As far as NFLX, you can't extrapolate the $384M with a linear run rate over 4 quarters until proven otherwise. NFLX has never demonstrated consistent high profitability over the course of 4 quarters. Even if they did, the valuation is still 10X Disney and NFLX stock was HAMMERED after the $384M (down 11%) because they missed subscriber counts. The entire reason the are valued at such an insane multiple is subscriber growth. If that falters, you'll see the stock drop 50%. It's already down ~20% from its high.
I think you missed the point where I agreed that Netflix valuation is pretty high right now.
Note that I actually agree that Netflix valuation is pretty high right now, but my main point is that the potential value of streaming media represents potential for Disney.
And I think you also missed my main point, which is that the profitability of streaming media, specifically Netflix, points to the potential for Disney to do well in this space.
OTOH, I do think that they could turn their $5B operating income in cable networks and $1.2B operating income in broadcast into $5-10B combined streaming and traditional income over the next 5-10 years.
And I don't suppose you care to share your opinion on the question of what such a positive result might mean for Disney Parks & Resorts?
If this comes to pass, such a positive result could be either good or bad for Parks & Resorts. Being flush with cash could result in green light strategic investment. Alternatively it could increase pressure on Parks & Resorts to increase margins which would comparatively become the underperforming unit, and this would obviously be terrible.
Unless your main point is just to fight with me about Netflix financial results purely to substantiate your emotional bias against Netflix valuation, in which case let me note again that I agree that their valuation seems crazy high right now.
Don't talk to me about earnings growth when you're basing growth on numbers like $65M-$200M. Those numbers start getting a lot harder to grow when you get into larger numbers. Most recently, they had earnings growth of 32% from a $290M base.
Yes, in their latest reported quarter, they reported "only" 32% quarter-over-quarter earnings growth. For the quarter ending June 30, 2018, their earnings were $384 MM, up 32% from $290 MM for the quarter ending March 31, 2018. That was both remarkable and disappointing.
Here are their quarterly earnings going backwards. I only post these to show that quarter-over-quarter earnings have actually been pretty steady, unlike in the past, facilitating some degree of informed projection.
June 30, 2018 = $384 million
March 31, 2018 = $290 million
December 31, 2017 = $185 million
September 30, 2017 = $129 million
June 30, 2017 = $65 million <- subscriber growth exceeded expectations, but earnings took a hit based on higher content expenses
March 31, 2017 = $178 million <- these earnings were the high outlier, note that the stock dropped due to a subscriber miss
December 31, 2016 = $66 million
September 30, 2016 = $51 million
June 30, 2017 = $40 million
March 31, 2017 = $27 million
Big deal.They are essentially a one trick pony. It's a good trick, but they don't own much content and offer nothing besides their streaming service. No argument from me they are growing, but again, this company doesn't deserve to be valued the same as Disney.
I'm less negative on Netflix, but as a result I'm more positive on Disney. I agree that streaming media has great potential for them. If they can create 3 separate streaming services (Disney, ESPN, and Fox/Hulu), and if they can grow these internationally, they have the potential to be 3x as profitable as Netflix, maybe more if content creation is a cheaper than content acquisition.
