We are on Netflix, Inc. (NFLX) encountered a bullish paper, replaced by a rational range. In this article, we will summarize the Bulls' paper on NFLX. As of May 8, Netflix, Inc. (NFLX) share is $1,144.43Th. According to Yahoo Finance, NFLX's backward and forward P/E are 54.08 and 46.08, respectively.
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Netflix can think of it as an expensive stock because of its high P/E ratio and moderate free cash flow yield, which provides a fun case for value investors when considering the accounting treatment of their content assets. Although Netflix has $467 billion in financial capital and net revenue of $9.27 billion, Netflix's finances may not immediately reflect the value embedded in its extensive content library. This is due to the amortization method, especially for content produced internally, such as the iconic "House of Cards."
Unlike useful assets that depreciate tangible assets, Netflix amortizes its content over a period of time, which usually takes up to 10 years, but takes a more loaded approach – about 90% of the amortization occurs within the first few years. As a result, much of the content Netflix has created over the past decade no longer has value on its balance sheet, even if it continues to generate a lot of ratings and revenue. For example, shows like "House of Cards," which is now 10 years old, are almost worthless in Netflix's financial statements, although they last a lot. This difference between accounting processing and the actual value of content leads to potential hidden value in the Netflix library.
While Netflix's ongoing investment in new content is crucial for its future, the long-term value of its older content, while amortized on paper, will still be in the company's brand, audience engagement, and potential future revenue streams through merchandise, sequels or new formats. This nuanced understanding of Netflix's accounting approach gives a deeper understanding of the company's financial situation, suggesting that its content library may have more value than it was initially obvious. While Netflix may not be undervalued at current levels, investors with a long-term perspective may still consider it a compelling company because of its future potential for intellectual property and the ability to earn ongoing revenue from existing content.
Netflix, Inc. (NFLX) in our list The 30 Most Popular Stocks in Hedge Funds. According to our database, 144 hedge fund portfolio held NFLX at the end of the fourth quarter, with 121 in the previous quarter. Although we acknowledge the risks and potential of NFLX as an investment, our belief lies in the belief that certain AI stocks have greater hope to provide higher returns and do so in a shorter time frame. If you are looking for AI stocks that are more promising than NFLX but have less than 5 times its earnings, check out our report Cheapest AI stocks.