Why Netflix Isn't in WisdomTree's Growth Leaders Fund – and Hasn't Ever Been

By Jeremy Schwartz, CFA, Global Head of Research; Alex Moazed, CEO of ApplicoFAANG is now FAMGA (Facebook, Apple, Microsoft, Google, Amazon). This is the message Applico has been communicating for the past couple years, dating back to Alex’s Fox Business interview in 2019. And since Netflix’s annual report was released this month, Netflix’s high-growth tech story has been debunked. Instead, Netflix is just a movie studio with better digital pipes than its competitors. And, unfortunately for Netflix, those pipes can be replicated.Why is it that Netflix has fallen out of grace so quickly with investors? Because it’s not a platform business. And that’s precisely why it’s not in the WisdomTree Growth Leaders Fund (PLAT), which seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Growth Leaders Index (WTMDPL).A platform business connects two user groups together: consumers and producers (in this case, content creators). Let’s compare YouTube versus Netflix as a comparison of platform versus linear. YouTube has millions of content creators who willingly contribute videos onto the YouTube platform—for free! YouTube doesn’t have to pay licensing fees or make upfront payments for content. Said another way, almost all of YouTube’s content sits off the balance sheet. It’s contributed onto the platform by…
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