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- Attractive Industry of Entertainment: Netflix
Attractive Industry of Entertainment: Netflix
Netflix stocks lost over 50% of their value during the general market correction. But the company has a strong business according to the recent quarterly report. Netflix reported $1.6 billion in free cash flow by the end of Q4 2022, forecasting it up to $3 billion by the end of 2023. The company has reported revenues at $31.6 billion in 2022, which is better that $29.7 billion in 2021 and $24.9 billion in 2020.
The number of subscribers rose by 9 million to 231 million during 2022. Despite the aggressive streaming services penetration into our daily lives, people spend 50% less time using the service compared to watching ordinary TV. This is a good sign for the industry as streaming services have a lot of room to increase people’s engagement and to expand. Netflix’s partners recognize that the company has much stronger average revenue per user compared to its peers. General Motors is collaborating with Netflix to promote its EV’s in Netflix’s series and movies.
Netflix is often compared to Apple. Both companies may not dominate their niche, but have first-class products and fans who help them get the highest revenues compared to their peers. Netflix management is planning to continue double-digit revenue growth to return to the 2021 operational margin of 21%. The company has reported 18% operational margin in 2022. In other words, these plans imply revenues of $34.8 billion with earnings of $7.3 billion (21% of the revenues) in 2023.
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