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2021-07-27
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Netflix: Calculating Its Intrinsic Value<blockquote>Netflix：计算其内在价值</blockquote>
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However, we highlight what you need to consider before jumping into the stock. We base our forecast purely on the company's fundamentals. By doing so, we are able to point to the specific growth drivers rooted in numbers as opposed to perceived potential. In addition, we believe that Netflix's margins will expand going forward. Using the fundamentals allows us to more reasonably estimate the company's margin expansion.</p><p><blockquote>Netflix Inc(NFLX)有潜力表现良好。然而，我们强调了在买入该股之前您需要考虑的事项。我们的预测纯粹基于公司的基本面。通过这样做，我们能够指出植根于数字而不是感知潜力的具体增长动力。此外，我们相信Netflix的利润率未来将会扩大。使用基本面可以让我们更合理地估计公司的利润率扩张。</blockquote></p><p> <b>Valuation</b></p><p><blockquote><b>估值</b></blockquote></p><p> Forecasting is not easy and it's difficult to be precise. However, the point of forecasting is not to be right but to be reasonable. Our projections are based on the company's fundamentals. We try to determine what growth rates the company can fundamentally sustain up until 2025.</p><p><blockquote>预测并不容易，也很难做到精确。然而，预测的重点不是正确，而是合理。我们的预测基于公司的基本面。我们试图确定公司可以基本维持到2025年的增长率。</blockquote></p><p> We will begin with the growth rate we expect for fiscal year 2021. The first thing we need is to determine what will constitute as reinvestment. For Netflix, it will be research and development, marketing, capital expenditures, net investment in content, and change in net working capital.</p><p><blockquote>我们将从2021财年的预期增长率开始。我们需要做的第一件事是确定什么构成再投资。对于Netflix来说，将是研发、营销、资本支出、内容净投资以及净营运资本的变化。</blockquote></p><p> Please note that we measure net investment in content as the cash spent on developing content subtracted by the amortization of previously developed content. Our assumption is that the amortized amount is the \"maintenance content\" needed to maintain the interest of current users and doesn't contribute to growth. The net investment in content is what we consider the \"growth content\" that contributes to attracting new users or justifying price increases.</p><p><blockquote>请注意，我们将内容净投资衡量为开发内容花费的现金减去先前开发内容的摊销。我们的假设是，摊销金额是维持当前用户兴趣所需的“维护内容”，对增长没有贡献。内容的净投资是我们所认为的有助于吸引新用户或证明价格上涨合理性的“增长内容”。</blockquote></p><p> In addition, that depreciation and amortization expense is subtracted from the reinvestment rate as it is used as a proxy for maintenance capex that does not contribute to growth.</p><p><blockquote>此外，折旧和摊销费用从再投资率中扣除，因为它被用作对增长没有贡献的维护资本支出的代表。</blockquote></p><p> The next step is to find the revenue-to-capital ratio. This measures how much revenue a company generates for each dollar in capital. Once we have both numbers, we multiply them to calculate the fundamental growth rate.</p><p><blockquote>下一步是找到收入资本比。这衡量公司每一美元资本产生的收入。一旦我们有了这两个数字，我们就把它们相乘来计算基本增长率。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f1190d7305518113889190a4e5d4e177\" tg-width=\"354\" tg-height=\"462\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p> In the picture above, we see that the reinvestment rate was 21.44% of revenue and revenue to capital was 93.39%. Therefore, the fundamental growth rate for fiscal year 2021 equals 20.02%. This is slightly above analysts' expectations but by very little.</p><p><blockquote>在上图中，我们看到再投资率占收入的21.44%，收入占资本的比例为93.39%。因此，2021财年的基本增长率等于20.02%。这略高于分析师的预期，但幅度很小。</blockquote></p><p> The next step is to determine the degree of operating leverage, which is a multiple that measures how much the operating income of a company will change in response to a change in sales. Netflix has had a ratio of over 2 over the past several years. To be conservative, we will use 2 and reduce it each year. In addition, we did the same thing with gross margins using a starting point of 1.08.