It's only three months into 2022, and some pure-play media companies are having a terrible year.
How terrible? Losing-half-market-cap bad.
Shares of Netflix are down a startling 67% year to date, pressured by another disappointing quarter for subscriber growth and a weak outlook. The streaming giant is now in cost-cutting mode — Meghan Markle's animated series 'Pearl' is now off — in an effort to boost profits with its top line slowing.
"Netflix is a growth company, but no longer a premium growth company," veteran tech analyst Mark Mahaney at Evercore ISI told Yahoo Finance Live on April 20 (video above).
Other media carnage isn't too hard to spot.
Roku also served up less than sterling first and second quarter outlooks, pushing its stock decline year to date to 56%.
Meanwhile, Spotify's stock has cratered nearly 55% as its first quarter also failed to impress Wall Street.
The lone relative outperformer in media has been Paramount.
Shares are up slightly this year amid momentum behind its new streaming platforms Paramount+ and Pluto as well as profit tailwinds from almost two years of cost cuts.
Chat up Wall Street pros and they point to a few reasons for the minimal enthusiasm for media stocks.
First, media stocks are being viewed as tech stocks — and tech has been battered on fears of rising interest rates from the Federal Reserve. Hence, the sector looks overvalued.
"I view Apple, for instance, as being priced for aggressive assumptions leading into the future, but not implausible assumptions," Research Affiliates Founder Rob Arnott recently said on Yahoo Finance Live. "It's very possible the growth will justify the price — not so for Tesla, Facebook, Netflix and Amazon. A lot of these are priced for implausible long-term growth."
Secondly, the media landscape's gains during the pandemic are not proving to be sustainable as the pandemic has waned.
"This concept of pull-forward of demand during COVID and how much demand was pulled forward from previous years and is going to have to sort of be given back [is a concern]," UBS strategist Stuart Kaiser. told Yahoo Finance Live on Monday (video above) "And I think a Netflix will kind of fall into that category."