Spotify, Netflix, Meta, Snap Stocks Go Off the Deep End. What Does It Mean? Why?

[Anderton]

I'll be interested to hear what the smart people on Musicplayer have to say about this.

[RABid]

Netflix lost users for the first time. Not surprising. It seems like every week another network or movie company is starting a streaming service. Disney is claiming to have the largest number of subscribers but experts found that they were counting subscribers multiple times if they had the Disney/Hulu/ESPN package. A lot of streaming services are suddenly pulling back on original programming after years of big budget productions that were not giving the expected returns.

[KuruPrionz]

I've been playing the stock market since 2009, my brother got me into it. 

Historically, internet service providers that offer non-tangibles have a lifespan, they come and go. We all remember MySpace? Classic example, they were the top banana in nonsense world and then other companies took their market share. 

A more recent example would be the way that Tik Tok has been eating Facebook's lunch in terms of shifts of membership. People may keep their Facebook page but not go on it, advertisers are privy to these changes and move their advertising dollars elsewhere. 

 

And, the only reason Twitter isn't on that list is because Musk took the company private. Doesn't change that Twitter has taken a nose dive, just makes it more difficult to track the data. 

 

If you  are going to play the stocks game, look for value in tangible items and play the long game. That said, stocks are currently taking a beating. I'm holding and looking away at this point, I missed the time to get out and wait. Even Apple is down right now, Nvidia dropped, Costco has gotten hit but is still up 35% from when I bought it. 

All of those companies offer actual value, people like or need their products. 

It's been a couple of years and is probably still in development but I remember reading that Nvidia had a robot in R&D that was programmed with a form of AI that could learn how to do something by watching a human do it. Think about how that will eventually affect the human labor market, it's staggering. So I'll hold it, it's been up much higher than it is now, this will change over time. 

 

Oil, energy, water, consumables - there are lots of places to park money and we are entering a time when buying a snick here and a chunk there could do very well over time. 

[Anderton]

Maybe the bloom is off the rose for sitting in front of a computer and streaming old TV shows or sub-par new movies, having Spotify sending the same stuff your way because of the algorithms, Facebook being so compromised, etc. etc. It's like companies came along with a shiny new toy, and everyone liked it. But now it's not so shiny. I wonder what the next shiny toy is going to be... 

[KuruPrionz]

1 hour ago, Anderton said:

Maybe the bloom is off the rose for sitting in front of a computer and streaming old TV shows or sub-par new movies, having Spotify sending the same stuff your way because of the algorithms, Facebook being so compromised, etc. etc. It's like companies came along with a shiny new toy, and everyone liked it. But now it's not so shiny. I wonder what the next shiny toy is going to be... 

This is why Zuckenberg is so obsessed with the Metaverse. 

Eventually we will hear about people who went to the Metaverse and never came back. 

 

[Anderton]

51 minutes ago, KuruPrionz said:

This is why Zuckerberg is so obsessed with the Metaverse. 

Eventually we will hear about people who went to the Metaverse and never came back. 

 

I think you just mentioned his name 🤣

[KuruPrionz]

The value of companies who herd "internet cattle" is questionable and transitory, as are the companies themselves. 

 

You start My Space, it explodes, everybody migrates to Twitter (or something, just tossing out examples without looking up, no data), then Tik Tok comes along and eats Twitter's lunch (or Twitter gets purchased by somebody who appears to be entirely ignorant of human nature) and then eventually somebody will torch Tik Tok with the latest and greatest concept. 

 

Being on a particular social media website is a fad-based concept. If you got in early on the stock and got out as soon as you made some good money, you're golden. 

Holding a social media stock is dangerously reckless. 

[Anderton]

Pet rocks. No intrinsic value, huge success, massive crash.

[KuruPrionz]

Just now, Anderton said:

Pet rocks. No intrinsic value, huge success, massive crash.

A good example but different because a pet rock is an actual, physical object -  just a failure as a "collectable" since anybody can pick up a nearby rock and claim it as their pet. 

