Needham analyst Laura Martin reiterated a Hold on Netflix Inc
She discussed the prospects of the OTT market, including market share swaps. The market share swaps imply higher customer acquisition costs and more churn than in the past.
The discussion also flagged whether the 2023 decisions to drive revenue growth upside, like paid sharing, eliminating basic tier, and offshore price cuts, led to a radical slowdown in 2024.
Weak ARPU, missed revenue, and disappointing guidance raise concerns about ARM's weakness. Martin discussed that strikes may boost FCF in the short term but could harm the film and TV businesses in the long term.
The discussion included whether strong subscriber adds in 2Q23 were a long-term trend or temporary.
Many bears worry that NFLX revenue growth must rely primarily on price increases, which adds risks to growth rates compared to having two revenue growth drivers - subscriber growth and pricing growth.
Martin also discussed the valuation of NFLX appropriately, considering growing subscribers and revenues at mid-single-digit rates and possible valuation metrics shift to EV/FCF or P/E.
Ad Tier & Video Games are still tiny revenue streams and are a slower ramp than expected.
They discussed whether generative AI aid NFLX's competitors (like Walt Disney Co
There is a widespread consensus that content companies must merge to cut costs. NFLX is more likely a buyer than a seller due to its size. Therefore, they discussed the risks to the share price if NFLX buys Paramount Global
Price Action: NFLX shares traded lower by 1.54% at $421.22 on the last check Wednesday.