</p><p><blockquote>下一步是确定运营杠杆程度，这是一个倍数，衡量公司的营业收入会因销售额的变化而发生多少变化。过去几年，Netflix的比率超过2。为了保守起见，我们将使用2，并每年减少它。此外，我们对毛利率做了同样的事情，起点为1.08。</blockquote></p><p> As the EBIT margin increases, the reinvestment rate decreases because R&D and marketing expenses become a smaller percentage of revenue, resulting in a slowdown of growth. We measure this slowdown by setting R&D and marketing to 70% of total operating expenses (percentage in fiscal year 2020). We then calculate the future fundamental growth rates with the projected numbers as follows:</p><p><blockquote>随着息税前利润率的提高，再投资率下降，因为研发和营销费用占收入的比例变小，导致增长放缓。我们通过将研发和营销设置为总运营费用的70%（2020财年的百分比）来衡量这种放缓。然后，我们用预测数字计算未来的基本增长率如下：</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8251e55395490f4c6d6347fef3a9a08f\" tg-width=\"640\" tg-height=\"605\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p> We used the average capital expenditure and D&A margins of the last three years. Now we will input these numbers into a DCF using the company's weighted average cost of capital of 5% based on <b>current market conditions.</b>Please note that we grouped net content investment with capital expenditures.</p><p><blockquote>我们使用了过去三年的平均资本支出和D&A利润率。现在，我们将使用公司5%的加权平均资本成本将这些数字输入到DCF中，基于<b>当前的市场状况。</b>请注意，我们将净内容投资与资本支出进行了分组。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/cfb2441365f739f8ec307436cfd81926\" tg-width=\"640\" tg-height=\"259\" width=\"100%\" height=\"auto\"><span>Source: Author using Finbox tools</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者使用Finbox工具</span></p></blockquote></p><p> As you can see, with a 5% discount rate, 21% tax rate, 2% terminal growth rate, and a forecast based on fundamentals, the company has the potential for 24.6% upside. Of course, discount rates are always changing and not everyone likes to use current discount rates. Therefore, we made the chart below to demonstrate the fair value at each discount rate and terminal growth rate:</p><p><blockquote>正如您所看到的，5%的贴现率、21%的税率、2%的终端增长率以及基于基本面的预测，该公司有24.6%的上涨潜力。当然，折扣率总是在变化，并不是每个人都喜欢使用当前的折扣率。因此，我们制作下图以展示按各折现率及最终增长率计算的公允价值：</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e8a824dfed49d58dacb3f22cad000213\" tg-width=\"430\" tg-height=\"209\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p></p><p> As you can see, if interest rates stay low for an extended period of time, Netflix can potentially see solid upside. However, there isn't much room for changes in the discount rates, and therefore should be careful if you believe discount rates are going up.</p><p><blockquote>正如您所看到的，如果利率长期保持在低位，Netflix可能会看到强劲的上涨空间。然而，贴现率的变化空间不大，因此如果您认为贴现率正在上升，请小心。</blockquote></p><p> <b>Checking for Consistencies in the Forecast</b></p><p><blockquote><b>检查预测的一致性</b></blockquote></p><p> Let's make sure everything makes sense in the forecast. We'll begin with revenue growth. You can see that we expect revenue growth to accelerate in 2022 before gradually decreasing in the following years. This is because we expect Netflix to increase its net content investment in 2021. The company has stated that it willincrease overall investment in contentto $17 billion, up from $11.8 billion in 2020. This consequently leads to a higher reinvestment rate and the potential to accelerate revenue growth. This seems reasonable to us because it has happened to Netflix in the past where revenue growth has accelerated.</p><p><blockquote>让我们确保预测中的一切都有意义。我们将从收入增长开始。您可以看到，我们预计收入增长将在2022年加速，然后在随后几年逐渐下降。这是因为我们预计Netflix将在2021年增加净内容投资。该公司表示，将把内容总投资从2020年的118亿美元增加到170亿美元。因此，这导致更高的再投资率和加速收入增长的潜力。这对我们来说似乎是合理的，因为Netflix过去就发生过这种情况，收入增长加速。