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2021-07-02

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Netflix Stock Forecast: Is More Growth In Store?

Summary Prior to 2020, I was bearish on Netflix due to negative cash flow and a speculative busines

Netflix Stock Forecast: Is More Growth In Store?

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{"i18n":{"language":"zh_CN"},"data":{"magic":2,"id":156231870,"tweetId":"156231870","gmtCreate":1625223819490,"gmtModify":1633942390778,"author":{"id":4087299060581740,"idStr":"4087299060581740","authorId":4087299060581740,"authorIdStr":"4087299060581740","name":"Henry33","avatar":"https://static.tigerbbs.com/c600b3b06e0b1b8b34d069a1fa7c8295","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":0,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Good buy&nbsp;</body></html>","htmlText":"<html><head></head><body>Good buy&nbsp;</body></html>","text":"Good buy","highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/156231870","repostId":1113667158,"repostType":4,"repost":{"id":"1113667158","pubTimestamp":1625218111,"share":"https://www.laohu8.com/m/news/1113667158?lang=&edition=full","pubTime":"2021-07-02 17:28","market":"us","language":"en","title":"Netflix Stock Forecast: Is More Growth In Store?","url":"https://stock-news.laohu8.com/highlight/detail?id=1113667158","media":"seekingalpha","summary":"Summary\n\nPrior to 2020, I was bearish on Netflix due to negative cash flow and a speculative busines","content":"Summary\n<ul>\n <li>Prior to 2020, I was bearish on Netflix due to negative cash flow and a speculative business model.</li>\n <li>If not for the pandemic, these concerns might have mattered. Instead, with billions of people locked at home, Netflix gained nearly 37 million new subscribers in 2020.</li>\n <li>Monthly subscribers are pretty sticky, and the cash flow gains should be more or less locked-in for Netflix.</li>\n <li>With a massive subscriber base and positive cash flow, Netflix has a ton of optionality. Netflix plans to get into the merchandising business as well, bringing new opportunities to profit.</li>\n</ul>\nWhy I Changed My Mind on Netflix\nBack in 2019, I wrote an article about why I was bearish on Netflix (NFLX). Today, I'm sharing why I've changed my mind and bought NFLX stock. At the time of my prior article, Netflix had negative cash flow, was losing US subscribers, and was still borrowing heavily in the junk bond market to produce content. What I never foresaw–less than a year after writing that article, the world stopped on a dime with government-imposed shutdowns. After the lockdowns, I found that nights out on the town with friends were replaced with entertainment at home. I wasn't alone in the change. In 2020, Netflixgained nearly 37 millionsubscribers, putting their global total at 200+ million.\nThe rush of new subscribers means more leverage/pricing power to license content, better cash flow, and with that cash the ability to produce high-quality content at a low cost of capital. The network effect of gaining subscribers means that the more Netflix grows, the better the economics of the business is for them. As such, NFLX stock was very strong during the start of the pandemic but has traded sideways recently. I'm constantly throwing water on tech valuations here–the truth is that large sections of large-cap tech are currently overvalued. Netflix has a high valuation as well, but continued subscriber growth and the inherent stickiness of subscription revenue gives Netflix a lot of optionality that can help NFLX stock appreciate in value. NLFX may not be as expensive as it looks if growth trends continue over the next few years. Last quarter, for example, analysts expected Netflix to earn $2.99, they crushed estimates andended up earning $3.75,yet the stock got crushed because traders wanted even more. If you're willing to buy and wait a year or two, I think Netflix could pull through yet again with big gains.\n<img src=\"https://static.tigerbbs.com/2445c827bb25b60b6679b7b1bfee9c6e\" tg-width=\"635\" tg-height=\"449\">\nData by YCharts\nIt's also worth discussing what is going on with the competition. Amazon (AMZN) is facing increasing amounts of political pressure and antitrust scrutiny, while Apple (AAPL) faces antitrust action in the EU over its music streaming service. Netflix has roughly 1/10 of the market capitalization of Apple and Amazon and is not getting heavily involved in political food fights the way other tech companies are. This should allow Netflix to focus on executing its business plan while competitors focus on putting out fires in Washington DC.\nIs Netflix Stock a Buy Now?\nThe valuation is high, but over the long run, Netflix's subscriber growth curve over the last 20 years has been nothing short of incredible. As subscribers continue to grow, margins should grow as well, and Netflix can start producing more and more cash flow. Assuming growth can keep rolling in, Netflix stock is an easy buy.\n<img src=\"https://static.tigerbbs.com/3faa28f8d9f3e9b96bf2ff916532dd9f\" tg-width=\"640\" tg-height=\"485\">\nSource:Backlinko\nBehind the growth curve lies a history of a company that almost didn't make it to where it is today. In September 2000, Netflix was in trouble as the dot-com boom turned to bust. Netflix CEO Reed Hastings and a few of his lieutenants were summoned to Blockbuster headquarters in Dallas. On the table– a proposed rescue of Netflix by Blockbuster. Netflix would become Blockbuster's online and mail rental division, while Blockbuster would focus on retail. Hastings proposed that Netflix and Blockbuster join forces. His price? $50 million. Netflix executives werelaughed out of the meeting.