Netflix Stock Underperforms Post-Split Amid Acquisition Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
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Should l Buy NFLX?
Source: Yahoo Finance
- Stock Split Impact: Historically, stocks that split have outperformed the S&P 500 by nearly 14 percentage points in the year following the announcement; however, Netflix's shares have dropped 28% since its 10-for-1 split announcement, indicating market unease about its future prospects.
- Analyst Perspectives: Despite Netflix's current price of $79 per share, virtually all Wall Street analysts believe it is undervalued, with target prices ranging from $79 to $150, the latter suggesting a 90% upside, reflecting divergent views on its intrinsic value.
- Acquisition Risks and Opportunities: Netflix's all-cash bid of $27.75 per share for Warner Bros. Discovery totals approximately $72 billion, and while it would inherit nearly $11 billion in debt, the acquisition could secure major franchises like the DC Universe, potentially driving business growth for decades.
- Earnings Expectations: Morgan Stanley analyst estimates Netflix's earnings per share could reach $6.50 by 2030, implying a 21% annual growth rate, while the consensus forecast suggests a 22% growth over the next three years, making the current P/E ratio of 31 appear reasonable, indicating that the market may be overly pessimistic about Netflix.
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Analyst Views on NFLX
Wall Street analysts forecast NFLX stock price to rise
38 Analyst Rating
27 Buy
10 Hold
1 Sell
Moderate Buy
Current: 77.000
Low
92.00
Averages
114.18
High
150.00
Current: 77.000
Low
92.00
Averages
114.18
High
150.00
About NFLX
Netflix, Inc. is a provider of entertainment services. The Company acquires, licenses and produces content, including original programming. It provides paid memberships in over 190 countries offering television (TV) series, films and games across a variety of genres and languages. It allows members to play, pause and resume watching as much as they want, anytime, anywhere, and can change their plans at any time. The Company offers members the ability to receive streaming content through a host of Internet-connected devices, including TVs, digital video players, TV set-top boxes and mobile devices. It is engaged in scaling its streaming service, such as introducing games and advertising on its service, as well as offering live programming. It is developing technology and utilizing third-party cloud computing, technology and other services. The Company is also engaged in scaling its own studio operations to produce original content.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Netflix Stock Underperforms Post-Split Amid Acquisition Concerns
- Stock Split Impact: Historically, stocks that split have outperformed the S&P 500 by nearly 14 percentage points in the year following the announcement; however, Netflix's shares have dropped 28% since its 10-for-1 split announcement, indicating market unease about its future prospects.
- Analyst Perspectives: Despite Netflix's current price of $79 per share, virtually all Wall Street analysts believe it is undervalued, with target prices ranging from $79 to $150, the latter suggesting a 90% upside, reflecting divergent views on its intrinsic value.
- Acquisition Risks and Opportunities: Netflix's all-cash bid of $27.75 per share for Warner Bros. Discovery totals approximately $72 billion, and while it would inherit nearly $11 billion in debt, the acquisition could secure major franchises like the DC Universe, potentially driving business growth for decades.
- Earnings Expectations: Morgan Stanley analyst estimates Netflix's earnings per share could reach $6.50 by 2030, implying a 21% annual growth rate, while the consensus forecast suggests a 22% growth over the next three years, making the current P/E ratio of 31 appear reasonable, indicating that the market may be overly pessimistic about Netflix.
See More
Netflix's Warner Bros. Acquisition: Risks and Opportunities
- Stock Underperformance: Since announcing a 10-for-1 stock split last October, Netflix shares have dropped 28%, while the S&P 500 has only risen about 1%, indicating market concerns about its future growth, particularly regarding its $83 billion bid for Warner Bros.
- Analyst Optimism: Despite the stock decline, nearly all Wall Street analysts believe Netflix's current price of $79 is undervalued, with a highest target price of $150 suggesting a potential upside of 90%, reflecting confidence in its future earnings potential.
- Strong Financial Performance: Netflix reported an 18% increase in fourth-quarter sales to $12 billion, with net income rising 30% to $0.59 per share, driven by membership growth and advertising revenue, despite the debt risks associated with the acquisition.
- Potential Acquisition Benefits: If the Warner Bros. acquisition succeeds, Netflix would gain rights to major franchises like the DC Universe and Game of Thrones, providing a wealth of intellectual property that could significantly accelerate its business growth for decades to come.
See More
Trump Sparks Global Political Turmoil with Recent Actions
- Call for Board Member Dismissal: Trump urged Netflix to fire board member Susan Rice on social media, accusing her of political bias and threatening political retaliation, which has sparked renewed scrutiny over corporate influence in media.
- Global Tariff Increase: Trump announced an immediate increase in the global tariff rate from 10% to 15%, framing it as a response to a Supreme Court ruling he criticized, despite 60% of Americans supporting the court's decision.
- Macron's Response to Trump: French President Macron expressed concern over Trump's public sharing of private messages, indicating a troubling shift in American leadership and a breakdown in diplomatic respect, highlighting tensions in international relations.
