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Netflix Inc NFLX

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Morningstar’s Analysis

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Economic Moat

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Netflix Beats Low Subscriber Guidance; Competition Appears to Be Weighing on Net Adds

Neil Macker, CFA Senior Equity Analyst

Analyst Note

| Neil Macker, CFA |

Netflix reported decent third-quarter results as subscriber growth beat the low guidance issued a quarter ago. While management expects to add 8.5 million net new customers during the fourth quarter, this mark would only be in line with last year’s fourth quarter and below the previous two years. We think the lower subscriber growth reflects not only saturation in its largest markets but strong competition in the regions with the most potential growth remaining, including Latin America and India. We are maintaining our narrow moat and raising our fair value estimate to $275 from $250 to account for slightly stronger margin expansion expectations due to lower marketing costs.

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Company Profile

Business Description

Netflix's primary business is a streaming video on demand service now available in almost every country worldwide except China. Netflix delivers original and third-party digital video content to PCs, Internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. In 2011, Netflix introduced DVD-only plans and separated the combined streaming and DVD plans, making it necessary for subscribers who want both to have separate plans.

Contact
100 Winchester Circle
Los Gatos, CA, 95032
T +1 408 540-3700
Sector Communication Services
Industry Entertainment
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 9,400

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