Netflix (NFLX) AI Stock Analysis

• Market Cap: $404.43B
• Dividend Yield: N/A
• Average Volume (3M): 5.38M
• Price to Earnings (P/E): 46.5
• Beta (1Y): 1.23
• Revenue Growth: 15.28%
• EPS Growth: 65.72%
• Country: US
• Employees: 14,000
• Sector: Communication Services
• Sector Strength: 98
• Industry: Entertainment
• EPS (TTM): 19.83
• Shares Outstanding: 427,757,100
• 10 Day Avg. Volume: 5,131,537
• 30 Day Avg. Volume: 5,383,271
• PEG Ratio: 0.71
• Price to Book (P/B): N/A
• Price to Sales (P/S): 10.53
• Price to Cash Flow (P/CF): 66.80
• P/FCF Ratio: 66.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $1,103.06
• Price Target Upside: 19.75% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 41

Netflix demonstrates strong financial performance and positive earnings sentiment, with successful subscriber and advertising growth. Technical indicators show mixed signals, and the valuation suggests potential overvaluation. Challenges with FX volatility and content spending are notable risks.

Positive Factors

Financial Performance

Management increased prices in several countries, which should benefit average revenue per member and ad revenue growth.

Growth Opportunities

Netflix has done a commendable job attracting users to its ad-supported plan, accounting for over 55% of new sign-ups in ad-supported countries.

Market Position

Netflix is the top SVOD service in the five largest markets in Europe, followed by Amazon Prime Video and Disney+ in most markets.

Negative Factors

Consumer Sentiment

General sentiment alone could be a potential headwind for Netflix in Europe, and an added cost burden on the consumer could potentially exacerbate the situation.

Market Competition

Competition is dynamic, valuation stretched, and the macro environment darkening.

Regulatory Risks

Rising global regulatory and tax risks from trade tensions could impact Netflix's financial performance.

Netflix Business Overview & Revenue Model

Company Description

Netflix, Inc. is a leading global entertainment services provider, primarily operating in the streaming media sector. The company offers a subscription-based streaming service that allows members to watch a wide variety of TV shows, movies, documentaries, and more across a wide range of internet-connected devices. With a focus on original content production and distribution, Netflix has established itself as a major player in the entertainment industry, delivering personalized viewing experiences to its subscribers worldwide.

How the Company Makes Money

Netflix makes money primarily through subscription fees from its streaming service. The company offers several tiers of monthly subscription plans that vary by features such as the number of concurrent streams and the video quality (SD, HD, or Ultra HD). Additional revenue streams include licensing agreements for content distribution and DVD rental services, although the latter has become a smaller part of the business. Netflix invests heavily in producing original content, which not only attracts new subscribers but also retains existing ones by offering exclusive shows and movies. Strategic partnerships with content creators, production studios, and technology providers also play a role in enhancing its service offerings and expanding its global reach. While advertising is not a primary revenue source for Netflix, the company has explored ad-supported plans to provide more affordable options for consumers and diversify its income streams.

Netflix Financial Statement Overview

Summary

Netflix exhibits robust financial health with strong revenue growth, improved profit margins, and stable cash flow, underpinned by a solid balance sheet. While debt levels are manageable, the company should continue monitoring its liabilities to maintain financial stability.

Income Statement

Netflix's income statement shows strong revenue growth with a significant increase from $33.7 billion in 2023 to $38.9 billion in TTM (Trailing-Twelve-Months) 2024, indicating a 15.6% growth rate. The gross profit margin is solid at 46.0% TTM, reflecting efficient cost management. The net profit margin has improved notably to 22.4% TTM, showing enhanced profitability. EBIT and EBITDA margins are robust, at 26.7% and 56.5% respectively, highlighting effective operational performance.

Balance Sheet

Netflix maintains a stable balance sheet with an equity ratio of 46.1% TTM, indicating a balanced capital structure. The debt-to-equity ratio is 0.63 TTM, showing manageable leverage. Return on equity stands at 35.2% TTM, reflecting strong profitability and efficient use of equity. However, the total liabilities are relatively high compared to assets, suggesting some financial risk.

Cash Flow

Cash flow analysis reveals a positive free cash flow of $6.9 billion TTM, consistent with the previous year, showing stability in cash generation. The operating cash flow to net income ratio is 0.84 TTM, indicating a healthy conversion of income to cash. The free cash flow to net income ratio is 0.79 TTM, demonstrating strong cash flow performance relative to earnings.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
39.00B	33.72B	31.62B	29.70B	25.00B
	Gross Profit
17.96B	14.01B	12.45B	12.37B	9.72B
	EBIT
10.42B	6.95B	5.63B	6.19B	4.59B
	EBITDA
24.88B	21.51B	20.33B	19.04B	15.51B
	Net Income Common Stockholders
8.71B	5.41B	4.49B	5.12B	2.76B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.58B	7.14B	6.06B	6.03B	8.21B
	Total Assets
53.63B	48.73B	48.59B	44.58B	39.28B
	Total Debt
15.58B	14.54B	14.35B	15.39B	16.31B
	Net Debt
7.78B	7.43B	9.21B	9.37B	8.10B
	Total Liabilities
28.89B	28.14B	27.82B	28.74B	28.22B
	Stockholders Equity
24.74B	20.59B	20.78B	15.85B	11.07B
Cash Flow		Free Cash Flow
6.92B	6.93B	1.62B	-131.97M	1.93B
	Operating Cash Flow
7.36B	7.27B	2.03B	392.61M	2.43B
	Investing Cash Flow
-2.18B	541.75M	-2.08B	-1.34B	-505.35M
	Financing Cash Flow
-4.07B	-5.95B	-664.25M	-1.15B	1.24B

Netflix Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 921.17
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NFLX, the sentiment is Neutral. The current price of 921.17 is below the 20-day moving average (MA) of 934.67, below the 50-day MA of 962.71, and above the 200-day MA of 812.45, indicating a neutral trend. The MACD of -3.46 indicates Positive momentum. The RSI at 45.16 is Neutral, neither overbought nor oversold. The STOCH value of 27.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NFLX.

Netflix Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOXA	82 Outperform	$22.46B	11.02	20.09%	1.05%	4.29%	177.70%
DIS	77 Outperform	$165.30B	29.69	5.54%	1.04%	3.97%	89.53%
NFLX	74 Outperform	$404.43B	46.46	38.43%	―	15.28%	65.72%
ROKU	63 Neutral	$9.32B	―	-5.37%	―	18.03%	82.15%
PARA	61 Neutral	$7.95B	―	-31.94%	1.80%	-1.48%	-450.15%
Sector *	58 Neutral	$26.94B	3.15	-10.67%	4.32%	2.14%	-43.11%
WBD	58 Neutral	$22.73B	―	-28.54%	―	-4.91%	-259.71%