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Netflix 4Q - Spending on Content

Netflix issued its results after the closing bell in New York last night. At this time of year (aka. our summer) that's only at 11pm. I was sitting up in my pyjamas, struggling to stay awake, anxious that I would only get a few hours of sleep before having to jump out of bed for my group run at 5am through Hillbrow and the Noord Street taxi rank.

The reason I won't miss a Netflix earnings release in real-time is that this is a company with elevated growth expectations, and which is prone to wild post earnings release swings. Over the years I've seen after hours share price moves of up to 20%, in both directions. What fun! The banter on social media can be fun to watch too. Here's me and 'Bubble Boy' comparing notes on Twitter ahead of the release:



Anyway, the numbers were fine. They delivered a revenue, subscriber growth and earnings beat, but CEO Reed Hastings pointed to a slightly softer first quarter of 2020 forecast than expected. The company is still spending money like crazy on new content, but the reviews have been very good. There is something there for everyone. The stock only rose 2.3% after hours, up to $345.75. Aw boring! Bubble Boy and I were both wrong.

I know that some people are worrying about Netflix having too much competition now, especially from Disney Plus. My view, which many of you have heard before, is that humankind is heading for a future where we all only work four days a week, and we will need to fill up our leisure hours with more media consumption. So there is plenty of room for multiple operators.

I made a forecast (thumb suck) that one day Netflix will have a billion customers, each paying them $50 a month. Imagine their scale and profitability then! For the record, they currently have 166.2 million paying subscribers, and they charge subscribers between $9.99 and $16.99 per month depending on the package.

Netflix should be in your portfolio. Send some money to your New York account and we will buy you some. If you think that Disney has a good offering, you can buy some of those shares too.


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