Blame it on Amazon (AMZN) .
I'm talking about the short sellers who are losing billions and billions of dollars every day now betting against Netflix (NFLX) and Tesla (TSLA) . They just don't understand the Amazon factor, meaning that you may not see what's causing all the love for either company, but that love is tangible and palpable and has both stocks breaking out to levels that most fundamentalists didn't think possible.
Let's start with Netflix. Last night it reported a much better-than-expected subscriber growth and streaming revenue. Some of the numbers here are so stellar they cry out for recognition: International membership grew by 5.12 million against a forecast of 3.75 million and 47% of the members of a company that started streaming just 10 years ago are from overseas, giving them 93.8 million users. They have the luxury of balancing profitability vs. growth and they, fortunately, are going with the latter.
They key to the story? Content: their original programming which, mind you, just began in 2013, in just four years accounting for five of the top 10 most searched TV shows globally. "The Crown." "Luke Cage." "Black Mirror." "Narcos." These shows are compelling enough to drive the sign-ups.
Yet there were so many people betting against this company. Listen to Wedbush today reiterating its Sell recommendation: "We continue to believe that Netflix is overvalued. We have been consistently wrong about this stock as we have always believed that valuation fundamentals dictate that companies be valued based upon the discounted present value of their cash flows. It is likely that we will be wrong for a while longer as there is more quality content than ever before and Netflix certainly has had its share of hits."
There you go, a bull case within a bear case. Too bad he didn't have two daughters who, when they left the house, didn't bother with cable. They had Netflix. Hence, why I have been behind it. Hence, why I begged Apple (AAPL) , an Action Alerts PLUS holding, to buy it at $25, $35, $50 and on and on.
Now it is too high. Why? Because it turned out to be Amazon. Sure it was and is faith-based investing, but it's been delivering. And while Wedbush waits to be wrong a little longer, with the only concession being that the analyst raises the price target for this $140 stock from $60 to $68, I am waiting for them to get to 200 million viewers. Why not?
It's a bargain.
How about Tesla? I have always called this a cult stock. Why? My kids can't own stock, but the only time they have been upset about that is when they haven't been able to buy Tesla's shares because they think that the car is amazing. It is amazing. Test drive one. The issues have been, though, how many can they make and can they make any money on them. One of the reasons why people have been dyed-in-the-wool bears, is a belief that they can't make as many as they say. But this morning Morgan Stanley, which with its Hold recommendation had laid out a compelling bear case, went to a Buy recommendation, pointing out that the company could make as many as 75,000 additional Model 3s by 2018. Plus, the company employs 25,000 people and makes all of its cars in the U.S. and Morgan Stanley then points out that CEO Elon Musk has an important line of communication to Donald Trump. Voila, it's a Trump stock.
But let's go back to Amazon. Both Netflix and Tesla -- like Amazon -- require you to go outside the traditional fundamentals to value their stocks. I have liked the stocks of Amazon and Netflix, two FANG members, because I think their products are bargains, although I have only said, if you like a Tesla go buy the stock. You need to accept that both can be the next Amazons and if you do, you know it would be foolish to short either, as so many dedicated professional short sellers no doubt feel after today's performance for these two incredible stocks.