All things STOCKS

#127
#127
Netflix and Amazon dropped hard this week but already starting a rebound I hope. Good time to get in a little if you can.
 
#134
#134
bignewt said:
The E will come they are building ridiculous value right now.
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I keep reading about their their spending on "original" programming but I haven't seen how much of that is owned versus licensed ("acquired"). Their costs for the highly popular licensed programming will increase significantly when those contracts have to be renewed.

The market cap is around $80 billion. That's half of Disney, about equal to Time Warner, and about twice that of CBS and Viacom combined. Continued subscriber growth is their key to driving up their stock price. Every million subs added increases revenue by $100-$200 million. But their expenditures on programming have to increase as well to attract and keep subs. They might have to create an advertising revenue stream to the mix. Surely the revenue on the DVD side won't be viable much longer.
 
#135
#135
Thunder Good-Oil said:
I keep reading about their their spending on "original" programming but I haven't seen how much of that is owned versus licensed ("acquired"). Their costs for the highly popular licensed programming will increase significantly when those contracts have to be renewed.

The market cap is around $80 billion. That's half of Disney, about equal to Time Warner, and about twice that of CBS and Viacom combined. Continued subscriber growth is their key to driving up their stock price. Every million subs added increases revenue by $100-$200 million. But their expenditures on programming have to increase as well to attract and keep subs. They might have to create an advertising revenue stream to the mix. Surely the revenue on the DVD side won't be viable much longer.
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No way.
 
#136
#136
VolStrom said:
No way.
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Each sub adds $100+ annually in subscriber fees. 1,000,000 x $100+ equals $100,000,000 plus. What do you come up with?

Netflix also trades for about 10x sales. So every 1,000,000 subscribers added increases the market cap by about a billion or more dollars.
 
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#137
#137
Thunder Good-Oil said:
I keep reading about their their spending on "original" programming but I haven't seen how much of that is owned versus licensed ("acquired"). Their costs for the highly popular licensed programming will increase significantly when those contracts have to be renewed.

The market cap is around $80 billion. That's half of Disney, about equal to Time Warner, and about twice that of CBS and Viacom combined. Continued subscriber growth is their key to driving up their stock price. Every million subs added increases revenue by $100-$200 million. But their expenditures on programming have to increase as well to attract and keep subs. They might have to create an advertising revenue stream to the mix. Surely the revenue on the DVD side won't be viable much longer.
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So don't buy it and watch me make money. That's cool.
 
#138
#138
bignewt said:
So don't buy it and watch me make money. That's cool.
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I'd maybe trade it. It seems kind of risky to hold at these levels for the LT... but a double isn't an impossibility.

I wonder what happens as the DVD business dies off. Maybe Amazon will eventually buy them out as they build out their delivery infrastructure.

Other than their subscriber list and their real estate, where is their value? What's their net cash position (serious question)? How much cash have they been generating? The earnings aren't there.
 
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#139
#139
The money has been invested in programming which I would bet is not a licensing thing it is an ownership thing. The rumor has been that they are going to hit merchandising hard so I would guess that that will replace the DVD side. I just dont think anybody is going to buy them, they are too maverick for that.
 
#140
#140
bignewt said:
The money has been invested in programming which I would bet is not a licensing thing it is an ownership thing. The rumor has been that they are going to hit merchandising hard so I would guess that that will replace the DVD side. I just dont think anybody is going to buy them, they are too maverick for that.
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Spending on programming and investing in programming are two separate things. From what I can tell they are licensing most of their programming. They"ll have to keep spending to keep their library of original content. Scripps Networks on the other hand owns the majority of their programming. What does it say in their SEC filings? The word "acquisition" means licensed. I'm curious what their mix of owned versus acquired programming is. Also, as I said in my earlier post, I am curious about their cash position. If they have $25 billion of cash on the balance sheet with little debt and are adding 3 or 4 billion a year, then an $80 billion market cap is more reasonable. But aren't they spending 5 or 6 billion annually just on programming with revenues of 8 or 9 billion?

Netflix seems more like a content delivery operation. Google, Apple, or Amazon could invade the space fairly quickly. Verizon and AT&T are ramping up their investment in content.

Merchandising is mice nuts. It can add a little bit of ancillary revenue, but they really need to sell advertising to grow their top line by a substantial amount.
 
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#141
#141
Thunder Good-Oil said:
Spending on programming and investing in programming are two separate things. From what I can tell they are licensing most of their programming. They"ll have to keep spending to keep their library of original content. Scripps Networks on the other hand owns the majority of their programming. What does it say in their SEC filings? The word "acquisition" means licensed. I'm curious what their mix of owned versus acquired programming is. Also, as I said in my earlier post, I am curious about their cash position. If they have $25 billion of cash on the balance sheet with little debt and are adding 3 or 4 billion a year, then an $80 billion market cap is more reasonable. But aren't they spending 5 or 6 billion annually just on programming with revenues of 8 or 9 billion?

Netflix seems more like a content delivery operation. Google, Apple, or Amazon could invade the space fairly quickly. Verizon and AT&T are ramping up their investment in content.

Merchandising is mice nuts. It can add a little bit of ancillary revenue, but they really need to sell advertising to really grow their top line.
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content deliverey operation? dont you think those other guys are trying to invade that space and are failing? Its the quality of content. I dont know how much is licensed as opposed to owned but I bet it is owned alot more than you think. They can afford to go that route.

