BusinessJan 20, 2021
Netflix surprises investors with a big fourth-quarter earnings report — profitability and share buybacks in sight
Streaming Leadership
Victor Lei
Discover
Netflix handed investors a perfectly splendid earnings report — sending its share up 16%.
But the bigger surprise is in what comes next…
Netflix made all the right moves early on — switching to a streaming model and developing its own content.
Despite accumulating $16b in debt to fund its content creation, Netflix’s strategy is paying off. 9/10 of the most Googled TV shows were created by Netflix in 2020.
But checkers playing competitors made significant moves in 2020 to catch up:
COVID lockdowns accelerated the growth of many streaming services. This led many to believe that growth would become unsustainable as COVID dragged on… After all, you’d think everyone who would’ve signed up, already signed up.
But Netflix proved everyone wrong.
Netflix delighted investors with strong numbers but here’s what surprised investors the most — notes from its CEO.
With $16b in debt, the company is deep in the hole — but Netflix expects to become “cash flow” breakeven in 2021.
But here comes the even better news — Netflix will be exploring stock buybacks from shareholders.
In 2021, Netflix made its way into 75.3% of US households. To continue growing its sales, Netflix has:
Netflix is doing all the right things but its large size eventually will become a problem. They’re slowly transitioning from a growth company to mature company.
What to expect from a mature company: Slower but more stable returns and potential dividends in the future.
