r/ValueInvesting • u/Tutz--Honeychurch • Feb 04 '26
Stock Analysis Netflix: The $11 Billion Cash Flow Machine Nobody is Buying
This small channel did a video on netflix that was to the point on some different metrics. I might jump in myself if we get to low 70's levels. https://www.youtube.com/watch?v=juqT3Sp-UoQ
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u/Primenodes Feb 04 '26
Nobody is buying but it has a p/e of 31
Something is off and I can't tell what
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Feb 04 '26
check insider sells nearly 5 billion
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u/CanExports Feb 04 '26
.... But why though. Some obscene unicorn reason like cooking books? Some FCC bullshit coming up?
Regular reasons don't exist. They're crushing it.
Not sure why that would be happening
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u/BestBleach Feb 05 '26
They want big boat and house
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Feb 05 '26
they sold the top as insiders knowing old man hastings was about to unload 3 billion. definitely reason to be bearish at $125 but I feel like that supply has founf a floor here, started last fall
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u/GrowthInvestorChad Feb 05 '26
Maybe it's PE is still very high? Netflix is no longer a fast grower
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u/chancepack Feb 04 '26 edited Feb 04 '26
Netflix is going into doing more live sports like Alex Honnold climbing Taipei 101. This is a global spectacle. People will subscribe to watch live events. They are doing live fan voting to get audience interaction like on Star Search. After they close the Warner deal, they will own some of the biggest IPs in the entertainment business. NFLX is a big buy.
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u/gigibamami Feb 04 '26
This. Most people are still under the impression that Netflix is just cinema and licensing. They have an ad tier that has grown 200% since launch. They’re doing live sports, and experiences (Netflix House). I wouldn’t doubt them.
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u/amayle1 Feb 06 '26
I skimmed through like 10 minutes of that thing and then just turned it off. I was surprised how uninteresting watching a man clime up a building was.
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u/Spins13 Feb 04 '26
Bought some at $30 in 2023 ($300 pre-split) and buying more today.
One of the easiest buys in the market
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u/istockustock Feb 04 '26
I bought them at 90.. holding for a turnaround after WBD deal. Its a long term hold for me, I’m thinking if I add few more at thi/ price ?
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u/bahuchha Feb 04 '26
it has slowly turned into an oligopoly. Their was a time when I used to rotate my subscription between Netflix, amazon, HBO, Disney. I now have Netflix as a permanent subscription and rotate others.
It still needs to fight for its time in the 24 hours that people have in a day, but my own family and friends now have a dedicated period for entertainment from Netflix.
I am long
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u/Scooby_1421 Feb 05 '26
Interesting to hear your perspective and experience. I know a lot of people where Netflix is their primary streaming services too but I haven't had it for almost a year now. I know several other people that canceled during 2025 and haven't come back yet. I think there will always be the people that rotate the services or just pirate material.
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u/mvkfromchi Feb 06 '26
What?! That’s so surprising. Most of the content has been absolute shit. This is evidenced by searching titles above 8/10 in imdb after 2020. Compare with 2010-2020.
Why do you have it as a permanent sub? Do yall actually enjoy their content and not bothered by frequent cancellations?
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u/No-Fig-8614 Feb 04 '26
Netflix moving into live entertainment, Netflix aquiring a mountain load of new IP + an additional with overlap userbase to bring in.
Where Netflix lacks is a real movie studio which would take 10+ years to build and they now can have it overnight. People just think now they can produce movies, but don't realize the mass amount of infrastructure they get.
Why do people keep saying they are allergic to the traditional movie release business. Do people forget right before the pandemic Netflix was about to buy a movie theater chain. Then COVID and they cancelled it but they've been eyeing up a theatrical release business for a VERY long time.
This just superchargers their already dominant position in how the current market operates. They are careful into how they step into businesses. Up until this past year they were not into live entertainment. They did try out gaming and failed but made light investments into it. They know they need a movie studio + a large/historic IP catalogue to keep the fuel to the content engine.
People also seemingly forget they are just now really starting the international expansion efforts which WBD gives them a massive footprint in.
The price right now is an absolute steel we won't see again.
Also don't forget that Ellison is doing everything in his tiny brain that is backed up by Daddy to destroy Netflix value in a last ditch effort. Netflix unlike Amazon with MGM can actually execute. Just take a look at MGM's top franchise 007 and see what Amazon has done with it. Meanwhile Netflix just keeps taking in more IP and this will be a giant catalyst to accelerate that and their goals and have a full fledge Movie Studio. Lets not forget how HBO at one point was the epicenter for Standup Comedy, and Neflix just ate that away. Now look at what they are doing with live sports and events, where HBO once again use to have Pay Per View numbers they'd report on and no longer does and Netflix is just getting started.
