As far as investors are concerned, international expansion is a great move that will give the company exposure to more people with relatively low investment. Netflix has also shifted the development of their service into 2 fronts: Content creation and International Expansion. It seems that investors are anticipating a slowdown of the high growth phase and are adjusting the price to the value closer to the present. The FundamentalsĪs far as Netflix is concerned, the company still trades like a growth stock, with a 32x price to earnings ratio, which has decreased from the 63x P/E from Q1 2021. Hence, why we see stocks being more sensitive to earnings calls. Investors will want tangible cash returns and stocks that trade with justifiable multiples/valuations. The takeaway from what we observe in markets, is that the fundamentals will matter more, not less. In that regard, it is quite hard to estimate where to move next, that is why we will pair our analysis with the fundamentals of the stock and see how investors might see the future of Netflix. Markets are future oriented, so they are also pricing-in uncertainty, economic slowdown and stability. Now, consumers are faced with picking from closed ecosystems of competitors that all offer a discretionary product. As time passed, more and more companies joined the streaming entertainment business. When Netflix started to gain popularity, it was a near monopoly on the streaming market, and customers were intrigued by the trendiness of the service. There is an argument to be made that this will continue to unfold as we keep tracking inflation developments. This included a rotation into financial institutions, energy/commodity companies, consumer essentials, utilities. Rise in high pricing power stocks - as inflation erodes the value of money, investors seek out stocks that can pass on these costs to their clients. Rotation from growth to value - closely tied to the previous point, investors started rotating their funds from high risk-return stocks, to lower return but established companies with reliable cash flows. For lenders, this is reflected in the rise of interest rates, while the market reacts with demanding a higher return from their investment in the near(er) future. This prompted both the market and lenders to change their valuations. Some key developments that changed how markets value sectors include: Investors speculate that there are a few reasons for the change in price - However, these are not independent of the company's fundamentals, and we will factor them-in later. Initially, the stock outperformed the NASDAQ100 up until November, but is now down some 33% from the last 12 months.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |