Market Outlook: Netflix, Flying Food and Tesla

Recent markets have been wobbling following rising interest rates and trade disputes that pressed investors to sell tech and fast-growing companies. According to the American Association of Individual Investors, the percentage of investors who expect stocks to fall over the next six months rose to its highest level in three months. Basically, bringing more uncertainty into the market. 35% of the reporting S&P 500 companies have missed sales forecasts this quarter and the index has shed over 5% in the past month.

In the entertainment industry, Netflix reported adding around 7 million new users in the third-quarter, but shares fell shortly after due to decreased optimism. Stock is still up 73% this year, but due to growing competition and the majority of their new users being overseas, I don’t see them doing well in the near future. This is due to everyone in the U.S. either already having Netflix or using a different subscription. Netflix is currently used in 75% of homes in the U.S. trailed by YouTube and Amazon, but I see their competitors merging in the near future, to overcome Netflix’s market share.

Moving onto Tech, while competitors like Amazon and Google are working on drones Uber is planning on making a fleet of food-delivery drones within the next few years. This opens up a whole new market for food-delivery, considering bankers valued UberEats at $20 Billion, this plan has the potential to take-off literally. Amazon is far ahead of Uber in drone development, but for now they’re focused on Alexa. Amazon is attempting to make Alexa smarter with AI, to hold their place at the top of smart-speaker sales with google, holding 51% share of the smart-speaker market. Their goal is to make Alexa more valuable, doing this will expand its capability to charge users for special skills.

Now Tesla. Over the past few months they’ve been wobbly due to Musk’s SEC investigation, but now that its over we can focus on their future. Beijing raised their tariffs on new car imports from 25% to 45% in July, Tesla’s cars are only made in the U.S., meaning a Tesla sold in China is now 60% more expensive. Vehicle imports to china have decreased from around 1,500 a month to 260 in July and August due to this new tariff. Tesla plans to build its first factory in China, it’s second largest market, accounting for 17% of sales last year. Tesla recently purchased 210-acres in Shanghai that has the potential to build 500,000 cars a year, this would be the first car maker to have an exclusively owned factory in China. Even though Musk says it will cost around $2 Billion for the new factory, Goldman Sachs says it will cost around $4-$5 Billion. Tesla will need to raise this cash on top of dealing with their $4.3 Billion existing debt due in 2020. I see Tesla having some trouble in the near future, but definitely going upwards in the long run, all relying on the building of this factory.