Netflix and No Chill, The Streaming Giant Got Destroyed

Dear Traders,

What a crazy market when you see Netflix blow up over $60 billion of its market cap, dropping more than 38% after disappointing earnings. We traded the heck out of Netflix on the short side, but I made some very big mistakes trying to catch a reversal on it too early, and that ended with a loss. Rats! You can watch the recap that Brian and I posted here. Ardi sold some $190 puts with an expiry in 2 days and made a quick $1,500 in one contract in 2 minutes. Easy money was definitely flowing today for the first 30 minutes. I encourage you to follow Ardi on Twitter for his trade recap.

One of the costliest mistakes you can make is to take a trade without a well-defined TradeBook. You very likely will experience some serious losses. That is why at Peak Capital Trading’s boot camp, we help you to not just build an effective TradeBook, but to also stick to it. There are limited seats available for the next boot camp that starts on May 9th. If you’re interested, you can sign up here.

Stocks in Play

As I mentioned, Netflix was destroyed in trading after losing customers for the first time in a decade. The streaming giant lost 200,000 customers in the first quarter and has projected it will shrink by another 2 million customers in the current second quarter. Netflix plans to create a lower-priced version of its service that has advertising and, even before that launches, will start cracking down on people sharing their passwords. As John tweeted, “If you care about your 401K, you will change your $NFLX #password tonight! #doyourpart”. So, everyone, please, do your duty. In January of this year, Netflix was at $612 per share and the State of California owned around 2% of the company through its pension fund. Today, it seems they lost over $1 billion. Accordingly, if you lost money recently, do not feel bad, apparently the entire State of California’s pension fund is much like us! With that said, losing 200k customers isn’t really that horrid, but the extent of their crash demonstrates just how much of Netflix’s value was based on future growth

Global Economic News Headlines

A small but growing number of senior Kremlin insiders are quietly questioning Vladimir Putin’s decision to go to war. In a rare public criticism by a Russian businessperson, sanctioned billionaire Oleg Tinkov slammed Putin’s invasion of Ukraine via an Instagram post:

“I don’t see a single beneficiary from this insane war.”

Ukrainian defenders at a sprawling steel plant in Mariupol said they were outnumbered and appealed to world leaders for help. Troops risk being encircled in a new Russian offensive. China indicated it will continue strengthening strategic ties with Russia. European car sales plunged as the war deepens manufacturers’ supply chain woes.

Investors in 10-year Treasuries can expect to earn real returns on their money for the first time in more than 2 years. The yield on 10-year inflation-protected Treasuries rose as high as 3 basis points in Asia trading today, with the turnaround driven by the Federal Reserve’s hawkish stance. The Fed’s aggressive rate hike plans are jolting policy in China and Japan. Positive real yields will rip up the global markets’ playbooks.

BBT News and Webinars

Thor held an amazing webinar last night. It was very well attended and the recording has now been posted for access by all of our Elite members. Thor is a senior educator for Peak Capital Trading’s boot camps and will be presenting his training modules to the participants in the upcoming session. Make sure to register here in order to join me in learning from Thor and other exceptional traders. If you wish to view last night’s webinar but are not yet an Elite member, you can upgrade your account here and benefit from a heavily discounted price.

Tonight, for Wednesday Psychology, our psychology coach Susan will be leading a discussion on the subject of probability and trading. In this webinar, which starts at 8pm ET, Susan and her guests will discuss the main concepts presented in Annie Duke’s book, Thinking in Bets, and they’ll explain how you can successfully take those concepts and apply them to your own trading.

And Finally,

The king of memes did it again. Elon Musk has dropped another hint that he might launch a tender offer for Twitter shares, tweeting a phrase beginning with a blank space that could reference either “Tender is the Night” or perhaps “Tonight is the Night”. Tied in with this, The New York Times has reported that Musk may take out a loan against his Tesla shares to fund a bid for Twitter. But first, Tesla will be reporting its earnings results later today, and it is expected that the focus will mainly be on Shanghai electric vehicle production snarls.

All eyes will be on Tesla’s earnings results, and I am sure Ed is ready to make some big trades on it in his room. Join him.

To your success,
Andrew

PS: If you have not already, I urge you to try out our free web-based trading simulator at stocktradingsimulator.com. It’s conveniently available 24/7, whenever you have time to practice honing your trading skills