reported quarterly results that added angst, uncertainty, and worry for investors. Shares gained buyers after being touted as a favorite bullish position for Hedge Fund manager Whitney Tilson.
The Good News
…and the Bad News
- Netflix added 2 million new subscribers worldwide
- Total subscribers rose to 29 million, with 25.1 million from the United States
- Net income was 8 million
- Company reiterated it was committed to original programming
- DVD subscriptions declined from 9.24 million in the previous quarter to 8.61 million in the quarter
- Original programming will mean negative free cash flow for the next several quarters
- Competition from HBO (TWX) and Amazon (AMZN), and Hulu in online streaming is growing
- Content liabilities now total $5 billion
- $2.1 billion in liabilities is due in 12 months
Investors should take note of the negative cash flow, deterioration in profit margins, and unknown obligations. Netflix
the liabilities did “
not include obligations that we cannot quantify but could be significant
forecast it will lose between $2 million and $13 million next quarter.
tools, Netflix has a Price of Profit (the amount you are paying for $1 of next year’s profit) of over
. Its Book Value per Share is
, Price to Book Ratio is
The P/E is
Business Section: Investing Ideas
To evaluate the future prospects for Netflix further using Kapitall’s tools, below is a related list of companies to look at.
1. Netflix, Inc.
(NFLX): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $3.34B, most recent closing price at $60.12.
2. Amazon.com Inc.
(AMZN): Operates as an online retailer in North America and internationally. Market cap at $103.29B, most recent closing price at $228.49.
3. Pandora Media, Inc.
(P): Operates as an Internet radio company in the United States. Market cap at $1.57B, most recent closing price at $9.29. Pandora is not a direct competitor for Netflix, but its offers online music streaming.