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I Love it When the Market Proves Me Right…

I Love it When the Market Proves Me Right…

Posted On April 21, 2022 3:39 pm
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Yesterday Netflix’s stock price plummeted a shocking 35% in a single day behind a bad earnings report.

For the first time in the history of the company they actually lost subscribers.

This is what I meant yesterday when I pointed out that fundamentals eventually win.

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Think about every negative story you’ve seen in the news over the last several years about Netflix. There’s been several around content people considered inappropriate or offensive in some way.

But still, their subscriber base kept growing.

Competition has also grown.  Amazon streaming, Disney+, Peacock, etc…

All of these services compete – and to date, Netflix has taken on all comers and continued to grow.

However, in this earnings report, Netflix lost customers for the first time and had the worst day for its stock price since 2004 – almost 20 years ago.

What happened?

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That’s a complicated question, but let’s check some fundamental data on the economy…

Gas prices in April of 2020 were under $2 a gallon, today we are paying over $4 a gallon.

Food prices are shooting up, rents are on the rise…

And inflation (the CPI) is at 8.5% – may be higher if you listen to some economists.

And at the same time, Netflix is losing customers for the first quarter ever.

That doesn’t surprise me in the slightest.

As I said yesterday, fundamentals always win in the end.  The trick for traders is to know how and when to take advantage of anomalies to execute winning trades. 

Tomorrow, I am going to share an important lesson we can learn from Netflix about protecting yourself while trading.

In the meantime, let’s see about leveraging the market into personal gains for both of us!

Come trade with me in Options360.  Your first month is only $19…

It’ll be the best $19 you’ve ever spent, I promise!

To Your Success,

Steve

About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.