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Netflix Inc NFLX

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Morningstar’s Analysis

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PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Netflix Posts Slowing Subscriber Growth; Video Game Efforts Appear To Be a Distraction

Neil Macker, CFA Senior Equity Analyst

Analyst Note

| Neil Macker, CFA |

Netflix reported a mixed second quarter as subscriber growth remains anemic due to the pull forward in demand during the first half of 2020. Subscriber additions were well ahead of guidance, but revenue was in line with our projections for the quarter. While management expects adds to accelerate to 3.5 million next quarter, this mark is well behind our previous expectation of 6.9 million. We think the firm is experiencing not only saturation in its largest markets but also strong competition in the regions with the most potential growth, as we previously expected, and continue to expect. As a result, we keep our narrow moat and $250 FVE.

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Company Profile

Business Description

Netflix's primary business is a streaming video on demand service now available in almost every country worldwide except China. Netflix delivers original and third-party digital video content to PCs, Internet-connected TVs, and consumer electronic devices, including tablets, video game consoles, Apple TV, Roku, and Chromecast. In 2011, Netflix introduced DVD-only plans and separated the combined streaming and DVD plans, making it necessary for subscribers who want both to have separate plans.

Contact
100 Winchester Circle
Los Gatos, CA, 95032
T +1 408 540-3700
Sector Communication Services
Industry Entertainment
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Aggressive Growth
Employees 9,400

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