If I sold today I would have almost doubled my investment in a year. Maybe I should but Im going to ride it out a few more years and see what happens. I'm betting I will see the decline before it bites me too hard.
 
#142
#142
bignewt said:
content deliverey operation? dont you think those other guys are trying to invade that space and are failing? Its the quality of content. I dont know how much is licensed as opposed to owned but I bet it is owned alot more than you think. They can afford to go that route.

If I sold today I would have almost doubled my investment in a year. Maybe I should but Im going to ride it out a few more years and see what happens. I'm betting I will see the decline before it bites me too hard.
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No, I think that they're focused on their other businesses right now. Amazon's most profitable operation is their web services division. They're also expanding Amazon.com vertically by getting more into delivery.

Maybe those huge companies aren't diving in to the Netflix space just yet because it's not very profitable.
 
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#143
#143
Thunder Good-Oil said:
No, I think that they're focused on their other businesses right now. Amazin's most profitable operation is their web services division. They're also expanding Amaxon.com vertically by getting more into delivery.

Maybe those huge companies aren't diving in to the Netflix space just yet because it's not very profitable.
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They are diving in and are not succeeding. Amazon prime throws a lot of money at originial content, so does Hulu they just cannot match Netflix's success. Netflix is the new television network. They are like HBO on steroids.
 
#144
#144
bignewt said:
They are diving in and are not succeeding. Amazon prime throws a lot of money at originial content, so does Hulu they just cannot match Netflix's success. Netflix is the new television network. They are like HBO on steroids.
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I just looked at the 2016 cash flow statement. The operations burned through a billion and a half of cash. They borrowed a billion dollars. If the financials were great those three big guns that I mentioned earlier would ramp up in the space. IMO Netflix looks like the most dangerous member of FAANG to buy. But the biggest rewards typically come from the riskiest investments.
 
#145
#145
I'm not suggesting that anybody buy or not buy Netflix. I'm trying to understand the valuation. They could double their US subscriber count which should double the stock as well. But their delivery system and their content creation aren't exclusive. They're dependant on other companies to deliver their content. Other companies have been in content creation far longer and many of those have far deeper pockets. The other content companies can easily hire the producers and production companies away from Netflix. They can also bid up the cost of Netflix's original programming or even obtain the rights of their highest rated programs when the contracts have to be renewed and negotiated. If net neutrality changes, Netflix will be crushed.
 
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#146
#146
bignewt said:
The money has been invested in programming which I would bet is not a licensing thing it is an ownership thing.
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Nope. It's very much a licensing thing and not an ownership thing.

This is a statement in their 2016 10-K:

"The vast majority of content assets relate to licensed streaming content. Total content assets also include costs capitalized for production of original content, prepaid content and DVD content."

Now one big thing that is in their favor... IMO, there is very little incremental cost for each added subscriber. US subs are around 50,000,000 and could max out at around 100,000,000. They are in almost 200 countries, so if they grow the international subscriber base they can continue to add value. However, adding and maintaining non-domestic subs will be considerably more expensive than domestic subs.
 
#147
#147
Thunder Good-Oil said:
Nope. It's very much a licensing thing and not an ownership thing.

This is a statement in their 2016 10-K:

"The vast majority of content assets relate to licensed streaming content. Total content assets also include costs capitalized for production of original content, prepaid content and DVD content."

Now one big thing that is in their favor... IMO, there is very little incremental cost for each added subscriber. US subs are around 50,000,000 and could max out at around 100,000,000. They are in almost 200 countries, so if they grow the international subscriber base they can continue to add value. However, adding and maintaining non-domestic subs will be considerably more expensive than domestic subs.
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Their game plan is making production of original content a bigger and bigger slice of the pie.
 
#148
#148
bignewt said:
Their game plan is making production of original content a bigger and bigger slice of the pie.
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They're already producing original content. "Original" doesn't mean that it's not licensed from another party that owns the programming. Also "exclusive" means that it can't be viewed on other platforms... like YouTube or Hulu or Amazon.com. Original and exclusive are what they're doing to grow sub counts. The biggest hindrance to profitability IMO is that they license the programming and therefore won't be able to contain their costs. But... some of the licensing is for five years and television licensing agreements can very possibly include options to extend the term. You can't get the details of their hundreds of programming agreements off of the internet. They've possibly already negotiated very favorable terms even if they don't hold the copyrights to the shows. However, their cash flow would be even worse if they owned their programs outright.
 
#149
#149
Thunder Good-Oil said:
They're already producing original content. "Original" doesn't mean that it's not licensed from another party that owns the programming. Also "exclusive" means that it can't be viewed on other platforms... like YouTube or Hulu or Amazon.com. Original and exclusive are what they're doing to grow sub counts. The biggest hindrance to profitability IMO is that they license the programming and therefore won't be able to contain their costs. But... some of the licensing is for five years and television licensing agreements can very possibly include options to extend the term. You can't get the details of their hundreds of programming agreements off of the internet. They've possibly already negotiated very favorable terms even if they don't hold the copyrights to the shows. However, their cash flow would be even worse if they owned their programs outright.
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As long as people keep buying and keeping the stock ill be fine im always watching...
 
#150
#150
Did anyone see the results of the market today?😱😮😬😝😥👎😲That's the worst this year! We probably lost a minimum of $500 (that's on the lenient side). We made about $1500 for July.
 
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