$222 at the moment, down 68% from the 52-week high of $701.
It’s a hard firm to value. But it certainly has a value, and it’s a lot cheaper than it was.
Still pricey depending on how you look at it.
3.35 times trailing sales seems like a lot in some ways, but on the other hand it has usually been in the 5-10 times sales range in the last decade.
Not this cheap on that metric since a stretch around 2012.
People don’t like the fallen subscriber count, of course, but losing Russia was never going to be good for that number.
People don’t like the fallen subscriber count, of course, but losing Russia was never going to be good for that number.
Russia represented a little over a quarter of the subscription shortfall. Previously lowered guidance was for 2.5M net increase. Result was 200,000 net drop. Russia about 700,000. Another 600,000 on North American price hike. The rest maybe post-pandemic subscription fatigue/inflation-related belt tightening. Guiding for the loss of another 2M this quarter. BBC reported 1.5M canceled UK streaming subs in Q1 across all platforms in response to rising cost of living.
The main problem is they no longer look like a subscriber growth story. P/S falling with growth. Subscription churn suggests their markets are saturated, maybe still pandemic over-saturated. They appear to be reaching the upper edge of subscription price elasticity. They have less access to the libraries of other studios as rival streaming services proliferate.
Our revenue growth has slowed considerably … Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration - when including the large number of households sharing accounts - combined with competition, is creating revenue growth headwinds.
They used to be OK with shared passwords because they added to viewer numbers. Now they’re signaling a crackdown. They used to preach the superiority of the subscription model. Now they’re looking at ad-supported offerings. Amazon and Apple are investing heavily in their streaming services, including in live sports, an expensive arena dependent upon advertising in which Netflix does not (yet) play.
Seems like a crowded marketplace, capital intensive on the content side, with no real moats. Streaming OS/programmer Roku is down 77% from its pandemic high. Tough business. Lots of competition.
Seems like a crowded marketplace, capital intensive on the content side, with no real moats. Streaming OS/programmer Roku is down 77% from its pandemic high. Tough business. Lots of competition.
Ultimate, your comments are great, and I would agree that the company has not really proved it can profitably produce all this content in such a competitive environment.
The only thing I would dispute would be the ‘no real moat’ part. In terms of content production, where they have focused so much effort lately, I agree. But in terms of subscriptions, I would say they are very sticky. They have a great brandname, Netflix being almost synonymous with streaming video content, and I can tell you from personal experience that when I cancelled my plan on their latest price increase, I was told in no uncertain terms by other family members that I had better rectify that mistake FAST.
I wonder if Plan B couldn’t be to go back to what they used to call, a long time ago, the ‘long tail’ of video content, the stuff that only a few people are interested in, not enough to make a run in a movie theatre or on TV, but good for a service where you can hunt up content you like. Old films, foreign films, documentaries, etc. I would happily pay $10/month for foreign films, Anything But Hollywood for instance. But that’s probably not worth a $150b market cap.
Their password sharing monetization strategy seems like nudging. They offer the subscriber who is sharing a password the option to share passwords for $3-5 extra per month in subscriber fee. So far they are testing it in Latam, most recently Brazil.
So it’s not like they are cutting sharers off, more like trying to get a bit more out of the subscriber.
Maybe it works.
Maybe if they are considering ads, they’ll consider one year terms on subscriptions.
Agree with much of what Ultimate said. Couple other points worth noting:
-Monetization of shared passwords likely to take a year before rolling out globally per the CC. Think this is probably smart, as they don’t want to roll out immediately and alienate the paying user base until they can properly target the non-same household shared accounts. So no major near-term revenues there.
-I’d be willing to bet a reasonable portion of their churn is a result of releasing full seasons all at once. Particularly for their premium offerings, users watch it over a weekend and then can cancel and come back when something else moves their needle. Compare to Apple/Disney/Prime, who have adopted the weekly and/or 3-4 episode per week drop model. Netflix has frequently touted that their goal/standard is to have great new content on a weekly basis, but that is a tough standard to maintain.
Seems like a crowded marketplace, capital intensive on the content side, with no real moats
Crowded marketplace - Yes and no. Other players in the market place are primarily entering to monetize their legacy assets and not sure how much real competition they will be in the long run. For now, there are many players entering and burning capital, it will take sometime to settle down.
