2024-04-23 16:00:00 ET
Summary
- NFLX continues to post double beat FQ1'24 earnings call, with the recent over-reaction only attributed to the management's pivot in subscriber reporting from FQ1'25 onwards.
- Considering that it has already become a standard reporting method and is now being adopted by other legacy players, the sudden pivot is strange indeed.
- Even so, we agree with the management's stance in which profitable growth matters most, with its next opportunity being in the advertising market, against the maturing subscriber growth.
- NFLX's inherent profitability, growing market share, healthy balance sheet, and robust shareholder returns continue to demonstrate its long-term investment thesis.
- With the market correction still occurring, interested investors may want to monitor the stock's movement before adding at its previous support levels of $480s for an improved margin of safety.
We previously covered Netflix, Inc. ( NFLX ) in January 2024, discussing why its streaming prospects might remain robust as the macroeconomic outlook lifted, significantly aided by the robust labor market as discretionary spending grew.
Combined with the excellent FQ4'23 performance and impressive FQ1'24 guidance, the stock had also pulled forward part of its upside potential, with interested investors better off waiting for more attractive entry points despite the streaming company's (prospective) long-term success....
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For further details see:
Netflix: Well Deserved Pullback, Buy The Correction (Rating Upgrade)