Linking Netflix Stock To The Market

Netflix stock is down about 45% and i think its part of a larger sign that the market is about to slowdown even more than it already has.

I want to take a look at why its down, how this relates to the market as a whole, and what we should do about it.

First, netflix is down because of its reduced subscriber growth rate. At first glance, its the failed expectations that caused money to flow out. But this wasnt convincing to me since it was such a dramatic fall.

Bloomberg columnist John Authurs thinks that there's larger covid exuberance in the market.

Because projections were based on lockdown-era consumption habits, now that the world is returning to normalcy some habits have been weakened. Not only that, but we are also realising how frothy the market has been.

Back to the company at hand: It doesnt have a competitive moat so competition is strong. And with less liquidity, it also isnt a winning strategy to throw cash into expanding market share anymore.

This focus liquidity relates to the larger market.

The current expectation is that rates will rise, and liquidity will fall.

The key question involves what type of inflation is occuring. This means figuring out how strong consumer demand will be. As well as whether more workers are returning to the workforce and getting employed.

Jeremy grantham certainly thinks that we’re in a bubble. He says that market conditions now mimic the past few bubbles.

But the wider market is also selling off slowly, netflix is just the first victim - its not an isolated case. Speculative stocks and assets like crypto will fall first, and eventually bluechips will come under threat.

I think this is all true. I will be trying to read up on how to protect my money, but also how bad things will be in a market crash.

If I were looking to maximise returns, I wouldnt really be excited to put money in right now. That's just because it's almost a given that rates will rise.

Personally, I think many people have been excited to put money into the stock market over the last couple of years - and I hope they protect themselves and donlt get overextended.

Im not here to shill stocks or tell you what to do, I'm just interested in sketching out the mechanics behind market events and any other international, political, or social events.