Alister here with an update about Netflix, and their latest update. In case you haven’t heard. This little documentary called ‘Tiger King’ seems to be popular. Also, lots of people in lockdown all over the world have been binge watching more than usual.
What does that mean for the Stream King, Netflix, and their share price?
It means someone is going to be buying a few new jetski’s is what it means.
(Probably not this guy though.)
We are seeing analyst increase their target share price for Netflix, and a few have seen Netflix hit their predictions. We have spoken in the past about Netflix’s dominance in the streaming space, and the debate about tech company versus entertainment, but one thing is clear. It’s working.
Through Disney+ entering the battle, Hulu (also owned by Disney) ramping up their offering, and a few other contenders across the world throwing their collective hats into the ring, Netflix has kept it’s cool.
A few people are surprised to learn that Netflix isn’t considered a strong company when it comes to their cash. They aren’t special when it comes to the amount of profit they produce (relative to their size), they don’t have a lot of cash in the bank and have sizeable debts (funding movies and shows isn’t cheap!) Finally, they don’t give anything back to shareholders (similar setup to Amazon just without the insane profits.) All things consider, Netflix makes for a very low quality company, it’s in the bottom 20%!
If you thought the quality was ranked poorly, wait till you hear about the value! Netflix is very expensive (£142~ for a year of HD?) considering their share price versus how much money they actually make, which looking at the quality isn’t a lot. To really frame this, there are only 250~ companies we consider more expensive than Netflex. Netflix’s success is very much “priced in” yet we keep seeing incredible results and new achievements.
Speaking of the unexpected. What do the experts make of Netflix? It doesn’t make a lot of money, they reinvest it all and aren’t giving any to shareholders, they are massively over priced even against future expectations, so what does that mean? One of the highest momentum scores we have.
Analysts LOVE Netflix. Future revenue growth? Killing it. Future earnings growth? Consider it done. General sentiment and believe in their longevity? They have already bought it.
Will this change after their quarterly announcement this Tuesday? They appear to be putting out rather bullish (or tigerish?) statements and ramping up the excitement ahead of the announcement, but does that mean they are setting themselves too high expectations? If the analysts are anything to go by, they keep on impressing.
So is Netflix on your watchlist? Are you the 14% of analysts that say Sell, or the 67% that say buy? Or maybe you are waiting for The Irishman to finish so you can get back to your investing?