If the market were to correct just because hedge funds want it to correct, I think growth stocks will take one of the hardest hit.
Since if the market is in a downtrend, we want to be shorting stocks or selling them.
This is a high risk play.
The stock I would short is NETFLIX.
WHY?
SIMPLE.
OVERVALUED based on P/E, and also EV/FCF
Netflix free cash flow is so low as it has high capex.
Netflix will face steeper competition from Amazon PRIME VIDEO streaming, APPLE’s Video streaming, Verizon, Time Warner, Redbox.
Using Porter’s competition idea, the focal industry where netflix is in will face lower profitability as BUYER (that’s us) power goes up and supplier’s power also goes up.
Netflix will face much lower margins in the future, and it is going to earn lesser revenue per customer.
While its global growth is promising, and CRAMER thinks it can go to $400…. I am with all the sane hedge funds who think that NETFLIX is a huge bubble.
I will go short NETFLIX with a tight stoploss at $218.
The trade may see success when AMAZON officially announce its video streaming early March or slightly later.
NFLX was one of my successful short last year… I am calling it my biggest short this year again.
Happy trading.
You can do the opposite and still make money.. WHY? Stock is like gambling, u either win or lose.
Good luck.
1 comment:
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