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Just a short five days ago on this youtube channel i posted a video called amazon and netflix stocks or overvalued here’s why and i went into my bearish thesis on why i believe amazon stock and netflix stock are overvalued well here today after hours the first piece has fallen netflix is down over 13% after hours down 52 plus dollars a share after hours they just
Reported numbers here we’re gonna look at all these guys this is a company i just feel is severely overvalued right now and it’s kind of coming to fruition here so in the worst part is the my bearish thesis on this stock is not even start coming true till 2019 and 2020 so we’re like early days in this one okay netflix plummets after missing big on subscriber growth
Netflix missed its subscriber edition projections the first time in five quarters leading shares to tumble more than 13 percent the company reported second quarter earnings after the market closed on monday despite meeting estimates on revenue netflix posted a huge mess on subscriber additions the company only had a 5.1 million subscribers about 1 million less and
Forecasted domestic additions were only around half of what we’re expected well it added around 4.5 million subscribers internationally so here are all the numbers here so netflix reported revenue a three point nine one billion versus three point nine four was expected so not a big miss on revenue okay it’s not a big mess but it is a mess all right o mystic subscriber
Additions came in a six hundred and seventy thousand i can’t even believe how big of a missus was they were expected to do what about 1.2 million okay so with x they did around half the number they did about half the number i didn’t even like comprehend how big of a missed set is all right international subscriber additions came in at 4.5 million versus 5.11 million
Was expected the eps came in around eighty five cents which is almost a joke this company just at eps of 85 cents and this is a stock that was four hundred plus and dollars guys four hundred plus dollar stock eps of 85 cents in the quarter that’s absolutely unbelievable i was talking about competition here we’ll go into competition here in just a minute i’ll break
All that down but netflix also issued weaker guidance for the third quarter than expected saying that is expecting around 5 million subscriber edition compared to around 6 million was expected is projecting 650,000 new subscribers in the us and 4.3 5 million new editions internationally all right real quick care before we get into the competition and in my bearish
Thesis netflix talk this is a stock that has a 268 trailing p/e on the company that has a 90 a 90 forward p/e on the stock ok these type of companies you can’t in the slip-up you can’t make any type of mistake when you were priced at those type of pe ratios ok when you’ve got a 90 plus 4 p/e ratio it’s basically saying that you are the golden child you were just
Going to grow like to infinity into the future and you’re gonna continue to dominate and that’s gonna be that ok no it’s 2018 right now my bearish thesis on the stock doesn’t even really start as far as you know the real competitive threats tells 2019 all right 2019 up until now netflix has just kind of floated along and just kind of not had much competition all
Right they have you know a few little players like the who lose of the world you could say and some players like that but netflix hasn’t had any major major competitors really come in their space yet all right what you have here is in 2019 and beyond you have everybody getting in this face you have apple getting in this space ok you have google mcdougald coming in
This face in a massive major way you have amazon taking this space more and more serious with amazon prime video you have disney who’s gonna launch their streaming service in 2019 ok disney i don’t want to compete against those guys when it comes to content they own so much content it’s ridiculous all right and then you got all the the cable providers and all those
Guys trying to compete more in the streaming space you have so much competition right now coming into this space over the next couple years that netflix is not a stock that should be priced at a 90 for peo they shouldn’t be out of somewhat of a premiums that where the market right now i hundred percent agree with that because they have much bigger growth however
When you are trading at a ninety forward p/e on this company you’re basically saying there’s no competition you’re basically saying disney stands no chance in a space you’re basically saying amazon stands no chance apple stands no chance google stands no chance any competitor out there and anybody that hasn’t even been thought of yet they all stand no chance they
All have you know no possibility of expanding their businesses into the space and taking any real market share in netflix is just going to dominate for forever and forever okay when you train a 90 p because this thing about this some great growth companies will do some great growth companies that you look out in the future like man that company’s gonna continue
