Netflix - FAANG a Buy, Sell or Hold?, CME Black Swans Chasing Value in Biotech Stocks
Companies / Investing 2021 Aug 05, 2021 - 01:02 PM GMTBy: Nadeem_Walayat
I am often asked to take a look at Netflix as being one of the FAANG stocks. However Netflix the streaming service that has made it into many households during the pandemic including our own has never been on my radar because it is not an AI stock, Nevertheless enough patrons have requested I take a look at it then so I will starting with the fundamental state of the corporation that has seen huge growth during the pandemic though despite this growth in revenues and earnings the stock still trades on a lofty PE of 53.4! Whilst it is the beyond the scope of this analysis to generate a EC ratio, nevertheless the PE of 53.4 IS VERY HIGH!
The key metric where Netflix is is concerned is how fast it's subscriber base is growing for it is that which will generate future revenues and profits growth as new subscribers pay their monthly fees and for that we have this chart generated by Netflix themselves -
The chart speaks for itself, the pandemic giveth and the pandemic (end of) takeit away. The pandemic party is over for Netflix, their new subscriber additions look set to flat line for 2021. So what's going to drive growth and the price earnings multiples lower if Netflix for a while at least are not likely to get many new subscribers and given the slow pace new additions there is a REAL risk that they start to LOSE subscribers which means much heavier spending on marketing to attract new subscribers so as to prevent subscriber counts from going negative which suggests Netflix is in for a couple of tough years ahead that does not justify that earnings multiple regardless of what the likes of clueless copy writers at Fool.com are suggesting.
https://www.fool.com/investing/2021/07/12/3-great-reasons-to-buy-netflix/
Yeh, fools being the operative word.
This was one of the must buy stocks during the pandemic crash of 2020, when everything was marked lower regardless of the fact that this and many such as the Amazon were going to prosper hugely from the pandemic and so the Netflix stock price literally doubled from the pandemic low of $290 to trade to $575 within 4 months, since which it has been stuck in a trading range of between $575 and $480, completely failed to participated in the tech sector buying binge of the past 12 months for the obvious reason that the stock then as well as now is OVER VALUED!
Netflix is literally trading on thin air waiting for a stock market correction to burst it's bubble that will send this stock that has gone nowhere for 12 months sharply lower as right now Netflix is NOT a growth stock and unlikely to be one for several years as it's primary source of revenues and profits stagnates. Thus the stock should be trading on a multiple of between 15 and 25 X earnings, not 54, that would put the stock price in the range of between $143 to $238 which is set against last close of $515! So unless the Wuhan bio lab releases the updated virus Covid-21 then the prospects for Netflix stock price does not look so good, It could easily fall back into the $400 to $250 trading range. That's not to say it does not have good long-term prospects. it's just that I can't see how it can be higher than where it is today in say 3 or maybe even 4 years years time given the competition from the likes of Amazon Prime and Disney both of whom have deep pockets so can undercut Netflix. Nope Netflix is NOT a good stock to be invested in right now, the stock could easily halve in price and still not be a good buy! In fact if one really want to be invested in a streaming service then one would be infinitely better off investing in say Amazon or Disney than Netflix! Whilst I will continue to ignore this FAANG as not being relevant to my portfolio. So the answer to the question is that Netflix is a SELL.
Trending towards Hyperinflation!
We all know that the governments operate a ponzi scheme, one of printing debt that they sell to the banking crime syndicate that in turn sells to the central bank for printed money who then go back to buy more debt from the government.
where the objective of this ponzi scheme is to keep inflating the value of the currency for instance the US dollar at an approx rate of 2% so as to foster the illusion of prosperity i.e. rising wages and asset prices whilst at the same time the value of debt erodes, as well as the governments tax take increases, a perfect perpetual ponzi system?
Well there are untended consequences and those are the indexed to inflation obligations of the government , i.e. US Social security payments are about to jump by 6.1% due to the surge in CPI, let alone the massively ballooning obligations that are many times GDP quietly ticking away in the background that are INDEXED to inflation, hence why the risk of hyperinflation is REAL! The higher the inflation rate the more the future obligations of the central government INFLATE, all this whilst it becomes successively harder to generate growth with printed money.
How can all of this not end in hyperinflation or at least very high inflation?
Delta Variant!
Our household got Hit 1st of July! luckily double vaccinations appear to have WORKED, and the household appears to have made it through with little immediate impact, though will have to wait and see what the long-term consequences are. So looking at UK data the delta variant impact on those fully vaccinated is probably going to be on par with that of the flu.
Against this we had 120 scientists writing public warning letters against opening up the UK , whist the government has decided to ignore the scientist drama queens and go ahead the full reopening of UK on the 19th of July a science experiment for the world to watch to see what happens, Where our own recent experience suggests if one is fully vaccinated then the impact of the Delta variant is not going to that different than that which humans were already exposed to prior to covid. i.e, yes the elderly and frail are at far higher risk, but the rest of the population should not worry much about it as long as they are double jabbed.