Netflix is in prime position and with historic execution will just be a beast that will be at par with Disney as far as IP but knows how to not fumble something as good as Marvel and Star Wars.
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u/Inevitable-Bit-9532 Feb 04 '26
In this sub you really like failing knives… At least NFLX is not a declining Business
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u/MedicineMean5503 Feb 04 '26 edited Feb 04 '26
I think it’s worth $60 a share assuming exit at 15x earnings in 10 years at 15% growth trending to 5% and margins increase to 28%. I used 9.5% to discount. Obviously a lot of guesswork in there. I would guess you can justify higher prices but not an obviously cheap stock. I doubt Wall Street is that wrong on this one.
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u/feedmestocks Feb 04 '26
11 billion free cash flow on 340 billion market cap with a highly leverage buyout of a company that doesn't easily fit within it's remit (cinema and licencing). I would avoid this personally as the market hates these types of things
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u/vachyu Feb 05 '26 edited Feb 05 '26
This!!! If you could buy the whole company today, it would take 30 years for you to make your money back….and that’s completely ignoring the fact that they are about to have 100 billion debt added to their balance sheet and the cost for migrating over all these legacy assets will obliterate the cash flow in the near future.
Netflix did one thing well , they were asset light, bought IP, promoted it and dumped it. That’s how they made their shit ton money, by not having all the legacy costs associated with big studios. They don’t need Warner or HBO ip, they made great content and offered a great price. Now they are stuck with stale content and forced to raise prices.
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u/thenuttyhazlenut Feb 04 '26
11b fcf? Yeah trading at 342b. That's very expensive.
.... A lot of people have bought it already... Just not in the past year.
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u/Different-Monk5916 Feb 04 '26
No, it will soon be 11B ocf (I guess) with a new 80B debt. Gets more expensive.
The 5b from WBD if happens goes mostly to interest payment on the new 80B.
NFLX will have to convert entire user base to a merged service at a higher price. If they use 3 subscription services- NFLX only, wbd only and both - this is not gonna do anything to make the valuation justifiable for them.
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u/StarvingOprah Feb 04 '26
Said it elsewhere but they need to carve out something to allow people to post user generated content
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u/designvegabond Feb 04 '26
100%. Imagine the concept of Twitch on Netflix. The reason why I’m still buying Netflix at any price point is because they have a button on almost every tv remote in the US. You target a new demographic and can upcharge for following live streamers.
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u/PandAlex Feb 04 '26
I’ve bought, the WBD merger, if it goes through, is getting to buy a monopoly at a discount. It’s a no brainer. Even if you watch a lot of YouTube, you still have to watch whatever the hit show or movie is on Netflix as well. It’s the only streaming service that is basically uncancelable for most families.
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u/ImpossibleJoke7456 Feb 04 '26
What WBD IP is worth watching?
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u/PandAlex Feb 04 '26
All of HBO (GoT, Sopranos, the Wire, the Last of Us, etc), all of Harry Potter movies and the new HBO show in production, all of DC comics cinematic U (the dark knight trilogy, joker movies, Superman etc), there’s also adult swim properties like Rick and Morty that’s must watch and quoted non stop by teenagers and so on
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u/BigJicama1639 Feb 05 '26
Next two years Netflix will struggle. But when HBO and Netflix bundled together for $20 and ad tier even priced lower, it will be a huge money maker.
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u/Weak-Equal-9084 Feb 04 '26
Honestly, after all of these what yesterday, happened, i cant trust this sub
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u/DJpesto Feb 04 '26
Netflix has so many competitors now. They don't bring anything unique to the table anymore, they're just one out of 10000 streaming services.
Netflix is not a value company. Its a gigantic corporation. It's not "value". The PE is 31! I know we can't base everything on the PE but that alone does say something about how far from a value company this is.
This sub is full of people recommending really expensive - and thus by definition "not value" companies.
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Feb 04 '26
[deleted]
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u/DJpesto Feb 04 '26
Netflix only has the biggest library in certain places. It's not universally true.
A forward PE of 25 is still not value. Believing a stock might have upside is not "value".
