Company Reports

The National Football League's announcement that Netflix will be the exclusive home for a total of at least four NFL games over the next three Christmases doesn't affect our $440 fair value estimate. We don't expect significant subscriber benefits from these games, and The Wall Street Journal reported Netflix will pay about $75 million per game, which is not substantial in the context of the firm's annual content spending. However, the NFL's decision to partner with Netflix and highlight the global nature of the streaming rights hints at the value of Netflix's platform and its unparalleled global reach.

Netflix reported another quarter of incredible subscriber additions and revenue and profit growth. However, full-year sales guidance portends a deceleration in the second half, and the firm’s decision to stop regularly reporting subscriber numbers in 2025 supports our belief that yearly subscriber additions will reset at a significantly lower level. With the stock selling off after the report, we see Netflix as a victim of its own success. Its business continues to show incredible strength, but maintaining the recent level of success is unrealistic in our view. We’re raising our fair value estimate to $440 from $425 on the back of the strong quarter but still see the stock as a bit expensive.

Netflix is the leading streaming television platform globally and now enjoys the economic benefits of market-leading scale. We expect this position will persist throughout the next decade.

Netflix is the leading streaming television platform globally and now enjoys the economic benefits of market-leading scale. We expect this position will persist throughout the next decade.

Netflix reported significant fourth-quarter subscriber additions with strength across all regions, and average revenue per member was up after several quarters of decline, resulting in significant sales growth acceleration. We see further tailwinds to ARM over the next few years but believe subscriber growth will slow. We’re raising our fair value estimate to $425 from $410 after incorporating the results and management’s 2024 outlook, but we believe the stock has gotten ahead of itself even as we expect Netflix to remain dominant.

After taking a critical look at Netflix, we are raising our fair value estimate to $410 from $350 while maintaining our narrow moat rating and revising our Morningstar Capital Allocation Rating to Exemplary, from Standard. We expect Netflix to maintain its leading position in the television streaming industry at least throughout the decade.

Netflix is the leading streaming television platform globally and now enjoys the economic benefits of market-leading scale. We expect this position will persist throughout the next decade.

A big jump in subscriber additions highlighted Netflix’s very strong third quarter. Margins, cash flow, and other underlying trends were equally important in supporting the durable strength we see in Netflix’s business. Netflix anticipates a similarly strong fourth quarter, and we see several reasons for further optimism. We’re raising our fair value estimate to $350 from $330, but we think the 12% spike in reaction to earnings was a little overenthusiastic. We expect subscriber growth will moderate, and an eventual end to the actors’ strike will likely result in a big increase in cash content spending in 2024.

Netflix is a pioneer in subscription video on demand and is now the largest online video provider in the United States and the world. Our narrow economic moat rating is based on intangibles resulting from the use of data stemming from the firm's massive worldwide subscriber base.

Netflix is a pioneer in subscription video on demand and is now the largest online video provider in the United States and the world. Our narrow economic moat rating is based on intangibles resulting from the use of data stemming from the firm's massive worldwide subscriber base.

Netflix posted a solid second quarter with net customer additions of 5.9 million, well ahead of our estimate. The firm benefited from the rollout of its password sharing crackdown—paid sharing—covering over 100 countries including the United States. Despite the subscriber beat and additional shared account fees, revenue was in line with our estimate due in part to foreign exchange headwinds as well as stagnant average revenue per user, or ARPU, in Netflix’s two largest regions.

Netflix is a pioneer in subscription video on demand and is now the largest online video provider in the U.S. and the world. Our economic moat rating of narrow is based on intangibles resulting from the use of data stemming from the firm's massive worldwide subscriber base.

Netflix posted a quiet start to 2023, adding only 1.75 million net subscribers, well short of our estimate. The firm announced a number of initiatives including shutting down its legacy DVD mail rental business at the end of September. Management also disclosed that the password sharing crackdown—paid sharing—will roll out to most of the world in the second quarter, including the U.S. While no details were provided, we expect the program in the U.S. to look almost identical in pricing and structure to the one in Canada that cost CAD 8 per extra member slot, with one slot available on the standard plan and two on the premium plan. We still believe this plan will boost revenue, but we remain skeptical that it will significantly increase new subscriber growth from users left off existing plans. We keep our $315 fair value estimate.

Netflix dropped prices in over 100 countries and territories effective Feb. 23 according to Ampere Analysis. The magnitude of the price drop differed by both market and plan with the basic plan receiving the largest decreases, from 20% to almost 60%. The affected areas are spread across the world and are largely emerging markets. However, Netflix did not make changes to some of the largest emerging markets such as India, Brazil, and Mexico. We are maintaining our $315 fair value estimate as we have long assumed that Netflix would need to lower pricing outside of the U.S. and Western Europe to remain competitive.

Netflix continued its rebound from a weak first half, ending 2022 by adding 7.66 million net subscribers, well ahead of guidance of 4.5 million. The firm expects to rollout its effort to crack down on password sharing in the first quarter as it looks for more revenue-boosting initiatives. While the firm didn’t provide any specifics, we expect the program to look broadly like the tests run in Latin America. The pilot programs offered subscribers the ability to add additional users for a charge roughly equal to 20% of the plan cost which implies around $3 per month in the U.S. While we think this plan will boost revenue, we don’t believe it will significantly increase new subscriber growth from users not added on to existing plans and could increase churn.

Netflix is a pioneer in subscription video on demand and is now the largest online video provider in the U.S. and the world. Our economic moat rating of narrow is based on intangibles resulting from the use of data stemming from the firm's massive worldwide subscriber base.

Netflix rebounded during the third quarter, adding 2.4 million net subscribers after two consecutive quarters of net losses to start 2022. Management expects subscriber growth to continue in the fourth quarter, projecting 4.5 million net additions, ahead of our previous projection but well behind the 8.3 million added in the final quarter of 2021. The fourth quarter should benefit from the launch of the ad-supported offering in 12 key markets. The firm’s other revenue-boosting initiative, efforts to crack password sharing, will be rolled out in the first half of 2023.

Netflix is a pioneer in subscription video on demand and is now the largest online video provider in the U.S. and the world. Our economic moat rating of narrow is based on intangibles resulting from the use of data stemming from the firm's massive worldwide subscriber base.

Netflix announced on Oct. 13 that its anticipated ad-supported offering, newly dubbed Basic with Ads, will launch on Nov. 3 in 12 countries: the U.S., the U.K., France, Germany, Italy, Japan, Spain, Brazil, South Korea, Mexico, Australia, and Canada. While pricing will vary by country, the new service tier will be priced below the Basic tier with U.S. pricing at $7 per month with ads and $10 per month without. The new pricing is well below the Standard plan at $15.49 per month and Premium at $20 per month although those tiers offer higher resolutions, a larger library, offline viewing, and more concurrent streams. Given the pricing, we expect many of the ad-supported users in the U.S. will come from subscribers trading down from the more expensive Basic plan. We maintain our $280 fair value estimate as we await more details about the new service and the third-quarter earnings call on Oct. 18.

Netflix is a pioneer in subscription video on demand and is now the largest online video provider in the U.S. and the world. Our economic moat rating of narrow is based on intangibles resulting from the use of data stemming from the firm's massive worldwide subscriber base.