 

Investing in social media is like buying stock in a TV show, maybe it succeeds at first but the nosedive is inevitable. 

 

[Nowarezman]

Warning - long post.  FWIW, this is my wisdom such as it is on the stock market, wealth, and taxes.  This is not political...it's just straight figuring using tax law on the books. 

 

The stock market is not a very good place to get rich.  But it's a great place to stay rich.  

 

In my long career, I've seen hundreds and hundreds of people get into the stock market.  A tiny few made big bucks through sheer luck - like Austinites who bought Dell before it was anything but just another couple of guys in a garage building computers and Michael Dell was peddling chunks of stocks to friends and family for startup cash.  

 

The next group who made big money almost always lost it eventually - the day traders for the most part.  Quite a few of these before the dot.com bubble popped and their fast money disappeared.  These folks never have enough - they just keep playing until they are out of chips.  

 

The bulk of everyday investors I've seen who went to a retail brokerage to plunk down $50K to $250K - going to any of the big brokerage names that advertise and are well-known - they would generally make a little, lose a little, make a little, lose a little.  Impatient investors would get tired of this seesaw and quite often jump into day trading or some hot stock tip off the grapevine.  Others who just stuck it out for decades, letting their money manager make the investment decisions, for the most part came out pretty well but not spectacularly.

 

All of the above - except for the tiny few lucky ones who had windfall and didn't blow it by wanting too much more - never got rich from the stock market.

 

But the final group - the folks who are already rich to begin with, i.e. trust babies and successful business owners and owners of big acreage taken over by growing cities, some of these folks are able to stay very, very rich and make tons of money each year and not have to work a lick if they don't want to.  What they do is generally find a conservative broker, an old-school type, who spreads their wealth into a portfolio of mainly blue-chip, dividend-paying stocks, and maybe some bonds (when interest rates are not flat on the ground.)  These folks just leave the stocks there for decades, even across multiple generations, and their portfolios generate 2% - 4% in cash dividends annually, while their underlying investments just slowly rise over time. The short-term ups and downs mean nothing to them.  Who cares if you lost 30% of your original stock value the day after you bought it if it cost $10 per share at original purchase, and now is worth $150 per share, 30 years later?

 

Just think - if you have a portfolio of, say, 8 million, and it pays 2.5% in qualified dividends on average, you'll make $200K a year in cash dividends you can live off of.  And in 2021, for a couple filing jointly with no income but that $200K in qualified dividends, how much tax do you think they had to pay?   $13,710.   And zero medicare or social security withheld or paid in.

 

That's a tax rate of 6.86%.   (13,710 / 200,000) And this is a couple who does not claim any mortgage interest or charitable or any of the itemized deductions.  

 

If the same couple made $200K in the form of W2 wages, their tax in 2021  would have been $29,381.  Plus they would have had another $8,854 withheld by their employer for social security and $2,900 withheld for medicare.  For a total of  $41,135 in total tax.  That's a tax rate of 20.57%. (41,135 / 200,000) Because, well, you earned the money instead of just getting it off passive investing.

 

Lastly, if the same couple made $200K from their own self-employed small business, then here's the hickie:

 

Income tax $19,774 + self-employment tax $23,063 for total tax of $42,837.  That's a tax rate of 21.42%.  (42,837 / 200,000). 

 

Don't take my word for it - if you've got TurboTax, just plug these numbers in and see the results for yourself.

 

My takeaway is that, well, 21.42% I could live with and pay as a loyal citizen and just get on with life.  But that 6.86% for a non-working passive investor seems....[fill in your own adjective stream here.] 

 

nat

 

 

 

[harmonizer]

Myspace had compelling value when there was nothing else like it. Then someone else figured out they could build a similar service which did basically the same thing, so that Myspace was no longer the only game in town. And then that "someone else" figured out how to pass Myspace. (2) Netscape was the dominant web browser by far for a couple years. One can debate the fairness of how they were knocked from the top spot, but someone else built something that seemed close enough in capabilities, and that someone else then took the top spot. (3) Ford had over 50% market share for US automobiles from 1913-1925 (https://en.wikipedia.org/wiki/U.S._Automobile_Production_Figures). For a while their Model T was differentiator, but then GM overtook them.

