Can we talk about Netflix stock? It’s April and they just hit their all-time high, up a whopping +24% YTD against a very bearish market. That’s right, all the big tech stocks are down about -19% this year, and – are all down 19% this year, and Netflix is silently cruuuushing it!! The ‘Magnificent 7’ tech stocks (Alphabet, Apple, Microsoft, Amazon, Meta, Tesla, NVIDIA) – the tails who wag the dog of the S&P 500 and the NYSE at large – are tanking amidst 2025’s trade wars and a weakening US dollar. And yet, Netflix is not just weathering the storm, they’re thriving. There’s enough social commentary here to fill a novel, but here’s your ‘spin the wheel’ of conclusions, from which to draw. Choose wisely, however, for which you pick might just say a few things about you and the lens of the world you’re peeking through this fine year of our lord 2025:
1) Trade War Mitigation. Of all large cap US Tech stocks, Netflix is the one least dependent on foreign trade, in fact, even production for new content is already happening offshore. So what’s the take away? The US has already made it expensive for Hollywood to film domestically because of inflation and greed, so Netflix was well ahead of this offshore infrastructure long before this year. There’s no import taxes on digital content, yet. There’s no sign of foreign countries increasing filming and production taxes to US corporations operating abroad… yet. So I guess investors are more excited about digital entertainment than tangible goods and services. Let’s see where that gets us.
2) Monetizing Social Withdrawal. Speaking of digital entertainment, of all media companies, Netflix is the one service least invested in news media. Disney owns ABC and anything on Hulu, Warner Discovery has CNN, Amazon owns the Washington Post. Even news as a satire like the Daily Show & John Oliver seem to be dwindling from popularity. No, consumers are casting their votes for Netflix, for fiction, for shock, for serviceable passably mediocre, easy to go down entertainment. Ask yourself, is this because the content is great, or is it merely the natural reflex against unpalatable ‘HEADLINE NEWS’?! This seems to be the world we live in, when you’re sick of watching the trainwreck Orange Pimple reality show on CNN, switch it over to Netflix for a break. Go watch Selling Sunset or the Real Housewives of Beverly Hills, or better still, watch Black Mirror, and try to imagine a world more terrifying than the waking nightmare fuel we get force fed in real life.
3) Profits & Losses are meaningless (so is logic and math). Oh and did I mention that Netflix operates at a heavy loss? Did you get that? I didn’t say small profit, I didn’t say wavering operating costs. I said heavy, heavy loss… every year, since they stopped being a DVD rental company. So now ask yourself this question, what does this say about the US economy, when investors get excited about the rolling promises of a company that has never brought in tangible profit? What does it say about the NYSE when a companies valuation is inflated by the scope of their market share and their content library, not actual dollars? Does this help or hinder your faith that the stock market algorithm is guiding our economy into sustainable wealth? Or is everything about the spinning world, just propped up on debt? Every dollar printed, creating two more in red box… with interest.
Think about it, and let me know what the success of Netflix says about the world, about your grip of how things work. And if that makes your head hurt, well, you know how to alleviate this spinning existential mindfuck right? Put this scary editorial away for now. Cue the ‘Ta-Tong’ soundbyte and red screen, let’s all go watch the new trailer for Stranger Things Season 5.
Paul Carreo 