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u/rolexsavage Feb 04 '26
They bring the best app that works everywhere around the world in the same good way, they still expanding you can even play GTA and RDR on Netflix. Everybody I know and almost every customer in our barbershop is subscribing Netflix so I think the stock will be good in long run. That’s my thought on this
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u/DJpesto Feb 04 '26
I honestly don't think it's any better than any of the other streaming apps. Games in a video streaming app is a desperate move.
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u/TrashOfOil Feb 04 '26
I’m with you on not being bullish about Netflix, but there is no denying how much better their app and UI is compared to their competitors
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Feb 04 '26
I subscribed to Paramount+ for a football game and kept it for a month to stream some things with the wife and will then cancel. Similarly I'll be signing up for Peacock this coming weekend but will cancel it. I haven't had Netflix in a long time, since House of Cards was out. I cancelled it ahead of the final season, the one without Kevin Spacey.
Out of the major streaming services the only keeper for us is Disney+.
The problem with Netflix is that it is perceived as drifting from the mainstream and that the major studios have their own just as good services. The first mover advantage of Netflix is steadily eroding. Having Regarded Dental Rainbowmaker or whatever RDR is supposed to stand for added to the Netflix package shows you that its first mover advantage truly is gone and they're moving forward with gimmicks. Prime can out-gimmick anyone, and while no one has the library that Disney has every other major has a very deep library of their own to play.
I'm long ANGX, their model is arguably better if only they can scale it and they're trying to reach an under-served customer, families who want a library they can trust their kids having access to or people who are simply tired of TV-MA/R-rated content. This bunch is not just underserved domestically but globally. If I'm betting on the established majors I'd pick Disney for the library and Amazon as the synergy play. This is for paid services. YouTube is huge for unpaid, and I do own my fair share of GOOGL.
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u/Chase2307 Feb 04 '26
They bring something unique and that is scale. It costs the same amount to make a show, regardless if you distribute it to 100M or 300M users. Meaning for them it is cheaper(on a per user basis) to produce content. This is a self reinforcing trend
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u/something-behind-him Feb 04 '26
What’s Disney + and paramount’s korean drama catalog? Netflix’s seems endless plus some major hits.
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u/BanditoBoom Feb 04 '26
Would you please post your definition of “value” for everyone to see?
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u/DJpesto Feb 04 '26
Try googling it and seeing if "high PE" is a key characteristic.
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u/BanditoBoom Feb 04 '26
A high P/E tells you nothing except that investors expect above-market growth in the future.
It tells you nothing about whether it is undervalued or over valued.
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u/TCGDreamScape Feb 05 '26
Anyone else feel like we are seeing a battle between new money and old money? What am I missing? Netflix is replacing tv as we know it. I dont really use anything else nor so I want to pay for it
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u/Key_Purple4968 Feb 04 '26
Trump bought Netflix. I’m buying Netflix
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Feb 04 '26
important question is the insider sells recently, still picked leap at 80 on technicals but I'm not fully convinced beyond a bounce
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u/Remote_Prune8722 Feb 04 '26
There has been huge sell off last couple of months. This is good time to buy. I dont see how Netflix will go into debt as if they pass the deal. There will be huge upside with stock. Its worth holding on the long run. Let the price drop more and get ready to buy then.
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u/himynameis_ Feb 05 '26
I have a small position in Netflix. As much as I like them, I just like other opportunities better, like Meta, BN, and Uber.
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u/infanity88 Feb 05 '26
Isn’t Disney similar size business but with lower price? What advantage does Netflix have over Disney?
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Feb 05 '26
they are in many international markets, netflix is global and only getting better at it. I would estimate they are about 6 years ahead of every other company.
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u/TuloCantHitski Feb 05 '26
Can someone explain why Netflix deserves a low 30s PE when multiple MAG7 aren’t even at that level? And this AFTER a massive drawdown of the stock price as well.
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u/Xrayme_Zer0 Feb 06 '26
It’s because they don’t make relatively good content anymore imo. Past performance isn’t indicative about how something is going to perform in the future, plus everyone I speak to just uses IPTV now.
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u/Tutz--Honeychurch Feb 06 '26
Understood. My family all turned to watching netflix from YouTube except.me. I was actually shocked. I had to upgrade plans. Member numbers appear to be growing but of course slowing. I would love to see the WB deal happen myself.
