![]() ![]() The Capital Spending Won't StopĪt the same time, the company continues to have massive capital expenditures worth paying close attention to.įirst, the company has $6.7 billion in net debt after cash and investments. Those additional shares actually means that true FCF was almost 20% lower for the company, impacting what's already a weak number. In the last quarter, the company added 800 thousand shares but $2.1 billion in FCF (its strongest FCF quarter). That dilution is worth paying close attention to. Free cash flow ("FCF") remains weak as well despite the 1st quarter normally being the strongest, and dilution continues. At the same time, the company's net additions remain low showing continued struggles for its business. The company saw stronger growth in paid memberships of 4.9% YoY, but the revenue impact indicates the company's customers are shifting towards lower-cost memberships. The company's annualized EPS was $9.95 / share last year (P/E >40), and this year will likely be lower. The company's net income also declined YoY, impacting its EPS. For the company, that was lower than the impact of inflation, indicating that the company's real revenues declined YoY. The company's Q1 2023 revenue grew by a mere 3.7% YoY and less than that QoQ. Chasing new ideas (such as growth) has failed to pan out. Netflix's growth has effectively halted, showing the company's full market penetration size and minimal additional opportunities. Given that these competitors have enormous other businesses, we expect competition to continue its growth, putting Netflix in a difficult position. In the UK, YouTube is much smaller, but Prime Video / Disney and Hulu are each 1/3 as launch. In the U.S., Disney / Hulu are almost as big as Netflix, and Prime Video is already half as big. Internationally, Google's ( GOOG, GOOGL) YouTube continues to lead, but there's a more interesting story to be told in the premium markets of the U.S. the app continues to get 7% of watch time. Netflix remains a dominant streaming service. Amazon, for example, has a $1.3 trillion market capitalization, enabling it to spend massive amounts of money on new series such as The Hobbit. These competitors are also much wealthier than Netflix. ![]() That includes Amazon ( AMZN) Prime, Disney ( DIS) Plus, Max, and more. Netflix faces massive competition from incredibly deep-pocketed competitors. As we'll see throughout this article, the company's almost non-existent growth makes it a poor investment at this valuation. That's pushed its market capitalization to almost $200 billion. ( NASDAQ: NFLX) is one of the largest streaming companies in the world, and now its share price has recovered to highs not seen since late-2021. ![]()
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