Netflix: A Mildly Interesting Investment?

by

Netflix (NFLX +0.88%). Yes, that Netflix. The one that delivers moving pictures to your screen, mostly without causing the television to explode. They recently decided not to buy Warner Bros., a decision which, in the grand scheme of things, is roughly equivalent to deciding not to collect belly button lint. A perfectly reasonable choice, really. It seems Paramount Skydance will be doing the honors instead, and investors, predictably, breathed a sigh of relief. A sigh, mind you, that probably displaced a small amount of atmospheric pressure. It’s all connected, you see.)

The stock, having flirted briefly with negativity, has now wandered into positive territory. Which is good, unless you were specifically betting on it being negative. In which case, condolences. It also means it’s become slightly less of a bargain. Like finding a slightly less dented can of beans. Is it worth acquiring at this juncture, or should one patiently await a further dip? A question for the ages, or at least for the next quarterly earnings report.

What’s Next for the Flickering Box?

Investors are, understandably, relieved that Netflix didn’t embark on a spending spree that would have saddled it with debt. It’s a bit like deciding not to purchase a small country – it seems extravagant, even for a streaming service. However, don’t assume they’ve entirely abandoned the notion of expansion. They’re still likely to be poking around for content, perhaps acquiring studios along the way. (One imagines a team of acquisitions specialists, armed with spreadsheets and a disconcerting amount of enthusiasm.)

When Netflix announced it wouldn’t be raising its price for Warner Bros. (a decision which, frankly, feels anticlimactic to even mention), they described the deal as a “nice to have” rather than a “must have.” A remarkably honest assessment, considering the usual corporate hyperbole. Warner Bros. Discovery was, shall we say, undergoing a period of internal reorganization, presenting an opportunity. It wasn’t that Netflix was aggressively hunting for acquisitions, but rather that one sort of… drifted into their orbit. This suggests we shouldn’t anticipate any further, equally large deals on the horizon. They still plan to invest $20 billion this year in films and content, but that’s more about building the existing empire than conquering new territories.

For investors, this is reassuring. It demonstrates disciplined management – a willingness to spend, but only if it makes logical sense. (Logic, of course, being a surprisingly rare commodity in the world of high finance.) While the Warner Bros. acquisition wasn’t strictly necessary – Netflix was doing perfectly well on its own – it’s the sort of prudent behavior that discerning investors should seek out. (Discerning investors being those who can tell the difference between a sound investment and a particularly shiny distraction.)

Loading widget...

Has the Price Gone Slightly Mad?

Netflix’s stock has been exhibiting a tendency to climb, which has, inevitably, pushed its valuation upwards. It’s currently trading at around 38 times its trailing earnings, which is… rather a lot. The average stock on the S&P 500 trades at a mere 25 times its profits. (Which, when you think about it, is still a rather abstract concept. Profits. What are profits, really?)

However, if you’re a long-term investor – the sort who doesn’t panic sell at the first sign of turbulence – I still believe buying Netflix today is a reasonably sensible move. It has established itself as a leader in the streaming industry, and with a continued focus on growth, it’s the kind of stock you can comfortably own for the foreseeable future. (Assuming, of course, that the world doesn’t end. Which, statistically speaking, is always a possibility.)

Read More

2026-03-03 01:04