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Technology Stocks : Netflix (NFLX) and the Streaming Wars
NFLX 1,103+0.6%Nov 7 3:59 PM EST
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To: Zen Dollar Round who wrote (1755)10/21/2018 2:01:46 PM
From: walking corpse1 Recommendation

Recommended By
FJB

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There are several articles on the internet explaining why Debtflix is dead, such as this.
1. Content creation creates more and more debt. Accounting flexibility allows costs to be reported in the future quarters when the content gets to the market, and this creates suspicion in investors' minds that the revenues reported today are nothing compared to the debt that would be reported a few quarters later.
2. Growth has maxed out in US. India growth opportunity is false news. Sample article on the topic. Per head subscription cost is lower in India, and also old Cable TV is still very much the norm in India. Amazon is well established in India and it offers video along with Prime delivery, and it is a strong competition. Amazon defeated even the previously well-established home-grown Flipkart in India on market cap, such is the strength of Amazon.
3. 160 times P/E and 58 times EPS. Value for 5 years into the future already factored into the stock price.

The stock is trading on investors' bullish sentiment alone, not on fundamentals. For averaging down you need more money. Also bigger the % of your portfolio in Netflix, much higher is the risk even if averaging down were possible. The stock could easily go down 50% from where it is now trading at such high ratios.
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