By John Gruber
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Frank Pallotta, in a piece for CNN Business headlines “The Sky Is Falling for Netflix”:
It wasn’t that long ago that Netflix was a stock darling, but those days now feel like eons ago. The company’s stock peaked just south of $700 in November, but has since dropped to around $400 on Friday.
Netflix ended 2021 with 221.8 million subscribers. That’s significantly more than others in the streaming marketplace, including Disney, one of its closest competitors. Disney had 118.1 million subscribers as of October, and it grew subscriptions 60% between October 2020 and October 2021. During that same period, Netflix grew just 9%. [...]
Netflix is struggling to find more people to sign up in the markets it has been playing in the longest — particularly the United States — noted Nathanson. The company is going to have to “start aggressively going after growth in developing markets,” such as India and other Asian Pacific countries, to keep moving forward, he added.
220 million subscribers and growing (even if slowly) at $10–20 per subscriber per month is a nice business! That’s about $30 billion in revenue per year. It’s a good company with good content, good software, an iconic brand, and a loyal base of now several hundred million users (way more people use Netflix than there are paid subscribers, with shared account credentials).
I know, I know, investors don’t trade stocks based on what a company is today, they trade on what they expect it to do in the future. Was Netflix overpriced back in November? I don’t know. But is the sky fucking falling? No.
★ Friday, 21 January 2022