Is Management Playing the Long Game @ Netflix.?.?.
Before I start, let me first say I'm not a $NFLX shareholder and have no plans on buying here in the mid-$60's, so I've not no skin in the game but admittedly would like to see shares trade lower to at least get me to 'consider' a position at some point. With that in mind, take what I say with a grain of salt... If Netflix's management is playing the long game, which I believe they are, could it be in their best interest to keep expectations & sentiment low in order to keep the share price down for a period of time? I say yes and here's why... They're currently in the midst of a $25B buyback program and the lower the share price, the more shares they can buy back. They've already implemented $10B+ of the $25B with an implied average price per share of ~$82.xx (according to Gemini). I gotta believe they'd love to lower their average cost basis on buybacks in a big way and the best way to do that is to keep share price depressed for a while. How do you keep share price down? Lower expectations and do what you can to keep sentiment negative without going overboard. Most companies can't do that, but a company with strong C-suite leadership like Netflix's has the power & wherewithal to do so IMHO. I could be right or I could be wrong, but if I was a shareholder, I'd be paying close attention to when the $25B buybacks are close to complete, because if I had to guess, that's when management goes on the offensive again. In the meantime, I'd sit back and wait which just happens to be what I'm doing as a non-shareholder as well...
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12 Comments
Marc Beavis
@marcb · 12d
Fascinating insight and theory, Scott. Must admit, that's not something that would have crossed my mind, but who knows? I've never owned NFLX, although if I'm being totally honest, I do remember back in the day wishing I had. These days, I try and let go of my misses, but it's no easy sometimes. Great post, as always.
Nate
@hoodnate · 13d
management lowballing expectations on purpose during a 25b buyback... that's a spicy theory lol
Satwinder Singh
@thevalueinvestor · 13d
Great analysis Scott! As a Netflix shareholder with a small position (and not yet confident enough to go all in) this gives me some hope lol
Gusta
@gusta · 12d
All they need is engagement like stranger things was
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