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Netflix shares streaming higher today it's up point 5% Jeff today it's the best performer -- the S&P 500 for all 2013.
And that following yesterday's blowout earnings report -- earnings of two million.
And US never joined by pat piper Jeffers Michael Olson.
For a special edition of deal on media Michael take this quote from the Netflix chief content officer he says the goal is to become HBO.
Faster than HBO can become -- what do you think he meant an -- succeeding.
Well I think they're definitely succeeding him -- there's no question that Netflix continues to dominate the online video landscape.
I think really what he's saying is seen other gonna continued to -- on the original content route -- they've gotten into a position here where.
They've got a lot of great contents some of its non exclusive that Amazon and others have.
But as they continue to go down this this -- of adding new originals I think that's when you're gonna see like those subscribers having more perceived value for the service.
Yes -- -- 217 dollars now as far as it 300 dollars a peek back in July 2011.
What's your price target would you tell your mom to buy the stock even after rose 43 bucks today.
It's getting tougher are our price target is a 194.
And you know if you look at who kind of how to get there and look at the valuation that's required.
If you think out to 2015.
And you have to assume kind of forty -- fifty -- multiple on kind of five dollar so earnings number and to get to that kind of number you have to assume that they're gonna have around forty million or more domestic streaming subs.
Seventeen million or so international -- which they just reported they have seven million.
And so there's there's big aggressive numbers they -- the kind of put into place to make those numbers work and I think.
Like I said that there's no question they continue to dominate this this landscape but.
You know those numbers aren't unrealistic but they're also not overly conservative -- it.
That is the stock performance have almost nothing to do.
But the actual profit picture because if you look at Netflix -- numbers they earned all of three million dollars in net income.
On a billion dollars of revenue coordinates three bucks -- a thousand not HBO they keep comparing himself to HBO.
They still had four million dollars in sales last year and one point four billion dollars in profit is far more profitable.
Does that worry you at all.
Yeah I think I think there's definitely some concern out there -- related to that.
And I guess over time we'll we'll have to determine as to what degree can they continue to grow subscribers and revenue faster than their content expense right now that cash flow was negative this past quarter.
As a result of the company spending a lot not that specifically the new original content.
Over time that that should reverse itself were modeling for improved.
Positive free cash flow and not an outgoing quarters.
And I think that will alleviate some of the concerns people have yet when we we we had OK you know what I think we're gonna -- -- there -- nice job.
And we'll just watch that stock -- today thanks for being -- Michael Olson.
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