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Well good day subscribers i’m jeremy this is a financial education channel today we’re talking about two stocks that are in the news of very heavily the past day and that is snapchat and that is netflix all right both these stocks are in the news for different reasons snapchats making a massive downward move today over 13% netflix isn’t making much of a move today
But that’s because their news came out yesterday during the market trading day and netflix actually moved up over 6% on that day now i have very very strong opinions on both of these stocks if you know in the past okay netflix i remembered i did a video this past summer when netflix was over $400 about shorting netflix i never actually ended up doing it i probably
Should’ve cuz it was all the way down to 200 level and then snapchat i made a very negative video and several negative videos on snapchat in the past okay so i had a little bit of change of mindset around both of these stocks and i kind of want to share that with you here today all right now first off in regards to netflix news i want to talk about this for a minute
So netflix reported that it will be raising prices for all of its customers and what is widely regarded as the biggest price hike in the company’s history the lowest here will go from $8 to $9 while the $11 and $14 tears will go to 13 and 16 dollars respectively all right now here’s the thing about netflix we know that this is a service that a lot of people have
Know just because they like it for entertainment but because it’s a cheap service so it’s okay i doubt if netflix was $50 or $100 nearly as many people would have it okay but here’s the other thing we got understand about netflix they have a massive amount of subscribers 137 million just as this past quarter now that numbers going up and up and up that should be a
Well over 140 million and this this upcoming quarter and probably get to somewhere around 160 to 170 million by the end of 2019 so they got a massive amount of subscribers and basically they have different tiers for netflix now some people the single people out there they have the cheapest here okay they have the $8 tier now some families especially large families
And whatnot they might have the the more expensive tiers because they need to be able to stream on multiple devices a lot of people watching different content and things like that okay so it depends on your needs there but basically there all the plans are going up one to two dollars and here’s where i got to thinking about this and here’s why i’m having a change
Of heart in my negativity around netflix okay because i’m understanding like the pricing power that netflix has really and i’m thinking about this and i’m like 1 or 2 dollars it doesn’t seem like a lot and i can guarantee you most people 95 to 99 percent of people are not gonna cancel their netflix because it goes up one to two dollars a month okay it’s just not
Gonna happen alright and so i got to thinking about this i’m like what are the numbers breakout to here 137 million subscribers as of now and remember that numbers continuing to increase around the world okay here’s how those numbers breakout an extra $1 per month those cheap plans times 137 million subscribers is 137 million extra dollars for netflix per month
Okay so there’s a little raise that let’s be honest most people are not gonna cancel netflix because it went up $1 i’m not gonna be like all crap it went up $1 i got a cancel an hour or something like that like it’s just unrealistic so $1 times 137 million subscribers it’s 137 million dollars per month okay now if everybody was on the $2 plane which everybody is it
But let’s just assume everybody was on the $2 plan they were talking about two hundred and seventy four million dollars extra per month i can basically go straight to that bottom line and they can use that money to reinvest into new content and things like that marketing plans and whatnot okay now the verdict that the verdict i would come up with here is it looks
Like you bottom line they’re gonna get at least 200 million extra dollars per month from this okay because you got a certain amount of people that are on the cheapest plan and then you got a certain amount of people that are on the more expensive plan so if you kind of mix that together you’re gonna basically netflix is gonna make an extra about 200 million dollars
Per month off this as the prices continue to increase okay and keep in mind subscriber numbers are going up so that number should get a lot bigger now you times it out by 12 months that’s 2.4 billion dollars per year basically goes straight to that bottom line for netflix and here’s the best part of this okay i don’t think like this is the last time netflix is kind
Of raised prices okay i think netflix will probably raise prices again next year or if they don’t do it next year then we’ll do it in 2021 and they’ll do it the following there so i don’t think netflix is going to run out of pricing power think they’re gonna probably be able to go up one to two dollars on their pricing plans probably every year for at least maybe
The next let’s say three to seven years or something like that until you actually get to numbers maybe in the twenty to thirty dollar range where people actually start saying well this is actually costing a bit of money now maybe i don’t want netflix anymore but it’s gonna be a while till we get to those numbers because even now after these price increases the
Plans are still very cheap if you compare them to cable or anything like that okay so that’s my opinion like the pricing power i’m just kind of realizing it no as far as netflix goes i would consider myself no longer negative on the stock but i also wouldn’t consider myself necessarily positive on the stock because that valuation it’s still very ridiculous on the
Company though you gotta play you gotta pay nosebleed prices to buy that stock on the p/e ratios and whatnot so i’m not as negative as i was because i’m just realizing the pricing power netflix truly has but i wouldn’t say i’m positive on the stock out either like oh i’m gonna go buy netflix cuz a valuation is just ridiculous if netflix was in the $200 level then
Maybe i get kind of interested but you know now it’s approaching back up to somewhere around 350 dollars again and who knows i might go back to that 400 dollar level i get those heavy prices i’m just saying it’s not it’s not worth the risk reward in my opinion for that but i’m changing my heart as far as you know just kind of realizing the pricing power netflix
