My Netflix stocks : Where are we now?

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Approximately a year from today I had a conversation with a friend about my opinion on Netflix stocks. At the time I was not a user of the product, but I was definitely a strong advocate for Netflix stocks. I believe in the principle of “street smart value investing”. In short this is value investing without the mathematics , the complicated financial formulas and principles. Instead you just deduce how a company is going to do based on common sense and the trends that you are seeing in your surroundings.

A good example of this is 2016. In 2016 ,trust me when I say this but everybody was buying Nike shoes, it was the trend of the year. What did I go and do? I went and bought Nike stocks before their earnings release. It was an obvious and profitable decision. I can’t vouch for it to be bullet proof, but I can say it is a simple enough strategy that seems to work for stocks in companies that offer consumer goods. Even though Netflix does not offer an actual product, it offers a service that silences its competition.

In case you live under a rock and do not know what Netflix is, Netflix offers original series and other mainstream movies, documentaries and series on a single platform for a monthly subscription fee. What Netflix does that is different to its competition is that it would publish a whole season of series at once. This was outside of the box thinking. The catch of a good series is that it would have its viewers hunger for more so they could return the next week in front of their television to watch the next episode. The survival of the whole television industry was that the episodes would create such a significant hold on the viewer that they would guarantee their viewers return to that network or channel. So to publish a whole series at once seemed counter intuitive and self defeating, well, it was self defeating for everybody except the viewer, who really enjoyed this concept of releasing a whole series at once.

Netflix managed to gain a stronger hold on the viewer than  mainstream television ever could. The publication of an entire season at once put pressure on Netflix to create series that were a cut above the rest, because in essence the user now has to be pulled enough to come back to the platform to watch the following season of the series. It is for this reason that Netflix originals are amongst some the highest rated series in the world. Not only are Netflix series jaw dropping and leave the user hungry for more, they also are amazingly original.

This is why “television” will continue to die. In South Africa for example our main source of mainstream entertainment is provided for by DSTv, anyone who pays for DSTv, well at least me is left with a feeling of “why am I paying for this”. The service is poor, the episodes are outdated or just simply repeated throughout the week – I am better off getting entertainment from watching paint dry. 

Its no secret that I am a big fan of Netflix stocks and rightfully so. Since 2016 the price of Netflix stocks has doubled and I personally think they are still undervalued. In race for entertainment I do not think Youtube, Youtube Red, and Amazon Prime are remotely even in the same league as Netflix. I would advise that people really give Netflix a good look. I have come to learn even more about the company ( I will do a piece about the history of Netflix in a part 2 of this article) and all I have learnt confirms my position. I would however warn people of caution as the American market is over due for a crash to balance the long bull run and for this reason I would caution people to buy in now and hold out for a possible stock crash, which could provide for a good opportunity to get stocks dirt cheap.

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