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4008559ff06f06414badc2e9f7509765\" tg-width=\"640\" tg-height=\"71\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p> In addition, the net content investment in our forecast is similar to the absolute amounts Netflix spent pre-pandemic.</p><p><blockquote>此外，我们预测中的净内容投资与Netflix在大流行前的绝对支出金额相似。</blockquote></p><p> Furthermore, management expects free cash flow for this year to be break even or slightly higher. It's hard to say what slightly above means for the management team. Although $119 million is exactly slightly above breakeven, it is still significantly less than what it was in 2020. However, management hasn't specified whether it is unlevered or levered free cash flow and it is possible that unlevered free cash flow (which is what we used) might be higher. It is also possible that Netflix might have a stronger than expected second half. Regardless, the $119 million is immaterial to the valuation overall.</p><p><blockquote>此外，管理层预计今年的自由现金流将达到收支平衡或略高。很难说稍微上面一点对管理团队意味着什么。尽管1.19亿美元略高于盈亏平衡，但仍明显低于2020年。然而，管理层尚未具体说明它是无杠杆还是杠杆自由现金流，并且无杠杆自由现金流（我们使用的）可能会更高。Netflix下半年的表现也有可能强于预期。无论如何，1.19亿美元对于整体估值来说并不重要。</blockquote></p><p> <b>Growth Catalysts</b></p><p><blockquote><b>生长催化剂</b></blockquote></p><p> An obvious growth catalyst that impacts our forecast is the company's increase in content spend. Content is the most important factor when it comes to entertainment-based businesses. Netflix can have the most technologically advanced platform in the world but, if the content is boring, then nobody would use it.</p><p><blockquote>影响我们预测的一个明显的增长催化剂是该公司内容支出的增加。对于基于娱乐的业务来说，内容是最重要的因素。网飞可以拥有世界上技术最先进的平台，但如果内容很无聊，那么没有人会使用它。</blockquote></p><p> In addition, although streaming has become increasingly popular, cable still accounts for the largest share of total tv time in the US:</p><p><blockquote>此外，尽管流媒体越来越受欢迎，但有线电视仍占美国电视总时间的最大份额：</blockquote></p><p> <img src=\"https://static.tigerbbs.com/fa87184a65693ead5a02993493df64f9\" tg-width=\"640\" tg-height=\"434\" width=\"100%\" height=\"auto\"></p><p><blockquote></blockquote></p><p> As you can see, the streaming market as a whole is only 27% of the total share. Despite all the talk about increasing competition, there is still plenty of room for the streaming segment to grow as a whole. Therefore, even if Netflix loses market share to other streamers, it will still be able to grow in absolute terms.</p><p><blockquote>正如您所看到的，流媒体市场整体仅占总份额的27%。尽管人们都在谈论竞争加剧，但流媒体领域整体仍有很大的增长空间。因此，即使Netflix的市场份额输给了其他流媒体，它仍然能够在绝对值上增长。</blockquote></p><p> Finally, Netflix's venture intovideo gamescould be beneficial if executed correctly. However, we don't have too much conviction in this idea just yet, which we talk more about in the \"risks\" section below.</p><p><blockquote>最后，如果执行得当，Netflix进军视频游戏可能是有益的。然而，我们对这个想法还没有太多的信心，我们将在下面的“风险”部分详细讨论。</blockquote></p><p> <b>Risks</b></p><p><blockquote><b>风险</b></blockquote></p><p> We will begin with video games. The video game industry is very tough. With all the money that Amazon.com Inc (AMZN) generates, it hasstruggled to releasea successful game since starting the division in 2014. Likewise, Alphabet Inc (GOOG) has suffered asimilar problem. This implies that developing successful video games is not as easy as throwing money at developers and requires a certain level of specialization.</p><p><blockquote>我们将从电子游戏开始。电子游戏行业非常艰难。自2014年成立该部门以来，凭借亚马逊公司(AMZN)赚取的所有资金，该公司一直在努力发布一款成功的游戏。同样，Alphabet公司（GOOG）也遭遇了类似的问题。这意味着开发成功的视频游戏并不像向开发者砸钱那么容易，需要一定程度的专业化。</blockquote></p><p> Speaking of throwing money, Netflix's increased spend on content may not yield positive results if it is rushed. Thisarticledemonstrates that people can notice when projects are rushed. Although the article is from 2019, it is an important reminder that the quality of the content is likely to be more important than the quantity. If Netflix fails to deliver on quality, it could see subscriber counts drop.