Netflix is the worst FAANGM investment and it's getting worse
NFLX holds $6.1 billion in cash equivalents and has $13.9b in long-term debt. Of the other five companies, with $41.8 billion at the end of last quarter, META has the lowest level of cash and equivalents.
NFLX had $21.57 billion in content obligations at the end of last quarter, and $4.3 billion of that will be spent within the next year. Herein lies a major stumbling block for me when I consider NFLX as an investment.
Competition within streaming companies results in enormous capex devoted to content creation. It appears to be a vicious circle for all content providers, and that includes the likes of Apple, Amazon and Alphabet, each of which is now in competition with NFLX.
However, Apple, Amazon, and Alphabet have a great deal of FCF to potentially devote to content efforts. For example, Alphabet generated $69.8 billion in trailing 12-month free cash flow. Trailing 12-month free cash flow for NFLX was a relatively paltry $717 million in 3Q22.
Furthermore, while the other five FAANMG’s have investment grade credit ratings, Moody's still rates NFLX at Ba1/positive, a notch below investment grade.
Analysts’ price targets support my observations. The average 12-month price target for META, AAPL, and MSFT are each roughly 30% higher than the current share prices. AMZN and GOOGL have price targets that are 66% and 61.7% above the current share valuations, respectively.
NFLX? Analysts give that stock an upside of 1.3%.
NFLX had $21.57 billion in content obligations at the end of last quarter, and $4.3 billion of that will be spent within the next year. Herein lies a major stumbling block for me when I consider NFLX as an investment.
Competition within streaming companies results in enormous capex devoted to content creation. It appears to be a vicious circle for all content providers, and that includes the likes of Apple, Amazon and Alphabet, each of which is now in competition with NFLX.
However, Apple, Amazon, and Alphabet have a great deal of FCF to potentially devote to content efforts. For example, Alphabet generated $69.8 billion in trailing 12-month free cash flow. Trailing 12-month free cash flow for NFLX was a relatively paltry $717 million in 3Q22.
Furthermore, while the other five FAANMG’s have investment grade credit ratings, Moody's still rates NFLX at Ba1/positive, a notch below investment grade.
Analysts’ price targets support my observations. The average 12-month price target for META, AAPL, and MSFT are each roughly 30% higher than the current share prices. AMZN and GOOGL have price targets that are 66% and 61.7% above the current share valuations, respectively.
NFLX? Analysts give that stock an upside of 1.3%.
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Siausin : You are wrong. Netflix has outperformed other FAANG stocks over the last 12 months. I bought Netflix and Meta at the same time at around 180/shares. Netflix trades more than 300 now. Meta? Less than 150.