NFLX
Netflix, Inc.
TMT
09/25/2022
Presented
| Date | 09/21/2022 |
| Price | $236.87 |
| Market Cap | $105.34B |
| Ent Value | $89.81B |
| P/E Ratio | 21.06x |
| Book Value | $42.90 |
| Div Yield | 0% |
| Shares O/S | 444.71M |
| Ave Daily Vol | 9,903,914 |
| Short Int | 2.17% |
Current
| Price | $705.98 |
| Market Cap | $302.98B |
| Netflix, Inc. operates as a streaming entertainment service company. The firm provides subscription service streaming movies and television episodes over the Internet and sending DVDs by mail. It operates through the following business segments: Domestic Streaming, International Streaming and Domestic DVD. The Domestic Streaming segment derives revenues from monthly membership fees for services consisting of streaming content to its members in the United States. The International Streaming segment includes fees from members outside the United States. The Domestic DVD segment covers revenues from services consisting of DVD-by-mail. The company was founded by Marc Randolph and Wilmot Reed Hastings Jr. on August 29, 1997, and is headquartered in Los Gatos, CA. |
Publicly traded companies mentioned herein: Netflix Inc (NFLX)
Highlights
The presenter is long shares of Netflix Inc (NFLX), which is down 60% YTD largely due to changes in the business model as the company is looking to incorporate advertising and non-paying accounts. Investors had valued the consistency of the business model but can no longer count on NFLX delivering 15MM net adds per year, and Bill Ackman exited his position at a >$400MM loss, explaining that the business model changes would negatively impact the historical predictability of the business. While the presenter acknowledges that there are concerns around the dispersion of outcomes from the shift, as well as from competition, developed market maturities, and macroeconomic conditions, NFLX is still the largest scaled operator with the most engagement and arguably the best content. Ultimately, he thinks the lack of clarity has created an attractive entry point for a long-term long position. Adding a revenue source in the form of corporate ad budgets to provide increased access to consumers is already an accepted method of content delivery and could act as an idiosyncratic driver in an otherwise stable business. This is especially interesting since it likely comes without significant costs and incremental capital considerations over the short term. He is therefore comfortable that the company can meet or beat 2025 expectations. In a best-case scenario, he models 20% above 2025 Street estimates, equating to EPS of ~$20. At the current $240 share price, NFLX trades at 22x consensus forward earnings; simply underwriting a 16x – 20x multiple for year-end 2024 would yield a $320 – $400 stock price.
◆Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.
◆Signing up and creating account with us unlocks this content for you. Contact us today for full access to DeMatteo Research and more.