4/16/2024

Netflix: why is it worth buying shares?

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Companies are already gearing up to publish their first quarterly reports for 2024, and investors are eagerly awaiting Netflix’s statistics this week. Why is this company attracting financial players?

ParadTrade talks about the company structure, advantages for investors and how you can make money on Netflix shares.

Brief description of the company

Netflix Inc. is a company that provides subscription streaming media content services. It offers its users an extensive library of TV series, documentaries and feature films available to watch on demand.

In recent years, the video streaming market has undergone significant changes due to the entry of a number of large media companies with their platforms. That leaves Netflix facing intense competition from Walt Disney Co.’s Disney+, Amazon.com Inc.’s Prime Video, Apple Inc.’s Apple TV+ and Comcast Corp.’s NBCUniversal subsidiary Peacock.

However, despite this, the company maintains a leading position in the industry thanks to its extensive content catalog, constant release of new releases and innovative technologies.

Netflix Business Segments

The company’s main source of income is subscriptions. However, now, with the introduction of a cheaper subscription option with advertising, the company is generating additional revenue from this channel.

Netflix services are available in three tiers: Premium, Standard, and Standard with Ads.

Although Netflix operates as a single business segment, the company distributes its revenues across four broad regions:

  • The US and Canada remain Netflix’s mainstay, accounting for approximately 44% of the company’s revenue.
  • Europe, the Middle East and Africa – about 31.4% of revenue.
  • Latin America is the fastest growing region. It accounts for approximately 13.2% of quarterly revenue.
  • The Asia-Pacific region accounts for approximately 11.3%.

Successful company strategy

Bank of America Corporation analysts awarded Netflix the title of “king of streaming,” confirming the company’s unconditional victory in the competition in this market.

Netflix’s advertising segment, which is experiencing rapid growth, is expected to be one of the key drivers of its development in 2024. The company is actively recruiting new subscribers to its ad-supported plans, and the strategy is already bearing fruit, with more than 23 million active ad-tier users at the start of the year.

Another factor contributing to Netflix’s revenue growth this year will be its determined fight against free use of other people’s accounts. The recently introduced paid sharing policy has already resulted in a significant increase in subscriber numbers and is projected to continue to have a positive impact in the coming quarters.

Netflix has effectively built a system for controlling access to its services, preventing unauthorized use of other people’s accounts. At the same time, in the face of steadily rising inflation, Netflix adheres to a balanced pricing strategy.

Netflix’s investments in live streaming and video games are also paying off. The company live-streamed the “Netflix Cup” show and acquired exclusive broadcast rights to “WWE Raw.” In addition, Netflix’s Grand Theft Auto video game has become the best-selling franchise in history.

Why should you invest in Netflix?

Without the burden of a legacy media business, the company can focus entirely on developing its streaming service.

In addition, Netflix has significant potential for further growth. For example, the addition of Grand Theft Auto to the game library and the expansion of content licensing opportunities with legacy media partners further demonstrate that the company’s impressive subscriber base is its competitive advantage.

Planning to trade Netflix stock following its quarterly earnings results? There is nothing complicated: just open a deal using the trading terminal through your ParadTrade personal account.

To receive a detailed forecast, contact your personal ParadTrade manager, and also follow the updates of our YouTube channel!

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