Netflix Inc. (NFLX)

The price target was raised today. Is up 36% this year. It's a permanent compounder. They still own the streaming space, are #1. Looks great. Has so many tailwinds. Is recession resistant.

Meets a lot of his criteria but one -- it's not actually a capital-light business. Spends a lot on developing new content. A compounder. Well, and frugally, run. Investors would do well to read about the culture and the CEO. Dominates the space, market leader. Quite a bit of direct competition.

If you got in at favourable prices, stick with it. Strong company. One of the biggest mistakes investors make is that they "interrupt compounding unnecessarily" (paraphrased from Charlie Munger).

Then buy a piece of it, a little, then buy more if it goes down. NFLX may be the best-growing stock in the market.

Take out your cost basis (take some profits) and let it run.

Impressed by last week's quarterly results. Cracking down on password sharing is generating more revenue. Innovating by launching ad-supported versions. Geographic expansion. Aggressive investment in content. Has become a big free cashflow story.

Officially classified as a consumer discretionary stock, but he considers it more akin to a utility. A relatively inexpensive indulgence for the value it offers. Difficult macro headwinds would have minimal impact.

It recorded a great quarter last week and last January, but hasn't been immune from this ugly market. But it has made up its recent losses and it up 10.84% this year. They reported a solid revenue beat and monster earnings beat. Also, they didn't sound nervous about the future or the economy. but gave strong guidance for this quarter and reiterated their full-year.

The chart shows a head and shoulders formation. It's a great, worldwide company that's done many things right. Is up only 5% this year. He likes subscription models.

Their edge is their content library. Doesn't pay a dividend, so be disciplined: if you double your money, sell half. Any business news will punish shares. 

(Note the short timeframe.)  Until the last couple of weeks, the media sector has held up extremely well. Perhaps investors are thinking this area is not as impacted by tariffs. Correction Feb/March, but already bouncing back.

He and Lang suggests consumer-oriented stocks with a subscription base that work even in a slowdown: Netflix, Roku and Spotify. Last January, NFLX reported a super quarter, then shares gapped up, but rolled over mid-February with the market. Lang says that was a reset. Shares have been rebounding ever since, now 9% this year. NFLX has resistance at $1,000, but if it breaks that, Lang thinks it can reach $1,250. A momentum indicator--MACD--recently made a bullish crossover. Meanwhile, the Chaikin Money Flow (CMF) is slightly bullish; big buyers are still buying. RSI is starting to bounce after hitting oversold earlier this month, now around 50, so there's a ways to go before being overbought.

Clearly winning the streaming wars, being pulled upward by increasing number of global subscribers. That's driving pricing power. New ad-supported tier, password-sharing crackdown. Investing in original content. Live sports are generating revenue. No dividend.

Increasing cashflow. Sees 23% earnings growth. Shares are down ~15%.

It's now a momentum story, but now very expensive. A great company. He bought a lot of shares during the sell-off a few years ago when competitors like Prime launched. There are better opportunities in gen AI. They've done a great job in live programming (sports).

They plan to buy Formula One's TV rights, and they are in the best position to leverage more than anybody else buying such rights. Hopes it happens. Flawless execution.

Big numbers last night. Challenge with the streamers is that you're only as good as your last hit. Viewership is quite fickle, very hard to keep attention captured over time. Forward PE ~40x, very rich. 

They delivered a blowout Q4: a big revenue beat and EPS, up 102%, strong margins despite expensive shows. cash flow of $1.38 billion, revenue 16% YOY, and 18.91 million new subscribers vs. the expected 10 million. However, guidance was mixed, with the forecast in the current quarter below expectations, but they slightly raised full-year 2025 in revenue and operating margin. They're running circles around the competition. Their hits: Squid Game 2, Carry-On, and NFL on Christmas Day. Their ad-supported tier accounted for 55% of sign-ups in Q4. This has more momentum than he's ever seen.