Netflix Remains a Buying Opportunity Amid Acquisition Risks

15 days ago

Speaker

"I'm going to give Netflix's management team the benefit of the doubt here because they've been so effective in being allocators of capital. Now, they haven't made very many acquisitions. They don't have very much experience in making acquisitions. So, that is a risk that they overpaid and they won't be able to incorporate the assets they acquired because they just don't have experience in doing this. That's the big risk and that's something that I am concerned about to be sure. But overall, I've had Netflix stock rated as a buy. And after this acquisition, I'm going to update that I think this stock is still a buying opportunity. However, I will say that I liked Netflix business, the valuation, and everything before they made this acquisition."

The analyst acknowledges the risks associated with Netflix's acquisition strategy, including management's limited experience with acquisitions and potential integration challenges. Despite these concerns, he reiterates his buy rating on Netflix, highlighting that the acquisition, while increasing debt and slowing growth in the near term, ultimately improves the company's intrinsic value and long-term prospects.

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