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Wednesday, June 16, 2021

Reasons Why Long-term Faith on Netflix Inc. (NFLX) Could Pay Off Investors

Netflix Inc (NFLX) released its quarterly earnings report to investors’ surprise. Not all platforms can sustain revenue growth at such a high level. Forecasts from management indicate that revenues will increase by another 24% in Q1 2021, following a 22% increase in Q4 2020. The company has also disclosed targets for its operating margin for the first quarter of the year -25%. During the second quarter of the year 2020, this indicator peaked at 22.1%. Despite some unimpressive figures, Netflix’s business model has proved successful. Netflix has succeeded with its business model.

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In the past Netflix, rent content from third parties that carried a high rental cost and a high risk of a producer not renewing or raising the rent. It now has total control over the content and its distribution. As the media library continues to expand, the service will be more and more attractive to customers. Netflix can now afford to work with some of the biggest actors and directors in the industry.

Moreover, one of the most important factors that bolster Netflix’s prospects is that the company doesn’t expect to have to raise additional capital in the future. Although it may sound strange, Netflix stock appears to be undervalued. Currently, the “Price / Forward Sales” ratio is 7x. Yet, market participants are buying shares of hype technology companies, which are valued at more than 20x, despite them growing by an equal amount – about 25-30% per year.

Netflix Inc. (NFLX)’s stock price in the last trading session decreased by -1.11 percent to ratify at $579.84. An amount of 11.79 million shares have been traded at the current session, with an average volume of 5.21 million shares. A stock’s 52-week low and high prices are essential variables to consider when assessing it’s present and future worth. Netflix Inc. shares are down 2.27 percent from their 52-week high point and are up 99.77 percent from their 52-week low.

Despite a large number of existing subscribers, Netflix Inc. (NFLX) can still grow its clientele. Shortly, the situation should not change much, Netflix subscribers are happy, and the number of subscribers is increasing rapidly.

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