To grow easily into the future what are some great growth companies we could think about nvidia nvidia is at a 31 nvidia okay the ones that are in front of everybody and when it comes to artificial intelligence self-driving cars nvidia is out of 31 okay and do you think who’s more dominant in their space nvidia or or netflix come on okay a facebook facebook’s
Got to grow long into the future because ad rates will continue to go up more and more people will advertise on facebook platform instagram platform whatsapp their messenger features facebook’s out of 22 ford p all right 22 apples got one of the safest business models out there when you think about their their whole entire business model right and they’re gonna
Continue to grow throughout the future apple right now despite their services growing that 30% plus clip right now apples trading that somewhere around a 14 all right google mcdougal has huge growth in front of it straight ask somewhere around a 21 forward p/e okay these type of companies you know disney’s price to somewhere i think around a 15 or 16 for p these
Company you know even great growth companies are very low 40s compared to a company like netflix this company is priced to perfection and when your price to perfection you need to hit all your numbers and when you come in and you do six hundred and seventy thousand domestic additions when over 1.2 million was expected that’s beyond a massive miss okay i can’t even
Explain to you guys how big of a mess that is that’s like i couldn’t even believe the number when i thought i thought it was a typo like literally when i saw the numbers when i look that i’m like that must be a typo that can’t be correct can it 670 thousand and 1.2 plus million was expected you can’t you can’t come up with those type of shortfalls when you’re at
A 90 forward p/e okay and like i said so many people have just totally disregarded all these companies coming in their space or eyeballs are commodity we only have so much time to consume content okay there’s only so much time in a day that we have to consume content maybe it’s 30 minutes a day maybe for some people as several hours maybe for some people they have
No time in a day to consume content whether it be youtube netflix the television cable satellite i don’t care what it is apple google all these different things your eyeballs are commodity there’s only so much time and when there’s only so much time in your price that 94 p you better be there better be like no no competition you better just be knocking numbers out
Of ballpark netflix just missed in a massive way i think it’s the first part and i’m sticking by my bearish thesis on amazon as well i believe that company it’s definitely overvalued right now it’s not that i don’t believe in netflix it’s not that don’t believe in amazon these are companies i definitely believe in for the future but the fact is you can’t have
A ridiculous p/e ratio on your company okay you can’t trade it these on these in these parabolic p you know valuations amazon is approaching a trillion dollar market cap in my opinion it should not be there right now okay it should not be approaching a trillion dollar market cap netflix was approaching a 200 billion dollar market cap in my opinion this company
Should not be trading near a two hundred billion dollar market cap okay so i believe that some great companies but when you start trading that ridiculous the ridiculous valuations it just doesn’t make sense to be in those type of stocks they’re just they just get to a point where some of these stocks are way overvalued okay it’s either these other stocks are way
Undervalued or these stocks are overvalued what do you say i wouldn’t necessarily say all these stocks are massively undervalued some of them are undervalued but i would just say you know this is this one in particular way overvalued so i would love to hear your guy’s opinion on netflix in that comment section also amazon you want to give me your opinion on amazon
I know everybody’s bullish on amazon i just didn’t pulls on my my instagram yesterday i did polls on if people were more if the people thought tesla stock or amazon stock would go up more than next five years and on one i did amazon versus nvidia amazon won big time in that poll they won i think like 63 to 37% or whatever so people i know is a huge amount of the
Population that believes amazon stocks gonna be you know multi trillion-dollar market cap it could be some day could be but in my opinion does it deserve near a nine hundred billion dollar market cap right now or eight hundred plus billion dollar market cap no absolutely not in my opinion but i want to hear your guy’s opinion down there in that comment section as
Always but make sure you follow me on instagram if you have not imposed a ton of content on there and also my stock market membership group my private group that is half off of the remainder of july so if you want to get in there with me and hang out with me in there and learn from me about stocks and all the stocks i’m looking into investing in i got an account
In that group that’s over a hundred thousand dollars that you can you know kind of look at and whatnot and see that all the price ranges i have the shares i own in that group if you want to get in there use code half off at checkout can’t wait to see you guys in there thank you for watching have a great day
Transcribed from video
NETFLIX STOCK CRASH AFTER HOURS By Financial Education
