Media-streaming veteran Netflix (NFLX -3.69%) has taken a pummeling in the stock market in 2022. The stock is down 70% year to date, including a 49% drop in the last quarter.
The long and painful slide was punctuated by sharp plunges after each of the year's two earnings reports. Netflix is losing customers for the first time in the streaming era, and many investors are running for the exits.
Should the subscriber-growth slowdown keep you away from this stock, or is Netflix a great buy at these multiyear lows? Let's have a look.
Netflix by the numbers
Does this look like a company at death's door right now? A business fighting to stay afloat in a sea of new competition?
NFLX Revenue (TTM) data by YCharts.
I don't think so. Over the last five years, Netflix has tripled its top-line revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) -- the profit metric banks prefer to look at when assessing a company's creditworthiness.
Netflix used to focus on subscriber growth above all else, but that's not the case anymore. Nowadays, the company seeks to maintain revenue growth in the double-digit percentages, while boosting profitability. That effort is working wonders, as you can see from the soaring revenues and EBITDA profits.
Image source: Netflix quarterly filings.
We're still looking at the early days of a long-term growth story. Digital video-streaming services command a small portion of the time American consumers spend on viewing video content, according to Nielsen data. The streaming slice of viewing time is going up over time, and Netflix is boosting its individual share of this metric. Good old linear TV (cable, satellite, and broadcast), however, still account for more than 70% of the market.
That's in the domestic market, where the bears argue that Netflix has no room left to grow. That's just wrong, and I fully expect streaming services to grab the entire video-viewing market in the long run. And guess who's in the vanguard of that trend? Yep -- that's Netflix.
Netflix is a fantastic buy right now
As you can see, Netflix has plenty of room to grow larger and more profitable. And you should keep in mind that we're looking at the original, largest, and most mature single-nation market in Netflix's portfolio above. The potential for incredible growth expands even further when you consider the global market for streaming media.
Meanwhile, Netflix shares are trading at prices not seen since the fall of 2017, when Mindhunter was the hot new Netflix original series and Will Smith was about to star in Bright. Those were the days, right?
You can get all of this exciting and profitable growth for the bargain-bin price of 17 times trailing earnings. You can call Netflix a deeply discounted value stock today -- with a straight face.