</p><p><blockquote>说到砸钱，网飞在内容上增加的支出如果操之过急，可能不会产生积极的结果。这篇文章证明了人们可以注意到项目何时仓促进行。虽然这篇文章是2019年的，但它是一个重要的提醒，内容的质量可能比数量更重要。如果Netflix未能提供高质量的服务，用户数量可能会下降。</blockquote></p><p> <b>Final Thoughts</b></p><p><blockquote><b>最后的想法</b></blockquote></p><p> Netflix is undervalued under current market conditions; however, it doesn't provide enough of a margin of safety if the interest/discount rates increase. Thus, although Netflix may continue to do well, we will stay on the sidelines for now.</p><p><blockquote>在当前的市场条件下，Netflix的价值被低估；然而，如果利率/贴现率上升，它不能提供足够的安全边际。因此，尽管Netflix可能会继续表现良好，但我们目前仍将保持观望。</blockquote></p><p></p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Netflix: Calculating Its Intrinsic Value<blockquote>Netflix：计算其内在价值</blockquote></title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 12.5px; color: #7E829C; margin: 0;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNetflix: Calculating Its Intrinsic Value<blockquote>Netflix：计算其内在价值</blockquote>\n</h2>\n<h4 class=\"meta\">\n<p class=\"head\">\n<strong class=\"h-name small\">seekingalpha</strong><span class=\"h-time small\">2021-07-27 15:46</span>\n</p>\n</h4>\n</header>\n<article>\n<p>Summary</p><p><blockquote>总结</blockquote></p><p> <ul> <li>Our forecasts are based purely on fundamentals.</li> <li>We expect Netflix to see margin expansion going forward.</li> <li>Netflix is undervalued under current market conditions.</li> </ul> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7a06802a1c9fe18b04bc7c3eae704b91\" tg-width=\"1536\" tg-height=\"1022\" width=\"100%\" height=\"auto\"><span>Pascal Le Segretain/Getty Images News</span></p><p><blockquote><ul><li>我们的预测纯粹基于基本面。</li><li>我们预计Netflix未来的利润率将会扩大。</li><li>在当前的市场条件下，Netflix的价值被低估。</li></ul><p class=\"t-img-caption\"><span>帕斯卡·勒塞格雷坦/盖蒂图片社新闻</span></p></blockquote></p><p> Netflix Inc (NFLX) has the potential to perform well. However, we highlight what you need to consider before jumping into the stock. We base our forecast purely on the company's fundamentals. By doing so, we are able to point to the specific growth drivers rooted in numbers as opposed to perceived potential. In addition, we believe that Netflix's margins will expand going forward. Using the fundamentals allows us to more reasonably estimate the company's margin expansion.</p><p><blockquote>Netflix Inc(NFLX)有潜力表现良好。然而，我们强调了在买入该股之前您需要考虑的事项。我们的预测纯粹基于公司的基本面。通过这样做，我们能够指出植根于数字而不是感知潜力的具体增长动力。此外，我们相信Netflix的利润率未来将会扩大。使用基本面可以让我们更合理地估计公司的利润率扩张。</blockquote></p><p> <b>Valuation</b></p><p><blockquote><b>估值</b></blockquote></p><p> Forecasting is not easy and it's difficult to be precise. However, the point of forecasting is not to be right but to be reasonable. Our projections are based on the company's fundamentals. We try to determine what growth rates the company can fundamentally sustain up until 2025.</p><p><blockquote>预测并不容易，也很难做到精确。然而，预测的重点不是正确，而是合理。我们的预测基于公司的基本面。我们试图确定公司可以基本维持到2025年的增长率。</blockquote></p><p> We will begin with the growth rate we expect for fiscal year 2021. The first thing we need is to determine what will constitute as reinvestment. For Netflix, it will be research and development, marketing, capital expenditures, net investment in content, and change in net working capital.</p><p><blockquote>我们将从2021财年的预期增长率开始。我们需要做的第一件事是确定什么构成再投资。对于Netflix来说，将是研发、营销、资本支出、内容净投资以及净营运资本的变化。</blockquote></p><p> Please note that we measure net investment in content as the cash spent on developing content subtracted by the amortization of previously developed content. Our assumption is that the amortized amount is the \"maintenance content\" needed to maintain the interest of current users and doesn't contribute to growth. The net investment in content is what we consider the \"growth content\" that contributes to attracting new users or justifying price increases.