Report
Valens Research

NFLX - Embedded Expectations Analysis - 2021 06 02

Netflix, Inc. (NFLX:USA) currently trades above corporate averages relative to
UAFRS-based (Uniform) earnings, with a 36.4x Uniform P/E, implying bullish expectations for the firm. However, management may have concerns about their interactive gaming capabilities, subscriber growth, and new content variety

Specifically, management may lack confidence in their ability to increase subscriber growth as the world reopens, enhance their interactive gaming capabilities, and offer a new variety of content every quarter. Moreover, they may have concerns about account sharing, the potential of their upcoming big title launches, and their low-ARPU high-volume strategy. Additionally, management may lack confidence in their ability to provide the right features to meet viewers' broad set of needs and leverage go-to-market partners to attract new demographics
Underlying
Netflix Inc.

Netflix is engaged in subscription streaming entertainment service including TV series, documentaries and feature films across a variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, without commercials. Additionally, several members in the United States subscribe to the company's DVD-by-mail service. The company improves its streaming content with a focus on a programming mix of content. The company's members can download a selection of titles for offline viewing. The company operates its business as a global operating segment.

Provider
Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
  • Stock analyst recommendations are not grounded in disciplined financial analysis
  • Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
  • Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available

We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.

  • Corporate credit ratings remain years behind the fundamental underpinnings of company performance
  • Stock analysts continue to make recommendations with deeply inherent biases
  • Research firms have failed to break down the walls between credit, equity, and macroeconomic research
  • The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming

The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.

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Valens Research

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