Maybe it's the stay-at-home economy, stupid. On this day where the averages turned green chiefly led by Netflix (NFLX) and Domino's (DPZ) , both of which exploded for huge gains after monster good earnings, we have to ask ourselves if there is something bigger going on than just random companies doing well.
After all, what is Netflix but a company that offers you a competitive in-home experience that many feel directly trumps going to a movie theater for entertainment. Netflix produces long-form movies that you need to binge on to get the full story,
What is Domino's but the ultimate eat-at-home experience where you don't even have to call them. You can go online using their amazing website and order a pizza your way without ever having to talk to anyone, something that the millennials, who just don't like to talk on the phone, truly love. Don't want to use the website. Go to Facebook (FB) . Go to the Apple (AAPL) watch. They don't care. And best of all, you don't have to have cash. You can pay online. (Facebook and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
These companies have changed our habits. Netflix, which reported a sharply higher sign-up rate -- 3.5 million people to 86.7 million members; 1.27 million more than thought -- is growing at a ridiculously high 25% rate.
How is it doing it? By content. Go on their conference call. You can hear that Narcos 2, the second edition of their mostly in Spanish show about Pablo Escobar, drove the huge international sign-ups while Stranger Things aided the domestic market.
Analysts want so much to be able to pin growth down to something that is in the four walls of their spreadsheets, but Netflix either can't or doesn't care or is just having an immense amount of fun with the whole Wall Street process. They want CEO Reed Hastings to commit to cutting his huge spending, which is running to $6 billion on content next year. Hastings wouldn't hear of it: "No, we'll keep investing in growing the content spend even domestically for quite a long time. We see an ability to continue to please customers with a wide range of content, and so I think if you're trying to model the business long term, you should think of content and hours viewed and brand love all as continuing up in the U.S. for a long time." So there!
Not only that, but with Narcos 3 around the bend and Crown, a knockout behind-the-scenes drama about Queen Elizabeth II and the royals, which starts Nov. 4 -- a series Hastings said is "some of the most impressive television I have ever seen" -- directly ahead, I bet sign-ups will once again surprise to the upside. You don't get a stock up 20 points for nothing.
More important, though, we have a real secular shift here. Movies have gotten too expensive, more than a monthly sub for Netflix, and the candy's ridiculously overpriced. So is the soda. Not only that, but I believe that fear, actual terrorist fear, is playing a role in staying at home. We've seen incidents in a mall and a theater. It stays in your mind. Don't forget that Delta last week talked about how European terrorism has put a lid on international travel. I think that staying at home has become something people would rather do if they can.
Netflix is integral to that process. It's the bargain that's beloved with watercolor shows that people love to talk about. No, Reed Hastings doesn't use machine learning to figure out what will sell. But he knows what works and what people watch and he applies it well, better than anyone, something we know because of his incredibly low cancellation rate. Narcos 2 is bigger than Narcos 1 and a new franchise is born. If Crown takes off, I am sure you will see endless Crowns 2, 3, 4, etc.
I have made no secret of how much I love Domino's Pizza. My kids and I are addicted to it. We were bummed recently when Domino's was too far from where my daughter lives in Oregon. Obviously, we are not alone as the company reported an amazing 13.8% domestic same-store-sales number vs. the 8.5% number people expected. I will be speaking to CEO Pat Doyle later on Mad Money to discuss how the heck that is possible. Again, though, it's cheaper and more TV-friendly to stay at home and order a pizza then it is to go out and spend all that money and miss your programs. I can't tell you how many times we have done the Domino's-Netflix thing at home. It's a natural.
We've been covering video games and their penetration in the American psyche. According to Nielsen, Americans spend 11% of their leisure time gaming, hence the relentless strength in Electronic Arts (EA) , Activision Blizzard (ATVI) and TakeTwo Interactive (TTWO) .
We don't have the numbers, but many private companies have been vying to be the source for delivered ingredients that allow you to cook at home. Blue Apron comes to mind, right? Man, they've been all over the place with their push to be the first mover in the category. They have to go head to head with a deflationary trend at the supermarket where food prices have been rolled back in some cases to prices we haven't seen in years.
I have not cared for the stock of GrubHub (GRUB) because there are so many competitors out there, but it's been a winner, as getting that food at home is a top priority these days. I have watched with interest the private company Postmates, as well as the Caviar division of Square (SQ) because they seem to be thriving as people want things delivered instantly.
We have been loath at Bar San Miguel, my small-plate Mexican restaurant in Brooklyn, to offer takeout. We want our food to be eaten as soon as it's made. But we have no choice. People want takeout, they want to eat at home. We have had to bow to their wishes and have hired Caviar to do so. We aren't the only ones. We are doing it because everyone else offers it, which I think is a very big reason why the restaurant business has been in such a funk. Remember, we are a bar. We make our money on liquor. We want you to stay at our place and drink. But we have to cater to those who want to take the food home, too.
And then, of course, there's Amazon (AMZN) , which is the greatest stay-at-home story of all time. The idea of not needing a car and having everything brought to your house is now so ingrained that it is crushing so many bricks-and-mortar operations as to make owning shares in them painful. Amazon Prime is one of the great bargains of all time and it is winning the war of retail. It's the envy of everything and everyone in its path because it has used machine learning and incredible distribution to give you what you want when you want it for a lower price. Is it any wonder that people are waiting longer and longer to buy cars or get licenses? Amazon makes it too easy to stay home. (Amazon is part of TheStreet's Growth Seeker portfolio.)
Oh, and speaking of obvious: Do not forget that many of these items and devices and trends start with apps. Apple apps. Mobile, most specifically the iPhone, powers much of this trend. To leave that out is to leave out the punchline of the entire story.
People like to say that such-and-such a theme is in the early innings, or is just not starting to play out as if somehow the game will end. I think that this stay-at-home trend isn't going to end as quickly as it began. It's always going to be cheaper, it's always going to be safer, and in the case of Netflix, it's always going to be better than normal fare as long as current management runs the joint.