Netflix is BACK! NFLX Crushes Earnings and Stock soars

Netflix shares skyrocketed more than 14% after the Stock Market closed as the company crushed the expected results. Netflix also reported the addition of 2.41 million net global subscribers, doubling the ads the company had projected a quarter ago.

Guys netflix just announced and they have crushed it they are currently up seven and a half percent after hours a few minutes past i’m gonna pull up their actual report guys this is their actual shareholder letter this is directly from their website i just pulled it up minutes ago so reported revenue of 7.9 billion versus last year’s 7.483 which increase about 5.9

Percent net income of 1.398 billion versus 1.449 but here’s the big key they’re expected to earn low two dollars per share in profit they reported three dollars and 10 cents that’s why they’re up so much after hours now global streaming memberships 223 versus 213 and versus last quarter to 20. so very little growth but that’s okay for right here they’re expecting

Another 4 million subscribers here netcat free cash flow 472 million dollars versus the loss of 106 and shares outstanding down slightly so they crushed it let’s see how much more the stock is up now they’re at 10 now just like that guys so the question is what’s it worth now guys i want you everybody remember here little number right right here that’s the 52-week

High on netflix 700 per share please do me a favor at the end of this video i want you to go back and look at our videos about netflix how we talked about it wasn’t worth 700 etc paul you’re crazy there’s no way it’s gonna fall got it got as low as 162 during this crash during this crash 162 dollars that is a fall of how much 75 percent that’s incredible you’ve got

To remember that over valuation will valuation drives returns over long periods of time eventually valuation matters and it matters with a vengeance as john hussman says when it does matter it matters the vengeance and when everybody is in the crowded theater and the fire hits everybody wants out the side the door the one door and everybody thinks they’re gonna be

The one to get out of it and it doesn’t work out that way so let’s look at netflix and determine what we’re gonna do here eight pillars all right at least they’re buying back sure i mean i don’t like their back and back shares look at this negative cash flow they have negative free cash flow in the last five years yes it’s grown two billion but it’s still negative

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So let’s go with their cash flow statement right now and just look at this now they’re up ten and a half percent yeah so they just turned into positive free cash flow but look five years i mean this is a tough business now does that mean netflix isn’t worth it i mean at some point it’s gonna be worth it at some point they’re coming out with a new ads version

It’s gonna be cheaper but for me i’m just going to keep the nine i don’t like ads so i look at the stuff saying okay um i mean balance sheet they have no five-year cash flow their five-year pe is 38.8 we want it to be 22. um return investor capital is gonna be negative because they have negative cash for the last five years this is a company that’s still still

Investing back in itself but now like uber i think they realize oh my gosh cash flow matters now the market has shifted people want to see cash flow and that’s where we stand here today so let’s look what analysts are saying about the company so they’re expecting ten dollars per share in profit growing to 17 in the next five years which is pretty decent growth

70 increase in five years roughly 13 14 15 not bad now if you apply a 20 multiple of this that’s still 205 dollars apply 20 multiple of this you’re 340. the question becomes why are you applying 20 multiple these things this is not a fast growing company anymore the growth is gone now i mean how do you possibly grow when you have 230 million users look at the

Revenue growth look at this guys single digits this is single digit revenue growth it’s no longer the days of getting double digit revenue growth all the time there’s a lot of analysts following this thing so that’s you got to remember eventually the growth story stops eventually people care about valuation eventually people care about cash flow how am i going

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To get a return on my money when the when the hype train stops and the hype train has stopped for netflix doesn’t mean it’s not a good investment it just means now the investment matters based on the cash flow and the multiple you pay for cash flow very simple but i talk about that all the time on this channel over and over and over again my goal is to buy good

Cash flowing businesses for a good price netflix at 260 is still better than 700 but the question is is it good enough don’t be fooled to think that just because the stock has fallen 70 it means it’s a good deal not at all the analogy always give if you have a home that’s worth a million bucks and you ask 10 million for it and nobody buys it drop the 5 million is

It suddenly on sale well theoretically but is it a good value no it’s still only a million dollar home that you’re asking five million dollars for that’s the important part so let’s use our stock analyzer tool and determine what we want to pay for netflix based on a 10-year analysis now remember the five-year analysis the five-year estimates for revenue growth

Is single digits so on 10 years i want to go a little bit lower than that so i’m going to go three six and nine percent profit margin i do think the profit margin can get better their gross margin overall is 40 percent they did 16 in the last year so i’m gonna go with 13 16 and 19 and for free cash flow i’m gonna go 8 11 and 14. now over long periods of time free

Cash flow should be equal to earnings but they’re investing a lot back so i think they’re going to keep increasing that now one thing i want to keep in mind guys i’m showing free cash flow numbers that are very very high compared to what they’re showing here so just remember that when we see our free cash flow estimate of value pe now guys growth is really slowed

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It’s gonna be a bigger and bigger company and there’s a lot of competition so you’ve got to fact that all in here i’m gonna go with 13 14 and actually you know what i’m gonna do 14 15. and 16pe and price of free cash flow because guys very competitive is the leader right now absolutely but i have like eight streaming services and i have disney i have hulu i have

Peacock i have netflix to me i was paying 150 for cable now for all my streaming services i pay like 110 so to me i’m getting even more for less that’s my key that’s my view of this so there’s a lot of competition out there the question is everybody gonna be like me and look at it that way it’s a business that they keep creating more and more content to compete

So that’s going to suck out their free cash flow now does i return as you know you can get nine or ten percent in the long run by buying a low-cost ctf so to buy an individual company with these kind of growth parameters you need to put some sort of margin of safety in here for your desired return and the higher your assumptions the greater your margin of safety

Because you need to pay less money for the company because it’s less likely these things said so for netflix i’ll do 12 14 and 16 returns a company is currently at 272 dollars a share is now up 11 after hours 11 it’s up 27 all right boom all right guys let’s focus on earnings 112 to 206. middle price of 150. so it was pretty close to our middle price when it hit its

Low of 160. so i’m going to add it to my watch list at 180 and the reason being is i want to start doing more research when it hits 180. are my assumptions correct go understand the business more and then start selling puts on it based on those prices please subscribe to the channel we do a lot of videos like this two or three a day you’re gonna love it 1800 videos talk to you later

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Netflix is BACK! NFLX Crushes Earnings and Stock soars By Everything Money