Netflix Showing Real Inflation Rate
A new company called StarGate
This weeks Netflix earnings were strong as they adding 19m subs pushing their totals above 302m. What is strange is the analysts were only estimating 9.8m subs for the quarter but the number was 18.9m, what is the BLS now in charge of estimations! Anyway, moving forward Netflix will not give out these subscriber numbers on a quarterly basis, gee wonder why, but maybe that they feel the peak is there potentially as they continue to increase prices. This is where we feel the real inflation rate can be accurately quantified, by directly analyzing exactly where large consumer based corporations are requiring their subscription tiers to be based at. So let’s look at the upcoming price hikes shall we:
The standard ad-supported tier goes from $6.99 to $7.99 a month (+14.3%)
The premium tier is increasing from $22.99 to $24.99 a month (+8.7%)
The standard plan is increasing from $15.49 from $17.99 a month (+16.1%)
The cost of adding an extra member on a plan without ads is increasing from $7.99 to $8.99 a month (12.5%)
This would put the equal weight price increase at a staggering 12.9%, this is the real inflation rate that Netflix is providing based upon their cost of doing business and balancing these increases vs the potential loss of subscribers. So 12.9% inflation, this is what the business world is passing off to its consumer base.
We know sports and entertainment are always a source of great consumer discretionary outlets, yet to what price to the consumer are they willing to continue to pay. What once was a cost effective way for consumers to “cut the cord” has slowly trickled back up to where now the cost of home internet plus entertainment/sports app is now essentially back up to where cable pricing was prior. How far is the consumer willing to go with this? For now Netflix seems to have bought enough quality content, or sub quality depending upon your actual ability to decipher quality, versus just plain dumb amusements used as outlets to forget about one’s reality.
Maybe this is why Netflix will no longer provide their subscriber numbers! Somehow though the gap between the old cable all in one, versus al a carte apps is quickly narrowing! You know we are old enough to remember the days where you actually paid for cable because you didn’t WANT COMMERCIALS! Can you imagine that today a paid for entertainment services with no commercials? Well this is how cable used to work, well not so much anymore. While we all dote on the wealth of sports athletes, just understand that wealth comes at the price of ever increasing entertainment contracts bought and paid for by the billions in subscribers who have been effectively monetized and conditioned for that matter to bear that cost for what is quite often sub par, often bad officiated in the case of the NFL, rigged fights like the Paul/Tyson sports programming!
If you are a normal human with a family of 4, it costs an average of $500 just to go to a professional sporting event and if its an NFL game, well that’s over $1000. So its no surprise Netflix and Amazon have gotten into the live sporting event game! Anyway Netflix is up big, but sellers have shown up. Netflix over the last 30 months is +6.16x on the highs! Pretty damn amazing run if you ask me. As usual though these kind of post earnings moves tend to be reversed as clearer hands prevail and AI machines start to arbitrage out the volatility:
Our new line in the sand is $843 and rising, it was down at about $812 but will continue to rise so all of you lucky longs rest assure we know where your stop losses should be for your exits!
We are also seeing good movement out of Oracle, now Oracle has a well known CIA link and considering we saw Larry Ellison speaking about MRNA vaccines yesterday, well we don’t like it one bit, but the new Trump Administration announced a massive $500Bn AI infrastructure initiative in the U.S. under OpenAi with a company called “The Stargate Project.”
Rest assure this whole deal is going to give the conspiracy theorists plenty of cannon fodder! Just look at what we have its a new Blue Ocean to commoditize, well somewhat new Nvidia has been riding the wave for sometime now, but this AI, the savior for humanity and now we have CIA linked Oracle, with OpenAI which we know has flipped a 360 switch post senate hearing and who is in a battle with the great Elon, we have SoftBank and we know all the controversies surrounding them and a company called MGX. MGX is a UAE state backed Tech company launched by Mubadala Investment the Sovereign Wealth Fund of Abu Dhabi, who already has partnerships with BlackRock, GIP and Microsoft. Then toss in the words MRNA and Stargate now all the Plebeians will be stirring:
So there you have it all the tech giants aligning interests all one big happy family sharing in the investment and risks. Everything looks great and the money to be made is assuredly endless, looks as if the equity markets can generate 20% a year once again! Well I guess time will tell, but when there are this many hands in the pot the money at the top looks well spread, but let’s just see who truly sits at the bottom of this sieve in the end! Winners have still yet to be determined.
Oracle is up decent this week and a nice bounce off its lows +15.3% this week:
Ok on Thursday after the close Intuitive Surgical reports, if you guys don’t know who this is, well you should, their symbol is ISRG and they are the leader in the robotic surgery market. Their core product is The Da Vinci Surgical System, a robotic surgical system controlled by a surgeon from a console. This system enables minimally invasive surgery for various procedures, including prostatectomies, gynecological surgeries, and cardiac procedures. The stock has been on a rampage lately and its pushed well above the weekly 21p VWMA, a sign of massive buyer reach. This stock could be do for some consolidation and retracement thus perhaps a play on the put spreads may be in order. Yes this is counter intuitive to the strength of the buying lately but its also a play on volatility should and may be a good way to get long the stock via short puts. In order to do this and if you had in mind the thought process of wanting to get long this stock should we get a pull back then let’s look an option play.
For Expiry 1/24/25 for illustration purposes and potential trade example an investor could:
Buy 1 $575 put at $3.10
Sell 2 $550 puts at $0.80. The spread trade results in a debit of $1.50. If ISRG moves below $573.50 you are making money, if it moves below $550 you will have exposure as a long position but of one unit only or 100 shares.
This is a good cost effective way to establish a long position in an equity and as you can see from the chart above, buying at the 21p VWMA has proven very effective, until that trend is broken, well that trend is your friend. Ok that is it for today guys, please subscribe and support our work, we are using AI to determine an appropriate rate to charge and we feel that combined with what we provide that the current tiers are appropriate, for instance the price of one month of our work to subscribe is equal to about $0.44cents per article per month. $0.44 cents, the amount of capital return you can obtain via our knowledge, our data our analysis is factors that are assuredly astronomically above that value point. We can’t convince you to support our work and we won’t try, we know the world values us as it does and we accept those facts, our reality is the sum of those trillions of data points all aggregated down into this single submission. For all intents and purposes we are mere subjects to the whims of those machinations and we accept that, so if you can at the very least provide a like or share our work with others, this way we will continue to grow! There is too much to be uncovered and each and everyday now seems like a new angle, a new treasure trove of information to be deciphered, after all why are we all here other than to promote a positive existence and experience for one another! Till next time, cheers.
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