's been a general worry just recently that Netflix isn't doing enough, That opinion then turns around, strongly, just yesterday. Quite why the change in sentiment, well, that's something that has to be divined. One potential answer is that we've not more information on the growth of the lower priced, but ad supported, level of product now being rolled out. Apparently subscriber numbers from Canada are looking good. There's talk that Netflix is surpassing the audience size the advertisers initially demanded for example. 

 There's also talk that the paid for log-in sharing program in certain markets is meeting a lot less resistance than was expected. 

 The problem we have as investors is that clearly sentiment has changed. But there's no one clear and obvious - and single - reason for that change in sentiment. Therefore it's difficult to judge which particular happening is causing the change in sentiment and therefore judge when the effect is going to run out? Who knows, possibly it's that The Crown has now got to Will courting Kate and so must be nearing the end of its run? 

Top Brokers


Popular Links