Netflix & A Fool’s Errand

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Now, some folks are all a-twitter about Netflix (NFLX +1.11%). They reckon it’s a sure thing, a golden goose laying eggs of pure profit. And truth be told, the company’s done alright for itself. Three hundred and twenty-five million subscribers, they say – nigh on a quarter of the whole world, glued to those flickering screens. They brought in $45.2 billion last year, a tidy sum, and a bit more profit per share than a fella could shake a stick at. Seems like a grand success, don’t it?

But I’ve seen a many a “sure thing” turn to dust in my time. This business of chasing after the newest shiny object… it’s a fever dream, I tell ya. They’re now predictin’ this “ad revenue” will double to $3 billion in the next year. A whole new stream of coin, they say. Like squeezing water from a stone, if you ask me. Folks’ll pay for entertainment, sure, but they’ll grumble about advertisements the whole time. It’s a fine line, that, between profit and plain annoyance.

So the question is posed: is this a worthy investment for a thousand dollars? Well, that’s like askin’ if a hog can fly. Maybe, if you give it enough balloons. But I wouldn’t bet my hat on it.

They Changed Their Tune, Didn’t They?

Old Man Hastings, the fella who started it all, he used to scoff at the notion of advertisements. Said it’d ruin the experience. A man of principle, he seemed. Then, lo and behold, he did a complete about-face. Lost a million subscribers, they did, and suddenly advertisements were the answer. A man’s gotta eat, I suppose, even if it means compromisin’ his ideals. It’s a lesson in the ways of the world, that is.

Now you can watch your shows for a mere $7.99 a month, if you don’t mind bein’ bombarded with pitches for every contraption under the sun. It’ll bring in a new crowd, they say – folks who are a bit more… frugal. A penny saved is a penny earned, as my grandma used to say. But a penny earned from annoyin’ folks is a penny that might not stay earned for long.

And the numbers, well, they seem to be supportin’ this notion. Ad revenue jumped 150% last year and they’re expectin’ it to double again. Seems like a golden opportunity, doesn’t it? But I’ve seen numbers lie before. They’re slippery things, numbers are.

Truth be told, this Netflix outfit has a knack for pivotin’. They’ve gone from mailin’ DVDs to streamin’ movies, to makin’ their own shows, to dabblin’ in games and podcasts. It’s a wonder they haven’t sprouted wings and flown off to Mars. They’ve got a smart team, I’ll give ’em that. The stock price has risen more than twenty thousand percent in twenty years. That’s a lot of doubloons, that is.

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A Word of Caution, if You Please

Now, they’ve gone and announced a deal with Warner Bros. Discovery. A big, complicated, eighty-two-billion-dollar deal. The stock’s taken a tumble since then – down 24%, if you’re keepin’ score. And rightly so, I reckon.

It’s a gamble, plain and simple. A heap of debt, a mountain of uncertainty, and a whole lot of “what ifs.” Nobody can say for sure how this’ll all play out. It’s like tryin’ to predict the weather in a hurricane. You might get lucky, but you’re more likely to get soaked.

But here’s the curious thing: it’s made the stock cheaper. It trades at a price-to-earnings ratio of 30, which is a good bit lower than it was a year ago. A thousand dollars will buy you thirteen shares right now. But is it a good move? That’s the question, ain’t it? I wouldn’t be rushin’ to throw your money at it, not just yet. Let’s see how this Warner Bros. deal shakes out first. A wise man waits, and a fool rushes in.

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2026-02-26 18:52