Netflix Stock Crash Makes It a Much Better Buy!

Sven provides a deep dive into Netflix, analyzing its transition from a high-growth pandemic beneficiary to a more mature, yet still expanding, compounder. Sven notes that while the stock has dropped significantly, the business continues to grow revenue at double digits (12-13%) and is trading at a P/E ratio of approximately 22, which is historically cheap for this company. Sven emphasizes the 'stickiness' of the subscription service, noting that even if users want to cancel, the service's necessity for family members often prevents churn, creating a durable revenue stream.

Financial analysis by Sven suggests that Netflix is becoming more efficient with its content spending and is successfully diversifying revenue through its new advertising tier, which could reach $10 billion in revenue within a few years. Sven calculates a normalized free cash flow of roughly $12 billion, which supports a 1-2% share buyback program. Sven also addresses the amortization of content assets, concluding that the company's cash flow is robust enough to sustain growth and return capital to shareholders.