Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Is Netflix a Buy Yet?

Chief Technology Officer Jeremy Phillips and Senior Technology Analyst Eric Bleeker discuss whether Netflix is a buy after its post-earnings implosion. After CEO Reed Hastings announced on Facebook that viewers had streamed 1 billion hours of Netflix entertainment in June, investors went rabid, believing Netflix's subscriber numbers would soar. The problem is, that 1 billion number was just a large and out-of-context figure that didn't really tie into subscriber strength. Before earnings, Eric and Jeremy had cautioned investors to ignore the number, as it had little relevance to Netflix's subscriber growth.

The company is now valued at just $3 billion, which on the surface isn't a huge number for a subscription business with nearly 22.7 million paying domestic streaming subs, 3 million paying international streaming subs, and still 9.2 million DVD subscribers.

Even with these big subscription numbers, Netflix might have become its own worst enemy. On the quarterly conference call, Hastings hinted at a possible partnership with HBO, which HBO was quick to shoot down. It seems Netflix has built up an "us-vs.-them" mentality with other media outlets, which creates difficulties in licensing content at costs that enable reasonable levels of profits. Moreso, Jeremy questions some of the measures the company stopped reporting. As an example, he doesn't feel confident in a subscription-based model that stopped reporting its churn rate of leaving customers. Even at these cheap valuations, neither Eric nor Jeremy will be taking the plunge and buying Netflix. To see their full thoughts, watch the following video.

Netflix is no longer the darling of Wall Street it once was. But with a potential 600 million customers around the world, could it soar high again? While Eric and Jeremy aren't currently buyers, opinions on the company range, and investors should be aware of the threats and opportunities in front of the company. Check out our premium report for both the bull and bear cases on Netflix. Just click here to start now.


Eric Bleeker and Jeremy Phillips have no positions in the stocks mentioned above. The Motley Fool owns shares of Netflix. Motley Fool newsletter services recommend Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1972826, ~/Articles/ArticleHandler.aspx, 10/21/2016 11:06:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,070.00 -92.35 -0.51%
S&P 500 2,136.03 -5.31 -0.25%
NASD 5,245.31 3.47 0.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 10:50 AM
NFLX $122.84 Down -0.51 -0.42%
Netflix CAPS Rating: ***
TWX $84.31 Up +1.32 +1.59%
Time Warner CAPS Rating: ***