Video streaming veteran Netflix (NFLX -0.88%) saw stock prices soar after the July 18 second-quarter earnings report. Netflix’s stock has gained 29% in a week, and many investors are wondering if it’s too late to get into this surge. teleprinter.
Let me assure you that Netflix is a fantastic buy at these slightly higher prices. You’ve missed the biggest discounts, but you’ve also gained confidence along the way. After all, Netflix shares are rising for good reason, and it’s easier to believe in the company’s long-term business prospects than before the earnings report.
Good news in the earnings report
Netflix exceeded its own forecasts and analysts’ expectations in almost every area in the second quarter. Subscriber count was 1 million accounts above forecast, earnings were 7. This may interest you : The Oddballs series from James Rallison announced on Netflix.7% ahead of prior year, and free cash flow now exceeds previous guidance for the whole year.
The company achieved these strong results despite the triple whammy of recent price increases, unnecessary currency effects and an industry-wide wall of head-to-head competitors. It’s no surprise to see investors embracing the stock after this rousing financial presentation. The immediate jump was followed by continued market strength as the market slowly digested Netflix’s nice business update.
Netflix stock is still cheap
As powerful as that 29% price increase seems in isolation, you should know that the market hasn’t forgiven Netflix for all of its sins. To see also : 5 high-profile Netflix releases that will get everyone talking next week.
The stock is still trading 69% below all-time November highs, including a 35% decline since the first quarter report in April. Analysts and investors are struggling to deal with the company’s ongoing shift in strategy, which places more emphasis on profitable growth and less on subscriber numbers.
In the long run, this shift in strategy should translate into investor-friendly numbers like rising earnings and strong cash flow, which will help market makers overlook potentially slower subscriber growth. Additionally, Netflix is trying several new tactics in support of the updated high-level strategy, including a shift in ad-supported plans for price-sensitive consumers and an attempt to collect more revenue from people. who are currently sharing their Netflix connection. credentials for free.
Netflix therefore remains one of the best investment ideas in the market today, even after the profit-based price increase. Don’t worry if you’ve decided against buying Netflix stock in the run-up to the low price report. You can still create a great long-term position on Netflix at current prices, which would sound familiar to a visiting time traveler from January 2018:
To put the humble price chart into context, here’s how Netflix’s results have evolved over the same period:
NFLX Revenue Data (TTM) by YCharts
Netflix stock is poised for a tremendous rebound, and the market action is just beginning.
Market timing is a gamble at best, and very few investors actually manage to buy the low and sell the high. Successful investing is a long-term marathon, not a sprint; you shouldn’t sweat the small stuff. Yes, a 29% price jump is small in the context of Netflix’s massive growth opportunity from here.
Anders Bylund holds positions at Netflix. The Motley Fool has posts and recommends Netflix. The Motley Fool has a disclosure policy.
Anders Bylund holds positions at Netflix. The Motley Fool has posts and recommends Netflix. The Motley Fool has a disclosure policy.
