By
Godfrey Benjamin
April 17th, 2024
While Netflix currently boasts remarkable financials, the company’s stock could pull back, which would be a buying window for many.
From being a mail-order movie service Netflix (NASDAQ: NFLX) has become a global content powerhouse with millions of subscribers worldwide, contributing to its solid financials. Apart from now producing its own movies and TV series, the entertainment company has more than 13,000 titles in its catalog. Despite the global economic downturns, Netflix has impressive financials, including stable revenue and a strong balance sheet. Its sales in the last quarter jumped 4% YoY to $8.2 billion. Even as earnings per share plunged 18% from the previous year, the figures came in on a good note of $2.88 per share.
Netflix Posts Solid Financials amid Operational Changes
Impressively, the strong financials extend to its cash stockpile, as Netflix had $7.8 billion in cash and equivalents as of March end. The cash possession was such a growth from the previous year when it reported $6 billion. Investors are keeping a close watch on Netflix’s financials, especially since the company started making changes to its business operations.
The company began taking measures against password sharing by rolling out paid sharing earlier in the year. It also introduced a cheaper ad-based plan to onboard new subscribers and give users the option for a more affordable plan. Between November 2022 and now, Netflix has recorded almost 5 million global monthly active users of its ad-supported tier, causing a spike in its financials. Per Netflix 2023 Upfront report, over a quarter of signups, chose the ads plans in locations where it is available. Also, 70% of the plan users are between 18 and 49 years. Co-CEO Greg Peters stated:
“The signals are promising: engagement on our ads plan is similar to our comparable non-ads plans. That’s critical because it all starts and ends with customers.”
While Netflix currently boasts remarkable financials, the company’s stock could pull back, which would be a buying window for many. At press time, NFLX trades at $439.47, having gained 144.78% over the past year. The Bank of America (NYSE: BAC) recently raised its price target on the entertainment company from $410 to $490. The bank also increased its new users forecast for 2023 from 13.7 million to 18.7 million. Expectations are high on what Netflix’s financials for the coming months will be. Like the Bank of America, Citibank also raised its price target on Netflix from $400 to $500.
Investors are expecting even better financially from Netflix as it continues to make beneficial changes. Co-CEO Ted Sarandos commented:
“Netflix is a little bit different. In the past – when consumers had very little choice of where to watch – it didn’t matter so much which network a show or film landed on. They were all very similar. Today, we believe that having a title land on Netflix makes all the difference in the world.”
The entertainment company’s stock has grown more than 49% since the year began and increased by 3.88% in the last five days.