\nNetflix found the financing they needed to survive elsewhere, and the meeting in Dallas went down as one of the most ironic in the history of tech, with Blockbuster going out of business less than 10 years later and Netflix becoming one of the best-performing stocks of the 21st century.\nAre stories like these just survivorship bias? No one knows for sure. Apple nearly went bankrupt in the 1990s, Netflix turned down a buyout offer from Amazon in 1998, and countless other high-flying tech companies either failed or were bought out at low prices by competitors. Netflix became a heavily shorted stock in the 2010s but proved doubters wrong, raising the money they needed to cover their losses while rapidly growing subscribers. Today's Netflix is different, with the company having a well-entrenched network effect and optionality to monetize subscribers in different ways. Netflix'scredit rating has been upgraded, and the company looks like it will be upgraded to investment grade soon. For example, Netflix could use their lower cost of capital to buy a Hollywood studio, a Bollywood studio, and/or a live sports TV provider like fuboTV (FUBO). Going up the food chain, it's possible that Apple could acquire Netflix. Netflix is also looking to make money through an online merchandise shop, which I'll cover in a bit.\nNetflix Stock Forecast\nIn 2021, analysts expect Netflixto earn$10.59 per share. For 2022, analysts expect $13.05 in earnings. At least 10 sell-side analysts are providing estimates to 2025 when they expect Netflix to earn $25.66 per share (I generally crowdsource earnings estimates and make adjustments when I think there is a systematic bias). At today's stock price and 2025 earnings, Netflix would be trading for only 21x earnings. Netflix's high valuation creates risks, but the large subscriber base means that NFLX has many routes to growth. If NFLX can maintain a multiple of 35x in 2025 and analyst earnings estimates are correct, then that would imply a 2025 price for NFLX of roughly $930 per share.\nThis means a total return for NFLX of roughly 15 percent per year assuming a moderate amount of multiple contraction and steady growth. Stocks like NFLX are notoriously hard to value, the range of analyst earnings estimates are wide and P/E ratios for growth stocks fluctuate in line with market conditions. The analyst numbers seem reasonable, and they may be too low if Netflix finds clever ways to monetize their subscribers. Any time you buy a stock like Netflix for as high as a multiple as it trades for, you incur risk. Given the long-term growth trends, however, I think that the risk is more than offset by the potential upside if Netflix is part of a well-diversified portfolio.\nOverall, NFLX is a reasonable investment. In the event of a market pullback, NFLX could be a great stock to buy on the tip. I believe that NFLX has a much easier path to doubling in price than other FAANG stocks. I own a lot of value stocks, so I buy tech as well to balance out the portfolio. Netflix has a much smaller market cap and a subscription-based model. Apple, Amazon, and Facebook's(NASDAQ:FB)ability to grow are increasingly constrained by politics. Facebook was pretty cheap in the fall, now I think it's fairly valued going forward. After analyzing all of them, I think Netflix and Google(NASDAQ:GOOG)(NASDAQ:GOOGL)will have the best returns of the FAANG stocks going forward. For Netflix in particular, one more potential opportunity comes from their online shop.\nNetflix's Online Shop\nNetflix is making its first entry into e-commerce with the opening ofNetflix.shop. Fans will be able to buy merchandise related to Netflix's content at a price point from $30 to $135. This takes a page out of Disney's (DIS) playbook, which makes billions of dollars per year fromlicensing and selling merchandise. Disney makes $3 billion per yearfrom licensing alone with very little cost or risk associated.\nNetflix alsocut a dealwith Steven Spielberg's production company. Spielberg directed the popular Indiana Jones movies and Jurassic Park. Spielberg is 74 years old as of my writing this but may have at least one big hit left in his career. The idea may be that Netflix can get some synergy out of Spielberg's new productions and their online merchandise shop. Netflix has everything to gain and little to lose from merchandising, and developing alternative streams of revenue can help sustain Netflix's P/E multiple and offer new routes to growth.\nWith 200+ million subscribers, this is just one way that Netflix can earn more money from their customers. While I don't know whether Netflix can approach the level of success that Disney has had with merchandising, they are following a proven and effective business model that movie studios have used to milk additional profit out of the money they spend on creating content.\nConclusion\nNetflix's huge gains in subscribers came at the perfect time. With production restarting after the coronavirus and Netflix having a current audience of over 200 million subscribers, there are plenty of ways for the stock to grow into its valuation. With an improved credit rating and cheap capital at its disposal, Netflix could look to make acquisitions or continue to invest in content without fear of a shortfall of cash. Netflix is cash flow positive and has great optionality from making acquisitions, growing organically, and executing existing business plans like its online shop. With consensus earnings estimates looking good and a deeply entrenched network effect, Netflix stock could steadily appreciate over the coming years.","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Netflix Stock Forecast: Is More Growth In Store?