 

It takes a lot less time to develop a new web browser or social media platform than it does to design a new car that can be manufactured cheaply enough with desirable features. Tesla is the US Automaker who is a new player and has made a reasonably large impact in its field, and they have offered a differentiating product to allow them to capture the market share they have today. Time will tell if they can maintain this. 

 

[Anderton]

1 hour ago, Nowarezman said:

Warning - long post.  FWIW, this is my wisdom such as it is on the stock market, wealth, and taxes.  This is not political...it's just straight figuring using tax law on the books. 

 

A clear, concise explanation - great job.

 

<<Lastly, if the same couple made $200K from their own self-employed small business, then here's the hickie: Income tax $19,774 + self-employment tax $23,063 for total tax of $42,837.  That's a tax rate of 21.42%.  (42,837 / 200,000). >>

 

That's not necessarily ironclad, because of the deductions available as part of the business. For example, I deduct a portion of my phone bill and internet because it's used for business. When I was on the board of a NARAS chapter, I could deduct all the CDs and albums I bought because they were necessary to fulfill my duties of deciding who to nominate and vote for. I deducted buying the DVD of Mad Max: Fury Road prior to interviewing the person who did sound for it, because I had to ask the right questions.

 

The basic requirement for something to be considered a deduction is that it must be "an expense necessary to incur income." For example, I really needed a guitar with single-coil pickups to test out my commercially available presets, and to write authoritatively about recording using single-coil guitar pickups with amp sims and such. So I bought a Tele, and yes, I'm deducting it. I guarantee that if I'm audited and questioned about it, I'll have no problem because I can show that it generated income that exceeded its cost. The IRS encourages these kinds of deductions (which is why the laws exist) because I'm growing the economy by helping provide jobs for Fender.

 

Fortunately, there is no IRS regulation that says you can't enjoy your job   

[KuruPrionz]

3 hours ago, Nowarezman said:

Warning - long post.  FWIW, this is my wisdom such as it is on the stock market, wealth, and taxes.  This is not political...it's just straight figuring using tax law on the books. 

 

The stock market is not a very good place to get rich.  But it's a great place to stay rich.  

 

In my long career, I've seen hundreds and hundreds of people get into the stock market.  A tiny few made big bucks through sheer luck - like Austinites who bought Dell before it was anything but just another couple of guys in a garage building computers and Michael Dell was peddling chunks of stocks to friends and family for startup cash.  

 

The next group who made big money almost always lost it eventually - the day traders for the most part.  Quite a few of these before the dot.com bubble popped and their fast money disappeared.  These folks never have enough - they just keep playing until they are out of chips.  

 

The bulk of everyday investors I've seen who went to a retail brokerage to plunk down $50K to $250K - going to any of the big brokerage names that advertise and are well-known - they would generally make a little, lose a little, make a little, lose a little.  Impatient investors would get tired of this seesaw and quite often jump into day trading or some hot stock tip off the grapevine.  Others who just stuck it out for decades, letting their money manager make the investment decisions, for the most part came out pretty well but not spectacularly.

 

All of the above - except for the tiny few lucky ones who had windfall and didn't blow it by wanting too much more - never got rich from the stock market.

 

But the final group - the folks who are already rich to begin with, i.e. trust babies and successful business owners and owners of big acreage taken over by growing cities, some of these folks are able to stay very, very rich and make tons of money each year and not have to work a lick if they don't want to.  What they do is generally find a conservative broker, an old-school type, who spreads their wealth into a portfolio of mainly blue-chip, dividend-paying stocks, and maybe some bonds (when interest rates are not flat on the ground.)  These folks just leave the stocks there for decades, even across multiple generations, and their portfolios generate 2% - 4% in cash dividends annually, while their underlying investments just slowly rise over time. The short-term ups and downs mean nothing to them.  Who cares if you lost 30% of your original stock value the day after you bought it if it cost $10 per share at original purchase, and now is worth $150 per share, 30 years later?

