Is Netflix Stock a buy it now?


Mmedia streaming veteran netflix (NASDAQ:NFLX) suffered a major blow to the stock market in 2022. The stock is down 70% since the start of the year, including a 49% drop in the last quarter.

The long and painful slide was punctuated by steep falls after each of the two earnings reports for the year. Netflix is ​​losing customers for the first time in the streaming era, and many investors are racing for releases.

Should slowing subscriber growth keep you away from this stock, or is Netflix a great buy at these multi-year lows? Let’s look.

Netflix in numbers

Does it look like a business on the brink of death right now? A company struggling to stay afloat in a sea of ​​new competition?

NFLX Revenue Data (TTM) by YCharts.

I do not think so. Over the past five years, Netflix has tripled its revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) — the profit metric banks prefer to consider when assessing a company’s creditworthiness. company.

Netflix used to focus primarily on subscriber growth, but that’s no longer the case. Today, the company is looking to maintain double-digit revenue growth while increasing profitability. This effort is working wonders, as you can see with skyrocketing revenue and EBITDA earnings.

Chart showing streaming services gaining market share from traditional TV over time.

Image source: Netflix Quarterly Documents.

We are still in the early days of a long-term growth story. According Nielsen The data. The streaming time slot increases over time and Netflix is ​​increasing its individual share of this metric. Good old linear television (cable, satellite and broadcast), however, still represents more than 70% of the market.

It’s in the domestic market, where the bears argue that Netflix has no more room to grow. This is simply untrue, and I expect streaming services to capture the entire video viewing market in the long run. And guess who is at the forefront of this trend? Yes, it’s Netflix.

Netflix is ​​a fantastic buy right now

As you can see, Netflix has plenty of room to grow and become more profitable. And you should keep in mind that we’re looking at the original single market, the largest and most mature in Netflix’s portfolio above. The incredible growth potential extends even further when considering the global streaming media market.

Meanwhile, Netflix shares are trading at prices not seen since the fall of 2017, when spirit hunter was Netflix’s new original series and Will Smith was set to star in Bright. That was the time, wasn’t it?

You can get all this exciting, profitable growth for the low price of 17x trailing earnings. You can call Netflix a very low value stock today – with a straight face.

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Anders Bylund holds positions at Netflix. The Motley Fool has posts and recommends Netflix. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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