However, video games remain a massive wild card for Netflix. Discovery ( NASDAQ:WBD), the firm behind the MAX streaming service, trades at 0.55 times price-to-book and just 24.5 times forward P/E.īy comparison, WBD stock seems like a steal compared to Netflix. That said, today’s current 39.8 times trailing price-to-earnings (P/E) multiple still entails growth, and it’s a heck of a lot richer than its ailing peers in the streaming space right now.įor instance, Warner Bros. Now, Netflix stock has already felt a massive squeeze to its multiple - NFLX stock used to trade at an average of around 70.3 times price-to-earnings over the last five years - as a part of the brutal 2022 market sell-off that dragged shares nearly 75% off their late-2021 all-time high. Further, Netflix’s valuation multiple (and stakes) still seem as high as ever as the company looks to spend money to maintain streaming dominance while powering its next growth driver. It’s important to note that the gaming industry has faced its own headwinds since the pandemic peak. For now, I remain upbeat and bullish.Īt this juncture, Netflix seems eager to take a page out of the FAANG playbook as it attempts to show shareholders that there’s still growth left in the tank as its original market (video streaming) matures further. As shares start rolling over again, I view NFLX as more of a Buy than a Sell. The video streaming market has been tough sledding since the pandemic lockdown days and the rise of stay-at-home plays. Netflix was the only FAANG company to not graduate the Magnificent Seven, and it’s not a head-scratcher as to why. Still, members of the FAANG group that graduated to the Magnificent Seven basket have demonstrated the means to keep the growth alive even into old age and market caps at, near, or above $1 trillion. It’s a normal part of corporate aging to shift gears from growth to profitability and return capital back to shareholders. It’s no mystery that companies gradually lose their ability to grow as they age. With the video-streaming scene now crowded, it’s clear that Netflix needs to go above and beyond its traditional markets to maintain its high growth and high price-to-earnings (P/E) multiple. Undoubtedly, getting into the business of gaming is no easy feat, especially for a firm that spent its lifetime specializing in streaming film and television. While Netflix was a notable exclusion from Jim Cramer’s Magnificent Seven stocks, I still think it’s a mistake to ignore the company as it looks to keep making major strides in the gaming market to jolt growth. Netflix ( NASDAQ:NFLX) stock is losing ground again, slipping more than 22% off its 52-week high as a part of a broader tech stock sell-off.
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