NFLX - Netflix Has A Deep Moat With Its Virtuous Circle

2024-03-08 13:29:36 ET

Summary

• Netflix has a deep moat with a massive $260Mn subscriber base, which is its biggest asset.
• The saturation in the streaming market has allowed it to become the de-facto gatekeeper to our homes.
• Netflix has great and increasing operating margins, which throws out gobs of cash, creates even more content and perpetuates the virtuous cycle.
• The improving operating margins make it a very attractive earnings story in addition to the market leadership in subscribers.
• There are further growth catalysts from gaming and advertising, which should propel it to even greater heights.

I've owned Netflix, Inc. ( NFLX ) for a long time, mainly focusing on subscriber and revenue growth. However, the most recent quarter was a great one, where Netflix hit it out of the park with 13Mn subscriber growth and ended the year with 21% operating margins, convincing me that Netflix has become more of an earnings story, and I should buy more and recommend it on earnings strength as well, instead of just global subscriber additions....

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