Netflix announced a new partnership with WWE to bring WWE Raw programming to its members globally. This move aligns with their strategy of expanding into live event programming and growing their sports entertainment offerings.
The company expects healthy double-digit FX-neutral revenue growth in 2024, driven by continued member growth, the full-year impact of 2023 net additions, and the scaling of their ads business. However, ads won't be a primary driver of growth in 2024.
Netflix's ad-supported subscriber base is expected to grow as they leverage partner channels and bundle the ads plan into lower-priced offerings. They believe there is room for multiple players in the advertising market and are focused on playing to their strengths, such as having an engaged audience and offering culture-defining content.
The gaming portfolio has seen significant expansion, with games like Grand Theft Auto Trilogy performing well. Engagement in gaming has tripled over the past year, and Netflix plans to continue investing in this area. They will focus on recognizable games and licensing existing popular titles or those based on well-known IP.
Pricing changes are expected to resume now that the majority of password sharing implementation is complete. Netflix will assess when additional value has been delivered to members before asking them to pay more. They aim to sustain healthy revenue growth, increase profit margins, and reinvest a portion of profits back into the business.
Netflix remains focused on its core areas of movies, television, and games, where they see significant room for growth. They believe there is still much potential to capture consumer spending and TV time within these categories. They do not anticipate a shift towards other forms of media consumption at this time.
Overall, the earnings call highlighted Netflix's continued investment in content, expansion into live event programming and gaming, and the growth potential of their ads business. They remain confident in their ability to deliver value to subscribers and drive revenue growth while maintaining disciplined capital allocation practices.
Undervalued by 0.8% based on the discounted cash flow analysis.
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About NetFlix Inc
CEO: Reed Hastings
Netflix is the world's leading streaming entertainment service with over 195 million paid memberships in over 190 countries enjoying TV series, documentaries and feature films across a wide variety of genres and languages. Members can wa...