Netflix Earnings: Fantastic Period Dampened by Likelihood of Growth Deceleration

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.