[Charts]: More Streaming Losses Ahead

You're receiving this email as part of your subscription to Lou Basenese’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] [Charts]: More Streaming Losses Ahead Friday, April 22, 2022 When Fridays roll around in the Trend Trader Daily Nation, we roll out the charts. All it takes is a quick glance — and you’ll be up to speed and poised to profit from the market’s most important trends. This week, I’m putting an exclamation point on my bearish stance on Netflix, Inc. (NFLX), and on the entire streaming sector for that matter. So without further ado… > ADVERTISEMENT < GET OUT NOW If you have serious assets in the market, [read this warning by May 11](. The man who predicted the 2020 crash says that a May 11 announcement could have a massive impact on the best-known stocks. "Move your money by 4:05pm ET on May 11," he says. The last time he issued a public warning, the market saw its biggest one-day drop in history. [Click here to learn more.]( Streamed Out In case you missed it, during my appearance on Fox Business earlier this week, I [predicted]( that one of the newest streaming services on the scene, CNN+, was “absolutely doomed.” Guess what? A day later, news hit that CNN+ would soon be shuttered… after less than a month of operations! We couldn’t ask for more compelling proof that consumers are streamed out. Truth is, we binged too much on all the new content. As you can see in the chart below, 35% of consumers now pay for four or more streaming services. That’s up from just 11% a few years ago. And it’s just not sustainable. (click image to enlarge) Remember, the original value proposition for unbundling TV programming was that it would be cheaper for us to consume only the content we wanted. The unbundling went too far, though, and now adding up the cost of individual streaming services is starting to outstrip the cost of traditional TV. Translation: The streaming market needs to find equilibrium again. Since the pendulum always swings too far in each direction, I remain convinced that there’s much more pain ahead. Particularly for Netflix. Here’s why… From Leader to Bleeder When a turning point hits in any specific market, the leaders always get hit the hardest. That puts Netflix squarely in the crosshairs for more selling… and more subscriber losses. That might be hard to believe, considering that the stock is off more than 60% this year already. But this chart really puts the seriousness and severity of the situation into perspective… (click image to enlarge) Since its inception, Netflix has enjoyed unfettered growth. But not anymore. A new reality is upon us. We’re not simply talking about a slowdown in growth; now we’re talking about an actual drop in subscribers… with further drops expected to come. That means it’s time for a transition. No longer can Netflix keep spending like a drunkard on content to keep growing. It has to start controlling costs, so there’s something left over to drop to the bottom line. That’s what investors demand when a business matures. The only problem? When you cut content, you cut the reason for subscribers to stay engaged. They’re too accustomed to new material. Making matters worse, no one likes to pay more to get less, but that’s what’s happening, as Netflix raises subscription prices and tries to sensibly scale back content. Good luck with that! Stock prices always stumble when companies are forced to adjust to a new reality. Even ones with massive audiences. For proof, look no further than Meta Platforms, Inc. (FB): it stumbled out of the gate when it first went public because its business needed to transition to a new “mobile” reality. To be clear, Facebook’s stock ultimately soared after it successfully navigated the transition to mobile. But that didn’t happen until the company had proved it could re-energize user and profit growth. Look for Netflix’s stock to similarly suck wind until management can prove it can profitably adjust to its new reality. And I assure you, the transition won’t be as easy as it was for Facebook. This isn’t simply about supporting a new device for consumption. It’s about trying to convince users to keep consuming more content.   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Ahead of the tape, Lou Basenese Founder & Chief Investment Strategist   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 301 S. Perimeter Park Dr. Suite 100 Nashville, Tennessee 37211 [Update Subscription Preferences]( | [Unsubscribe from this list]( RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. 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