Netflix price hike is here - this is how much more money Netflix may bank

Yahoo Finance’s Brian Sozzi and Alexis Christoforous recap the week in tech with Dan Ives of Wedbush Securities.

Video Transcript

ALEXIS CHRISTOFOROUS: It has been a big week in tech. We've been talking about it all morning long from the Section 230 hearing to a myriad of earnings from Amazon, Facebook, Twitter, Apple. Here to break it all down for us is Dan Ives of Wedbush.

Dan, good to see you. Went through your note, which was quite the thesis, this morning-- lots to cover. I want to start with Apple. Big beat-- I mean, they did beat on the top and bottom line for the most part. IPhone sales we know were weak, but one would expect that given the fact that the iPhone 12 was coming around the corner. Do you believe we're still in a supercycle here?

DAN IVES: Yeah, I mean, I think the supercycle is just starting. I mean, that's why from an investor perspective this quarter really takes a back seat to what's going to be the supercycle hitting in the-- starting in the holiday season. And we think you could be looking $100-billion-type quarter.

And that's why, you know, a knee jerk-- I think a bit of an overreaction in terms of the iPhone miss. It's a pause, especially in China ahead of what I believe is a supercycle. And I can tell you from a check perspective, preorders up more than 2x its predecessor, so we be buying on this type of weakness.

BRIAN SOZZI: Dan, curious on Amazon. So much of the focus this morning on Amazon is the $4 billion in related COVID expenses. I get that's a big number. Investors have to focus on that. But to me, the real story is the margin pressure in Amazon Web Services and the slowing growth. You cover Microsoft. Is Microsoft taking share from Amazon, or is this more a reflection of hey, it's challenging out there from an economic standpoint.

DAN IVES: Yeah, you hit the nail on that. I think that continues to be a bit of a concern. I mean, if you look-- I think you're starting to see some share shifts toward Microsoft and Azure because now you're really getting into core enterprise workloads right when they're starting to gain share. Note that this is a big enough ocean for more than two boats. You're even see GCP Google gain traction there. But I do think they got to put more expenses, more sales and marketing, more R&D into those initiatives, but ultimately take a step back.

I mean, we are in really what's a golden period for cloud computing, and that continues to be really a two-horse race between AWS as well as Azure. And I think the Amazon number is priced to perfection in terms of expecting a quarter, but even when you look at the guidance, I think that's an SBS, sandbag special.

ALEXIS CHRISTOFOROUS: Dan, I want to get your thoughts on Netflix quick here because they didn't come out with earnings, but what they came out with was an announcement saying they're going to raise their subscriber plans. We're going to have to be paying a little bit more for our Netflix. Still less than HBO streaming service, might we add, but raise it nonetheless. Is this is going to be a disaster? Are people going to leave the platform, or will they pay up?

DAN IVES: If they're in a position of strength, and they know when they test prices, especially in this COVID pandemic, it's something they can increase buyer prices more if they wanted to. And that's why it all comes down to the king of content. And if you look at churn, it's really been impressive, what they've been able to do, and despite competitors from all angles-- Disney, Apple, as well as many others, you know, coming across the globe. I think Netflix just continues to be in a position of strength there. And them putting together that price increase, I think it's what investors want to see, you know, just given they know that they could do that. And that's going to be just another sort of added tailwind to the top line.

ALEXIS CHRISTOFOROUS: I want to ask quickly. We have talked in the past about maybe Apple buying up one of the movie studios to help it beef up its content as it now fights in the streaming battle. Do you think that Apple might do that with $190 billion it's sitting on right now?

DAN IVES: Yeah, I mean that continues to be the missing piece because they've essentially built a castle, a mansion, with no furniture in terms of content. And that's really going to be the driver. You know, I would be shocked if they do not buy a studio over the next three to six months. We've talked Lionsgate, Sony, MGM, A24-- the ones that would make sense. Because from a content perspective, that's what's missing for Apple on the streaming side, and that's why the investors-- that's what they want to see them do. They do that, stock's up on that move.

BRIAN SOZZI: Dan, California has Prop 22 on the ballot. I've been following Lyft CFO, Brian Roberts, on Twitter the past few days, and he's been tweeting up a storm. I should be really running the company. If this goes against Uber and Lyft, how detrimental could it be to their financials but also the stock price?

DAN IVES: It would be a massive gut punch, really a business-model change, especially when you look at Lyft-- 16% of revs comes from California. And that's why when you look at Uber, with the gig economy, I mean so much is riding on Prop 22 because it's not just California. It's potentially a Pandora's box and what that could do to other cities, states, and even, you know, countries-- [INAUDIBLE] and London I think also watching this closely.

I view it as a-- right now it's a contained risk because I do think they pivot on the business models depending on the outcome next week. I do think Lyft is more exposure than Uber because Uber, when you take it down to global exposure, 3% to 4% of revenues. But this is-- looks, this is a fork-in-the-road situation, and it continues to be a head scratcher in terms of AB5. But I think a lot riding going into next week on Prop 22. That's why Brian and Lyft are so focused on this. This is an existential business-model threat.

ALEXIS CHRISTOFOROUS: Dan, what about Alphabet's Google? Alphabet is one of the only big tech stocks actually higher this morning. They also had blowout earnings, but they're coming under a lot of pressure on the Hill with this anti-trust case now against them. Do you think that's going to impact the business going forward, at least in the short term?

DAN IVES: Yeah, and they've had-- as opposed to other FANG names, they've actually had headwinds on digital advertising. [INAUDIBLE] have turned the corner. That was huge relief for the Street. But ultimately from a DOJ and antitrust, I mean that's the big worry going into next year. Remember, a blue wave I think just adds to some of the threats and theme from a breakup perspective. They and Facebook continue to be front and center. Now they will very closely watching the DOJ suit because this is not a light matter, and I think this comes down to the beltway versus big tech battle, which is going to be a big theme into the next year with Alphabet front and center.

ALEXIS CHRISTOFOROUS: Are you surprised then that the stock is being bid up like it is today?

DAN IVES: It's being bid up because it's viewed right now antitrust is a contained risk. If you look at those numbers, those were even better than whispered expectations-- turn the corner on digital advertising, which is key because it shows maybe some business-model changes into some sort of semi-normal. And you compare that with the likes of Amazon and Apple, which of course didn't meet expectations with the Street looking for perfection.

ALEXIS CHRISTOFOROUS: All right, Dan Ives of Wedbush. Thanks as always. Good to see you.

DAN IVES: Thank you.