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Netflix Analyst Report (Essay Sample)

You will be required to write a Wall Street style analysts report for NFLX based on: In class discussions; company/industry news; field research; and, fundamental analysis which should have been performed during the semester. The paper must specify: i) A price target for December 31, 2012, ii) Buy, sell or hold recommendation; and iii) Earnings and revenue estimates for 2012. Provide a rationale for all those opinions based on the research conducted through the semester. Include overall price target, earnings estimates, financial statements to support your data. Also include graphs and charts if possible. 3Q Letter to shareholders http://files(dot)shareholder(dot)com/downloads/NFLX/1541076695x0x511277/85b155bc-69e8-4cb8-a2a3-22465e076d77/Investor%20Letter%20Q3%202011.pdf Earnings Call Transcript http://files(dot)shareholder(dot)com/downloads/NFLX/1541076695x0x515349/ecfea841-b71a-4625-a57e-5e19b02535d3/NFLX-Transcript-2011-10-24T22_00.pdf Latest News http://files(dot)shareholder(dot)com/downloads/NFLX/1541076695x0x520386/0626e621-d271-4f08-bc03-b7547f80a9af/Netflix_Announces_Pricing_of_400_Million_Concurrent_Common_Stock_and_Convertible_Notes_Financing.pdf source..

Netflix Analyst Report
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3 December 2011
Netflix Analyst Report
Netflix has witnessed crises in almost every aspect of its business now. First it lost its market share due to fierce competition which translated into lesser subscriptions and now the overall value of the shares of the company is also tumbling. The following report would consider the latest financial information released by the company along with the transcript of the earnings call conference. In accordance with the analysis of the present financial information, estimates regarding next financial period would also be made.
The financial information in each investor letter released by the company presents the actual figures for the current period and the estimated figures for the next period. The year end of the company is 31st December therefore the latest financial information available is that of the 3rd quarter of the company which ended on 30th September 2011. There are a number of figures that are estimated for the next quarter in the report including the number of subscriptions, total revenue from domestic activities, operating income of the company, total revenue from international activities and the operating income of the company from international activities.
Equity Research
Following is the analysis of the financial information from the 3rd quarter of the year ending 31st December 2011 along with the estimates regarding the year ending 31st December 2011.
Number of Subscribers
The total number of subscribers from the U.S. in the third quarter was 23.79 million which is significantly less than the number of subscribers that were anticipated by the company. The latest reports by the analysts suggest that the number is set for another steep drop in the 4th quarter and the trend is likely to continue in the next financial period of the company which would end on 31st December 2012. The main reason behind this steep drop in the number of domestic subscribers is said to be the rise in prices over the summer. Along with the rise in prices, a number of users cancelled their subscriptions.
Sector: Services
Earnings Reported







Dec 10

Mar 11

June 11

Sep 11











Source: Yahoo Finance
EPS Trends: Current Estimates
Current Qtr.Next Qtr 2011 2012
0.87 1.11 2.964.08
Source: Yahoo Finance
Ticker NFLX
Price (05/12/2011)$67.53
52-Week Range 62.37-304.79
Market Cap3.55B
Book Value per Share7.39
ROE 82.02%
Source: Yahoo Finance
The total revenue for the third of the company is $799 million. The revenue remained steady due to the in...
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