Here I am going to attempt to value Netflix Inc, the Scotts Valley, California based company for video streaming.
Netflix is currently valued at 152.739 billion USD by US public markets. Is Netflix undervalued? Yes. In the current environment and in the long term I think Netflix is circa 50% undervalued? Why? Because video streaming is the new hot mega trend in internet services and Netflix is the leader in the video streaming category. The global video streaming market size is estimated at 36.64 billion USD as of 2018 by various market sources. By 2023 the global video streaming market size is expected to reach 102.0971 billion USD by 2023.
Netflix reported revenue of 15.794 billion USD in 2018. So basically in terms of revenue Netflix has close to 50% of the global video streaming market. Netflix's revenue has been growing with more than 30% year on year for the last three reported years up to 2018 full year earnings. What is more, now Netflix is profitable recording 1.2 billion USD in profit. The trailing Price/Earnings ratio of 84.39 of Netflix seems high, but Netflix has been raising its net profit margin percentage steadily in the last several yeas.
A risk before my prognosis is that an economic recession could come and Netflix's stock price could tank along with the rest of the stock market. But the trend toward the merger of TV and Internet will remain intact and after a possible crisis Netflix could emerge even stronger and the fall in price, if it happens, could prove a good buying point.
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Petar
Vladimirov Posledovich is not liable for any investment losses incurred
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Respectfully yours,
Petar Posledovich
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