</p><p><blockquote>请注意，我们将内容净投资衡量为开发内容花费的现金减去先前开发内容的摊销。我们的假设是，摊销金额是维持当前用户兴趣所需的“维护内容”，对增长没有贡献。内容的净投资是我们所认为的有助于吸引新用户或证明价格上涨合理性的“增长内容”。</blockquote></p><p> In addition, that depreciation and amortization expense is subtracted from the reinvestment rate as it is used as a proxy for maintenance capex that does not contribute to growth.</p><p><blockquote>此外，折旧和摊销费用从再投资率中扣除，因为它被用作对增长没有贡献的维护资本支出的代表。</blockquote></p><p> The next step is to find the revenue-to-capital ratio. This measures how much revenue a company generates for each dollar in capital. Once we have both numbers, we multiply them to calculate the fundamental growth rate.</p><p><blockquote>下一步是找到收入资本比。这衡量公司每一美元资本产生的收入。一旦我们有了这两个数字，我们就把它们相乘来计算基本增长率。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f1190d7305518113889190a4e5d4e177\" tg-width=\"354\" tg-height=\"462\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p> In the picture above, we see that the reinvestment rate was 21.44% of revenue and revenue to capital was 93.39%. Therefore, the fundamental growth rate for fiscal year 2021 equals 20.02%. This is slightly above analysts' expectations but by very little.</p><p><blockquote>在上图中，我们看到再投资率占收入的21.44%，收入占资本的比例为93.39%。因此，2021财年的基本增长率等于20.02%。这略高于分析师的预期，但幅度很小。</blockquote></p><p> The next step is to determine the degree of operating leverage, which is a multiple that measures how much the operating income of a company will change in response to a change in sales. Netflix has had a ratio of over 2 over the past several years. To be conservative, we will use 2 and reduce it each year. In addition, we did the same thing with gross margins using a starting point of 1.08.</p><p><blockquote>下一步是确定运营杠杆程度，这是一个倍数，衡量公司的营业收入会因销售额的变化而发生多少变化。过去几年，Netflix的比率超过2。为了保守起见，我们将使用2，并每年减少它。此外，我们对毛利率做了同样的事情，起点为1.08。</blockquote></p><p> As the EBIT margin increases, the reinvestment rate decreases because R&D and marketing expenses become a smaller percentage of revenue, resulting in a slowdown of growth. We measure this slowdown by setting R&D and marketing to 70% of total operating expenses (percentage in fiscal year 2020). We then calculate the future fundamental growth rates with the projected numbers as follows:</p><p><blockquote>随着息税前利润率的提高，再投资率下降，因为研发和营销费用占收入的比例变小，导致增长放缓。我们通过将研发和营销设置为总运营费用的70%（2020财年的百分比）来衡量这种放缓。然后，我们用预测数字计算未来的基本增长率如下：</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8251e55395490f4c6d6347fef3a9a08f\" tg-width=\"640\" tg-height=\"605\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p> We used the average capital expenditure and D&A margins of the last three years. Now we will input these numbers into a DCF using the company's weighted average cost of capital of 5% based on <b>current market conditions.</b>Please note that we grouped net content investment with capital expenditures.</p><p><blockquote>我们使用了过去三年的平均资本支出和D&A利润率。现在，我们将使用公司5%的加权平均资本成本将这些数字输入到DCF中，基于<b>当前的市场状况。</b>请注意，我们将净内容投资与资本支出进行了分组。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/cfb2441365f739f8ec307436cfd81926\" tg-width=\"640\" tg-height=\"259\" width=\"100%\" height=\"auto\"><span>Source: Author using Finbox tools</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者使用Finbox工具</span></p></blockquote></p><p> As you can see, with a 5% discount rate, 21% tax rate, 2% terminal growth rate, and a forecast based on fundamentals, the company has the potential for 24.6% upside. Of course, discount rates are always changing and not everyone likes to use current discount rates. Therefore, we made the chart below to demonstrate the fair value at each discount rate and terminal growth rate:</p><p><blockquote>正如您所看到的，5%的贴现率、21%的税率、2%的终端增长率以及基于基本面的预测，该公司有24.6%的上涨潜力。