Last night I sat down with China Global Television Network and talked about the Netflix (NFLX) quarter. We mainly spoke about the net sub adds and some of the content. Didn’t get into the financial numbers and potential stock reaction as much. Also, I do realize that I have a face for radio. Here is the interview (only 5 minutes): https://america.cgtn.com/2018/10/16/netflixs-q3-report-blows-through-expectations
The stock has clearly pulled back off its highs, but is amazingly still up 86% year-to-date while the Nasdaq (QQQ) is only up 10.5% this year.
My view on the pullback after the Euphoria is that even thought he net sub add for 4q was impressive, it does represent a high bar for the company to jump over. And the stock is still trading at 85 times next’s years EPS for 57% growth. And cash flow per share is still negative all the way into 2020. I guess another question is do you want to put your eggs in the Netflix basket when DIS, TWX, T, and Hulu ramp up their own streaming services. Ultimately isn’t Netflix just a content studio competing with a lot of other streaming content services? Does it look like some weird version of CBS at some point. CBS trades at 1.3x revenues – Netflix is 8x revenues. That won’t happen for a while – but is that the mentality of some investors?
This is rare for me, but I don’t have a real opinion on this one – feels like no man’s land for the stock as it waits for direction from the market. Guess while I wait, I will watch The Crown or Stranger Things.