Is Netflix Stock A Buy In 2018/2019?

In today’s video we’re going to be talking about one of the hottest stocks in the market. Over the past 5 years it has gone up a mere 903%. So obviously this leaves a lot of sheep I mean investors flocking towards the stock not wanting to miss out on any returns.

Is Netflix stock a Buy, let’s dig a little deeper, we’ll talk about the basics of the stock, the business model, fundamentals, risks and whether I consider it a buy. Welcome back all subscriber I’m very grateful to have you apart of the channel.

I’m going to aim to do more stock analysis videos like this every month just because I enjoy analysing different shares and seeing people’s different opinions on them. I know a lot of people have been interested in Netflix stock.

The companies even got it’s own damn saying known around the world, Netflix and Chill. I was going to use it in the thumbnail but nah to cheesy. But let’s start with talking about the company itself and what’s happening with Netflix.

Netflix is an entertainment company founded in the United States that provides streaming media, video-on-demand online, and DVD by mail. You can pretty much cross out that last one because no-one under the age of 50 uses DVD by mail.

Netflix allows people to stream a bunch of different videos. In 2012 they started producing their own content which was a big thing for the firm. And since then they’ve produced a massive amount of their own content.

2 years ago in 2016 they produced an estimated 126 original series and we can only assume they have produced a greater number then that since then. Netflixes business model is in essence beautiful, harnessing the power of the internet.

They operate on what’s known as a subscription based model, meaning users pay a monthly fee to subscribe and in return they get too watch the content on Netflix. The thing about the business model is they have pretty much no extra fees for an additional subscriber.

Meaning the more subscribers Netflix gets the more effective the business model becomes. And the business model is pretty effective at the moment with over 125 million subscribers as of April 2018. So at the moment all flowers and rainbows.

But I’m going have to start being real with you guys now. There are a number of things that would make me feel very very edgy if I were a Netflix shareholder. Let’s start with the companies debt. If we look at their long-term debt its just been increasing year and year out.

It’s gone from 2.3billion in 2015 to 6.5 billion in 2017 so almost triple. But their total long-term debt and obligations racks up to a massive number, over 20 billion. Now they’re making new content yes.

And some of it is successful. But they’re borrowing a truck load to make this new content and that makes things extremely risky. All Netflix shareholders better hope the original content becomes more successful and brings in more money.

I mean the risk with holding all that debt is rising interest rates which could really put the company under a lot of pressure. Now let me know in the comments if you think it’s a smart idea for Netflix to borrow this much money.

I know Buffett certainly wouldn’t think so and to be honest neither do I. Let’s move on to something else. The numbers. 1 share of Netflix is selling for a price of $349 and for that share you’ll get a whole 1 dollar 25 in return.

This gives it an insane P/E ratio of 279. What this means is the stock earnings better well grow. And to be fair it has been growing well from 122 million in 2015 to 558 million in 2017. But remember this was a period when the economy and the stock market did really well.

What happens when the economy starts flattening out or decreasing that we’ll talk about soon. Now I wanted to make this point. The average p/e ratio in the U.S stock market over time is around 15. For Netflix to get this average they need to grow their earnings from $1.

25 to $23.3. That’s just to be on average terms. That’s a tonne of growth to hope for, I’ll leave it for you to decide if you think they can do it. Risks Economic Cycle The other thing is we are in the late part of the economic cycle.

This is the part of the cycle where discretionary stocks thrive because consumers have a lot of money. And what most people do when they get extra money is find a way to spend it. Monkey see, monkey want.

Its what most of the world does. They’ve never heard of investing and they don’t want to hear about because it means you have to save some money. Most people on the channel hopefully won’t be like this but I’m sure a lot of their friends do.

Now Netflix is a great thing for people to buy when they have left over money. Which is a reason why Netflix has done so well. Tell me what happens when there is a recession and people don’t have this leftover money.

They drop things that they don’t need. Things like Netflix subscriptions. What happens next is Netflix reports bad earnings and investors run for the hills. Panic happens and the stock drops. Maybe then I’ll consider buying it but until then I’m good.

Netflix is a stock that has high risks associated with it at the current price they’re selling at. That is my main issue with the stock. Also their high amounts of debt. I’m staying the heck away from it.

Does that mean Netflix stock will drop. Of course not. No-one knows for sure what will happen, especially in the short term. I could definitely see Netflix report great earnings in the next couple of quarters and the stock increase dramatically.

But in the long term its just too risky and the rewards aren’t great enough for me to take that risk. The last thing I wanted to point out are the types of investors who own Netflix. As you can see mainly mutual fund holders.

And this is a big reason why I advocate for picking individual stocks. Because if you go with active management or index funds, your going to be highly exposed to risky stocks like Netflix. If you want to hold a high percentage in stocks like these then go ahead.

But I’d prefer to pick individual stocks. That’s it for today’s video. The comment section is waiting below so that you guys can let me know if I’m wrong or right about Netflix. I love seeing people’s different comments, I love seeing people’s different opinions.