当然，折扣率总是在变化，并不是每个人都喜欢使用当前的折扣率。因此，我们制作下图以展示按各折现率及最终增长率计算的公允价值：</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e8a824dfed49d58dacb3f22cad000213\" tg-width=\"430\" tg-height=\"209\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p></p><p> As you can see, if interest rates stay low for an extended period of time, Netflix can potentially see solid upside. However, there isn't much room for changes in the discount rates, and therefore should be careful if you believe discount rates are going up.</p><p><blockquote>正如您所看到的，如果利率长期保持在低位，Netflix可能会看到强劲的上涨空间。然而，贴现率的变化空间不大，因此如果您认为贴现率正在上升，请小心。</blockquote></p><p> <b>Checking for Consistencies in the Forecast</b></p><p><blockquote><b>检查预测的一致性</b></blockquote></p><p> Let's make sure everything makes sense in the forecast. We'll begin with revenue growth. You can see that we expect revenue growth to accelerate in 2022 before gradually decreasing in the following years. This is because we expect Netflix to increase its net content investment in 2021. The company has stated that it willincrease overall investment in contentto $17 billion, up from $11.8 billion in 2020. This consequently leads to a higher reinvestment rate and the potential to accelerate revenue growth. This seems reasonable to us because it has happened to Netflix in the past where revenue growth has accelerated.</p><p><blockquote>让我们确保预测中的一切都有意义。我们将从收入增长开始。您可以看到，我们预计收入增长将在2022年加速，然后在随后几年逐渐下降。这是因为我们预计Netflix将在2021年增加净内容投资。该公司表示，将把内容总投资从2020年的118亿美元增加到170亿美元。因此，这导致更高的再投资率和加速收入增长的潜力。这对我们来说似乎是合理的，因为Netflix过去就发生过这种情况，收入增长加速。</blockquote></p><p> <p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4008559ff06f06414badc2e9f7509765\" tg-width=\"640\" tg-height=\"71\" width=\"100%\" height=\"auto\"><span>Source: Author</span></p><p><blockquote><p class=\"t-img-caption\"><span>来源：作者</span></p></blockquote></p><p> In addition, the net content investment in our forecast is similar to the absolute amounts Netflix spent pre-pandemic.</p><p><blockquote>此外，我们预测中的净内容投资与Netflix在大流行前的绝对支出金额相似。</blockquote></p><p> Furthermore, management expects free cash flow for this year to be break even or slightly higher. It's hard to say what slightly above means for the management team. Although $119 million is exactly slightly above breakeven, it is still significantly less than what it was in 2020. However, management hasn't specified whether it is unlevered or levered free cash flow and it is possible that unlevered free cash flow (which is what we used) might be higher. It is also possible that Netflix might have a stronger than expected second half. Regardless, the $119 million is immaterial to the valuation overall.</p><p><blockquote>此外，管理层预计今年的自由现金流将达到收支平衡或略高。很难说稍微上面一点对管理团队意味着什么。尽管1.19亿美元略高于盈亏平衡，但仍明显低于2020年。然而，管理层尚未具体说明它是无杠杆还是杠杆自由现金流，并且无杠杆自由现金流（我们使用的）可能会更高。Netflix下半年的表现也有可能强于预期。无论如何，1.19亿美元对于整体估值来说并不重要。</blockquote></p><p> <b>Growth Catalysts</b></p><p><blockquote><b>生长催化剂</b></blockquote></p><p> An obvious growth catalyst that impacts our forecast is the company's increase in content spend. Content is the most important factor when it comes to entertainment-based businesses. Netflix can have the most technologically advanced platform in the world but, if the content is boring, then nobody would use it.</p><p><blockquote>影响我们预测的一个明显的增长催化剂是该公司内容支出的增加。对于基于娱乐的业务来说，内容是最重要的因素。网飞可以拥有世界上技术最先进的平台，但如果内容很无聊，那么没有人会使用它。