Netflix’s -50% crash lured me to do a deep dive, which on the surface doesn’t look great. Classic valuations also too high (for me).
However, after I got past some fancy accounting, Netflix seems to have more FCF & NI than it reports (tax optimisation & reinvestment like $AMZN).
However, after I got past some fancy accounting, Netflix seems to have more FCF & NI than it reports (tax optimisation & reinvestment like $AMZN).
Some DM questions, so I'll add additional points. My view is:
• they are probably claiming a lot more in content expenses to reduce their tax bill than originally noticed at first glance
• cashflow statement shows "other operating activity" running at 17.3 billion
• they are probably claiming a lot more in content expenses to reduce their tax bill than originally noticed at first glance
• cashflow statement shows "other operating activity" running at 17.3 billion
• filings show 8.9 billion was predetermined liabilities they had to spend under contract (pay actors & the sets in their own production)
• there is content spending that is needed to maintain the current business, then there is spending which drives future growth
• there is content spending that is needed to maintain the current business, then there is spending which drives future growth
• seems like a good portion of the other operating activities is overstated and would normally come from FCF as a re-investment back into business to drive future growth
• Netflix could be understating FCF by circa 3 to 5 billion in FY 2021, and maybe even as much as 8 billion
• Netflix could be understating FCF by circa 3 to 5 billion in FY 2021, and maybe even as much as 8 billion
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