Loftus Peak chief investment officer Alex Pollak is confident his firm is still on a winner with its Netflix holdings, despite the company taking a $54 billion plunge in value this week.
Tech stocks have suffered from market correction after soaring during the pandemic, but Pollack insists Netflix’s crash is due to questions over its future growth, which Pollak believes in.
“One hundred million people sharing passwords shows you that 100 million people still want the service and are not paying for it,” he tells The Australian.
“Is Netflix more or less at peak subscription at 200 million? You would be asking that same question with or without Covid. But are we yet at peak subscriptions with password sharing, now that household budgets are stretched?”
Pollak argues that Netflix is self-sustaining in a way that its competitors aren’t.
“It is an engine that promotes content and requires no funding debt or equity to make it happen.
“Apple and Amazon Prime, even with MGM, are nowhere near that level of content spend and rely on their other businesses to support them. But HBO has a debt burden under the Discovery channel.”
While Pollak favours disruptive companies, he is moving away from “concept stocks”.
“Stocks like Roblox and Snap – they may succeed but this is the end of easy money. We are dealing with a world of rising interest rates where the ability to raise debt gets harder.”