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNetflix Stock Forecast: Is More Growth In Store?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-07-02 17:28 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4437324-netflix-stock-forecast-is-more-growth-in-store>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nPrior to 2020, I was bearish on Netflix due to negative cash flow and a speculative business model.\nIf not for the pandemic, these concerns might have mattered. Instead, with billions of ...\n\n<a href=\"https://seekingalpha.com/article/4437324-netflix-stock-forecast-is-more-growth-in-store\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NFLX":"奈飞"},"source_url":"https://seekingalpha.com/article/4437324-netflix-stock-forecast-is-more-growth-in-store","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1113667158","content_text":"Summary\n\nPrior to 2020, I was bearish on Netflix due to negative cash flow and a speculative business model.\nIf not for the pandemic, these concerns might have mattered. Instead, with billions of people locked at home, Netflix gained nearly 37 million new subscribers in 2020.\nMonthly subscribers are pretty sticky, and the cash flow gains should be more or less locked-in for Netflix.\nWith a massive subscriber base and positive cash flow, Netflix has a ton of optionality. Netflix plans to get into the merchandising business as well, bringing new opportunities to profit.\n\nWhy I Changed My Mind on Netflix\nBack in 2019, I wrote an article about why I was bearish on Netflix (NFLX). Today, I'm sharing why I've changed my mind and bought NFLX stock. At the time of my prior article, Netflix had negative cash flow, was losing US subscribers, and was still borrowing heavily in the junk bond market to produce content. What I never foresaw–less than a year after writing that article, the world stopped on a dime with government-imposed shutdowns. After the lockdowns, I found that nights out on the town with friends were replaced with entertainment at home. I wasn't alone in the change. In 2020, Netflixgained nearly 37 millionsubscribers, putting their global total at 200+ million.\nThe rush of new subscribers means more leverage/pricing power to license content, better cash flow, and with that cash the ability to produce high-quality content at a low cost of capital. The network effect of gaining subscribers means that the more Netflix grows, the better the economics of the business is for them. As such, NFLX stock was very strong during the start of the pandemic but has traded sideways recently. I'm constantly throwing water on tech valuations here–the truth is that large sections of large-cap tech are currently overvalued. Netflix has a high valuation as well, but continued subscriber growth and the inherent stickiness of subscription revenue gives Netflix a lot of optionality that can help NFLX stock appreciate in value. NLFX may not be as expensive as it looks if growth trends continue over the next few years. Last quarter, for example, analysts expected Netflix to earn $2.99, they crushed estimates andended up earning $3.75,yet the stock got crushed because traders wanted even more. If you're willing to buy and wait a year or two, I think Netflix could pull through yet again with big gains.\n\nData by YCharts\nIt's also worth discussing what is going on with the competition. Amazon (AMZN) is facing increasing amounts of political pressure and antitrust scrutiny, while Apple (AAPL) faces antitrust action in the EU over its music streaming service. Netflix has roughly 1/10 of the market capitalization of Apple and Amazon and is not getting heavily involved in political food fights the way other tech companies are. This should allow Netflix to focus on executing its business plan while competitors focus on putting out fires in Washington DC.\nIs Netflix Stock a Buy Now?\nThe valuation is high, but over the long run, Netflix's subscriber growth curve over the last 20 years has been nothing short of incredible. As subscribers continue to grow, margins should grow as well, and Netflix can start producing more and more cash flow. Assuming growth can keep rolling in, Netflix stock is an easy buy.\n\nSource:Backlinko\nBehind the growth curve lies a history of a company that almost didn't make it to where it is today. In September 2000, Netflix was in trouble as the dot-com boom turned to bust. Netflix CEO Reed Hastings and a few of his lieutenants were summoned to Blockbuster headquarters in Dallas. On the table– a proposed rescue of Netflix by Blockbuster. Netflix would become Blockbuster's online and mail rental division, while Blockbuster would focus on retail. Hastings proposed that Netflix and Blockbuster join forces. His price? $50 million. Netflix executives werelaughed out of the meeting.\nNetflix found the financing they needed to survive elsewhere, and the meeting in Dallas went down as one of the most ironic in the history of tech, with Blockbuster going out of business less than 10 years later and Netflix becoming one of the best-performing stocks of the 21st century.