Netflix reported Q3 on Tuesday and its stock fell 6% after the close, the lowest level in two years per Variety. Co-CEO Ted Sarandos told analysts on the earnings call that the strategy is unchanged.
The mechanism is the earnings call, the room where executives explain to the Street that a six point drop is noise. Sarandos said the flywheel is working and there is no need for a fundamental shift in strategy. A flywheel is a wheel that keeps spinning and going nowhere, which is the correct word for a stock that is down more than 40% over the last year.
The call ran an hour and the only thing broken is America. The U.S., Sarandos said, is also working, it is just not growing as fast as it could. The word working did a lot of lifting on that call. The layoffs are a hard tradeoff, per Greg Peters. The C-suite got swapped. A new chief content officer is arriving to fix the execution. When everything is working, you usually do not need a new chief content officer.
And then there is the box office. Netflix has one week of publicly reported grosses behind it and the plan is to check in again in about six months. The company that spent a decade refusing to say how many people watched anything is now counting ticket stubs and calling it excitement. The stock disagreed, and the stock is the only one in the room not selling.
YOUR TURN: When an exec says the strategy is unchanged, who do you believe, the exec or the stock?
Comments (1)