HI HODLers, Hiveans and Lions,
Netflix just reported its 4th quarter numbers and they are good as I expected. I am saddened to not have loaded the boat more but well, I will take this extra 10%!
Paid Net additions were impressive and Guidance for 2024 on the top and margin sides were also better than expected.
What is crazy is that: Netflix generated -$132mn in FCFs in 2021. 2 years later, it generated $6.5bn!
The company is literally printing money. Competition is also having a hard time to pick up. I have recently unsubscribed to some of these services as they are not worth the money in my opinion. In the end, there will probably be 1-3 winners of the entire Video Streaming market.
Also, Netflix keeps innovating and venturing into live events. They just signed a deal with the WWE to stream WWE events live, they signed a live tennis match between C.Alcaraz and R.Nadal, etc...
Not to mention they are also trying to make their way into the videogame sector.
What's the next step?
Well, I think the company is just starting to have an operational leverage while competition cannot spend as much in content and is barely breaking even.
Following almost the same investment thesis, I have started to look into Spotify $SPOT which has been cutting costs heavily, is the audio streaming market leader and should also start printing nice Free Cash Flows. The previous CFO is leaving and they are looking to bring on a more experienced one.
They have also new potential markets that they are venturing in such as: events, audiobooks, merchandising...
What do you think?
Reports Q4:
- Revenue $8.83B vs FactSet $8.72B [36 est, $8.59-8.83B]
- Global Streaming Paid memberships 260.28M vs StreetAccount consensus 256.00M
- Global Streaming Paid Net Additions 13.12M vs SA consensus 8.88M and guidance similar to 3Q23 ~8.76M
Q1 Guidance: - EPS $4.49 vs FactSet $4.10 [27 est, $3.59-4.47]
- Revenue $9.24B vs FactSet $9.27B [25 est, $9.01-9.59B]
Since entering this trade, I am up almost 50% and will probably sell a part of it to fund other more attractive opportunities.
FY Guidance (Dec 2024):
'Healthy double digit revenue growth on f/x neutral basis'% y/y
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