Meanwhile, the company is generating significant amounts of free cash flow (FCF). As a result, at some point, analysts will start measuring Netflix's ARPU (average revenue per user), just like they do at other media companies that have a mix of revenue from each user. So, if Netflix can eventually extract a significant new line of revenue, plus pick up new streaming membership recurring revenue, it could potentially have its cake and eat it too.įor example, Hulu recently went to an ad-free revenue package of $16.99 per month and bundled Disney and EPSN for $19.99 a month. The company wants to see users sign up for the $6.99/mo plan that includes ads, or else pay $15.99 per month without ads. To counteract this, Netflix has now gotten rid of its existing $9.99 per month ad-free plan in the US and the UK (except for existing members who don't change their plan). But these have not delivered the goods.įor example, ad revenue was not material for Netflix, according to the company. So, the markets can't have it both ways, or can they? The markets don't seem to like the fact that much of the growth appears to be from its ad-included plans. Since then the company has gained 17.72 members, climbing to $238.67 in Q2 2023. That was significantly better than the 1.75 million QoQ increase in Q1 over the prior quarter.Ī year ago NFLX stock took a huge tumble when the company posted a slight drop in memberships to 220.67 million. In fact, on July 19 the company said in its Q2 shareholder letter that it posted an increase of 5.89 million in memberships for the quarter over Q1. On Friday, July 21, NFLX stock was trading at $428.37, off another 2.0%. But does that make it a buy now? The company's recently released financials show that investors may have overreacted. Netflix (NFLX) is off over 10% from its high of over $477 per share since it released its Q2 results. Netflix (NFLX) Stock Is Off 10% From Its High - Is It A Buy Now?
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