"The market loves movies and the internet and who doesn’t. It’s just that movies and the internet don’t make a great business."
From "Movies and the Internet" posted Thursday on Asymco.com:
Almost a year ago, on March 1st, 2021, I tweeted a snapshot of the “FAANG” P/E ratios. They were:
- Netflix: 88.63
- Amazon: 73.94
- Microsoft: 34.65
- Google: 34.75
- Apple: 32.89
- Facebook: 25.53
Today same companies have the following ratios:
- Netflix: 19.34
- Amazon: 46.08
- Microsoft: 30.17
- Google: 22.35
- Apple: 27.79
- Facebook: 13.67
What a difference 13 months makes. Microsoft and Apple saw modest falls 13% to 16%. Amazon, Google and Facebook saw large falls in their ratios: 38%, 36% and 48%. Facebook (now renamed pitifully as “Meta”) in particular saw its valuation collapse by half!..
But the star of the show, the real blockbuster, is Netflix. It fell from P/E of 88 to P/E of 19. Even six months ago the P/E was close to 70. What happened?...
Several paragraphs follow summarizing the history of Netflix as a business, from a DVD catalog to a streaming catalog to a hit-or-miss movie catalog with subscriptions reaching saturation and starting to decline.
That all happened rather quickly. The market loves movies and the internet and who doesn’t. It’s just that movies and the internet don’t make a great business...
Movies look to be more of a feature of an internet service bundle. That’s Apple’s approach. They don’t see video as a business but as hygiene: must-have something to put in a bundle.
My take: Like Horace, I never understood why FAANG had an N in it.