I just took a look at what superinvestors bought during last quarter. And I've seen that Sequoia Fund bought Netflix. Actually, that's a big buy for them because it's a new position representing 4% of the fund...
So, I've taken a look at Netflix... to see that it was indeed a great company.
We may think that Netflix has some serious competition with all the other streamers that are coming in the market. I have to admit that I don't know that much the streaming market, but I've tried a bit of Amazon Prime Video and I wasn't that seduced by it.
I haven't tried Apple +, but I've heard that the offer wasn't that wide. Anybody could do a little critic of what they've experienced on various platforms?
Anyway, anybody who has bought Netflix 5 years ago has made more than 5 times his money. And anybody who has bought Netflix last year has made about 50% his money.
Here's a few observations:
The growth rate is still very high.
They make profit;
The ROE is very good (30);
Forward PE is OK (42);
The debt level is high, however, it's mostly long term debt.
The cash flows are negative, year after year (probably because they reinvest a lot of their CF), it's strange, but probably logic;
The brand is HUGE. It should be even bigger in the future. Because everybody has nothing else to do than watching stuff on their computers. The habit will stay, after the pandemic. Netflix is like Apple: for a lot of people, it's a no brainer. And I think that it's the main advantage of Netflix. It's already in the head of hundred of millions of people, all around the world as an easy and cheap entertainment. And I'd bet that it's gonna be there for many years.
So, i'm positive about that stock.