***Is Netflix ($NFLX) a Good Price & Good Company ? CEO Stepped Down !
This will be my afterthoughts to Tiger_chat 's question of whether an investor profits from a good company or a good price ?
To that I have asked, "why not both" ?
Wouldn't that have more upside comparatively speaking ?
Having covered a handful of US banks, I am keen to look at other Non-bank companies.
So for a change, lets take a look at Entertainment stock - , its Q4 2022 earnings and see if it still fits the bill.
Sidetrack: I have covered (1) an investment management company, (2) a healthcare company and (3) 7 financial institutions; to test out this theory.
- Goldman Sachs - Click here to read. Like the post ok. Tks.
- Morgan Stanley - Click here to read. Like the post ok. Tks.
- BlackRock - Click here to read it. Like the post ok. Tks.
- UnitedHealth Grp - Click here to read. Like the post ok. Tks.
- Citigroup - Click here to read. Like the post ok. Tks.
- JP Morgan - Click here to read. Like the post ok. Tks.
- Bank of America - Click here to read. Like the post ok. Tks.
- Wells Fargo Inc - Click here to read. Like the post ok. Tks.
- Jefferies Financial Group - Click here to read. "Like" the post ok. Tks.
- An American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California.
- Founded in 1997 (25 years young company) by Reed Hastings and Marc Randolph in California.
- Is a member the Motion Picture Association.
- In Y2K, Netflix held off its plan for Initial Public Offer (IPO) due to the dot com bubble burst
- 2 years later, on 29 May 2002, Netflix went public, selling 5.5 million shares of common stock at US$15.00 per share.
- It ranked #115 in Fortune 500 list of companies for year 2022
- It has approximiately 222 Million subscribers; as of Sep 2022 and is continuously finding ways to grow its subscribers base.
- As of 2023, according to US News, Reviews, PC Mags etc.. - Netflix is still the #1 On Demand streaming platform.
- Offers a film & television series library through distribution deals; as well as its own productions, known as Netflix Originals.
- Out of 195 countries in the world, Netflix is available in at least 190 countries except China, Russia, North Korea and Syria.
In 2022, a year where US market has been hammered by extreme volatility and ease of covid pandemic restrictions - how did Netflix fare ?
Current stock price < 20 Jan 2022 stk price by -37.87%. Potential upside ?
NetFlix - Summary
- Total revenue came in at $7.85 Billion vs $7.71 Billion (Q4 2021); thats a +1.82% QoQ gain
- However, net income was only $55 Million vs $1.44 Billion (Q4 2021); thats a -96.18% QoQ loss
- With that, earnings per share was $0.12 vs $1.33 (Q4 2021); again a -90.98% QoQ loss
- Is it alright to assume that Year 2021 earnings were an exception rather than a norm ? Given that year 2021 was right smack when Covid was most rampant and lockdown was the name of the game ?
Netflix - Customer Base
- I have come to realized that customer base criteria is important for customer-based oriented stock. Eg. $UnitedHealth(UNH)$ in healthcare and now Netflix.
- Total customers for year 2022 was 231 Million paid memberships, generating $32 Billion revenue and $5.6 Billion in operating income.
NetFlix - Operating Statistics
NetFlix - Other information
- Global paid net subscribers: 7.66 million adds, compared to 4.57 million subscribers expected, according to StreetAccount estimates. That's a +67.61% above expectations.
- Net cash from operating activities was $2.0 Billion and $1.6 Billion in Free cash flow (FCF).
Netflix's CEO on Q4 2022 Results:
“2022 was a tough year, with a bumpy start but a brighter finish. We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering,” the company said in a letter to shareholders. “As always, our north stars remain pleasing our members and building even greater profitability over time.”.... Reed Hastings, CEO, NetFlix....
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Why Netflix is Both A Good Price and Good Company ?
- For a start, it was able to bounce back from its low with a vengence !
- Entertainment stocks are non-cyclical in nature unlike semiconductors, construction, retail etc..
- With interest rates forecasted to continue rising to the 5% terminal rate banding ; its still too early to be seen whether Netflix would be affected by continuous interest hikes in 2023
- Netflix does not issue dividends just like Tesla and Meta (ex-Facebook).
- Comparing its current stock price and 20 Jan 2022 stock price, there is a potential upside of +37.87%
- If Netflix is able to (a) continue grow its customer base consistently, (b) eradicate the perennial issue of account password sharing and most importantly (c) bring in additional advertising dollars - the future is limitless.
- Do you think Netflix will be able to keep up its good of enlarging its customer's base in 2023 ?
- Do you think there are other better Entertainment stock/s out there ?
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