To The Moon

I quickly took a quick look $Netflix(NFLX)$  at the results of 22Q4 financial report, and I am quite satisfied. Here are my key observation:

1) Key indicators.

I am more concerned about the number of new users (and ARPU), cash flow, income. The number of new users exceeded expectations this time (7.7M Actual vs. 4.5M EST). If you look closely, Europe, Latin America's exceeding expectations have exceeded 100%, and the United States and Canada have also exceeded 50%, and Asia is in line with expectations. In any case, this result is still gratifying (of course, what will be the introduction of the advertising layer in the future, how will it affect the user's hierarchy, that is, the relationship between the number of users and the ARPU) Indicators such as margin and ebidta are also more than expected, which is satisfactory. In contrast, the income rev is in line with expectations, not as dazzling as the aforementioned. 

Revenue Income and Cash Flow:

2) From the company's point of view, NFLX has long been concerned about revenue, operating margin, cash flow.

3) This time the EPS is 0.12 yuan, and the expected 0.48 yuan, which looks like a great miss. But the company gives a very reasonable explanation: This was below our $0.36 Forecast due to a $462M non-cash unrealized loss. 

NFLXs Euro Debt as a result of the depreciation of the US dollar vs. Approximately $5B of Euro Bonds provides us with some natural hedge on the relative value of the Euro for net income. However, it Doesn't affect operating income as unrealized gains or losss are recognized below operating income in "Interest and other Income." 

In short, it is the influence of the calculation method of the exchange rate factor.

    Many people only simply look at the two indicators of income and earnings per share, and will think that the results of this financial report are very bad, and according to this, they believe that the stock price of Netflix will plummet. Here is why this is not is not a concern: 

4) In the outlook for the next quarter, the company's revenue and Operating Margin outlook once again exceeded market expectations, but EPS is not as good as market expectations. Taking into account the influence of the exchange rate factor given above, the importance of the EPS indicator is not as high as the previous two.

Conclusion:

NFLX is path on recovery and expectation isgood in the coming quarters as macroeconomic situation improve and exchange rate is stabilised. Right now I caution against buying it. 

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