Netflix struggled to hold onto subscribers in the first half of 2022, but a smaller-than-expected loss sent shares surging nearly 8% in after-hours trading on July 19, following the company’s second-quarter earnings release, The Washington Post reported. The streaming entertainment giant had expected to lose 2 million subscribers during the second quarter. However, the actual loss was 970,000, which renewed investor interest in Netflix stock.
The latest earnings report shows that Netflix increased revenue by 9% and increased average paid memberships by 6% compared to the first quarter of 2022. The average revenue per member rose 2%.
Viewer favorites included “Stranger Things,” “Ozark” and “Squid Game,” Netflix said in its letter to shareholders. The letter also noted that Netflix is investing in animated features and building on its lead in non-English programming.
|About Netflix||Company Snapshot|
|Headquarters||Los Gatos, California|
|Founders||Reed Hastings and Marc Randolph|
|CEO||Reed Hastings and Ted Saranos|
How Much Is Netflix Worth Now?
Based on market cap, the company’s worth is $95.99 billion as of July 21.
|How Much Is Netflix Worth?||Financials|
|Share Price, 52-Week Range||$162.71-$700.99|
|Revenue in 2021||$29.7 billion|
|Profit in 2021||$5.17 billion|
|Profit in 2nd Quarter 2022||$1.44 billion|
|Outstanding Shares||444.24 million|
What Is Market Capitalization?
Market capitalization is based on a company’s share price and the number of shares available, and it’s one way investors measure a company’s worth. To calculate Netflix’s worth, multiply the current price of the stock by the total number of outstanding shares. As stock prices fluctuate throughout the day, so does a company’s market capitalization. Share-price ranges are helpful to give you an idea of a company’s highs and lows for a desired period of time.
Netflix’s Market Cap
Netflix’s market cap is $95.99 billion as of July 21. Netflix is a large-cap company and No. 70 on the S&P 500. Share prices this year have fluctuated between $162.71 and $700.99, with the highest closing price achieved on Oct. 25, 2021.
How To Calculate Netflix’s Net Worth
To calculate net worth, subtract liabilities from assets. You’ll find this information in the company’s financial reports, typically released annually and quarterly. Take a look at key figures from Netflix’s most recent shareholder report, released on July 19. By this measure, Netflix’s net worth is approximately $19.08 billion.
|Netflix’s Assets and Liabilities||Financials|
|Total Assets||$46.35 billion|
|Total Liabilities||$27.27 billion|
Founders: Reed Hastings and Marc Randolph
The popular story is that Netflix started when Hastings was hit with a $40 late fee on an “Apollo 13” video rental. However, the story isn’t entirely true, since Netflix initially charged late fees itself. Randolph worked for Hastings at a Silicon Valley software company named Pure Atria. At the time the two started brainstorming a better video rental service, Pure Atria was undergoing a merger, and they were in search of the next project.
Randolph was CEO until he stepped down in 1999, making big decisions including turning down a buyout offer from Amazon. He did not stick around for Netflix’s major growth, although he says in his book, “That Will Never Work: The Birth of Netflix and the Amazing Life of an Idea,” that he’s OK with his decision. When Randolph stepped down, co-founder Reed Hastings took his place as CEO to witness Netflix become the major company it is today. Today, Hastings and Ted Sarandos serve as co-CEOs.
Key Product Lines Contributing to Revenue
Netflix relies on subscribers for the bulk of its income. It continues to invest in new content for a U.S. and growing international market. It plans on keeping subscribers and attracting new ones with:
- Original and non-fiction series
- U.S. and international markets
- Expansion into live-action and animated films
- Interactive games: “Black Mirror: Bandersnatch” and “Stranger Things”
Earnings Highlights From Netflix’s Fiscal 2nd Quarter Ending June 30
Although Netflix has faced some challenges, its revenue continued to increase in the second quarter. Netflix’s second-quarter highlights for 2022 include:
- Revenue: $7.97 billion
- Year-over-year revenue growth for 4th quarter: 8.6%
- Quarterly earnings per diluted share: $3.20 — down from first quarter’s $3.53
- Operating margin: 19.8%
- Global streaming paid memberships: 220.67 million
- Membership growth compared to the previous year: down 0.97%
Netflix’s Top 10 Shareholders
Asset managers and mutual funds are the company’s top shareholders. Here is a closer look at which institutions have the most stake in Netflix shares:
- The Vanguard Group: 7.71%
- BlackRock Inc.: 6.29%
- Capital Research & Management: 4.23%
- Capital International Investors: 4.16%
- State Street Corp.: 3.80%
- FMR LLC: 3.63%
- T. Rowe Price & Associates: 3.17%
- Capital World Investors: 1.94%
- Baillie Gifford & Co.: 1.73%
- Geode Capital Management LLC: 1.67%
How Does the Future Look for Netflix?
Netflix beat earnings and global paid net subscriber predictions in the second quarter, but it fell slightly short of revenue forecasts, CNBC reported. While the news was generally good — very good in the case of subscriber loss — the company’s share price is under pressure, primarily because of slowed subscriber growth. Shareholders are concerned about Netflix’s future ability to monetize content and how competing streaming services could take market share from the leader. According to Netflix’s second-quarter 2022 shareholder letter and Nielsen figures for the 2021-2022 TV season, TV share time is distributed as follows, given in viewing minutes:
- Netflix: 1.334 trillion
- YouTube: 753 billion
- Hulu: 128 billion
- Prime Video: 174 billion
- Disney+: 245 billion
- Apple: 22 billion
While still the market leader by a wide margin, heavy competition means Netflix has its work cut out. However, the company assures shareholders that there is a viable future growth plan if it continues to invest in international markets, continues producing original content and expands into interactive gaming.
Netflix expects to net 1 million new subscribers in the third quarter as a result of its roll-out of a less-expensive ad-supported membership tier, similar to Hulu’s model and its crack-down on account sharing. Success in new-subscriber growth could give Netflix the reset it needs. Should it miss its goal, “the second quarter of 2022 will serve as the inflection point when it became apparent the company’s halcyon days were over,” according to CNBC.
Is Netflix Worth the Money?
Netflix’s current price-to-earnings ratio is fairly low at 17.94. You get good bang for your buck at this rate, assuming Netflix can right its ship. But remember there is more to investing than one or two ratios.
According to Yahoo Finance, 11 analysts rate Netflix as a “strong buy,” 14 recommend Netflix as a “buy,” 14 rate it “hold,” one rates it “underperform” and one rates it “sell.” The NFLX stock price target is between $157 and $735, for an average target share price of $275.03. At its current price, it appears Netflix is worth the money. However, doing your research to determine your level of comfort with the company’s prospects — and where you believe Netflix will be in the future — is essential.
Data is accurate as of July 21, 2022, and subject to change.
Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, plus 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.
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- CNBC. 2022. "Netflix Shares Fall 20% On Slowing Subscriber Growth."
- Netflix. 2022. "Q2 Results and Q3 Forecast."
- Investing.com. "Netflix Financials (NFLX)."
- Slickcharts. "S&P 500 Companies by Weight."
- The Wall Street Journal. "NFLX | Netflix Inc. Analyst Estimates & Rating."
- The Washington Post. 2022. "Netflix loses nearly 1 million subscribers, and its stock soars."
- CNBC. 2022. "Netflix loses fewer subscribers than expected and says cheaper ad tier is coming in early 2023."