Though then we have this garbage called Track and Trace pinging everyone left right and centre, forcing over 600,000 workers to self isolate resulting in shortages of some goods in the super markets though nowhere near to the extent of the March 2020 panic buying empty shelves.
WHO REPORT ON VIRUS ORIGINS
Mainstream media (Washington Post) has blasted holes into the WHO's CCP sponsored propaganda reports into the origins of the virus, prompting the WHO to issue statements that the report is being revised in recognition of 'untended' errors such as that the Wet Market in Hannan district was NOT the origins of the virus as there were cases earlier than 9th December, and that the origins are likely across the Yangtze river in Jiangxia province which is where the Wuhan Institute of Virology is festering it's cocktail of bat viruses.
So slowly, very slowly the trend is inexorably towards the fact that it is a high probability that the Wuhan Lab IS the origins of the virus which has been my consistent view for the duration of the pandemic. Nevertheless the WHO cannot be trusted and remain in the pockets of the CCP.
Solar CME MULTIPLE Black Swans
Having converted my analysis of 25th November 2020 into a video that I shared with patrons in my last analysis.
However, back in November 2020 I imagined the Sun would send our way perhaps 1 major CME, instead the sun is literally exploding with solar flairs and CME's all month luckily so far the most violent have been on the far side of the sun, so we were safe, or should have been but still got barraged with high energy particles such as between Tuesday and last Saturday as CME's to some extent managed to wrap around and fly our way hitting the atmosphere with high energy particles during July and what else have we seen during July? Widespread FIRES and FLOODS, surely they are linked? I.e. a destabilised climate being hit by a barrage of high energy particles creating even more chaotic extreme weather than what one expect from climate change.
What this suggests we are in for one hell of a ride over the next 5 years! I think we are going to be looking back on the Pandemic of 2020 as the good old days before the Sun started exploding every other week sending a series of flairs CME's in our direction. By the time the suns done this could end up costing several multiples of the cost of the Pandemic so continue to expect exponential money printing QE4Ever.
Definitely time to start implementing rather than planning what to do, where now one needs to factor in climate consequences of fires and floods perhaps fell those trees growing nearby or ensure drainage is clear, and if you live in a valley or near a river then well you better consider moving as I last warned some 6 years ago when considering buying a house ensure it is at least 10 metres above the valley floor.
Dec 2015 - UK Climate Change Floods House Prices Crash Could Hit 20% of Properties
So again as a general rule prospective home buyers should not contemplate buying properties that are less than 10 metres above the height of any nearby river, water way or valley floor which puts virtually all riverside and flood plain properties out of contention so as to mitigate both the risks of actual flooding and negative effects on house prices.
A risk that is now starting to make itself manifest across the world where for the UK it is only a matter of time, probably measured in the months rather than years.
I will next probably take a look at the UK housing market (including a brief update on the state of the US housing market) or a multi month stock market trend forecast.
Chasing Value with Five More Biotech Stocks for the Long-run
Five more biotech stocks to add to the strategy of invest and forget for a potential X10 return. a reminder of why I am engaging in this binge on biotech stocks after having been focused on AI stocks for the past 5 years.
1. Biotech stocks are an unloved stocks sector whilst tech stocks over valued, even the ultra safe stocks such as the Top 10, so I am reluctant to add at current valuations hence why I hit the SELL button for the first time in many years and reduced my exposure to AI stocks by about 40%.
2. That biotech is a derivative of AI, we'll most sectors will soon become a derivative of AI because it is the PRIMARY tech megatrend of our age that will continue to broaden its reach to encompass all sectors of the economy.
3. That one of my former biotech 12xers got taken over (GW Pharma) that flooded my account with cash early May and so that focused my attention on repopulating my portfolio with 10 more biotech stocks where I expect at least 3 to 10x, with most of the rest expected to survive to varying extent. Though this is the stock market and so there are never any guarantees especially where such smallish cap stocks are concerned.
4. Our beloved AI stocks have been BID UP to high valuations, yes including Google, so they are not CHEAP, even after a 10% to 15% correction i.e. the likes of Microsoft and Amazon are discounting a lot of future earnings growth! Of course that does not necessarily mean that they are about to fall to what I would consider to be fair value let lone cheap levels as they did during March 2020 because at the end of the day they are GOOD stocks so usually command a healthy premium to invest in unless there is a market panic that marks everything lower regardless.
I had planned to have completed and posted this analysis shortly after my last biotech stocks analysis (Five More Small Cap Bio and Tech Stocks to Invest for 2021 and Beyond!), but focus shifted to crypto's on how to capitalise on the crypto bear market by investing in a select portfolio of crypto's at various buying levels, that and expectation of a correction would lower the price of these biotech stocks, which has happened even if the general market has held steady.