\nAre stories like these just survivorship bias? No one knows for sure. Apple nearly went bankrupt in the 1990s, Netflix turned down a buyout offer from Amazon in 1998, and countless other high-flying tech companies either failed or were bought out at low prices by competitors. Netflix became a heavily shorted stock in the 2010s but proved doubters wrong, raising the money they needed to cover their losses while rapidly growing subscribers. Today's Netflix is different, with the company having a well-entrenched network effect and optionality to monetize subscribers in different ways. Netflix'scredit rating has been upgraded, and the company looks like it will be upgraded to investment grade soon. For example, Netflix could use their lower cost of capital to buy a Hollywood studio, a Bollywood studio, and/or a live sports TV provider like fuboTV (FUBO). Going up the food chain, it's possible that Apple could acquire Netflix. Netflix is also looking to make money through an online merchandise shop, which I'll cover in a bit.\nNetflix Stock Forecast\nIn 2021, analysts expect Netflixto earn$10.59 per share. For 2022, analysts expect $13.05 in earnings. At least 10 sell-side analysts are providing estimates to 2025 when they expect Netflix to earn $25.66 per share (I generally crowdsource earnings estimates and make adjustments when I think there is a systematic bias). At today's stock price and 2025 earnings, Netflix would be trading for only 21x earnings. Netflix's high valuation creates risks, but the large subscriber base means that NFLX has many routes to growth. If NFLX can maintain a multiple of 35x in 2025 and analyst earnings estimates are correct, then that would imply a 2025 price for NFLX of roughly $930 per share.\nThis means a total return for NFLX of roughly 15 percent per year assuming a moderate amount of multiple contraction and steady growth. Stocks like NFLX are notoriously hard to value, the range of analyst earnings estimates are wide and P/E ratios for growth stocks fluctuate in line with market conditions. The analyst numbers seem reasonable, and they may be too low if Netflix finds clever ways to monetize their subscribers. Any time you buy a stock like Netflix for as high as a multiple as it trades for, you incur risk. Given the long-term growth trends, however, I think that the risk is more than offset by the potential upside if Netflix is part of a well-diversified portfolio.\nOverall, NFLX is a reasonable investment. In the event of a market pullback, NFLX could be a great stock to buy on the tip. I believe that NFLX has a much easier path to doubling in price than other FAANG stocks. I own a lot of value stocks, so I buy tech as well to balance out the portfolio. Netflix has a much smaller market cap and a subscription-based model. Apple, Amazon, and Facebook's(NASDAQ:FB)ability to grow are increasingly constrained by politics. Facebook was pretty cheap in the fall, now I think it's fairly valued going forward. After analyzing all of them, I think Netflix and Google(NASDAQ:GOOG)(NASDAQ:GOOGL)will have the best returns of the FAANG stocks going forward. For Netflix in particular, one more potential opportunity comes from their online shop.\nNetflix's Online Shop\nNetflix is making its first entry into e-commerce with the opening ofNetflix.shop. Fans will be able to buy merchandise related to Netflix's content at a price point from $30 to $135. This takes a page out of Disney's (DIS) playbook, which makes billions of dollars per year fromlicensing and selling merchandise. Disney makes $3 billion per yearfrom licensing alone with very little cost or risk associated.\nNetflix alsocut a dealwith Steven Spielberg's production company. Spielberg directed the popular Indiana Jones movies and Jurassic Park. Spielberg is 74 years old as of my writing this but may have at least one big hit left in his career. The idea may be that Netflix can get some synergy out of Spielberg's new productions and their online merchandise shop. Netflix has everything to gain and little to lose from merchandising, and developing alternative streams of revenue can help sustain Netflix's P/E multiple and offer new routes to growth.\nWith 200+ million subscribers, this is just one way that Netflix can earn more money from their customers. While I don't know whether Netflix can approach the level of success that Disney has had with merchandising, they are following a proven and effective business model that movie studios have used to milk additional profit out of the money they spend on creating content.\nConclusion\nNetflix's huge gains in subscribers came at the perfect time. With production restarting after the coronavirus and Netflix having a current audience of over 200 million subscribers, there are plenty of ways for the stock to grow into its valuation. With an improved credit rating and cheap capital at its disposal, Netflix could look to make acquisitions or continue to invest in content without fear of a shortfall of cash. Netflix is cash flow positive and has great optionality from making acquisitions, growing organically, and executing existing business plans like its online shop. With consensus earnings estimates looking good and a deeply entrenched network effect, Netflix stock could steadily appreciate over the coming years.","news_type":1},"isVote":1,"tweetType":1,"viewCount":49,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":7,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}