Netflix Crash

Many would say that the two-day collapse of the DJI was caused by the Powell speech. Even though the Powell speech contributed to the selling sentiment, remember that in times of high inflation, blue crisps and bonds have more upside; investors tend to shift their money into US30 companies or government bonds. Apart from this, TFC believes that sentiment is influenced by the few NEGATIVE news stories that cause this “PANIC LETTING GO SCENARIO”.

Bill Ackman divested his stake in Netflix Inc. after losing more than $430 million in less than three months.

Ackman’s Pershing Square Capital Management said Wednesday it sold its Netflix holdings after the streaming pioneer TV reported an unexpected drop in subscribers in the first quarter and forecast an even sharper decline in the current quarter.

Two notes on the “streaming wars” -.
On the surface, CNN+ and Netflix seem to have very little in common.

But the news on both services this week – CNN+ ceasing operations and Netflix losing subscribers – offer us two insights into the state of what have been called the “streaming wars” for years.

The first is that these so-called “wars” are over. Not only is it impolite to use these terms to describe the transmission of digital content while a real war is being fought in Europe, but this whole framework suggests winners and losers on a military scale.

Instead, we are dealing with relative victories, all shaped by a broad shift in consumer preferences.

Streaming services like Netflix initially won by differentiating themselves from incumbent cable operators by not offering ads and entire seasons of series to watch. Now we see influencer-dominated social channels differentiating themselves from established streaming providers like Netflix in the same way. Instead of turning on the TV to watch something, people are now turning to their mobile phones to satisfy the same need.

The second lesson these events show us is that the streaming era ushered in by Netflix has flattened the world of content. There is now almost no difference between how, when and why we watch anything at all.

Watching live events like sports has gone from being a standard form of consumption to a novelty. The initial benefit of watching a series on Netflix was that we could do so on our own schedule; now, thanks to TikTok and Instagram, we do not even need to have a schedule.

So when the company that defined the standards of success for an entire industry struggles to get its subscribers to watch, it’s no wonder CNN+ had trouble gaining traction with a new audience – they were late to a party that was ending.

Some thoughts on the weekend from the TFC team.
The pandemic is over for investors.

We are now well aware of the stock corrections in Netflix, Peloton and Zoom. It seems we are not meant to just stream TV at home after a bike ride and a day of digital meetings. And while this may still be the reality for some workers, remember that markets are forward looking: This too shall pass.

This week’s news that Just Eat is exploring a sale of Grubhub – the company had acquired it just 10 months ago – shows that the winds have shifted on another pandemic habit of ordering food more frequently. And as airlines and major transport operators lifted their mask requirements this week, travel industry stocks rallied.

Of course, many of these trends have been weakening – or accelerating, depending on how you look at it – for months.

Moreover, the lifting of the mask requirement, if anything, would potentially discourage some people from travelling. But the market’s reaction to the removal of the mask requirement shows that investors believe that the pandemic-related restrictions on just about any behavior have disappeared and will not return.

Tour operators, in turn, can begin to forecast “normal” demand in the coming years. And investors now seem to believe that they no longer need to factor in possible Covid-19 related slowdowns, in this or any other industry. So the future is now.
The current view is that the DJI will recover quickly by the summer.

TFC Team

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