But famed value investor Bill Nygren, manager of Oakmark Select Fund, still likes it.
“We think Netflix is a very, very cheap stock. If you look at traditional metrics, it’s at less than 25 times expected earnings, about five times revenue, [and] under $800 per subscriber for the first time in the modern streaming era,” he told CNBC.
“It’s a very small premium to the market for a company that we think is still in its early-to-mid cycle growth. The company is growing much more rapidly than any other sector in media.”
As of Jan. 13, The S&P 500 had a forward 12-month price-earnings ratio of 21.1.
Earlier this month, Netflix raised the price for its monthly plans for the first time since 2020. The monthly charge for its basic plan climbed to $9.99 from $8.99, the price for its standard plan rose to $15.49 from $13.99 and for its premium plan to $19.99 from $17.99.
While some analysts have said the increases will hurt Netflix, Nygren said “customers consider the prices to be a bargain.” Netflix accounted for 4.5% of Oakmark Select Fund as of Dec. 31.
Netflix closed Monday at $387.15, down 2.6%.
Morningstar analyst Neil Macker puts fair value at $305.
He’s bearish on the price increases, with the top two plans now the most expensive streaming offerings in the U.S.
“Our updated model now projects Netflix will raise prices every 18 months in the U.S. to spark top line growth,” Macker wrote Friday. “We think these increases will exacerbate the lackluster customer additions.”