I've finally decided to pull the trigger. Here is my reasoning in a very brief nutshell: The company has ~109 million subscribers at the moment. The world has about 1.2 billion households, only 50% of which can afford a Netflix subscription at the current prices, so there is a limit to the upside. The question is: what will the next 500 million subscribers bring that the first 100 million didn't?
In order to attract subscribers, the company must spend massively to build original content, so the free cash flow is horrendous. The company has diluted shareholders massively, and has taken on a mountain of debt.
At the same time, the shares are trading at multiples that assume a very profitable future will magically appear. It doesn't make sense to me and I think that over time, the shares will fall from these levels.
Submitted December 09, 2017 at 12:15PM by NotPatrickDoyle http://ift.tt/2BP3gpc