Has i’m just not changing to the point where i’m like oh i gotta go buy some netflix shares no no no not not like that okay guys no next thing where i talk about is snapchat so this was big news that came out last night after the market closed snapchat is losing its chief financial officers usually the number two in any company okay after less than a year and the
Stock is plummeting obviously we saw what the stock did today so tim stone the cfo of snapchats parent company snap is quitting stone who came to snap from amazon only took the job in may of 2018 so this guy was on the job for a very short amount of time okay what eight or nine months or something like that very short amount of time he was actually on the job he
Was walking away from most of a 20 million dollar payback in charge a 20 million dollar pay package snap has said that stone will be sticking with the company through least it’s a quarterly earnings call on february 5th the company stock is cratered obviously on the news we know we saw it’s down over 13% today snap says that it’s q for 2018 financial results are
Likely to be slightly favorable to the top end of our previously reported quarterly guidance ranges okay so that’s the you know you got bad news and good news in there basically first snapshot one the cfo is leaving in very short amount of time and it just kind of makes you wonder why why leave so fast like that did you get to the company you just kind of realize
Like like coming from amazon you coming from this massive goliath company that’s kind of like the center of the universe right and then you go to snapchat that’s kind of like this floundering like app that’s like trying to make it right and and like some people might like that and some people might be like dang i feel like i just like wind down 10 levels it’s like
Going from a team that’s winning the super bowl which is amazon right to go into the team that’s like 2 and 14 like the cleveland browns or something well cleveland browns improved this year it’s like going on one of those lower teams right so that’s a bad bad situation for some people to go into because they just sort just don’t want to take that okay you go from
The team that’s winning to the team that’s losing bad that’s no fun and so maybe you just kind of looked at this and he’s like i got a guy out of this company now i like this isn’t a place for me i want to go back to amazon or i want to go back to a big company again or something like that okay which he could probably you know pull off and whatnot but the good news
About snapchat is it gonna be report it toward the high end of their guidance rangers i’ve been very very negative on snap for a long time since they basically changed their there are a whole service around they’ve made like views on snapchat almost get cut in half overnight and i got to say with snapchat now at this point in time i always say i’m like netflix at
A neutral rating fish stock as far as do i see that a big decline in snapchat coming in the future probably not i think most people that already left snapchat and don’t want to use a platform anymore i think most people now at this point in time as of january 2019 i think most people have already left okay i think if you want it to stop using snapchat you probably
Already stopped using snapchat and from what i see out there you know looking at friends or family that might use snapchat those people that are still diehard snapchat fans they still use snapchat as pretty much their main message messaging service and their main app they kind of use out there and whatnot so in my opinion at this point in time would snapped at this
Five-dollar level i just kind look at it as a stock it’s kind of in in no-man’s land right now do i see massive downside for the stock probably not because they’re they’re reporting good numbers and they cut off you know different employees actually they should get to maybe profitability or at least this break-even level where they can kind of figure out what’s
Going but do i know sara lee see like all as a massive catalyst for snapchat probably not unless they get user numbers moving up in a big big way again which i’m not i’m not convinced you’re gonna see that at least here in the short term but i just think as far as the amount of people that have moved off the platform i think that’s kind of done and i think and more
Advertisers will still come on to snapchat it’s just they’re gonna be going after a limited amount of users now versus let’s say if they wanted to advertise on facebook or instagram you’re getting to go after a massive massive audience on those different platforms snapchat you’re going after a very young audience and a very small audience there so that’s kind of
The bad news with snapchat and the cfo leading in such a quick quick amount of time that’s never a good look for a company so i would say snapchat i’m neutral on and netflix i’m neutral on i’m not negative on those stocks anymore but at the same time i’m not gonna go buy some netflix or snapchat shares out there snapchat could be an interesting play if somebody’s
Looking for a spec play out there could be interesting but it’s still i’m just like you i if you want if you get in a spec play you kind of like are getting in it because you hope it might you know double or triple a– something like that with you know a risk/reward game but if i looked at snapchat i’m like is there anything that’s really gonna double snapchat as
Far as a stock price over the next you know 24 months or 36 months or 48 months that’s a little hard to see unless they get user numbers going up in a big way and it doesn’t look like that it’s gonna be like that for azzam now but netflix man they got some pricing power there i gotta say it it’s it’s it’s impressive we’ll have to see what the quarterly numbers start
Coming out with in a quarter to see how many people actually cancel and my opinion is gonna be a very very small percentage of the population you’re talking about 137 million subscribers as of now and that numbers continuing to increase you know maybe a million cancel and that would be a lot but still that’s like nothing compared to the whole so you know whatever
They make up in the numbers as well work that even if a half million people cancel or a million people even if five million people cancel the numbers are still worth at five million people aren’t gonna cancel that’s the bottom line there anyways i would love to hear your guy’s opinion on this in the comment section netflix snapchat i would love to hear from you
Guys as always thank you for watching have a great day
Transcribed from video
Netflix Raises Prices & Snapchat CFO Quits By Financial Education
