Recent share performance and business snapshot
Netflix (NFLX) has drawn fresh attention after recent share price weakness, with the stock down around 7% over the past month and about 15% over the past 3 months.
The company reports annual revenue of US$46.89b and net income of US$13.37b from its streaming entertainment service, supported by nearly 10% revenue growth and about 12% net income growth on an annual basis.
See our latest analysis for Netflix.
The recent 7% decline in the 1‑month share price return and 15% fall over 3 months compare with a 1‑year total shareholder return that is down 33.11%. However, the 3‑year total shareholder return stands at 82.52%.
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With Netflix generating US$46.89b in revenue and US$13.37b in net income, yet the stock is down 33.11% over the past year, should you view the current price as a potential entry point or conclude that markets are already pricing in its future growth prospects?
Most Popular Narrative: 14.1% Undervalued
According to the most followed narrative for Netflix, the fair value estimate of $94.66 sits above the last close at $81.27, which frames the current debate around whether the market is underpricing its long term potential.
I’ve owned Netflix shares before, sold last Fall after strong gains and recently bought back in after the share price dipped.
What gives me confidence in Netflix’s future is one number above all others: subscriber growth.
Curious what sits behind that $94.66 fair value mark? This narrative focuses on compounded subscriber gains, rising margins and a premium future earnings multiple that reflects the view that Netflix continues scaling its global reach.
Result: Fair Value of $94.66 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this view could be challenged if subscriber trends soften, or if higher content and production costs start to squeeze Netflix’s margins.
Find out about the key risks to this Netflix narrative.
Next Steps
This mix of risks and rewards has sparked plenty of debate, so if it matters to your portfolio, it makes sense to review the details yourself and move quickly. To see both sides laid out in one place, take a closer look at the 4 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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