NFLX will report its Q3 results on October 17. Revenue and operating income are likely to meet or beat estimates, but future guidance looks risky in my opinion.
It looks like Netflix has reached its limit in terms of new subscribers and price increases. Daily active users are down in all three months of Q3, and that's the first time that's happened since late 2021, when the stock was also falling (source: BofA research note, 10/7/2024: Internet/e Commerce September app data: Mixed trends with Amazon DAU acceleration a bright spot).
With Netflix trading at 38 times estimated 2025 earnings, there isn't much of a "margin of safety". Today, the streaming industry is a bit like the airline industry: the players are fairly interchangeable to the customer, with not much to differentiate them. Aside from the content (which I think is declining in quality), Netflix's "you can cancel at any time" service literally has no moat.
The first streaming company spends 10 billion on content, the next 20 billion, and so on, while there is a clear ceiling on the prices they can charge. And Amazon is giving away its streaming almost as a free bonus to its Prime subscription… In the long run, it's the customers who win, not the investors.
The Future of Netflix: No Moat, No Margin – Like an Airline?
byu/dontkry4me inwallstreetbets
Posted by dontkry4me
10 Comments
What has changed from last quarter? It’s pretty much the same company.
It is like Tesla, I don’t understand why it is valued so high in terms of MC, but every time I try to fight it , I lose. So I’ve accepted it and not touching it.
Nah you fucking idiots will keep paying for the price increases
I don’t know about the valuation, but their moat is time and content, larger the library would be longer they can keep the consumers. but for finding true value you will have to do deep analysis of balance sheet with p/l per movie/series.
there is simple ways to do analysis like asking friends & family or observing around
or complex way you in crazy finacial number crunching
every one does there own way
Your mom
I feel they have a pretty good moat with kids. I’ve been trying to cancel Netflix forever, but my kids won’t let me.
follow the positioning in the market
The difference between Netflix and the airline industry: scalability and marginal cost. Mic drop.
At this point their moat must be “Seinfeld”.
Who even wastes time watching TV anymore?
Thanks! Buying calls..