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It’s official – Netflix just became dead money

Apr 20, 2022

Good morning!

The markets are largely flat after yesterday’s run.

Here’s my playbook.

1 – Netflix is dead money

Netflix lost 200,000 subscribers when Wall Street - in its infinite wisdom and my voice dripping with sarcasm - expected a net gain. Now Netflix is going to be cracking down on password sharing, raising prices AND introducing advertising.

Obviously not a good recipe - shares are down 25% as I type.

Here’s my take with the fabulous Dagen McDowell sitting in for Maria Bartiromo earlier this morning. (Watch)

There’s already chatter … “who knew” cry those who got caught flatfooted. Short answer … we did, my friends.

2 – The next Nike

LULU is well known for yoga pants but the company’s a whole lot more than that. Management wants to double 2021 revenue in the next 5 years.

I think they’re going to do it.

The last time they did this kind of “objective setting” the company tripled digital revenue while also doubling menswear revenue 2 years ahead of schedule.

Anecdotally, I’m hearing a lot of chatter from Asia that LULU is gaining traction. Might be worth a look in the $350-$400 range. (Read)

3 – Not just Tesla

Tesla is going to take a 90,000 vehicle hit as a result of the three-week COVID shutdown in Shanghai, according to Credit Suisse. (Read)

I don’t think it’s going to be the only one to take a hit.

Though it won’t be as pronounced of a supply chain shock as 2020, Shanghai is still a production powerhouse, and I think we’ll see major disruptions in a couple of months over here.

Makes sense to have at least a few large-scale software and cloud services because they don’t deal with, you know, stuff.

You can find my choices in the One Bar Ahead™ model portfolio, which you can get by signing up here.

4 – If you thought Apple’s app store fees were bad

Meta – the company formerly known as Facebook – plans to take a 47.5% cut of all digital sales on the Horizon Worlds platform (their virtual universe). Not surprisingly, potential sellers are enraged. (Read)

This dwarfs Apple’s app store fees but nobody is raising a stink. Makes me wonder why and who’s protecting who inside the beltway. Betcha a few lobbyists know all too well.

Zucked again.

5 – The last mask mandate

Disney lifted Covid-related mask requirements after a federal judge in Florida binned a national mask mandate on public transportation. Could be good for park traffic now that legions of parents pushing sugar-addled kids want to make up for lost ground and visit. (Read)

Not sure it’ll move the needle stock-wise but it’s another step in the right direction.