Netflix Might Get “Blockbustered”

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T.O.T.F. is an essential foundation for successful investing.

A cellphone displays the apps for the FAANG companies -- Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOGL)

Source: Koshiro K / Shutterstock.com

T.O.T.F. stands for “trends of the future,” and if you’re not trying to profit from them, you’re fishing in the wrong pond.

Too often, we investors stock our portfolios with “yesterday’s winners” instead of transitioning into the companies that can become tomorrow’s winners.

We’ll cling to “blue chip” names simply because they are familiar to us. But familiarity is rarely a solid basis for investment; familiarity can blind us to risks and anesthetize our critical faculties.

Familiarity can tempt us to hang onto to stocks like Pan Am, Polaroid, or Playboy… until there is no stock left to hang onto.

Famous brands like these do not usually disappear completely. But they often do languish for years once their initial success attracts stiff competition.

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Consider the plight of Netflix (NASDAQ:NFLX). Let’s turn back the clock to a Friday night in late July in 2002.

After grabbing the kids from day camp, you swing by Blockbuster to pick up a flick. Maybe it’s a Disney (NYSE:DIS) film or something a little more parent-friendly without being too adult. You tell the kids to shield their eyes from the latest menacing covers of the horror section, making a mental note to reserve a copy of Resident Evil for when they’re at your parents’ house next weekend.

Yep, it used to be that much of an ordeal to watch a movie only 20 years ago. (If you’re of a younger audience, this probably sounds like a fever dream.)

But now, it’s a much different story; a massive list of ways to stream your favorite T.V. shows and movies are at your fingertips. Netflix has become as much of a household name as Google, Clorox, KitchenAid, Cheetos, and more.

However, the streaming titan might be experiencing some buffering of its own…

And it almost makes you wonder if the “FAANG stocks” era is coming to a close.

In a way, it may be. I’m no fortune teller, but what I do know is that despite the chokehold the FAANG stocks — Facebook’s parent company, Meta Platforms (NASDAQ:FB); Amazon (NASDAQ:AMZN); Apple (NASDAQ:AAPL); Netflix; and Google’s parent company, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) — have on the market, there are far better ways to make money on tech.

A Familiar Story

Last week, Meta Platforms (formerly known as Facebook) reported a tremendously disappointing earnings report, plunging the stock from $322.99 at market close on Wednesday to $239.98 at Thursday’s opening bell — erasing $190 billion of market value faster than you can say “Zuckerberg.”

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Because FB makes up a significant chunk of the S&P 500, the index saw a huge loss, too. Not even the excellent numbers Amazon reported the following day could rally the S&P to previous levels.

That’s how much power the FAANG stocks wield, but perhaps that power is waning a bit. At least, that’s the story the stock market seems to be telling us. NFLX stock has tumbled more than 40% from the all-time high it reached three months ago.

To be sure, Netflix remains a dominant streaming company, but it faces stiff competition from multiple media channels. Needham & Co. analyst Laura Martin goes so far as to assert that Netflix, “cannot win the streaming wars given its current strategy.”

Elsewhere on Wall Street, analysts have been ratcheting back their earnings estimates for the company.

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Netflix isn’t about to wither up and blow away, but its stock could struggle for a good, long while.

Rather than hang on to a success story of the past like Netflix, I suggest scouting for opportunity in the success stories of the future. My crystal ball might not be any better than yours, but for the next year or two, I believe the following sectors could deliver market-beating gains:

  • 5G technology.
  • The resurrection of travel.
  • Short-term oil plays.
  • Battery metals, green energy, and energy storage.

In my investment services, I’ve identified a few select plays in each of these areas. Maybe none of these recommendations will become the next Amazon, or even the next Netflix, but they each stand to benefit from powerful trends of the future, not from trends of the past.

Eric Fry

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On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.


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