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1. Company Snapshot

1.a. Company Description

Netflix, Inc.provides entertainment services.It offers TV series, documentaries, feature films, and mobile games across various genres and languages.


The company provides members the ability to receive streaming content through a host of internet-connected devices, including TVs, digital video players, television set-top boxes, and mobile devices.It also provides DVDs-by-mail membership services in the United States.The company has approximately 222 million paid members in 190 countries.


Netflix, Inc.was incorporated in 1997 and is headquartered in Los Gatos, California.

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1.b. Last Insights on NFLX

The recent 3-month performance of Netflix, Inc. was negatively impacted by a combination of factors. The company's Q4 earnings beat was overshadowed by a disappointing margin outlook, leading to a sell-off in the stock. The guidance for 2026 targets 12-14% revenue growth, a 31.5% operating margin, and continued double-digit top-line expansion via new verticals and content efficiency, but this growth deceleration pressured the stock post-earnings. Additionally, the risk of the WBD deal rising has contributed to the stock's decline. The company's growth narrative is also approaching its limitations, with a straightforward strategy of increasing subscriber numbers, raising prices, and reinvesting in content no longer sufficient to drive growth.

1.c. Company Highlights

2. Netflix Q4 2025 Earnings Report: Strong Revenue Growth and Margin Expansion

Netflix reported revenue growth of 16% in 2025, with operating profit growth of 30%. The company's earnings per share (EPS) came in at $0.56, slightly above analyst estimates of $0.552. The revenue growth was driven by a strong slate of content, positive impact from paid sharing, and healthy subscriber acquisition. The company's focus on content creation and user engagement has paid off, with a significant increase in revenue and profitability.

Publication Date: Jan -21

📋 Highlights
  • Revenue & Profit Goals:: Aims to double revenue to $51B in 2026 and triple profits via organic growth, with 2025 showing 16% revenue and 30% operating profit growth.
  • Content Spend & Margins:: Plans to grow content amortization 10% in 2026 while expanding operating margins to 31.5%, prioritizing core content and slowing spend relative to revenue growth.
  • Ad Revenue Expansion:: Forecasts ad sales to double to $3B by 2026, leveraging improved ad tech, new formats (e.g., video podcasts), and a focus on closing ARM gaps between ad-supported and ad-free plans.
  • Live Events & New Formats:: Executed 200+ live events in 2025, with expansion beyond the US, and explores cloud-first games (targeting $140B market) and TV-focused gaming like Red Dead Redemption.
  • Warner Bros. Acquisition Impact:: 85% of combined revenue from core business, adding HBO’s prestige TV, a mature theatrical division, and 10%+ margin improvement potential through synergies.

Financial Performance

The company's financial performance was strong, with revenue growth of 16% and operating profit growth of 30%. The EPS of $0.56 was slightly above analyst estimates. The company's valuation metrics, including a P/E Ratio of 35.51 and P/S Ratio of 9.19, indicate a premium valuation. However, the company's strong revenue growth and margin expansion justify this premium.

Content Strategy

Netflix's content strategy is focused on creating high-quality, engaging content that drives user acquisition and retention. The company has invested heavily in original content, including films and series, and has seen significant success with titles such as "Squid Game" and "Emily in Paris." The company's content slate for 2026 includes a range of titles, including new seasons of popular shows and new original content.

Ad-Supported Business

Netflix's ad-supported business is a growing segment of the company's revenue. The company has seen significant growth in ad sales, driven by its large and engaged user base. The company's ad-supported Average Revenue per Member (ARM) is currently lower than its ad-free ARM, but the company believes it has opportunities to drive revenue growth through improved ad targeting and measurement.

Valuation Metrics

The company's valuation metrics, including a P/E Ratio of 35.51, P/B Ratio of 14.27, and P/S Ratio of 9.19, indicate a premium valuation. The EV/EBITDA ratio is 13.94, and the Free Cash Flow Yield is 2.25%. The company's Return on Invested Capital (ROIC) is 24.13%, and the Return on Equity (ROE) is 41.86%. These metrics indicate a strong and profitable business.

