DIS - Netflix Has Become Too Pricey
2024-05-30 15:37:19 ET
Summary
- Netflix is facing major challenges as the stock closes the previous peak of over $675 which it reached at the end of 2021.
- There is an increase in streaming competition from Big Tech companies who are going all in to add new subscription revenue stream.
- The overall streaming business is also facing a saturation point as customers are unwilling to pay higher prices for several streaming platforms.
- Investors should also be wary about the recent bull run in Netflix which has made the stock too pricey.
- I believe Netflix’s high growth days are behind it and with a PE ratio of 45 the stock could see a strong correction if there is any dip in revenue growth.
Netflix ( NFLX ) stock is close to reaching its previous peak of over $675 which we saw towards the end of 2021. There was a strong correction in the stock in late 2021 and early 2022 which saw the price dip by a staggering 75%. As the stock reaches close to its previous peak, the company is facing several headwinds which can lead to a bearish momentum in the next few quarters. I believe the stock can see a correction to PS ratio of 3 to 5 from the current 8.5 over the next few quarters if the YoY revenue growth falls to a single digit rate. This could lead to a 40%-45% Netflix stock price correction. There have been a number of price increases in the streaming platforms over the last few quarters. These increases will start hurting customers' budgets in my view, and we could see slower membership growth in Netflix and other streaming platforms. ...
Netflix Has Become Too Pricey