Hey Snackers,
As if the pandemic weren’t enough, some people are postponing their weddings and trips again because Mercury is in retrograde for an extra time this year.
Stocks closed higher as investors checked earnings to see how corporate America is navigating inflation, war, and supply shortages. That was before Netflix dropped a shocker after the bell…
Binged “Anatomy of a Scandal”... Netflix knows we can devour a limited series as if we had unlimited time. The streaming leader revealed yesterday that it lost 200K subscribers last quarter (it was expected to add 2.5M). Even worse: it expects to lose 2M global subs this quarter. Flix shares plunged 25% after hours and are down over 40% this year.
Netflix’s ultimatum... Unlike Hulu, HBO Max, and other ad-supported streamers, Netflix has rejected commercials, relying instead on subscription $$. In 2019, CEO Reed Hastings said he’d never do ads, “period.” But high prices (#flation) + subscription overload (#subscripuration) have made it harder for consumers to afford multiple streamers. Fast-forward to now:
It’s the price-cutting paradox… Lowering prices can boost revenue — but only if customers who were paying “premium” prices don’t downgrade. Netflix’s $15.50/month standard plan may be out of reach for many budget-conscious households, so adding a cheaper plan supported by commercials could help it grab a new market. The risk: subscribers who are paying for pricier ad-free plans might downgrade (that hasn’t happened to HBO Max yet). As streaming competition intensifies, it may be worth the risk for the Flix.
Slow burn… Today is 4/20, the unofficial holiday of cannabis connoisseurs. It’s been a decade since recreational pot was first legalized in the US, in Washington and Colorado. Since then, 16 more states and DC have followed. While national legalization remains an open question, the industry has found ways to advance:
Put that in your pipe and vote on it… This month the House passed legislation to legalize cannabis nationwide. But the bill’s stuck in the Senate, where it’s unlikely to pass because of partisan gridlock — even though it has support from nearly 70% of voters. The absence of a federal law has been a buzzkill for cannabis companies as they try to expand nationally:
High demand doesn’t always assure fast growth… Sometimes it’s in the hands of politicians. President Biden hasn’t pushed for pot legalization, which makes it unlikely the Dem-controlled Senate approves the current bill. But analysts think lawmakers may greenlight canna-banking this year, which could help cannabis companies expand to multiple states even without full legalization.
Authors of this Snacks own shares of Netflix, Canopy Growth, Disney, Uber, Walmart, Amazon, and Tesla
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