 

Just think - if you have a portfolio of, say, 8 million, and it pays 2.5% in qualified dividends on average, you'll make $200K a year in cash dividends you can live off of.  And in 2021, for a couple filing jointly with no income but that $200K in qualified dividends, how much tax do you think they had to pay?   $13,710.   And zero medicare or social security withheld or paid in.

 

That's a tax rate of 6.86%.   (13,710 / 200,000) And this is a couple who does not claim any mortgage interest or charitable or any of the itemized deductions.  

 

If the same couple made $200K in the form of W2 wages, their tax in 2021  would have been $29,381.  Plus they would have had another $8,854 withheld by their employer for social security and $2,900 withheld for medicare.  For a total of  $41,135 in total tax.  That's a tax rate of 20.57%. (41,135 / 200,000) Because, well, you earned the money instead of just getting it off passive investing.

 

Lastly, if the same couple made $200K from their own self-employed small business, then here's the hickie:

 

Income tax $19,774 + self-employment tax $23,063 for total tax of $42,837.  That's a tax rate of 21.42%.  (42,837 / 200,000). 

 

Don't take my word for it - if you've got TurboTax, just plug these numbers in and see the results for yourself.

 

My takeaway is that, well, 21.42% I could live with and pay as a loyal citizen and just get on with life.  But that 6.86% for a non-working passive investor seems....[fill in your own adjective stream here.] 

 

nat

 

 

 

More than one way to skin a cat. I haven't gotten wealthy in the stock market but overall I've done well with it. 

It's important to choose stocks carefully. Currently we are in a downturn, this would be a good time to consider some purchases. 

I waited too long so now I will wait longer but companies like Costco will continue to prosper. Nvidia is tech but they are cutting edge with important products that end up in many computers (not just laptops and desktops, automobiles etc. also have computers). Neither of those are a bad place to park some money, especially during downturns. 

Apple or Microsoft? Again, tech but both have played the long game and are still doing well. 

Day traders are essentially playing the stock market as a casino. That may or may not work well, I don't play that game for the most part. I did make $3,600 in 3 days once but the reality is I'd have done much better to hold the same stock for a couple of years. 

More time on research and less time flipping in and out of the market would be my advice. Be skeptical and practical. 

Some stocks may pay dividends that add up, others have been around forever and are solidly established in their marketplace, safe places to park money but not always very profitable. 

At a certain point Tesla would have been great but a disaster if you bought late and held too long. I ignored it, not really sure why but I don't regret it now. 

[KuruPrionz]

Last but not least, I use a Roth IRA, paid the taxes on the money going in and now I can withdraw without taxes. 

Doing a 401k and letting somebody else manage your money may be OK and once in a while really good but most managers are cautious and diverse to the point that things don't move much. 

[Stokely]

The stock market is ultra-rich people's fears and hopes and predictions made manifest.  

As far as what is going on now in tech, considering the wealth of Zuck and Bezos and the like, I'd call it the "We're not as rich as we'd like to be!" crisis.   And as usual, regular workers and programs like Amazon's Smile charity program get the axe.   I love that Amazon says "it's not having as much impact as we like."  Well, now there will be less impact, since you aren't giving anything...I'd actually applaud a bit of honesty, just come out and say "we want to keep our money."

[ElmerJFudd]

Hmmm, maybe it’s just that offerings have increased so there’s a lot more competition than there was when Netflix went live.  Potential for growth has evaporated. 
 

Netflix can’t get content from studios who are now streaming their content by subscription themselves and have cut deals with other studios and streaming services to bundle.  For example Disney+, Hulu and ESPN+ can be bundled.  Paramount+ and Showtime can be bundled.  
 

Netflix therefore needs to spend money on content development and production to be competitive.