Short Netflix, Long Disney

Published on
July 30th, 2019
Duration
23 minutes

Short Netflix, Long Disney

Trade Ideas ·
Featuring Andrew Freedman

Published on: July 30th, 2019 • Duration: 23 minutes

Andrew Freedman, CFA, communications sector head at Hedgeye, makes his Real Vision debut in style with a pairs trade on Netflix and Disney. He discusses why Netflix’s subscriber growth is hitting a wall, explains how Disney’s DisneyPlus could be a Netflix killer, and breaks down his price targets for both stocks, in this interview with Jake Merl. Filmed on July 29, 2019.

Comments

Transcript

  • JL
    James L.
    4 September 2019 @ 05:18
    NFLX has good original content and competitive pricing... not to mention a 151 million of subscribers. There are much better candidates to short than NFLX.
  • SB
    Scott B.
    2 August 2019 @ 18:37
    Freedman crushing it.
  • OC
    Otto C.
    2 August 2019 @ 15:30
    NFLX is definitely a short and so is DIS. DIS had a great run but buying it at this level is not very prudent. I would suggest that it gets below $100 before it gets to $200.
  • HS
    Henry S.
    31 July 2019 @ 18:13
    Interesting thesis....... Still won't be shorting Netflix though.
  • RS
    R S.
    31 July 2019 @ 07:53
    Data-driven and articulate. Classic Real Vision greatness with this. Nice trade idea.
  • KM
    Kelsey M.
    31 July 2019 @ 05:49
    While I agree with his general thesis, I do believe he's also wildly underestimating the recession risk. People book theme park trips way out in advance, but they're also paying for those trips now, or at least they're saving for it. If a recession hits, many might cancel the trip but there will also be groups that "find a way" by trimming the fat in their budgets. Netflix, etc. are the first things to get cancelled in a downturn, not big ticket, once-in-a-lifetime family trips. Look at subscription box churn for a better comparison. There's massive churn in the summer, when families go on their yearly trips. There's a reason Prime Day is in July; they're trying to steal vacation dollars at the slowest time of the year.
  • PG
    Philippe G.
    30 July 2019 @ 23:24
    I understand the overall key themes of the short thesis on Netflix, but how many times can one rewatch Friends....not a big loss in my opinion...
    • TM
      The-First-James M.
      31 July 2019 @ 16:46
      In my Girlfriend's case, A LOT!!!
  • BF
    Brad F.
    30 July 2019 @ 15:52
    I'm sure I have seen this trade before on RV, or am I suffering from de-ja-vu?
  • DL
    DAN L.
    30 July 2019 @ 10:48
    Let's say I buy the argument here but I'm just a retail investor without the ability to short. Do long-dated put options on Netflix make sense here?
    • BF
      Brad F.
      30 July 2019 @ 16:00
      The issue here for me would be the high implied vol on NFLX which make options expensive, and the long dated options are not very liquid so getting out of the position might be painful. For the Jan 2021 contract you would need the stock to drop to $275 to breakeven (not accounting for the cost of capital) at a cost of $5050 per contract.
    • DF
      Darren F.
      30 July 2019 @ 17:01
      just buy disney