Netflix Stock Drops 46%: Reasons Behind My Increased Investment

Key Points

• Netflix (NASDAQ: NFLX) reported a stock drop of approximately 46% since its peak last summer due to slowing revenue growth.

• As of now, the company has 325 million global subscribers and is projected to generate $12.5 billion in free cash flow in 2023.

• Netflix’s content budget stands at $19 billion per year, with advertising revenue expected to rise from $1.5 billion in 2025 to $3 billion this year.

Netflix’s stock has declined significantly as earnings growth has slowed, prompting management to disclose less about viewer engagement. Despite this, the streaming giant is still considered the leader in subscription video-on-demand services. The company is focused on using its substantial free cash flow effectively, with plans to buy back $27 billion in shares after already repurchasing $11.5 billion in the first half of the year. Additionally, Netflix continues to grow its subscriber base while increasing revenue per membership through price hikes and advertising.

Netflix remains well-positioned in a competitive media landscape, with its stock trading at 28 times its free cash flow, which analysts view as an attractive pricing point in light of its growth potential.