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City comment: Changing of the guard as Netflix sinks and Tesla accelerates

·1-min read
Netflix’s stock dropped 35% on Wednesday (REUTERS)
Netflix’s stock dropped 35% on Wednesday (REUTERS)

Netflix’s share price slump isn’t just historic by company standards, it’s symbolic.

Yesterday’s 35% collapse, after its first fall in subscriber numbers in 10 years, marked the end of a decade of dominance for Silicon Valley’s social media and social-adjacent (read: streaming) giants.

It was not unexpected. There have been tremors. Netflix dived 20% in January on slower subscriber growth and a month later Facebook lost a quarter of its value after missing forecasts.

Both companies are victims of their own success. When you get that big, sometimes there is nowhere else left to grow.

Tech giants’ lofty stock prices assume continued growth, so running out of road means a crash is inevitable. Mark Zuckerberg wept seeing as he had no more worlds to conquer.

More broadly, though, the social and consumer tech boom of the last decade looks pretty tapped out. The rapid revenue growth enjoyed by many digital businesses will be hard to repeat.

Where will the next Facebook come from? Here’s a decent bet: clean energy.

Tesla, one of the leaders in the field, has delivered record quarterly earnings and profits. It has far outperformed Facebook & co over the past two years when it comes to share price growth.

A global push towards net zero will require new green energy inventions and a huge shift in the way we live, work and play. Those who can crack the problem will reap big rewards. Tesla looks to be among them. Many would argue the $1 trillion electric car maker is overvalued but its ascent is a sign of the times.

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