00:00 Netflix reported earnings a few days ago and the stock hasn't reacted too much.
00:04 Net income came in at $1.3 billion and free cash flow was $2.1 billion which means the
00:09 stock is valued at around 35 times earnings or 53 times free cash flow. Total number of
00:14 paid subscribers increased by 1.75 million in the first quarter and revenue grew 3.7% to $8.2 billion.
00:21 This is encouraging for Netflix investors because there were signs before that subs were starting to
00:26 fall but this is hardly scintillating growth and it's simply not enough when the stock trades at
00:31 such a high multiple. The streaming business is intensely competitive. Netflix is responding by
00:36 introducing ads and making it harder to share passwords but it's also cutting investment in
00:40 new content. One way to do this is to produce cheaper reality star shows and fewer expensive
00:46 blockbusters. None of these decisions are going to be good for the Netflix brand and its stable
00:51 of content. Disney, HBO and many others are chasing from behind but without stronger growth,
00:56 Netflix stock looks like a sell.
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