A nice analysis of Netflix, their stock price, revenue, expenses, and income

(The following is a nice, simple analysis of Netflix, how they make their money, how much things cost, etc.)

I'm going to start off by saying that as a product, I love Netflix (NFLX). From its simplicity to its low price, I think that it is a great product that many consumers benefit from. But as a business, I don't think that Netflix is worth as much as it may seem. It will never be worth tens of billions of dollars again. As of the time of writing of this article, Netflix is worth $3.36B. I think that this is a fair valuation for Netflix, and is, if anything, still a bit inflated.

If I were investing in Netflix, I would do so solely for its streaming business. In addition, I would set a realistic expectation that the profitability of this online business would be almost fully concentrated in the United States for the next couple of years. In addition, as that online streaming is set to become an extremely competitive space, it is evident that investing in Netflix is very risky: larger competitors like Apple (AAPL), Google (GOOG), Microsoft (MSFT), and Amazon (AMZN) could damage Netflix heavily if they were to offer similar unlimited streaming service with wide libraries of content. Because of this risk, I would only invest if there were a potential for huge gains. Therefore, I built a quick model focused on its US streaming to try to predict how much the unit could be worth in the coming years.