Netflix, Inc.
Thesis
Netflix's business model is outdated and unsustainable in the face of increasing competition from cable and telco video on demand services, which have already penetrated a significant portion of the market. The company's growth is stagnating, and as margins shrink, it will struggle to retain customers, particularly as usage declines. A price target of $16 indicates a potential downside of approximately 30% from current levels.
Did it work?
The short thesis called for roughly 30% downside to a $16 price target on claims that cable/telco competition would erode Netflix's growth and margins. Instead, over the ~18.75 years since the pitch, Netflix's stock moved decisively in the opposite direction — the short position lost approximately 275.7%, implying the share price more than tripled (and far exceeded that on a split-adjusted basis) as Netflix pivoted to streaming and became a global market leader. The core thesis dynamics (stagnation, customer attrition, obsolescence) were decisively invalidated rather than confirmed.