Capital intensive on content side - I disagree. I think Netflix has reached the critical threshold where their content amortization cost will cover most of the content spend.
Moat - Netflix moat is very well demonstrated in the past price hikes. When you have over 220 million subscribers saying Netflix doesn’t have a moat is just silly.
Sure Netflix has issues, the price may still be pricey, the stock may go further lower from here, when you lose 35% in one day, often it takes sometime for the shareholder base to churn and find a new bottom, etc.
There are challenges, all growth companies hit growth ceiling at some point or other. But declaring Netflix has no real moat is just silly.
“It’s a hard firm to value. But it certainly has a value, and it’s a lot cheaper than it was.”
Hard to value tends to say a lot to an individual investor. The industry - entertainment -
is highly competitive, has a large range of other opportunities and a large range of properties
and costs to develop properties. Does Netflix have a a market driver that offers a lower cost or
a hook to keep subscribers while they increase their prices?
What makes Netflix a better option than say Disney - or any sports or betting related company?
Howie52
The first key is always the business - the industry - and what this company offers that is unique
to drive earnings.
Netflix has a chance to survive certainly. But what is the earnings driver?
Right now a company that has a low-cost position in fertilizer might be a better choice than a
low cost entertainment firm.
Course, in five years or ten you might want to have shifted - but after the recent (in the past 2
or 3 year period) run up in entertainment stocks - is now even a low-point for entry?
But declaring Netflix has no real moat is just silly.
Netflix has no real moat.
There are more great streaming shows available than I have time to watch. I don’t care of the provider is Netflix, Hulu, or HBO. I’ve signed up for and canceled Hulu and HBO several times. I’ve been a Netflix subscriber since the red envelope days, but after “Better Call Saul” is over Netflix will probably get canceled in favor of Paramount so I can watch Yellowstone and Picard. When that is over there are a couple Hulu series I want to watch. I’ll probably re-subscribe to Netflix eventually, but not for a while and it depends what HBO and Paramount come up with the the meantime.
I’ve been a Netflix subscriber since the red envelope days, but after “Better Call Saul” is over Netflix will probably get canceled in favor of Paramount so I can watch Yellowstone and Picard. When that is over there are a couple Hulu series I want to watch. I’ll probably re-subscribe to Netflix eventually, but not for a while and it depends what HBO and Paramount come up with the the meantime.
This describes the problem perfectly. I regularly subscribe, cancel, and resubscribe for services based on what I want to watch. When a new season of Lasso comes out I will rejoin Apple TV, but for now, there are too many other options available for me to pay for more than one or two services. On the other hand, I always have Netflix, Amazon Prime, and Direct TV subscribed since I have no cable subscription.
I’ve been wondering whether there’s a possibility of some sort of streaming aggregator, that would allow a subscriber to pay a monthly fee that is distributed to the various providers based upon usage. This would eliminate the need for periodic subscribing and unsubscribing to gain access to all available offerings. Any thoughts on that?
CNN+ is dead… NFLX down 60% YTD, DIS down 33% YTD. Now, all the “aspirational” players will realize they are going to burn precious capital and market is not going to reward them for having a streaming platform…
Consolidation, shutting down, partnerships coming. It is a crowded marketplace for Investment banks to make money…
I have my eye on DIS - which I have been buying recently (mostly in the $130 range). I still have some more capital I want to add to this position. At $120 it looks like a good opportunity (of course I thought the same at $130 :0 )
I wouldn’t be surprised to see annual pricing plans deployed to help offset some of the churn issues. Amazon has already set the precedent with PRIME.
Examples: (USD)
Netflix Monthly $25
Netflix Annual $199
Netflix Group (up to 4 logins) $299
Its clear that the Netflix is approaching saturation with their target markets; so pricing and packaging is really all they have left. Disney+ and YouTube still have a lot of upside IMO.
Lot’s of good criticism of NFLX here, but at what price does this become irresistible? The share price hasn’t been this low since 2017. They are trading at a PS of 2.8. They are still making money the last time I checked. My wife won’t let me cancel. I’m getting tempted. If google hadn’t become so attractive I might have bought Netflix already.
$15? LOL I think patience is important here. WE don’t know where the stock is going to settle. Let it hit the bottom and trade sideways, before you consider buying, assuming you have fundamental reasons to buy.