- Humanitarian Aid Discussions with Cuba: Trump labeled Cuba a “failed nation” amid an oil blockade and emphasized the need for humanitarian aid, reflecting a focus on the humanitarian crisis in Cuba and the U.S.'s diplomatic engagement with the island nation.
See More
Netflix Stock Underperforms Post-Split Amid Acquisition Concerns
- Stock Split Impact: Historically, stocks that split outperform the S&P 500 by nearly 14 percentage points, yet Netflix's shares have dropped 28% since its 10-for-1 split announcement, while the S&P 500 has only risen about 1%.
- Analyst Perspectives: Despite Netflix's current price of $79 per share, nearly all Wall Street analysts believe the stock is undervalued, with target prices ranging from $79 (no change) to $150 (implying a 90% upside), indicating a significant divergence in market sentiment regarding its future.
- Acquisition Risks: Netflix's all-cash bid of $27.75 per share for Warner Bros. Discovery totals approximately $72 billion, but the company would also inherit nearly $11 billion in debt, potentially straining future cash flow and earnings growth.
- Content Advantage: Despite acquisition risks, Netflix holds valuable intellectual properties like the DC Universe and Game of Thrones, which could drive long-term business growth through original content, with analysts projecting earnings of $6.50 per share by 2030, reflecting a 21% annual growth rate.
See More
Stock Splits Captivate Investors Amid Strong Performance
- Trend of Stock Splits: Stock splits have captured investor interest in recent years, typically signaling strong company performance, with historical data showing an average return of 25% in the year following a split, significantly outperforming the S&P 500's 12% average.
- Strong Performance by Netflix: Netflix's stock has surged 782% over the past decade and executed a 10-for-1 stock split last year, with fourth-quarter revenue reaching $12 billion, a 17% year-over-year increase, driving EPS up 30% to $0.56, leading analysts to favor its future outlook.
- Potential of Booking Holdings: Booking Holdings announced a 25-for-1 stock split, and despite recent stock declines due to travel slowdown fears, its fourth-quarter revenue grew 16% to $6.3 billion, with EPS rising 38% to $44.22, prompting analysts to remain optimistic about its prospects.
- Growth Outlook for ServiceNow: ServiceNow's stock has appreciated 852% over the past decade, despite a 55% drop from its peak, with fourth-quarter revenue increasing 21% year-over-year to $3.53 billion and adjusted EPS up 24% to $0.92, leading analysts to express positive views on its growth potential.
See More
Stock Splits Renew Investor Enthusiasm
- Stock Split Trend: Stock splits have regained investor interest in recent years, typically signaling strong company performance, with historical data showing an average return of 25% in the year following a split, significantly outperforming the S&P 500's 12% average.
- Netflix's Strong Performance: Netflix generated $12 billion in revenue in Q4, a 17% year-over-year increase, driving a 30% rise in EPS to $0.56, with 70% of analysts rating it a buy and a price target of $111, indicating a potential upside of 43%.
- Booking Holdings' Robust Results: Booking Holdings announced a 25-for-1 stock split, with Q4 revenue growing 16% to $6.3 billion and EPS up 38% to $44.22; 77% of analysts rated it a buy, with an average price target of $5,915, suggesting a 45% upside.
- ServiceNow's Continued Growth: ServiceNow's Q4 revenue rose 21% year-over-year to $3.53 billion, with adjusted EPS increasing 24% to $0.92; 91% of analysts rated it a buy, with a price target of $189, indicating an 81% potential upside.
See More
Netflix Stock Underperforms Post-Split Amid Acquisition Concerns
- Stock Split Impact: Historically, stocks that split have outperformed the S&P 500 by nearly 14 percentage points in the year following the announcement; however, Netflix's shares have dropped 28% since its 10-for-1 split announcement, indicating market unease about its future prospects.
- Analyst Perspectives: Despite Netflix's current price of $79 per share, virtually all Wall Street analysts believe it is undervalued, with target prices ranging from $79 to $150, the latter suggesting a 90% upside, reflecting divergent views on its intrinsic value.
- Acquisition Risks and Opportunities: Netflix's all-cash bid of $27.75 per share for Warner Bros. Discovery totals approximately $72 billion, and while it would inherit nearly $11 billion in debt, the acquisition could secure major franchises like the DC Universe, potentially driving business growth for decades.
- Earnings Expectations: Morgan Stanley analyst estimates Netflix's earnings per share could reach $6.50 by 2030, implying a 21% annual growth rate, while the consensus forecast suggests a 22% growth over the next three years, making the current P/E ratio of 31 appear reasonable, indicating that the market may be overly pessimistic about Netflix.
See More
Netflix's Warner Bros. Acquisition: Risks and Opportunities
- Stock Underperformance: Since announcing a 10-for-1 stock split last October, Netflix shares have dropped 28%, while the S&P 500 has only risen about 1%, indicating market concerns about its future growth, particularly regarding its $83 billion bid for Warner Bros.
