Metric analysis

Netflix share: a new measure for investors to follow – MavenFlix

On November 16, Netflix announcement that it will share audience data differently from content. So far, the company has been counting the number of accounts that have watched every leading show or movie for at least two minutes. Now the reported metric will become “number of hours viewed” for each piece of content.

But how can this new metric impact Netflix stock (NFLX) – Get the Netflix, Inc. report and its investors?

Figure 1: Netflix headquarters in Los Gatos, California.

(Learn more about MavenFlix: Jim Cramer: It’s short-sighted to sell Disney stock now)

Netflix’s weekly top 10

Netflix has announced that it will release a weekly list of the 10 best TV series and movies based on airtime. The initiative could be a response to some criticism it has received for lack of proper transparency on operating performance. This decision could also have a positive impact on the perception of the company by investors.

The most recent data released by Netflix covers the last few months (see below). Squid Game was by far the most viewed content during the period. Having this information can be bullish, as it highlights Netflix’s ability to generate big profits with little investment on low budget production.

Figure 2: Netflix's most watched content by weekly hours.

Figure 2: The most watched content on Netflix by weekly hours.

If Netflix continues to produce inexpensive shows that reach large audiences, for example, costs could fall and lead to higher expectations of NFLX stock price appreciation.

Competitive advantage?

Disclosure of data may highlight Netflix’s suitability in the video streaming segment. Today, Netflix has the largest market share in terms of number of subscribers. Weekly reports can also help draw conclusions about market share based on time spent on the platform.

If the likes of Disney (SAY) – Get the Walt Disney Company Report and Amazon (AMZN) – Get the Amazon.com, Inc. report starting to report similar metrics that fall short of Netflix’s, it may become more evident that the Los Gatos giant is a better business and a better stock in the space. If the same transparency is not offered, investors could reasonably suggest that Netflix has a competitive advantage reflected in the number of viewers, as suggested by 2.1 billion hours of Squid Game watched.

Our point of view

We appreciate having access to another data point that can help investors make more informed decisions. We believe, for example, that audience trends can help predict the number of net subscribers added, as a slowdown in platform engagement could mean low retention of current subscribers or lower incentives for potential subscribers to sign up.

(Learn more about MavenFlix: Netflix Stock: How Games Can Help Push NFLX Beyond $ 700)

Twitter speaks

Netflix will report the number of hours watched for each of its best shows and movies each week. As an investor, could this impact NFLX stock?

Is the price correct?

Examining a company’s business fundamentals is only half the work of finding a good stock. The amount you pay to own the stocks is a key factor in the success of any investment. This is why valuation analysis is so important.

Alpha Spread’s The user-friendly platform allows you to estimate the fair value of a stock via valuation multiples, discounted cash flows, and more. I believe service is a must for anyone looking to own the right stock at the right price. Visit alphaspread.com and start with a 7-day free trial.

(Disclaimers: This is not investment advice. The author may go along with one or more of the actions mentioned in this report. Additionally, the article may contain affiliate links. These partnerships do not influence editorial content. Please support MavenFlix)