It has been a hard quarter for both Netflix and multiple cannabis stocks. But why are investors of the opinion that those assets are heavily overvalued? Here we go though some of the reasons why short selling might be appropriate, and how you can join the selling squad on the way down..
Netflix are loosing US customers and grows slower in EU and Asia
Netflix has been a great bet the last few years, but many new competitors, lower margins and slower growth are worrying investors.
US subscribers fell by 126 000 during Q2, 2019, while Netflix analysts expected a growth of almost 310 000 subscribers. New international customers grew with 1.92 million fewer than estimates. It’s now obvious that Netflix is the 3rd most shorted share in the US this year, and it might be on it’s way to become the most shorted. Many current Netflix customers are complaining about price rises, and now consider competitors with more affordable prices instead, such as Hulu, Amazon Prime Video, Sling TV, Pureflix, Showtime and HNO Now. Among Europeans, many turn to Mubi, Shudder, Flix Premiere or HayU which are all about half or 1/3 of the price, but with considerably fewer programs and film to watch.
Cannabis One got 45% of shares lent out
About 45% of all shares in the canadian company Cannabis One has been shorted on Monday the 22nd of July, 2019. Apparently, the company is seeking financing and many believe they will have a hard time getting it.
Rob Koyfman writing for Forbes that cannabis stocks are full of hot air. What he means is that cannabis stocks are trading at crazy valuations and the growth will never be as high as expected. In U.S and Canada, many states allow smokable marijuana, while European countries such as Portugal, Spain and only permit cookies, tea and other products without the real effect. When people start to realise this, the shops offering these products will not be in business much longer. Valuations for many cannabis stocks worth shorting got a P/E ratio of close to 85x earnings. Will valuations ever come even close? Current sales in the industry of cannabis in the U.S and Canada is around 50 billion USD, while the current sales are about 580 million.
How to short cannabis and Netflix?
There are many ways to short a stock such as Netflix or a cannabis stock. Sign up at Skilling, which is the easiest way for short selling at the moment. The show all fees and interest charges, so you can notice how much it will cost to go short in a stock you don’t believe in. Another place to visit if you would like to earn money when the Netflix shares loose value, is to short the stock at AvaTrade. The company is one of the pioneers in the field and highly recommended by us at ShortSelling.com. Finally, another simply way with maximum flexibility for margin trading is eToro. Here, you can select 2x, 4x or 10x shorting leverage on most stocks available. So even if the share only moves 2%, you can gain 20% in one day. Try short selling Netflix at eToro today!