Netflix Stock & Apple Stock Surge
We here at Profit Confidential don’t take political sides: the only side we’re on is yours. We want our readers to see the biggest investment gains possible.
With that in mind, whatever you think about Nancy Pelosi, it’s worth paying attention to what her rich investor husband, Paul Pelosi, has been doing on the market—specifically in regard to Apple Inc. (NASDAQ:AAPL) and Netflix Inc (NASDAQ:NFLX).
It’s easy to forget amidst the whole coronavirus hubbub that many of the major tech stocks have been experiencing a very good year.
AAPL stock is up by more than 50% year-to-date. NFLX stock, meanwhile, has soared by nearly 50%, even with a recent fall due to an earnings report miss.
Chart courtesy of StockCharts.com
The important thing to remember is that, coronavirus or no, the world still keeps spinning—and some stocks still keep seeing huge gains.
And it makes sense to see both Apple stock and Netflix stock surge.
While Apple Inc. is vulnerable to delays in its supply chain (much of that coming out of China) due to the COVID-19 crisis, what better time for people to upgrade their phones or computers while sitting at home with little to do other than play with one’s gadgets?
NFLX stock, on the other hand, had a pretty obvious upward trend in the cards: people have been watching a lot of Netflix due to coronavirus-related shutdowns. We may even see COVID-19 eat into a chunk of 2021 (here’s hoping not). If that’s the case, then Netflix Inc will likely keep on raking in subscribers.
And while competition in the video streaming sector has certainly heated up, with companies like Apple Inc. and Amazon.com, Inc (NASDAQ:AMZN) trying to dethrone the streaming king, they’ve so far been unsuccessful.
No streaming company has had the cultural impact with its in-house production quite like Netflix. I mean, we all saw the Tiger King documentary spawn a thousand jokes, memes, and otherwise capture the attention of millions.
I couldn’t even name you one show on “Apple TV.” And while “Amazon Prime” has certainly had a few critical hits here and there, it still lags far, far behind Netflix in terms of cultural clout.
This means the outlook for Netflix stock looks great for the foreseeable future.
NFLX stock did take a bit of a dip recently, however, when the company didn’t meet Wall Street’s expectations.
In the second quarter, Netflix Inc saw earnings per share of $1.59, lower than the $1.81 that analysts expected. (Source: “Netflix Shares Fall After Earnings Miss, Weak Subscriber Guidance for Third Quarter,” CNBC, July 16, 2020.)
Revenue, however, jumped to $6.15 billion, higher than the expected $6.08 billion, marking a victory for the company. And the biggest win: global paid net subscriber additions hit almost 10.1 million, higher than the 8.3 million that was expected.
The problem was that the company’s projections for future additions to its subscriber base came in at half of what Wall Street had anticipated, ending with Netflix stock losing a fair bit of value over the past few weeks.
And that’s to be expected. Wall Street is weird place, where analysts tend to be reactive about being proactive.
What I mean by that is, they have been reacting to the COVID-19 crisis, and then being proactive by assuming that Netflix would see huge growth for the next while. But, as is often the case, analysts tend to get carried away, so it’s no surprise that NFLX stock saw a bit of a dip after the second-quarter earnings release.
Having said all that, the future is still very bright for the streaming giant. After Netflix Inc recovers from this minor correction (and signs are that it already has), then I expect the gains to keep on rolling in for Netflix stock.
And I’m not alone: Nancy Pelosi’s multi-millionaire investor husband thinks so too.
Pelosi’s Tech Stocks
It’s a sad reality of our political and economic system that the best earners on the stock market aren’t necessarily the crack analysts or wily day traders; it’s often those in the political class. (Source: “An Invitation to Corruption,” The Atlantic, March 20, 2020.)
But there’s a way you can benefit from this uneven system: do as the politicians (or their families) do.
In this case, Paul Pelosi recently disclosed some of his big moves on the market, and they’re very bullish for both Apple stock and Netflix stock.
In the case of Apple Inc., Pelosi recently sold about $1.0 to $5.0 million worth of AAPL stock, trading on the good showing of the tech giant in 2020 so far. (Source: “Nancy Pelosi’s Husband Made Large Transactions in Apple, Netflix Securities,” Barron’s, July 28, 2020.)
But I wouldn’t take that to mean Apple stock is headed down anytime soon. I instead interpret it as a way for Pelosi to make a quick buck while the stock is high and use that money to reinvest elsewhere that perhaps may be more immediately promising.
I remain very bullish on AAPL stock, as the company has proven itself to be more than capable of weathering the storm of China–U.S. trade wars and a disruption of its supply chain due to COVID-19.
In fact, we can see some of that money being put to use acquiring NFLX stock.
Paul Pelosi used options to acquire 5,000 shares of Netflix Inc for a $250.00 strike price (almost $1.3 million in total) on June 18, a day that saw shares of the streaming giant close at $449.87. Those options had been set to expire the next day.
Paul Pelosi’s recent trading was almost exclusively in tech stocks. We at Profit Confidential are consummately bullish on tech stocks. The fact that top figures in the country are similarly bullish on tech stocks should only reinforce our convictions.
Rightly or wrongly, politicians make some of the best investors. There’s a good chance that this could lead to corruption and leave open the potential for insider trading on a massive scale, but that’s a problem we’re not going to solve today.
Instead, what we can do is make sure that you, dear reader, don’t get left out in the cold while politicians and financial elites make winning plays on the market.
By following their disclosures, we can track the market and predict trends. In this case, what we’re being shown is that tech stocks, particularly Netflix stock and Apple stock, are among the more highly valued picks.