Man, is this the way that the market is going to operate now?
That a stock can come on the scene, and in a relatively short period of time, become one of the biggest stocks on the planet…
And just a few short years later – it begins its inevitable plunge southward.
It used to be that if a stock was a Blue Chip – it would stay on top for decades…
Or at least hover around the top – but in today’s age where day traders rule the roost and every Tom, Dick and Harry have access to a trading app – things are different.
As I said, one of the biggest stocks in the world is having a rough go of it at the moment – and it remains to be seen if this is its future – or just a rough patch…
However, one thing for sure is – shareholders better be on their toes.
You’ve probably been wracking you brain – trying to figure out which stock I’ve been hinting at – as there are a bunch that it could be…
But if you paid attention the past few weeks – you probably already know.
Have you figured it out yet?
Here’s a hint: this one could wind up biting people with its sharp teeth.
Did that help?
Ok, if not, yes… I’m talking about one of the FAANG – and yes…
I’m talking about Netflix (NFLX).
Netflix is having a hard time of things lately – as things just aren’t going so smoothly for the movie streaming company – which has baffled people as the pandemic seemed to be the best thing for it…
A captive audience bored out of their minds with nothing else to do than binge-watch their favorite shows.
But as we begin to emerge from the lockdown protocols – Netflix is showing some cracks – and there are a few reasons why it has taken so many hits lately.
It seems that the Gorilla wasn’t the only one to have reservations about this company – as there are more than a few analysts out there who predicted that Netflix would tank after its earnings report came out.
Why?
Well, it has to do with subscriber numbers – however, its subscriber numbers aren’t exactly bad…
Before we get into that – let’s talk about profits.
Netflix blew earnings expectations out of the water, banking a profit of $3.75 per share on revenue that jumped 24%, to $7.16 billion – and both of these figures were above Wall Street’s targets.
You’d have thought that would be enough to keep Netflix soaring high, right?
Well, apparently the public doesn’t seem to care about revenue or earnings…
They care about subscriber growth.
On that front, Netflix came up considerably short – like 2 million subscribers short – as the company expected 6 million new subscribers – but only landed 4 million.
Missing expectations isn’t good…
What’s worse is LOW expectations the following quarter – and that may be the biggest problem – as the company has only put out expectations of one million new subs.
If it doesn’t reach that – expect Netflix to fall further.
The company said, “We believe paid membership growth slowed due to the big COVID-19 pull forward in 2020, and a lighter content slate in the first half of this year, due to COVID-19 production delays.”
The company’s attitude seems to be that people will come back later this year – when it’s able to get back to their regular schedule of filming of its original content…
But not many people share this enthusiasm.
Netflix isn’t the only streamer on the block anymore. In fact, the market is saturated…
While it seemed at one point Netflix would hold sway over the industry – every media company with a smidgeon of content and every tech company with enough money to buy content — has its own streaming service.
If Netflix thinks things will just go back to normal in the second half of 2021, it’s in for a rude awakening.
Consumers’ media budgets are already tapping them out – Netflix, Amazon Prime, Hulu, ESPN+ – these charges are racking up and the simple fact is Netflix won’t be at the top of everyone’s “keep” list.
Bottom line: Netflix and its investors have to come to grips with the fact that the days of excessive growth are over.
Netflix now must fight tooth-and-nail just to maintain its position… but while I don’t think Netflix is going anywhere – it’s no longer a high-growth tech stock. It’s now a Blue-Chip company – and that changes everything.
Of course, things could change…
That’s the nature of the market – and why I started GorillaTrades in the first place. I knew that there were certain companies that would grow and make $$$ regardless of what the public knew or didn’t know about them.
There’s a reason that GT has become one of the most trusted stock recommendation services on the internet – and I’d love for you to become a part of it – which is why I’m extending an offer to subscribe to GorillaTrades today.
However, I get that it may not be your thing – and understand why you want to go it alone…
Just know where here if you need us.
And do yourself a favor – keep an eye on Netflix – it could be in for a wild ride.
“Sometimes I feel like I am on top of the world. Other times it feels like the world is on top of me.” – Raegan Butcher