Caution on Netflix Over High Multiples Despite Strong Earnings

4 days ago

Daniel Pronk

"Let's now move on to Netflix stock because Netflix has been getting hit pretty hard in the market today. Their revenue grew 17% which was in line with guidance, but the operating margin was below expectation due to a Brazilian tax dispute. Despite strong earnings in revenue, margins and free cash flow, Netflix is trading at about 50 times cash flow. That high multiple makes the stock very expensive in my opinion and is the main reason I do not like buying it."

The speaker provides commentary on Netflix, noting that even though the company reported strong revenue growth and margin expansion, its high valuation at 50x free cash flow renders it expensive. He attributes the recent sell-off partly to a one-time tax expense and argues that the lofty multiples make Netflix a less attractive buy.

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