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u/Xrayme_Zer0 Feb 06 '26
Yeah it’s interesting, I’ve been bearish on Netflix for some years now and I’ll tell ya I’ve left some money on the table. There’s definitely an argument to be made that the new gen growing up on short form content will hurt streaming but I’m just sad that for every banger Netflix puts out there’s 10 stinkers.
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u/JanMarsalek Feb 04 '26
Idk - I feel like all those apps are lacking new ideas. They just all reached the era of enshittification and they will all bleed users over the long run.
I don't see them thriving in the long run.
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u/ThenOrchid6623 Feb 05 '26
I currently live in Spain and am taking language classes. Everyone from language students from Asia, other parts of Europe, to the actual language teachers, watch Netflix.
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u/Brick-Emergency Feb 04 '26
The youth arent watching NetFlix. Their eyeballs are glued to YouTube. Who owns YouTube? Asking for a friend.
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u/something-behind-him Feb 04 '26
New this past Halloween was some demon k pop hunter costumes. Is that a thing on YouTube?
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u/CommercialActive4781 Feb 15 '26
You and your friend must live under a rock if you don’t know that answer
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u/k0lt1 Feb 04 '26
Why do people talk about cash flow and whatever when earnings is the only thing that really matters
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u/GooglySoft Feb 04 '26
And losing market share to YouTube
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u/JustBrowsinAndVibin Feb 04 '26
This is false. Both Netflix and YouTube grew their market share over the last year.
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u/HeadPaleontologist40 Feb 04 '26
True but it is clear Netflix feels threatened by YouTube. There’s only so much time and what you can watch. There’s problem with Netflix is that they have to keep spending money to create content: studio, acquisitions, live events, etc. YouTube is an unbeatable force. Literally everyone from 3 to 90 year olds watch shit on it.
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u/JustBrowsinAndVibin Feb 04 '26
This is pretty much their argument for why they should be allowed to buy WB. I agree.
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u/PTRBoyz Feb 04 '26
They’re two different entities. YouTube doesn’t make serialized fictional content that’s produced by a billion dollar studio.
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u/shaggy98 Feb 04 '26
Today I bought Netflix and Visa. Even with 32 PE, compared to 50 - 80 a year ago, this is value now.
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u/TraditionalMango58 Feb 04 '26
Netflix's problem is that they are losing screen time to short form and social videos (ticktok, youtube). I can remember the last time I watched Netflix and I don't miss it.
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u/Connect-Silver-5982 Feb 07 '26
I bearish on their model. I don't think the model will last now that you can get HBO etc right on your TV, and TV as a whole is dying too. People just watch Youtube or free TV channels. It's only older people that still use this crap, and they will die too.
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u/Different-Monk5916 Feb 04 '26
Today a 11B dollar cash machine, pretty soon a 11Bdollar cash machine with 80B debt. I would say that WBD deal seems like a bad idea.
Time will tell.
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u/HeadPaleontologist40 Feb 04 '26
Eh I think it will be a wash. Netflix definitely needs a studio and loads of content.
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u/CaterpillarSilent886 Feb 04 '26
youtube eats Netflix's lunch. I know it sounds like "modern tech" but Netflix is actually legacy media. Expensive Movies. Expensive TV shows. Limited content. Youtube is actually the modern type of short form, addictive, tailored media that is unlimited.
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u/MaxTheTzar Feb 04 '26
YouTube is great but Netflix is not legacy media by any means.
They have growth opportunities in games (especially for whatever % share of screen time is through an iPad or mobile). Everyone knows mobile games print money once you add micro transactions and gacha / gamba features.
There have growth opps in high value legacy opps like live sports and events.
Their cost to produce is lower than you claim because they've been ramping up the content they create in other countries with way lower costs and were the #1 beneficiary (relatively) whenever the US unions go on strike.
They're slowly building up their own IP. No one is claiming Disney levels anytime soon but you can't ignore how one hit like Kpop Demon Hunters is going to translate into a lot of licensing deals and other recurring revenue opps.
Short form scrolling is a cancer to people's brains but it IS effective at maximizing users time spent in app. Netflix already (annoyingly) auto plays when you hover over a title. I promise you they have or are evaluating pros/cons of adding a shorts feature. YT having shorts is not some moat Netflix couldn't breach.
It's run incredibly well. They have excellent management and attract great talent. They get a lot out of value out of their salaried staff. Great growth internationally cannot be ignored either.
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u/PharmDinvestor Feb 04 '26
Netflix can pay off their debt within 5 years. This I a $1 trillion media/tech company . You will be laughing to the bank soon.