- Analyst Optimism: Despite the stock decline, nearly all Wall Street analysts believe Netflix's current price of $79 is undervalued, with a highest target price of $150 suggesting a potential upside of 90%, reflecting confidence in its future earnings potential.
- Strong Financial Performance: Netflix reported an 18% increase in fourth-quarter sales to $12 billion, with net income rising 30% to $0.59 per share, driven by membership growth and advertising revenue, despite the debt risks associated with the acquisition.
- Potential Acquisition Benefits: If the Warner Bros. acquisition succeeds, Netflix would gain rights to major franchises like the DC Universe and Game of Thrones, providing a wealth of intellectual property that could significantly accelerate its business growth for decades to come.
See More
Trump Sparks Global Political Turmoil with Recent Actions
- Call for Board Member Dismissal: Trump urged Netflix to fire board member Susan Rice on social media, accusing her of political bias and threatening political retaliation, which has sparked renewed scrutiny over corporate influence in media.
- Global Tariff Increase: Trump announced an immediate increase in the global tariff rate from 10% to 15%, framing it as a response to a Supreme Court ruling he criticized, despite 60% of Americans supporting the court's decision.
- Macron's Response to Trump: French President Macron expressed concern over Trump's public sharing of private messages, indicating a troubling shift in American leadership and a breakdown in diplomatic respect, highlighting tensions in international relations.
- Humanitarian Aid Discussions with Cuba: Trump labeled Cuba a “failed nation” amid an oil blockade and emphasized the need for humanitarian aid, reflecting a focus on the humanitarian crisis in Cuba and the U.S.'s diplomatic engagement with the island nation.
See More
Netflix Stock Underperforms Post-Split Amid Acquisition Concerns
- Stock Split Impact: Historically, stocks that split outperform the S&P 500 by nearly 14 percentage points, yet Netflix's shares have dropped 28% since its 10-for-1 split announcement, while the S&P 500 has only risen about 1%.
- Analyst Perspectives: Despite Netflix's current price of $79 per share, nearly all Wall Street analysts believe the stock is undervalued, with target prices ranging from $79 (no change) to $150 (implying a 90% upside), indicating a significant divergence in market sentiment regarding its future.
- Acquisition Risks: Netflix's all-cash bid of $27.75 per share for Warner Bros. Discovery totals approximately $72 billion, but the company would also inherit nearly $11 billion in debt, potentially straining future cash flow and earnings growth.
- Content Advantage: Despite acquisition risks, Netflix holds valuable intellectual properties like the DC Universe and Game of Thrones, which could drive long-term business growth through original content, with analysts projecting earnings of $6.50 per share by 2030, reflecting a 21% annual growth rate.
See More
Stock Splits Captivate Investors Amid Strong Performance
- Trend of Stock Splits: Stock splits have captured investor interest in recent years, typically signaling strong company performance, with historical data showing an average return of 25% in the year following a split, significantly outperforming the S&P 500's 12% average.
- Strong Performance by Netflix: Netflix's stock has surged 782% over the past decade and executed a 10-for-1 stock split last year, with fourth-quarter revenue reaching $12 billion, a 17% year-over-year increase, driving EPS up 30% to $0.56, leading analysts to favor its future outlook.
- Potential of Booking Holdings: Booking Holdings announced a 25-for-1 stock split, and despite recent stock declines due to travel slowdown fears, its fourth-quarter revenue grew 16% to $6.3 billion, with EPS rising 38% to $44.22, prompting analysts to remain optimistic about its prospects.
- Growth Outlook for ServiceNow: ServiceNow's stock has appreciated 852% over the past decade, despite a 55% drop from its peak, with fourth-quarter revenue increasing 21% year-over-year to $3.53 billion and adjusted EPS up 24% to $0.92, leading analysts to express positive views on its growth potential.
See More
Stock Splits Renew Investor Enthusiasm
- Stock Split Trend: Stock splits have regained investor interest in recent years, typically signaling strong company performance, with historical data showing an average return of 25% in the year following a split, significantly outperforming the S&P 500's 12% average.
- Netflix's Strong Performance: Netflix generated $12 billion in revenue in Q4, a 17% year-over-year increase, driving a 30% rise in EPS to $0.56, with 70% of analysts rating it a buy and a price target of $111, indicating a potential upside of 43%.
- Booking Holdings' Robust Results: Booking Holdings announced a 25-for-1 stock split, with Q4 revenue growing 16% to $6.3 billion and EPS up 38% to $44.22; 77% of analysts rated it a buy, with an average price target of $5,915, suggesting a 45% upside.
- ServiceNow's Continued Growth: ServiceNow's Q4 revenue rose 21% year-over-year to $3.53 billion, with adjusted EPS increasing 24% to $0.92; 91% of analysts rated it a buy, with a price target of $189, indicating an 81% potential upside.
See More
