Les Billets de Monocle

Netflix stock: defeated by K.O.

27 April 2022

Value of the company last November: $300 billion
Value of the company today: $85 billion

An exceptional drop of 70%.
Could we have anticipated this? Many indications are in favor of a "yes".

- As early as 2020, the results indicate that Netflix has sold out in the US and Canada, its main market.
- At the back, the pack of Disney Plus, Amazon Prime Video and others are pushing hard and want their piece of the pie.
- On the content side, Netflix is stuck: tens of billions of dollars are spent on adding series and movies to the platform every year. The goal: to keep its customers.

And yet, at the same time, buyers value Netflix 120 times what it generates in cash.

Typical example of a beautiful asset, very badly valued.

Already partially done in January (-22% following the annual results), the awakening is therefore violent for the shareholders who see their share price drop by 35% on the session of last Wednesday.

Growth came to an abrupt halt in the first quarter. And a downward trend is emerging. Result: $70 billion have been lost in 1 week.

The stock is finally approaching a justifiable price.
Enough to take a closer look at the case.

To be continued...

Have a great week,

Pierre

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