2022 was tough for media stocks like Netflix and Disney, and 2023 doesn’t look good

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#1
2022 was tough for media stocks like Netflix and Disney, and 2023 doesn’t look good, either
* Media stocks were hit with major losses in 2022 as streaming subscriber growth waned and the advertising market weakened.
* Disney and Warner Bros. Discovery’s stocks hit 52-week lows in late December.
* Netflix, Paramount and Comcast hit the same benchmarks earlier this year.

Lillian Rizzo
PUBLISHED THU, DEC 29 20227:00 AM EST

Media stocks got rocked this year, with companies losing billions of dollars in market value, as streaming subscriber growth waned and the advertising market worsened.

The pain is likely to continue in the first half of 2023, according to media executives and industry analysts.

Disney and Warner Bros. Discovery, two companies undergoing transitions, especially when it comes to streaming, each hit 52-week lows in recent days. So far this year, Warner’s stock is down more than 60% and Disney is off more than 45%.

The media industry has come to a turning point as competition among streaming services is at an all-time high and consumers are getting pickier about their number of subscriptions. On top of that, companies are contending with lower ad revenue and more cord cutting. Some expect consolidation to occur in the near future.

“Across the sector, it’s chaos,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners. “Everyone has been saying for years that technology is going to change the media world, and it has. But we’re at this real point now where it’s crunch time.” He predicts bundled streaming will become more important in 2023.

It’s been a tough year across the board for the market. The Nasdaq Composite is headed for its worst decline since 2008, and it’s positioned to underperform the S&P 500 for a second straight year. Other industries’ stocks, including tech, have been clobbered.

Major tech stocks have lost at least half of their value. Streaming giant Netflix’s stock has dropped more than 50%, with its market cap cut in half to roughly $123 billion.

More details in https://www.cnbc.com/2022/12/29/netflix-...-year.html
Specuvestor: Asset - Business - Structure.
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#2
Amazon, Apple, Disney are in the streaming space. Each have a cash printing department who will finance the loss making shennigans.

Netflix is the incumbent who is likely facing a dwindling cash generation ability. Fortunately, they have been able to generate hitt such as the recent, Wednesday. But they have to be at their A game in order to match the other 3. Warner Bros is the distant fifth who dosent know what has hit them and had leveraged themselves to the hilt but have glorius past in the form of DC universe which they have been unable to match Disney.

Its an unfair competiton for Netflix and Warners because they are up against cash-rich competitors. Its like the premier league where most of the football clubs are in operating loss and there are cash rich clubs who are being sponsored by their oil rich tycoons. I personally think its going to be a perpetual money burning business and Netflix will eventually be unable to keep producing hits one after another
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#3
This has been the script for the last decade but will things be changing in the coming decade?

Capital markets are changing and the decline in share prices are signaling to companies that weren't very focused on profitability in the past, that they probably need to pay more attention to it in future.

Back to Netflix, most of us had expected that competition would catch up but none of us could predict when it would and then start to impact its valuation (ditto Tesla and the EV industry it created). Covid-19 gave Netflix a tremendous headwind but also gave its rivals who were behind, the same or maybe bigger one too. Personally, I think the u-turn from Netflix on advertising speaks good about its Mgt team - when the facts change, they change their mind. I expect the streaming industry to reach an oligopoly situation where the few remaining players start to signal and play ball with each other. But of course, I can't predict when.
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#4
(30-12-2022, 09:32 AM)weijian Wrote: Personally, I think the u-turn from Netflix on advertising speaks good about its Mgt team - when the facts change, they change their mind. 

Exactly. They are looking ahead. The pivot to gaming, and they aren't exactly starved of IP. They can always turn to other sources if Disney wants to yank their content.

https://www.polygon.com/23452779/netflix...ease-dates

I do not have any idea if it will work. Building up a gaming franchise is a multi-year effort and arguably risky though it can be mitigated by starting small on mobile and using it as a learning curve.
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