NFLX - Netflix Stock: Buy Sell or Hold?
2024-01-28 12:26:00 ET
Not long ago, Netflix (NASDAQ: NFLX) had investors very worried. Revenue and membership growth decelerated rapidly in 2022 and eventually hit low-single-digit levels. Also weighed down by a sell-off in tech stocks, the stock cratered, falling more than 50% in 2022. However, as Netflix started rolling out its advertising business and began cracking down on users who accessed the service without paying by logging into someone else's account, the narrative quickly turned positive. Shares have risen more than 80% since the beginning of 2023, and the stock is up 50% over the trailing 12 months.
With such incredible gains in the rearview mirror, some shareholders may be debating what to do. Is it time to sell and take profits, or is the stock's big move higher evidence of a much stronger long-term investment thesis?
It's not surprising that Netflix's stock has risen sharply recently. The company's financials are improving on almost every key metric. The company reported fourth-quarter results on Tuesday. Its year-over-year revenue growth rate went from 1.9% in the fourth quarter of 2022 to 12.5% in the fourth quarter of 2023. Over this same time frame, earnings per share increased from $0.12 to $2.11, paid memberships rose from 231 million to 260 million, and quarterly free cash flow soared from $332 million to nearly $1.6 billion. Not to mention Netflix's total diluted share count decreased from about 451.6 million to 444.3 million during this period thanks to a well-timed share repurchase program.
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Netflix Stock: Buy, Sell, or Hold?