Wolfgang KleinNetflix Inc.NFLXDON'T BUYJun 22, 2018

It reported after the bell yesterday. It reported a monster beat in paid subscribers and revenue beat, sales up 12.5% YOY, and the second straight quarter of accelerating revenue growth. Netflix is mature and the operating margin was strong, but missed earnings because of a one-time tax hit that nobody cared about. Guidance was mixed: sales was light and operating income much better. The 13.1 million paid net subs additions was due to the password crackdown and offering an ad-supported tier (with target ads). This remains an exciting story. The company expects double-digit growth. Despite that, some analysts have downgraded the stock, noting that it's too early to count on the ad-supported tier to deliver meaningful revenues. However, he maintains that Americans may take Netflix for granted, but there's still a lot of room to grow internationally. Plus, the ad tire has been successful, which suggests that there is room to grow in the U.S. The company continues to prove its profitability and cash flow. Also, one of those analysts has always called Netflix wrong. And they have content from around the globe, another plus. It seems pricey at 32x PE, but it's worth it.

They continue to execute by delivering new content. They leverage foreign content with amazing dubbing to present to North American audiences. Their subscription rates continue to go up. It's clearly the #1 streamer. But they spend a lot on content, and the PE of 40x is too high for him. Fears of Disney+ overtaking them never happened.

Now a lot more competition in the space. Higher interest rates were a headwind for growth stocks. Everyone's now focused on making streaming profitable, not just pushing content or increasing subscribers.

He just sold it to fund buying other stocks. He bought it last year opportunistically.

Just reported a superb quarter and have good ad-driven stuff coming. High quality.

They just reported a good quarter, but can they sustain that? He might buy it if shares slide.

He targets $463, so a decent runway ahead. Will raise rates. They're talking to Trade Desk and Comcast. NFLX has 238 million subs in 190 countries, but big growth is coming outside North America. Password crackdown paid off, because subscriptions have risen (6 million increase). They added a videogame company which helped. Would still buy it.

Stock soared on last week's report: strong in-lines sales and profit margin meant an EPS beat, and raised their full-year operating margin guidance and strong 2024 forecast. Also are generating crazy cash flow, and rising global subscriber growth, beating expectations (the third straight quarter of growth), helped by password crackdowns. Will raise rates in the US, UK and other territories. Despite the rally, he still recommends it because it's still below July's high and trades at 25x PE 2024.

He agrees, thinks Netflix could hit $500. In recent years, he has bought on weakness and sold on strength, based on the company's direction of revenue growth, now 16% (3 years) and 8% (2 years) and 3% (1 year). We could easily see that accelerate. He would buy it back.

It is an over-the-top streaming company. He likes the space and owns Disney along with its successes and some setbacks.

A year ago, it was losing subscribers and a lot of dreams had come out of the stock. They turned it around, nice rebound, but got ahead of itself in light of earnings last night. He sold because growth was all priced in.

Announced a disappointing quarter and forecast today. Shares may take a breather, but Netflix doesn't decline for long.

Just hit a 52-week high. Are working on their password sharing crackdown while the ad tier is starting to work well. They are starting to generate cash flow again. Likes this for being a pure streamer as opposed to Disney, which he may re-buy down the road.

It's all about the content war, and they're winning it. They have great content.

Down today because all tech is down. Big announcement today about Warner's and HBO. NFLX is king, no one else can compete on economies of scale. The one he has the most certainty on growth going forward. Not cheap, but attractive based on growth.