Y Combinator’s Garry Tan Goes to the MatRead more

A trader on the floor of the New York Stock Exchange. Photo by Bloomberg

Netflix Stock Slump Drags Down TV Stocks

Photo: A trader on the floor of the New York Stock Exchange. Photo by Bloomberg

Greetings!

Another day, another market sell-off. And things are getting a little indiscriminate. Take today’s 5% to 7% drop in the stocks of Disney, Discovery and ViacomCBS, apparently triggered by a 22% plunge in the price of Netflix. It’s a little like a teacher punishing an entire class for the misdeeds of one student. Penalizing TV stocks for Netflix’s sharply slowing growth doesn’t make much sense. It’s arguably the competition posed by these very companies—with their newish streaming services—that is one of the factors weighing on Netflix’s growth.

Adding insult to injury, none of the three has enjoyed the incredible run-up in value that Netflix has seen in recent years—they’re each valued well below the video-streaming pioneer on a multiple of revenue and profits. That makes sense, given that Netflix has been growing 20% to 40% a year for most of the past decade, while the TV companies were plodding along at mostly single-digit percentages. But it is Netflix's valuation that should contract as its growth rate slows, not those of the other companies.

Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Former Apple design chief Jony Ive and OpenAI CEO Sam Altman. Photos by Getty.
Exclusive
Designer Jony Ive and OpenAI’s Sam Altman Discuss AI Hardware Project
Jony Ive, the renowned designer of the iPhone, and OpenAI CEO Sam Altman have been discussing building a new AI hardware device, according to two people familiar with the conversations.
From left to right: Blair Effron, Robert Pruzan and David Handler. Photos by Getty; Tidal Partners.
Exclusive Finance
Disputes, Employee Misconduct Rattle Centerview’s Silicon Valley Dreams
The San Francisco Bay Area–based bankers at Centerview Partners, the investment bank that advised Silicon Valley Bank’s owner and Credit Suisse through recent turmoil, got two doses of bad news last week.
Art by Clark Miller
Exclusive startups entertainment
MasterClass Takes a Crash Course in Frugality
MasterClass had a problem with the shoot featuring its latest star instructor, Walt Disney Co. CEO Bob Iger.
OpenAI CEO Sam Altman and Microsoft CEO Satya Nadella. Photos via Getty
Exclusive microsoft ai
How Microsoft is Trying to Lessen Its Addiction to OpenAI as AI Costs Soar
Microsoft’s push to put artificial intelligence into its software has hinged almost entirely on OpenAI , the startup Microsoft funded in exchange for the right to use its cutting-edge technology.
From left: Paul Graham, Garry Tan and Michael Seibel. Photos by Getty. Art by Mike Sullivan.
Exclusive startups ai
Y Combinator’s Garry Tan Goes to the Mat
Garry Tan was in his happy place. Surrounded by food trucks and techies basking in San Francisco’s September sun, the CEO of Y Combinator snapped selfies with entrepreneurs as he meandered through a crowd of 2,700 attendees at the startup accelerator’s annual alumni event.
Dave Rogenmoser, cofounder of Jasper. Photo via Getty.
Exclusive startups ai
Jasper, an Early Generative AI Winner, Cuts Internal Valuation as Growth Slows
Jasper AI, an early darling of the generative artificial intelligence boom, has cut the internal value of its common shares 20%, according to former employees who were notified by the company.