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Netflix's Cash Burn Continues, Stock Expensive

The streamer keeps adding customers at a better than expected rate, but potential investors shouldn't overlook the firm's free cash flow losses.

Netflix's Cash Burn Continues, Stock Expensive

Netflix posted a very strong quarter in terms of subscriber growth as the firm handily beat its guidance, but we still shares as overvalued today.

The better than expected increase in international subscribers meant that both revenue and segment contribution came in above our projections. However, the firm continues to burn cash at a faster pace with a free cash flow loss of over $2 billion in 2017 versus a loss of over $1.7 billion last year. Management expects the free cash flow burn for 2018 to increase to $3 billion to $4 billion. 

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Neil Macker does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.