That way we get a fuller picture of the stock. Let me know your thoughts below. Don’t forget to drop a like to see more videos these. It really helps the channel. Also if you want to learn more about investing then subscribe to cooper academy and we can talk more about different stocks.

Till next time everyone, bye. in today's video we're going to be talking about one of the hottest stocks in the market over the past five years it has gone up a mere nine hundred and three percent so obviously this leaves a lot of sheep I mean investors flocking towards the stock not wanting to miss out on any returns as Netflix doc goodbye let's dig a little deeper we'll talk about the basics of the stock the business model fundamentals risks and whether I consider it a buy welcome back or subscribers I'm very grateful to have you a part of the channel I'm gonna aim to do more stock analysis videos like these every month just because I enjoy analyzing different shares and seeing people's different opinions on them and I know a lot of people have been interested in Netflix stock I mean the companies even got its own dare him say known around the world Netflix and chill I was going to use it in the thumbnail but nah too cheesy so let's start we're talking about the company itself and what's happening with Netflix Netflix is an entertainment company founded in the United States that provide streaming media video on-demand online and dvd-by-mail you can pretty much cross out that last one because no one under the age of 50 uses dvd-by-mail so Netflix allows people to stream a bunch of different videos in 2012 they started producing their own content which was a big thing for the firm and since then they've produced a massive amount of their own content I mean two years ago in 2016 they produced an estimated one hundred and twenty six original series and we can only assume that they have produced a greater number than that since then we'll move on to the business model which is an essence quite beautiful harnessing the power of the internet they operate on what's known as a subscription-based model meaning users pay a monthly fee to subscribe a nun return they get to watch the content on Netflix I mean the thing about the business model is they have pretty much no extra fees for an additional subscriber meaning the more subscribers Netflix gets the more effective the business model becomes and the business model is pretty effective at the moment with over a hundred and twenty five million subscribers as of April 2018 so at the moment all flowers and rainbows but I'm gonna have to start being real with you guys now there are a number of things that make me feel very very edgy if I were a netflix shareholder let's start with the company's debt if we look at the long term debt it's just been increasing year in and year out it's gone from 2.

3 billion and 2015 to 6.5 billion in 2017 so almost triple in just two years but the total long-term debt and obligations wreck up to a massive number over 20 billion now they're making new content yes and some of it is successful but they're borrowing a truckload of money to make this new content and that makes things extremely risky or Netflix shareholders better hope that the original content becomes more successful and brings in a lot more money I mean the risk worth holding all that debt is rising interest rates which could really put the company under a lot of pressure now let me know in the comments if you think it's a smart idea for Netflix to borrow this much money but I know Buffett certainly wouldn't think so and to be honest neither do I let's move on to something else though the numbers once your Netflix is selling for a price of $349 and for this year you'll get a whole $1 25 in return now this gives it an insane p/e ratio of 279 what this means is the stock earnings bitter well grow to be fear it has been growing well from 122 million in 2015 to 558 million in 2017 but remember this was a period when the economy and the stock market did really well what happens when the economy starts flattening out or decreasing that we'll talk about soon now I wanted to make this point the average p/e ratio in the US stock market over time is around 15 for Netflix to give this average they need to grow the earnings from a dollar twenty five to twenty three point three dollars and they're sure to be on average terms that's a ton of growth to hope for but I'll leave it to you to decide if you think they can do it and the other thing I wanted to mention is that we are in the late part of the economic cycle this is a part of the cycle where discretionary stocks thrive because consumers have a lot of money and what most people do when they get if your money is find a way to spend it monkey see monkey won that's what the most of the world does they've never heard of investing and they don't want to hear about it because it means you have to save money most people on the channel hopefully won't think like this but I'm sure a lot of the friends do now Netflix is a great thing for people to buy when they have leftover money which is a reason why Netflix has done so well now tell me what happens when there is a recession and people don't have this leftover money they drop things that they don't need things like Netflix subscriptions what happens next as Netflix reports bad earnings and investors run for the hills panic happens and the stock drops maybe then I will consider buying it but until then I'm good Netflix is a stock that has high risks associated with her at the current price they're selling out that is my main issue with the stock also their high amounts are debt I'm saying the heck away from it does that mean Netflix top will drop of course not no one knows for sure what will happen especially in the short term I could definitely see Netflix Report great earnings in the next couple of quarters and the stock increased dramatically but in the long term is just too risky and the rewards are great enough for me to take that risk the last thing I wanted to point out other types of investors who own Netflix as you can see mainly mutual fund holders and this is a big reason why I advocate for picking individual stocks because if you go with active management or index funds you're going to be highly exposed to risky stocks like Netflix if you want to hold a high percentage and stocks like these then go ahead but I'd prefer to pick individual stocks that's it for today's video the comment section is waiting below so that you guys can let me know if I'm wrong or right about Netflix I loved seen people with different comments I loved seen people with different opinions that way we get a fuller picture of the stock so let me know your thoughts below don't forget to drop a like to see more videos like these it really helps my channel also if you want to learn more about investing then subscribe to coober Academy and we can talk more about different stocks till next time we've run bye


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