Netflix, Inc.
Thesis
Netflix has already experienced its strongest growth phase, and its revenue is expected to peak in 2008. The company lacks a competitive advantage in online distribution and is facing deteriorating subscriber economics due to rising customer acquisition costs and churn. Additionally, the emergence of new DVD technology will further squeeze margins, leading to a poor long-term outlook.
Did it work?
The short thesis was decisively invalidated: Netflix's revenue did not peak in 2008 — instead the company successfully pivoted to streaming, built a dominant global distribution platform, and became one of the market's best performers. The short position suffered a -275.7% loss over the ~18.6 years since the pitch, reflecting massive share price appreciation rather than the predicted decline. Every core element of the thesis (no online distribution advantage, peaking revenue, margin squeeze from new DVD technology) proved wrong.