Netflix Stock Stronger Than It Seems Following Q2 Earnings

netflix market share tweet by Beth Kindig
Above: Portfolio Manager of I/O Fund, Knox Ridley, discusses Netflix earnings results.
Chart showing Cash Content Spend-to-Content Amortization Ratio

Forward-Looking Catalysts:

Netflix has a few new paths to monetization and to re-accelerate subscriber growth. The company is rolling out a new password-sharing plan and is also now partnered with Microsoft on ads to roll out in 2023. More times than not, cross-selling results in higher revenue where someone who would normally churn can now be monetized through ads. Likewise, viewers who can try out Netflix may decide to upgrade to remove ads. Ultimately, the move towards ads also helps Netflix to be more recession-proof in the event households decide to cut costs.

Risks:

We do not see the current soft subscriber numbers as a sign of saturation. Netflix has risen in market share over the past year. Instead, soft subscriber numbers are a result of the pull forward nearly all media companies experienced from Covid. We fully expect Netflix will return to normal subscriber growth due to the catalysts listed above.

What to Watch: Price Action for Netflix Stock

The big picture question to ask is — has NFLX put in THE bottom? There are three scenarios that could unfold from the current price range, that would help us manage risk around this question:

Chart showing price action of Netflix Inc

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Beth Kindig

Beth Kindig

1.4K Followers

CEO and Lead Tech Analyst for the I/O Fund with cumulative audited results of 141%, beating Ark and other leading active tech funds over four audit periods in 2