August 13, 2019

NFLX – Market expectations are for Uniform ROA expansion, but management has concerns about subscriber growth and self-produced content


  • Netflix, Inc. (NFLX:USA) currently trades above historical averages relative to UAFRS-based (Uniform) Earnings, with a 47.0x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about their self-produced content and subscriber growth
  • Specifically, management may be concerned about their ability to continue growing their total net adds, and they appear concerned about recent slowdowns in subscriber growth. Furthermore, they may be concerned about their ability to maximize the value of the subscription model, and they may be concerned about the sustainability of their self-produced content-driven competitive advantage.
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