281–290 of 321 posts
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Are you talking about their shows sometimes costing $7M an episode? Do you know which ones besides House of Cards and The Crown?
Sense8, The Get Down, Marco Polo. They are planning on spending 8 billion on content this year. Lets say they spend 10 million on a couple puzzle/king/angry bird style games. That's .125% of their content creation budget.
Finding Netflix fairly frustrating these days. Despite their runaway success they haven’t really done anything to change the Hollywood model. 99.9% crap with a sprinkle of watchable content. And despite the hoards of engineers and machine learning wizards they employ, discovery and interface has regressed in their product. Only reason I haven’t canceled yet is avoiding the hassle of going full torrent/YouTube.
However, the 230-year figure might be optimistic, because Netflix's cash flow from operations, before capital expenditures, has been negative for the past three years, largely due to fast-growing spending on content. Operations burned almost $1.8 billion last year. It could take longer than 230 years.
In theory, Netflix could stop aggressively investing in content any time now, and it would become more profitable. In theory, they could find other ways to monetize the content at some unspecified time in the future, to generate additional profits. In theory. In reality, it remains to be seen if they can and will do those things at some point in the future, and whether doing them will justify today's market capitalization.
It is, how shall I say this, questionable whether Netflix will be able to generate sufficient cash flow in the future to justify today's market capitalization. That said, I love the service and think the management team has done an amazing job building it, so I hope and wish they can pull it off, for the sake of their current investors, who must be relying on similar hopes and wishes.
BTW, Netflix is far from the most optimistically valued company today in terms of current earnings. Amazon's price-to-earnings multiple is currently 335, and Salesforce's is 14,796. These are not particularly unusual examples in today's stock market. There quite a few companies trading at high-double, triple, quadruple, and quintuple multiples of earnings.
In other words, there are currently many companies whose earnings-payback period, for a would-be cash acquirer, all else remaining the same, is in the many decades, centuries, millennia, or even greater. It makes no sense to me.
Source for all figures: https://finance.google.com
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Sustained 3% US GDP growth is overly optimistic. We have 0.7% population growth, and no obvious major investments. The computer boom is mostly over with the low hanging fruit taken. Prior to that we had IC engines and electricity, but nothing on the horizon seems to have that kind of potential to radically reshape society. And to double the economy every 25 years you need regular dramatic shits. PS: Look at the past…
The only things I can think of are: 1) AI. Somehow, we finally get the AI working, and it somehow produces a lot more jobs. I really think the opposite will happen, but who knows. 2) Climate Change. The ever rising waters and the ever worsening storms will cause nations to re/build large infrastructure projects. Think seawalls and repairing the NYC subway. I don't think that will be good, as it'll mostly just be debt…
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For sure, dividends donesn't mean nothing here. If a company is profitable and don't pay dividends to shareholders, they need to do something with the money that are accumulating, and they will invest on the company (new machines, products, services, etc. all accordingly with the company strategy), and if the company grows with this investments, the stock price will follows it.
How stock price follow it ? In a hypothetical scenario, if company declare not to pay any dividend any time in the future, nobody will invest in it no matter what.
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A lot of sophisticated financial people share your thinking. The problem is there's no growth to be found anywhere. People are cheering for 3% GDP growth in the US. Interest rates are at all-time historical lows, meaning discount rates are lower than they've ever been. These macro trends have added up to an environment where people are willing to pay staggering premiums for even a remote shot at growth. It's affectin…
I think one of the big problems is that most people's retirement money gets pumped into the stock market to purchase shares on the SECONDARY market. When people buy shares on the secondary market, companies never see any of that money. But when companies sell shares directly to the public through the primary capital markets, that money can be invested to produce NEW goods and services which create economic GROWTH. Th…
You're ignoring all the ways that companies use their stock as a currency. From employee compensation to non-cash acquisitions, companies absolutely benefit from the secondary market. Especially in an era of low interest rates, it makes more sense for companies to borrow capital when they need it rather than raising money by issuing new equity, especially when other ways of issuing equity come with tax advantages.
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A lot of sophisticated financial people share your thinking. The problem is there's no growth to be found anywhere. People are cheering for 3% GDP growth in the US. Interest rates are at all-time historical lows, meaning discount rates are lower than they've ever been. These macro trends have added up to an environment where people are willing to pay staggering premiums for even a remote shot at growth. It's affectin…
Forgive my ignorance but how does the stock market as a whole keep growing if the GDP isn't growing at a similar rate? where is all the attributed value coming from? Or am I thinking about it the wrong way ?
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But that doesn't mean it lost half it's value. If I printed an extra 100 trillion dollars and launched it into space that wouldn't affect the value of the dollar. And the same thing was true during the bailout. 99% of that money was never spent so it didn't have any affect on the economy.
> 99% of that money was never spent Then where did it go?
Basically the Fed made lines of credit (with strings attached) open to banks to guarantee liquidity, increasing trust in markets. Banks didn't withdraw the money, and some that did (or were forced to take it to dissuade bank runs on the others) paid it back quickly to get out from under the strings.
Here's [1] a decent source on the finances of the bailout (which were actually loans).
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But that doesn't mean it lost half it's value. If I printed an extra 100 trillion dollars and launched it into space that wouldn't affect the value of the dollar. And the same thing was true during the bailout. 99% of that money was never spent so it didn't have any affect on the economy.
> 99% of that money was never spent Then where did it go?
The BoE then collected and destroyed government payments on the bonds, so the net amount of money doesn't change in the long-term.
One side-effect of this is that the cost of bonds went up -- demand had increased -- so the profitability of buying them went down, meaning the banks were naturally incentivised to do something else with that money.
It's not a panacea, but it is quite a neat lever to have when you want to increase the supply of money without actually spending any. Unfortunately it still looks like the banks are being given lots of free cash, but it's not actually free.
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A lot of sophisticated financial people share your thinking. The problem is there's no growth to be found anywhere. People are cheering for 3% GDP growth in the US. Interest rates are at all-time historical lows, meaning discount rates are lower than they've ever been. These macro trends have added up to an environment where people are willing to pay staggering premiums for even a remote shot at growth. It's affectin…
I think one of the big problems is that most people's retirement money gets pumped into the stock market to purchase shares on the SECONDARY market. When people buy shares on the secondary market, companies never see any of that money. But when companies sell shares directly to the public through the primary capital markets, that money can be invested to produce NEW goods and services which create economic GROWTH. Th…