Netflix: Why I Decided To Trim After 3 Years (Downgrade)

YR Research
4.55K Followers

Summary

  • After years of bullishness, I'm downgrading Netflix to 'Hold' due to weaker engagement trends and a demanding valuation.
  • Engagement metrics are showing cracks, with Netflix's share of US streaming time at a three-year low.
  • Future growth may require Netflix to diversify into podcasts, music, live TV, and more ambient or user-generated content to compete with YouTube.
  • While long-term prospects remain strong, the current valuation already prices in much optimism, so I am trimming my position and waiting for better opportunities.
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hapabapa

They say you shouldn't get emotionally attached to a stock, and that's definitely true, but boy, am I a victim of emotionally attaching to my Netflix, Inc. (NASDAQ:NFLX) investment.

Besides being my most successful investment in terms of returns, Netflix might

This article was written by

4.55K Followers
I aim to invest in companies with perfect qualitative attributes, buy them at an attractive price based on fundamentals, and hold them forever. I hope to publish articles covering such companies approximately 3 times per week, with extensive quarterly follow-ups and constant updates.I manage a concentrated portfolio targeted at avoiding losers and maximizing exposure to big winners. This means that often I'll rate great companies at a 'Hold' because their growth opportunity is below my threshold, or their downside risk is too high.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of NFLX, GOOG, AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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