mercredi 8 février 2017

Netflix (NFLX)

Do you have Netflix? 
If the answer is yes, have you ever watch "The OA"? My god, that fucking series is so stupid. A fucking girl comes back after being disappeared for 7 years. She reunites a crew of weird people who become her disciples, listening to her tragic story of being held prisoner by a guy who killed her on multiple occasions to study the phenomenon of death. But she never died for good because she and her hostage friends had the ability to survive to death experiments. And they sometimes come back from death with a special power: a strange movement that they can use mainly to look stupid but also to do things like bring back people from death. That fucking movement looks like some crazy fucking contemporary dance with guttural sounds. My god, I was ashamed to see them do these fucking movements for 5 minutes, looking like a band of retard. And the link between that dance and resurrection is one of the worst thing ever happening in the history of entertainment.
But, on the other hand, still on Netflix, you have Stranger Things which is a masterpiece and a mix between E.T., Poltergeist, The Goonies and the Labyrinth of Pan. I've really liked that series. It's great from beginning to end. The scenario is much more solid than "The OA". 
Going back to Netflix...I don’t know if I’ll ever invest in that company, but this is a business in which I have a lot of faith for the future.
DVD rental is over. Cable providers are facing short-middle term death. In Quebec, we have Bell and Videotron. With Videotron, I have to pay about 45$ each month to have access to cable TV. A few boring channels, most of them I never watch. If I want to watch something really interesting, like Game of Thrones, I have to pay for HBO.
With Netflix, we can have access to a lot of series, films and documentaries for less than 10$ a month. Plus, every week, there’s a lot of additions on Netflix. And every year, Netflix is becoming more and more a like a big studio, releasing dozens of new series and threatening Hollywood. 
If I want to watch a movie, I don’t have to spend kilojoules. I don't have to take my car to the videoclub to pay 6$ for a movie that I’ll have to bring back the following day (spending more kilojoules). I now just have to chose something on Netflix and stay on my couch, keeping for myself my precious kilojoules.
Yeah, I really like that Neflix business. It’s the future of passive passtimes. And as the animated movie « Wall-E » told us, the future is for obese people, unable to get up on their feet.
I may love Neflix but the valuation of the stock is crazy.
Actual PE : 340
Highest PE last 5 years : 408
Lowest PE last 5 years : 79
ROE : 8
ROE last 5 years : 9
Annual sales growth last 5 years : 23%
Annual EPS growth last 5 years : -7%
Debt : About 40 times earnings (heavy debt)
If you’re a serious investor, you probably can’t invest in a business that has a PE of 340 and that is not that profitable (ROE of 8). Almost any random stock is more profitable than that. But Neflix represents the future. And investors are crazy when they believe they've found the future of a specific industry. That's why they paid a PE of 100 for Cisco in 2000. Isn't Cisco the most important thing in our life now?
The only big problem I have, is that I ask myself if Netflix is not the next ICQ. Were you there in 1998? We had ICQ to send short messages to friends online at the time. Then, a few years later, ICQ disappeared and we had MSN. Then, MSN disappeared and we had Facebook. Technology is so often associated with "the next big thing", which is not something that happens in most other industries. 
 But anyway, I like Netflix. And if I had an irrational investment to chose, Netflix would be considered. 

1 commentaire:

  1. Funny you mention Netflix. They just announced this masterpiece today:

    The video-on-demand industry has fairly low barriers of entry, hence why there's enormous competition. Tier 1: Netflix, Amazon Prime Video, HBO. Tier 2: Hulu, Crackle, Seeso, CraveTV etc. The only real moat the former have that separates them from the latter, is the cash to create their own content. But even that, is a minuscule moat considering many people would pirate their favourite few shows, rather than spend $10 a month for a bunch of crap they don't care for. We're living in a true golden age for content, but investing opportunities seem bleak, to me anyway.

    Stranger Things is in fact the shit.