Netflix's 3Q Results Show Lack of Moat
We anticipate making a material reduction to our fair value estimate.
Netflix (NFLX) reported poor third-quarter results, and its outlook was even worse than we anticipated. We believe this is self-inflicted, a reflection of poor management decisions as well as our long-standing viewpoint that the company has no economic moat. Netflix lost more than 800,000 subscribers during the quarter, and management indicated that the first two quarters of 2012 could have overall operating losses because of international expansion in the United Kingdom and Ireland. We anticipate making a material reduction to our fair value estimate and plan to publish a more detailed note and updated report Tuesday.
Morningstar Premium Members gain exclusive access to our full Netflix Analyst Report, including fair value estimate, consider buy/sell prices, bull and bear breakdowns, and risk analysis. Not a Premium member? Get these reports immediately when you try Morningstar Premium free for 14 days.
Michael Corty does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.