Netflix; time to buy?

Almost every leader in business, politics, diplomacy, the military, the church and more, reads the venerable (174 years old) The Economist.

Writing about Netflix, from today’s Economist Espresso:

“The streaming giant comes into today’s quarterly-earnings report on a roll. It has gained subscribers faster than even bullish analysts expected, adding 26m net new members globally in the 12 months to March 31st, for a total of 125m. The firm credits that in large part to its aggressive spending on content, which is expected to top $12bn this year. Just its planned increase over last year, about $3bn-4bn, exceeds the entire content budget of HBO or the BBC. But Netflix manages this by borrowing a lot of money, $8.5bn so far. As a result, it is expected to burn through billions of dollars of cash for years to come. Bearish investors believe Netflix is a house of cards. Nevertheless, the company’s share price has more than doubled this year. Expect it to go on climbing, regardless of how much money the service is spending, if Netflix reports strong subscriber growth again today.” (Bold text, mine.)

The Economist rarely makes predictions. When it does, it’s readers take notice. Should Monday Morning Millionaire Program members and subscribers invest in Netflix?

Buying the entire US market instead of picking stocks is one of the seven habits which the Monday Morning Millionaire Program promotes for highly effective investors. No, one cannot invest in Netflix. One can only speculate. It does not belong in the core portfolio of Monday Morning Millionaire Program members and subscribers.

It is a possible buy for your explore portfolio if you have one. If you buy it, you need to rely on the greater fool theory to time your selling. Note that another habit of highly effective investors is to buy and hold, not to try timing.

 

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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