3. NewsRoom

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Trump's Netflix threat is a warning to every CEO

Feb -22

Source: businessinsider.com

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Trump says Netflix will face ‘consequences' if it doesn't fire board member Susan Rice

Feb -22

Source: techcrunch.com

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Netflix Officially Under DOJ Antitrust Scrutiny “To Create A Monopoly” With Warner Bros Merger; Feds Want Details From Producers & Filmmakers On Streamer's Leverage

Feb -22

Source: deadline.com

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Trump demands Netflix fire Susan Rice as DOJ probes Warner deal

Feb -22

Source: cnbc.com

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Trump warns Netflix of ‘consequences' unless it pulls top Democrat from board

Feb -22

Source: theguardian.com

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Trump Demands Susan Rice's Removal, Macron Responds On Leaked Texts, Tariffs And More: This Week In Politics

Feb -22

Source: feeds.benzinga.com

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1 Stock-Split Stock to Buy Before It Soars 90%, According to a Wall Street Analyst

Feb -22

Source: fool.com

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3 Stock-Split Stocks to Buy Before They Soar Between 73% and 149% According to Select Wall Street Analysts

Feb -22

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.30%)

6. Segments

Streaming Entertainment Service

Expected Growth: 12.3%

The growth is driven by increasing demand for streaming services, expansion into new markets, and continuous investment in original content, which attracts and retains subscribers. Competition and market saturation might slightly limit growth, but Netflix's strong brand and content library support steady expansion.

7. Detailed Products

Streaming Service

A subscription-based online streaming service that provides access to a vast library of movies, TV shows, documentaries, and original content produced exclusively for Netflix.

Original Content

Exclusive TV shows and movies produced by Netflix, including dramas, comedies, documentaries, and children's programming.

DVD Rental Service

A DVD rental service that allows customers to rent DVDs by mail, with a flat monthly fee and no late fees.

8. Netflix, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Netflix has a moderate threat of substitutes due to the presence of alternative entertainment options such as video game consoles, social media, and outdoor activities. However, the convenience and affordability of Netflix's service mitigate this threat to some extent.

Bargaining Power Of Customers

Netflix has a low bargaining power of customers due to its dominant market position and lack of switching costs. Customers are also loyal to the brand, which reduces their bargaining power.

Bargaining Power Of Suppliers

Netflix has a low bargaining power of suppliers due to its significant market share and ability to negotiate favorable content deals. The company's dependence on a few major studios and networks is mitigated by its diversified content offerings.

Threat Of New Entrants

Netflix faces a high threat of new entrants due to the low barriers to entry in the streaming industry. New players such as Disney+, HBO Max, and Peacock have already entered the market, increasing competition and threatening Netflix's market share.

Intensity Of Rivalry

The intensity of rivalry in the streaming industry is high due to the presence of multiple players competing for market share. Netflix faces intense competition from established players such as Amazon Prime Video and Hulu, as well as new entrants, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.40%
Debt Cost 5.91%
Equity Weight 58.60%
Equity Cost 10.09%
WACC 8.36%
Leverage 70.64%

11. Quality Control: Netflix, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
AT&T

A-Score: 7.0/10

Value: 7.5

Growth: 2.6

Quality: 5.5

Yield: 9.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
Verizon

A-Score: 6.9/10

Value: 8.0

Growth: 3.1

Quality: 5.8

Yield: 10.0

Momentum: 4.5

Volatility: 10.0

1-Year Total Return ->

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Nexstar Media

A-Score: 6.9/10

Value: 7.0

Growth: 8.2

Quality: 5.4

Yield: 7.0

Momentum: 7.0

Volatility: 6.7

1-Year Total Return ->

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Comcast

A-Score: 6.1/10

Value: 8.6

Growth: 5.2

Quality: 6.6

Yield: 7.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Netflix

A-Score: 5.6/10

Value: 1.5

Growth: 9.0

Quality: 8.1

Yield: 0.0

Momentum: 8.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Walt Disney

A-Score: 5.4/10

Value: 5.1

Growth: 6.8

Quality: 6.3

Yield: 1.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

78.67$

Current Price

78.67$

Potential

-0.00%

Expected Cash-Flows