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There is great news around Netflix (NYSE:NFLX), including the acquisition of important wwe rights, part of its ongoing plan to expand its entertainment suite. He has also recently focused on gaming and has partnered with industry-leading veterans to bring top-notch content to the field.
But before we continue with that, here's a new look at the company's fourth-quarter 2023 earnings results, released last night.
Earnings update
Netflix's earnings per share for the fourth quarter of this year were $2.11, slightly below consensus expectations of $2.20.
However, the company posted a nice 12.5% increase in revenue from the prior-year quarter. It also added 13 million subscribers.
Surprisingly, it also reported net income of $938 million, a huge increase from $55 million a year ago.
Co-founder and co-CEO Reed Hastings also resigned from his position. He will now serve as CEO of Netflix. To replace him, COO Greg Peters will join current co-CEO Ted Sarandos in the role.
Based on these earnings results, I think the company will have a great year ahead. It has some interesting expansions underway, and with the accompanying financial growth, it's hard to complain.
A closer look at WWE and the games
The company reached an agreement to broadcast WWE's weekly television show, Rawwill live in several countries starting January 2025.
The move signifies the company's expansion into live streaming. A key part of the deal is that Netflix will become the home of all WWE shows, specials, documentaries, original series and upcoming projects.
Netflix is also getting into gaming. It began its video game operations with interactive content on its streaming platform. Now it has hired people like Mike Verdu, a former executive at GoalOculus and EA.
Less than 1% of Netflix subscribers regularly engage with its games in August; Therefore, the company is trying to grow this. It acquired several game studios and opened its own in Helsinki and California to bolster the effort.
Valuation and other risks
The current results seem promising. However, as a result, the market may have overvalued the stock. It has a P/E ratio based on forward estimates of around 32.
Therefore, there is little room for error in the company's results to justify the current price.
Additionally, the company could face major problems with its video game strategy if more established studios prove more popular. Competition in the industry is fierce and players are often loyal to the work of specific studios. Breaking into the advanced gaming market is not an easy task.
Carry
Overall, in my opinion, Netflix is on a bullish streak. The company expects double-digit growth for all of 2024.
I was worried about the stock a couple of weeks ago, but less so after the recent news and earnings.
Although there are risks to its new strategies and valuation is a concern to contend with, the stock is a buy for me. I'll probably add it to my portfolio soon when I have some extra cash to invest.
