The bottom is dropping out of Netflix

Netflix is old enough now that a lot of subscribers now have children that are in college or have graduated. My daughter is in college, and she definitely uses my netflix credentials. At what point does Netflix feel it is required for her to have her own subscription?

People are so used to having smoke blown up their asses that when someone tells them honestly about slightly negative news, they get confused.

I am thankful though that YouTube sucked so bad for so long because I spent a lot of time with my kids when they were young, reading to them, biking with them, taking them on road trips. Cutting the cord was the idea when my first daughter was born - to have the kids grow up without television (we would put on over-the-air PBS kid's shows when they were young but it was pretty much only hotels stays when they would see Sponge Bob or whatever, ha ha).

I expect the entire streaming business to follow the cable TV model: 1 - start with a paid, high quality and/or increased supply without ads; 2 - bleed ads into some of the streams because the first stage was unsustainable; 3 - race to the bottom with bundles, because the individual streams are too expensive. Expect Comcast to be the big winner here through a roll up and cross-sale of carriage to their cable channels into streaming bundles (because aggregated bundle fees will provide at least some revenue without the cost of running your own streaming platform.

Youtube ought to win this battle but have to date demonstrated little competence. Comcast is the superpredator.

Because it is a problem.

Firstly, it's a problem because stock prices are a measure of predicted future value. The profit today is mostly irrelevant. In order to make a profit on shares the business has to be in a position to do better in the future. If it doesn't then people won't believe it'll do better even farther in to the future, so they won't bid more for the shares than they're worth today. That means investors can't make a profit. If you bought Netflix shares in the past you'll lose money. That's a problem.

Secondly, and in my opinion more importantly, Netflix (and every other tech unicorn) use their shares as a hiring incentive. If the shares are going the wrong way then good hires will refuse offers and go elsewhere. A big chunk of renumeration in tech is predicated on people getting stock instead of cash because that's worth more to the individual and cheaper for the business. If that fails then the business has to start dipping in to that $6bn profit to replace people who leave, or to acquire businesses, or just to maintain the status quo.

It isn't hard to imagine a scenario where a $6bn profit turns into a loss within a decade or less. The driving force behind people saying Netflix has a problem is that they're predicting that the future of the company isn't good.

I mean, they might be wrong and Netflix might be fine, and ultimately even if things go badly Netflix is never going to "fail" because it'll get bought long before that happens, but if you hold Netflix stock it's entirely reasonable to be worried despite the healthy profit they make.