Netflix is Way Overhyped
Netflix stock is exploding to the moon. In the last few days, there’s another major bank or financial institution upgrading the company’s stock every chance they can. It doesn’t sound crazy to think that Netflix could be a $500 by the start of the summer.
Does Netflix justify the burgeoning price? No. Netflix has the advantage of being known as the premier video streaming company since they are the face of the revolution. Netflix was the first platform that led to so many wanting to stay home and binge programs hours upon hours. Hulu might have been first, but Netflix was the best to adapt to all devices such as television, cell phones and computers, leading to people watching at home or on-the-go. Netflix also seems to be a part of an evening or weekend activity for so many people even if it refers to binging shows in general.
Even though Netflix is such an icon of the streaming era, it’s not alone in its own category, which should make one question its dominance. It’s no longer a monopoly and they could never get away with increasing their prices due to all the competition. That alone should be a major concern when looking into the stock. We’re seeing a large test of Netflix’s competition during this horrific pandemic. What’s important to see is that people are binging shows, but it’s not just Netflix. Sure, “Tiger King” was fantastic, but Amazon has “Marvelous Mrs. Maisel” and “Jack Ryan”, Disney+ has “Frozen 2” and Hulu has “Little Fires Everywhere”.
There’s so much out there and there’s just so many options other than Netflix. Why give Netflix all the love? Is it because they’re a streaming platform company only and it’s competitors are owned by massive conglomerates? Possibly, but Netflix shouldn’t receive bonus points for that, when they’re not so much stronger than the others. Disney owns Disney+ and Hulu and isn’t receiving anywhere close to the love as it should just because they own theme parks and movie studios, which are both struggling. Why should Netflix not be punished for also owning its own production houses and not being able to make their own content, especially when they’re in so much debt that they have to produce content in order to pay it off? Why should they get praised while having this problem?
Netflix is not as great as everyone thinks and eventually the punishment will come for everyone who is buying in as the company hits over $400 and a P/E ratio of over 100. The stock is bound to implode and is benefitting way too much for being a “stay at home” company. Hopefully investors will take advantages of Netflix’s competitors soon.
