In the stock market, there is always some drama happening and today the company that makes the drama is the center of the drama. Netflix stock is down 35% post-earnings. It’s consuming all the bandwidth today but there are lots of fascinating moves that seem to be happening too. Let us focus on a few stocks that should get your attention today.
Netflix results point to the obvious thing – Streaming is an overcrowded market
When the industry dynamics change, then everything looks uninvestable.
Streaming is an extremely overcrowded market now. It is not possible for individuals to subscribe to too many services at once. A new strategy might emerge where people might jump from one set of streaming players to another every quarter.
Netflix
Disney
HBO Max
Prime
Paramount— Deepak Singh (@smarket) January 22, 2022
There are just too many choices now and one behavior change people will make is they will switch from one subscription service to another. Also, Disney and Netflix have gone extreme left in their content and that’s turning off regular people. Disney has slipped below an important support level. In times of insane inflation, people have lesser money to spend on woke issues and theme parks
One is better off staying away from all streaming names be it Netflix, Disney, Paramount, or Warner Brothers Discovery. The dynamics of the industry have changed.
Will IBM finally make a move?
Amidst all the Netflix drama, this is one stock that’s not getting the desired attention. IBM came out with an earnings report and this is how the market is reacting. A Big Gap up post earnings and one can hope that the stock would break 140 in this move.
IBM now looks like a focused company. Arvind Krishna’s strategy seems to be working. In the first quarter, IBM posted adjusted EPS of $1.40 (+24.4%) on revenue of $14.2B. The company is on the right growth path and this looks like a safe stock to invest in the current market environment.
PayPal – No Low is low enough
When a stock is in a downtrend, no matter how good the company looks, no low is low enough. You buy and you only get disappointed as the stock trends lower.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
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