DISCLAIMER - Investing in Smallish cap stocks is VERY HIGH RISK. The analysis in this article is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis derived from sources and utilising methods believed to be reliable, but I cannot accept responsibility for any trading or investing losses that may be incurred as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any investing or trading activities
Firstly here's a reminder of the small cap bio-tech stocks state of play as per my last analysis of which I now personally hold positions in ALL 4 of the biotech stocks mentioned i.e. ABBV, CRSP, NBX, AVR, all of which are trending in the right direction. Though of course I am focused on many multiples towards 10x many years down the road.
The rest of this extensive analysis focused on finding value in unloved biotech stocks with the potential to X10 over the next 5 years has first been made available to Patrons who support my work. So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.
Chasing Value with Five More Biotech Stocks for the Long-run
Contents
- RISK RATINGS
- HIGH RISK STOCK BUYING LEVELS\
- Bxxxxxxxxx - Bxxxx -- Risk 3
- Cxxxxxxxxxxxx- Cxxx - - Risk 5
- Txxxxxxxxxx - Txx - - Risk 1
- Bxxxxxxxxxxxxx- Bxxx - Risk 8
- Axxxxxxxxxxx - Axxx -- Risk 10
- High Risk Stocks Portfolio Buying Levels
- Netflix - FAANG a Buy, Sell or Hold?
- Trending towards Hyperinflation!
- Delta Variant!
- Solar CME MULTIPLE Black Swans
Including access to most recent extensive analysis - AI Predicts AI Tech Stock Price Valuations into 2024, Time to Buy Chinese Tech Stocks?
Contents:
- AI Stocks Value Forecaster (ASVF).
- How I Use ASVF6 - Percent Upwards Pressure (PUP)
- AI Stocks Buying Levels Plus ASVF & PUP
- AI Stocks Portfolio Buying Levels
- Dow Stock Market Trend Forecasting Neural Nets
- Pattern Recognition
- Trend Analysis Preprocessing
- Crossing the Rubicon With These Three High Risk Tech Stocks
- Cheap Chinese Tech Stock 1
- Cheap Chinese Tech Stock 2
- Cheap Chinese Tech Stock 3
- CME Black Swan
- You Don't Know How Big of a Bubble Your in until AFTER it BURSTS
- Stock Market Summer Correction
- REPO Market Brewing Financial Crisis Black Swan Danger
- Margin Debt Bubble
- US Bond Market Long-term Trend
- Michael "Big Short" Burry CRASH and HYPERINFLATION WARNING!
- Michael Burry's Track Record
- Michael Burry's Portfolio
- Investing During Uncertainty
- AI Stocks Portfolio Buying July Levels Update
- HEDGING AI Stocks Portfolio
- Crypto Bear Market Accumulation State
- Bitcoin Bull / Bear Indicator
- Market Oracle AI Coin Thoughts
- Biotech Brief
And access to my comprehensive analysis of Bitcoin and the crypto markets.
Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels
- Investing in the Tulip Crypto Mania
- Bitcoin Price Trend Forecast Review
- Lessons Learned
- Cathy Crypto Wood's View on Bitcoin
- BITCOIN HALVINGS TREND TRAJECTORY
- Stock to Flow Infinity and Beyond!
- Bitcoin, Crypto's and the Inflation Mega-trend
- Black Swan 1 - Will Crypto's Get Banned?
- Black Swan 2 - GOOGLE
- Black Swan 3 - USDT Tether Un-Stable Coin Ponzi Schemes!
- BLACK SWAN 4 - Bitcoin 51% Network Attack by China?
- Black Swan 5 - Bitcoin is Already Obsolete
- US Trending Towards Hyperinflation
- BITCOIN TREND ANALYSIS
- Bitcoin Bear markets analysis - How low could she blow?
- Bitcoin Trend Forecast
- Bitcoin Long-term probable Next bull market price target
- Alternative Scenarios
- My Crypto Bear Market Investing Strategy
- Crypto 1 - Ethereum (ETH) $2600
- Crypto 2 - Bitcoin $40,375
- Crypto 3 - Ravencoin $0.078
- Crypto 4 - Cardano $1.59
- Crypto 5 - Pokadot $25
- Crypto 6 - ChainLink $26
- Crypto's 7 to 10
- Creating The Perfect Crypto
- How to Invest in Crypto Without Getting SCAMMED
- CHIA SCAM COIN
- Binance vs Coinbase
- Have ARK Invest Funds Bottomed?
And lastly AMD to the MOON! Are you invested? If not why not?
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Nadeem Walayat
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Nadeem Walayat has over 35 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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