NFLX – Market expectations are for Uniform ROA to expand, but management may have concerns about the Netflix Games launch and their content expansion initiatives

• Netflix, Inc. (NFLX) currently trades near corporate and recent averages relative to Uniform earnings, with a 44.8x Uniform P/E (Fwd. V/E’).
• At these levels, markets are pricing in expectations for continued Uniform ROA expansion, accompanied by 9% Uniform asset growth.
• Meanwhile, analysts expect Uniform ROA to rise to 54% by 2022, accompanied by 18% Uniform asset growth.
• If sustained going forward, these levels would imply a stock price closer to $488, representing approximately 26% equity downside for the firm.
• Moreover, the firm’s most recent earnings call suggests management may have concerns about the Netflix Games launch and their content expansion initiatives.