“I am not trying to chase what other people are doing.” – Said Softbank Founder and CEO Masayoshi Son
Mad Hedge Technology Letter
August 3, 2022
Fiat Lux
Featured Trade:
(LOSING ITS MOJO)
(NFLX), (AMZN)
The reversion to the mean crowd who like to do no research and just buy certain shares when they go down anticipating a quick rebound needs to avoid former streaming darling Netflix (NFLX).
The company has gone from bad to worse and like your black sheep little brother who loves to play the victim, avoid at all costs!
NFLX has parlayed deteriorating content with an even worse future game plan that screams subscriber bleeding.
The headwinds are adding up to something that will be insurmountable quite soon and I don’t believe that has been accurately reflected in the stock price yet.
Let’s take the running of their clean brand.
They are damaging the brand by integrating it with a lower-cost, ad-supported tier in early 2023. This comes on the heels of Netflix tapping Microsoft to be its partner on the ad-supported offering.
For many years, NFLX was adamant they would never go this route only to do an about-face.
Already losing subscribers, inserting ads to only muddy the content further won’t move the needle in terms of improving the quickly eroding content quality.
Like on a sinking ship, they are trying to chug as many whiskey bottles as possible before the ship goes underwater.
Netflix had warned investors last quarter that it expected to shed around 2 million subscribers but only lost around 970,000 during the three-month period ending June 30.
This artsy game of claiming a pyrrhic victory because the subscriber loss was only around a million and not 2 is insane.
A million subscribers lost is detrimental to any subscriber-based company in any sphere of business.
And remember, NFLX is supposed to be the preeminent growth company, yes, the one that is losing 1 million subscribers every 3 months.
Let’s rate the business model today.
Will the median consumer bite at a monthly NFLX subscription?
In the current market environment, which is characterized by inflation, consumers alter spending. In concrete terms, this means that consumers are concentrating on fewer streaming services.
Also, an NFLX content archive that is shrinkflating doesn’t help and I am not talking in terms of volume.
They no longer have access to the hit shows of old like Friends or Seinfeld that many Millennial viewers love to watch because other streaming platforms have recalled that content.
Times are lean to the bone for NFLX these days.
What we have today is a streaming service that can’t make in-house blockbusters apart from Stranger Things and after that, the kitchen is barren.
Weirdly enough, NFLX executives have turned to anime as if it’s a broad solution to the content woes.
I’ll give you a hint - it’s not.
Stealing content ideas from their 14-year-old daughter won’t hack it in this climate.
Even worse, they are taking classic anime titles from Japan and Americanizing them.
This type of Frankenstein anime is hard to watch.
The conclusion of Stranger Things Season 4 is peak NFLX for 2022 as pitiful as that sounds.
The search for content has really gone into full drive with Amazon (AMZN) picking up France Ligue 1 soccer league rights for $250 million per year on a 3-year contract.
Things have moved on a lot in the content world with American tech companies scouring the world for quality content while NFLX has been stuck in neutral.
The stock has gone from $700 to $200, and the poor executive decisions today mixed with inferior content means that they will underperform any tech rally that is manufactured to end the year.
“Your time is limited, so don't waste it living someone else's life.” – Said Co-Founder of Apple Steve Jobs
Mad Hedge Technology Letter
August 1, 2022
Fiat Lux
Featured Trade:
(The iCar)
(APPL)
CEO Tim Cook and the company he runs, Apple (AAPL), are widely known as the iPhone company, but he wants to change that.
Cook wants to take over your car because the iPhone business is saturating at an alarming speed.
So what’s his plan for the iCar?
Apparently, he doesn’t want Apple to produce the physical car, but he wants access to the system that controls the car.
By doing this, Cook saves time by avoiding the physical design process of the metal, suspension, engine, and curves during inflationary times.
Cook feels that it’s more cost-effective to play God from a remote office in California.
Why not?
The manufacturing part is a serious risk these days with bottlenecked supply chains and rising input prices.
This leads me to say, there will likely be no Apple-branded car, even though all the Apple fanatics have been waiting for years for this.
Apple wants the car to be made by the car companies.
If Apple and Cook can pull this off, this would most likely become Cook’s legacy at Apple after he steps down in the future.
Like it or not, he’s been living in the shadow of Steve Jobs’ contributions to Apple since he took the CEO job.
He finally is looking to put his tailor-made stamp on the company before he leaves.
Cook has always been overshadowed by Jobs because he’s never been able to bring uniqueness like Jobs did.
At its WWDC developer conference recently, Apple presented a new version of its car operating system Carplay, which is due to be launched at the end of 2023.
So far, Carplay can do relatively little. Users can use the navigation, plus some apps like music and voice control and this is the first step to building a killer system that will later be installed as the car's nervous system.
Apple wants to completely take over the interior of the car in terms of software and the iPhone will simply be used as hardware.
The fact that the new Carplay version will not be available until the end of 2023 indicates that a stronger CPU will also be used in the iPhone. This will be the in-house M1 or M2 chip in the mobile version, which is expected in the iPhone by 2023 at the latest.
Just 4% of users say they prefer the built-in infotainment system to Apple's. In addition, owners of expensive vehicles are more likely to own a new iPhone model. So premium brands would run the risk of losing customers if they didn't offer Apple’s Carplay.
The batteries come from China, the electric motors from a supplier, as do large quantities of the other components.
Shockingly enough, there hasn’t been much pushback from elite German automakers like Mercedes and Audi.
This is a sign that they know they can’t compete in software against an army full of top-grade dorky software developers at Apple.
But then why would Apple need to work with a German automaker to install an expensive design that would spike costs?
Surely, Apple can outsource iCar manufacturing to China like they already do with the iPhone.
In the case that German automakers gleefully integrate Apple’s software into their own car design, it would mean death to corporate Germany.
It would decrease the value of German auto manufacturers by 75% overnight.
Technology is a winner-takes-all sweepstake and this business situation epitomizes that.
This would most likely get Apple to a $4 trillion market cap while crushing its European competition.
“Build something 100 people love, not something 1 million people kind of like.” – Said Co-Founder and CEO of Airbnb Brian Chesky
Mad Hedge Technology Letter
July 29, 2022
Fiat Lux
Featured Trade:
(BUYER BEWARE)
(TIKTOK)
Mad Hedge Technology Letter
July 27, 2022
Fiat Lux
Featured Trade:
(STITCHED UP BY ITS OWN POOR DECISIONS)
(SFIX), (AMZN)
Mad Hedge Technology Letter
July 25, 2022
Fiat Lux
Featured Trade:
(THE FUTURE IS HERE)
(NO CODE)
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