Barry SchwartzNetflix Inc.NFLXSTRONG BUYJul 22, 2024

It reports next Tuesday. He expects the ad business to be strong. They need to focus on the content spend. Sports is expensive, but a Squid Game sequel will be profitable. Shares are attractively priced now.

The new content executive starts soon. NFLX is incredibly positioned. Continue to be patient. It's a fine stock to own.

He's surprise by the negative reaction from the market to the new content executive. They're focusing more on live sports. They need to find a way to create user-generate content that makes YouTube popular. But today's news is a step in the right direction.

Tough business model. Subscriber numbers drive a name like this. Generates FCF, and not many in the space do. Once you compare FCF yields in the space, this one comes out too rich. Steer clear right now.

Likes it and looking at it. Waiting for a better entry point. Headwinds to cashflows and FCF. Stay away for now, or wait to see management commentary going forward at next earnings report.

There are two big streaming companies, Netflix and YouTube. Netflix should be able to increase its subscriber growth by diversifying its business into sports, etc. There is an uptick on their paids. It does a lot of its own content and buys content very easily. You can buy at these levels.

He's a big fan (and a big fan of his son who's an actor ;). Transformed the way we looked at television, synonymous with streaming. But now so many other streamers in the market. Doesn't have the tech edge anymore, would have to reinvent itself.

They still have margin strength, still have 330 million subscribers and their ad-tier business will continue to accelerate. Also, their cash flow generation has been more positive. He gets it--slower engagement. But these positive drivers will accrete long-term.

He bought more, though it's a small position, because it traded down on a downgrade--but this was piling onto a stock that already had a tough time. He thinks for a trade, this will bounce. He though their last quarter was good, though the market didn't. With everybody so negative on Netflix, he thinks the bad news is already baked in.

He sold it last June, and NFLX is -17% since. He is bearish on all streamers, because they're getting challenged on margins, whereas the growth is in live entertainment and sports. But that is very experience to acquire. So, the streamers will continue to raise prices.

He's buying more shares. Investors worry NFLX is losing share to YouTube and TokTok, while Paramount and Warners will likely merge. But NFLX still has the largest user base in the world and they make the most money per engagement. This allows them to add more content than their peers. They still grow revenues and profits. Still likes it.

He sold it recently and bought it back. Thinks it's safe. Not sure about the upside, but the downside has been taken out. Other streamers are raising prices which makes NFLX a value player.

Proven pricing power. ROE has been solid. Earnings should be up this year ~40%. Now above 200-day MA; the rising 200-day should provide good support. RSI starting to improve. Use the 200-day as your stop. Investor made a good buy.

(Note the short timeframe.)  The market loved it for a while after the abandoned WBD deal. Then market started to focus on competition. But people aren't cancelling subscriptions; in fact, just the opposite. Trades at 20x 2027 PE for double-digit growth, terrific balance sheet. Boundless opportunities, sees so much upside.