Netflix Inc. (NFLX)

It reports Tuesday. He expects to hear why NFLX wants to pay a fortune for Warner Bros.

He hopes they don't buy Warner Bros., a very unpopular deal in Hollywood and will take Netflix's eye off the ball. He doesn't see the value in Warners. Also, the stock isn't cheap.

Continues to dominate. Potential acquisition of Warner Bros. would make it even bigger. Market's concerned about how much it's spending on the deal. But it's all about content, which brings on more viewers and subscribers. Could find support at $80-81. Likes the long-range view.

Not concerned about valuation at 29x PE, cheaper than WMT or COST. Still very strong earnings growth of 20-25%.

Paramount needs the Warner Bros. deal more than NFLX does. Family trust has now been taken out, with Ellison backing the whole thing, so the story becomes more difficult for Warner. From a regulatory view, this would put Paramount in charge of an awful lot of media.

As for NFLX itself, this is the first time it's really bought something; has been homegrown up till now. If they can get this asset, it'll have a much broader and deeper catalogue, as that's what it spends a lot of its money on. Good deal if they can get it. Hollywood hates NFLX, but the reality is that streaming is where movies are going. Hollywood's dying a slow death. 

Multiple's only about 28x, whereas it was previously 100x. If they walk away from the deal, stock will go up. If they do the deal, it'll be great for them in the long run. Great time to be buying. You don't lose too much by dipping in at these levels. May up their bid, and that would hurt the stock a bit. The NFLX bid seems to be Warner Bros' preferred one.

A decent, but expensive company, trading around the 30x PE, cheaper than before they announced the Warners deal. Problem is they need to spend a lot on content and continue to. He regrets not buying it in 2022 when it traded at 16x PE. Are not better opportunities in tech. He respects the founder deeply though. 

Paramount's bid for WBD is partially financed by the fifth-wealthiest person in the world, Larry Ellison (Oracle), but Netflix wants WBD and has the blessing of the WBD board. Paramount won't get WBD unless Ellison comes back with HUGE money. WBD is up 20% in December.

NFLX has emerged as essentially the clear winner in the streaming space. A few years ago, this statement was not as clear, as competitors like DIS, AMZN, were potential peers to NFLX in the space, but it is now clear that NFLX has a strong moat around its platform. Sales and earnings growth are expected to trend higher, analyst estimates are rising, and margins are expanding. It generates strong free cash flow and mostly repurchases shares with its cash flows. It trades at a reasonable valuation of 31X forward earnings. We feel that in a consumer slowdown scenario, cutting streaming platforms is one of the first places that consumers look at, and this is one of the biggest risks for the name, but over a long period of time, we think this name has a lot of potential. 

With the WBD bros deal we think NFLX becomes a powerhouse in the streaming space, without the WBD deal, we think it can continue to do well, but it will need to refocus on organic growth and balance sheet strength. Short-term the stock may fluctuate if the deal goes through, but we think it is positive for the stock long-term.
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This will be the start of a very long, difficult battle with Paramount over WBD.  Not a buy.

It is buying Warner Brothers in a multi-billion dollar deal. Building more content is interesting but globally how much more growth can be expected in subscriptions. Anti-trust investigations could be an issue. A lot of debt will be needed. If you own it, wait and see.  

Usually the acquiring company's stock does fall, so that's normal. There's going to be incredible regulatory scrutiny.  He predicts the deal won't get done, it's too anti-competitive. The White House is already taking a dim view of it. If the 1 in 4 odds come through and the deal does happen, it would be incredible for NFLX. We're talking about a 100-year library of the best movies.

Last quarter, missed on some Brazilian tax issues and so it missed on earnings. Big competition. But Q3 had the best sales ever, revenue was up 17% YOY, raised guidance. Aiming to double revenues by 2030. Also trying to leverage generative AI. Growing ~20%, trading at ~27x. Still really good value.

He sold 85% of his holding, though he really likes it. This will be a political football for the coming year after announcing it is buying Warner Bros. Discovery. While this deal works its way through the meat grinder, there are better things he can do with his money. There's a big anti-trust contingent in both parties in Washington.

He thinks it's a great deal, though it's unlikely Washington will approved it. Also, we'll see a hostile bid from Paramount. It's amazing to take Paramount's established franchises to another level. Will buy. If the deal dies, NFLX stock goes higher. He could write covered calls on this given more volatility to come.

King of the heap, global streaming leader. His 12-month price target is $134.50. Likes it, but it's not cheap. He suggests buying some here ~$104 (PE is ~mid-40s), and some more in the mid-$90s. Market outlook is good. 

Has owned it before. Is the definite leader. Are two strong drivers: cracking down on password sharers, and rolling out the ad tier. Also, they offer live events like WWE. Trades at 40-45x earnings on 15% revenue growth. Not cheap, but are best in class. Would buy below $90.