Netflix shares are beginning to price in disruption
In the future, everyone has a 30-second attention spans and spends all day watching AI slop on their phones.
That's the bear case for shares of Netflix, which are down 5.6% today on a chart that looks increasingly broken. It cracked today to the lowest since October 2024. It's been nearly cut in half since July.
The bulls are likely to fall back on valuation. The consensus earnings per share for this year and the two upcoming years is 3.58/3.88/4.65. That puts the P/E at 20/19/16x.
Those are attractive multiples if you view Netflix as something akin to a consumer staple and a core part of the entertainment budget. It's also a company that's forecast to continue adding subscribers and grew revenue 16% y/y last quarter. Finally, Netflix itself might be a beneficiary of AI as it drives down costs to make content. Right now the company makes roughly $25 billion (gross) on $51 billion in revenue and if it can lower its operating costs, that all goes to the bottom line.
The fear is that content isn't what it used to be. There's no 'mainstream' anymore with kids gravitating to YouTube and everyone able to produce moving pictures. A report today said Meta was exploring doing episode-by-episode series and broadcasting live content on Instagram. That's part of the reason it's under extra pressure.
All of this comes back to one thing: AI. If it didn't exist, Netflix shares would assuredly be higher but this new technology is going to be disruptive. Early on, all the market moves were driven by the upside of AI and the impressive possibilities. But for all the winners, there will be losers too and right now the market is having a hard time deciding which bucket Netflix will be in.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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