Stock analysis Netflix (NFLX)

 

Netflix is ​​the global leader in the industry providing subscription streaming entertainment services in over 190 countries. It offers TV series, documentaries, movies, and more in a variety of languages, with nearly 200 million subscribers. Subscribers can watch the content they want anytime, anywhere on any internet-connected device, and use it without ads. Additionally, DVD rental services are also available in the US.

It started offering streaming entertainment services in 2007 and has been working on optimizing screens connected by the Internet ever since. In addition, various genres of content are provided to subscribers, and the company is working on content creation. It is constantly developing interfaces for streaming services, and will provide contents download services to subscribers so that they can watch contents offline.

Its number of subscribers is experiencing a seasonality that increases as customers purchase internet-enabled devices. In the meantime, there was an increase in subscribers in Q1 and Q4. In addition, the number of subscribers increases according to the scheduled release date of our content and changes in service prices.

You can see that its sales, operating profit, and net profit all increased year-on-year. Net profit has more than doubled as the cost of purchasing content has decreased.

Total membership extra costs increased by 274% on a quarterly basis compared to the same period last year. In addition to growing demand for streaming entertainment, more time spent at home with COVID-19 led to a surge in demand for our services in the first half. As a result, it is predicted that the increase will weaken in the second half of 2020. Total sales increased 25% year-on-year and operating profit increased 92%.

 

Netflix charges a monthly subscription fee for streaming content to members. This subscription fee makes up 99% of sales. We have a variety of membership plans and prices vary by region.

1. United States and Canada (UCAN)

This is a chart of quarterly sales growth for the US and Canada compared to the same period last year. Total sales increased 14% year-on-year, and the total membership extra cost increased by 2,323% due to the impact of COVID-19. It should be taken into account that the growth rate was measured high due to the negative effect of the previous year.

2. Europe, Middle East, and Africa (EMEA)

EMEA region sales increase/decrease table. Overall sales increased 43% year-on-year, and total membership extra costs increased 63%.

3. Latin America (LATAM)

Latin America sales growth table. Overall sales increased by 16% year over year and total membership extra costs increased by 410%.

4. Asia-Pacific (APAC)

This is a table of sales growth in Asia Pacific. Overall sales increased by 64% year over year and total membership extra costs increased by 232%.

Cash flow from operating activities was $1,041 million, an increase of $1,585 million on a quarterly basis from the same period of the previous year. Sales increased by 25% year-on-year and decreased content purchase costs contributed to the increase in cash flow from operating activities. Cash flow from investing activities increased by $92 million year-on-year, investing in assets and equipment. Cash flow from fiscal activities decreased by $1,156 million year-on-year. Free cash flow increased year-over-year, and 2020 free cash flow was $179 million higher than net income.

The figure on the left is Netflix and the figure on the right is the industry average. Its ROE remains high at around 21% or more. The average 5-year EPS growth rate is 44.19%, which is growing rapidly. The Current Ratio is 1.12, which has a healthy short-term debt repayment capability. LT Debt to Equity is 163.85%, and debt payment ability is flat. Asset turnover is 0.67 and dividends are not paid. It appears to be a characteristic of a company that is growing rapidly.

 

Netflix is ​​a global entertainment streaming leader and one of the fastest growing companies of the 2010s. It has nearly 200 million subscribers and is providing a variety of genres of content with high-resolution streaming technology. The company is directly creating content together. The latecomers of the business include Disney+, Apple TV, and HBO max, and although they are still in the early stages of entry, fierce competition is expected as they have a large content distributor. For Netflix to maintain its market position as a leader, it must create and preoccupy quality content.