</blockquote></p><p> In addition, although streaming has become increasingly popular, cable still accounts for the largest share of total tv time in the US:</p><p><blockquote>此外，尽管流媒体越来越受欢迎，但有线电视仍占美国电视总时间的最大份额：</blockquote></p><p> <img src=\"https://static.tigerbbs.com/fa87184a65693ead5a02993493df64f9\" tg-width=\"640\" tg-height=\"434\" width=\"100%\" height=\"auto\"></p><p><blockquote></blockquote></p><p> As you can see, the streaming market as a whole is only 27% of the total share. Despite all the talk about increasing competition, there is still plenty of room for the streaming segment to grow as a whole. Therefore, even if Netflix loses market share to other streamers, it will still be able to grow in absolute terms.</p><p><blockquote>正如您所看到的，流媒体市场整体仅占总份额的27%。尽管人们都在谈论竞争加剧，但流媒体领域整体仍有很大的增长空间。因此，即使Netflix的市场份额输给了其他流媒体，它仍然能够在绝对值上增长。</blockquote></p><p> Finally, Netflix's venture intovideo gamescould be beneficial if executed correctly. However, we don't have too much conviction in this idea just yet, which we talk more about in the \"risks\" section below.</p><p><blockquote>最后，如果执行得当，Netflix进军视频游戏可能是有益的。然而，我们对这个想法还没有太多的信心，我们将在下面的“风险”部分详细讨论。</blockquote></p><p> <b>Risks</b></p><p><blockquote><b>风险</b></blockquote></p><p> We will begin with video games. The video game industry is very tough. With all the money that Amazon.com Inc (AMZN) generates, it hasstruggled to releasea successful game since starting the division in 2014. Likewise, Alphabet Inc (GOOG) has suffered asimilar problem. This implies that developing successful video games is not as easy as throwing money at developers and requires a certain level of specialization.</p><p><blockquote>我们将从电子游戏开始。电子游戏行业非常艰难。自2014年成立该部门以来，凭借亚马逊公司(AMZN)赚取的所有资金，该公司一直在努力发布一款成功的游戏。同样，Alphabet公司（GOOG）也遭遇了类似的问题。这意味着开发成功的视频游戏并不像向开发者砸钱那么容易，需要一定程度的专业化。</blockquote></p><p> Speaking of throwing money, Netflix's increased spend on content may not yield positive results if it is rushed. Thisarticledemonstrates that people can notice when projects are rushed. Although the article is from 2019, it is an important reminder that the quality of the content is likely to be more important than the quantity. If Netflix fails to deliver on quality, it could see subscriber counts drop.</p><p><blockquote>说到砸钱，网飞在内容上增加的支出如果操之过急，可能不会产生积极的结果。这篇文章证明了人们可以注意到项目何时仓促进行。虽然这篇文章是2019年的，但它是一个重要的提醒，内容的质量可能比数量更重要。如果Netflix未能提供高质量的服务，用户数量可能会下降。</blockquote></p><p> <b>Final Thoughts</b></p><p><blockquote><b>最后的想法</b></blockquote></p><p> Netflix is undervalued under current market conditions; however, it doesn't provide enough of a margin of safety if the interest/discount rates increase. Thus, although Netflix may continue to do well, we will stay on the sidelines for now.</p><p><blockquote>在当前的市场条件下，Netflix的价值被低估；然而，如果利率/贴现率上升，它不能提供足够的安全边际。因此，尽管Netflix可能会继续表现良好，但我们目前仍将保持观望。</blockquote></p><p></p>\n<div class=\"bt-text\">\n\n\n<p> 来源：<a href=\"https://seekingalpha.com/article/4441533-netflix-calculating-its-intrinsic-value\">seekingalpha</a></p>\n<p>为提升您的阅读体验，我们对本页面进行了排版优化</p>\n\n\n</div>\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NFLX":"奈飞"},"source_url":"https://seekingalpha.com/article/4441533-netflix-calculating-its-intrinsic-value","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1154159969","content_text":"Summary\n\nOur forecasts are based purely on fundamentals.\nWe expect Netflix to see margin expansion going forward.\nNetflix is undervalued under current market conditions.\n\nPascal Le Segretain/Getty Images News\nNetflix Inc (NFLX) has the potential to perform well. However, we highlight what you need to consider before jumping into the stock. We base our forecast purely on the company's fundamentals. By doing so, we are able to point to the specific growth drivers rooted in numbers as opposed to perceived potential. In addition, we believe that Netflix's margins will expand going forward. Using the fundamentals allows us to more reasonably estimate the company's margin expansion.\nValuation\nForecasting is not easy and it's difficult to be precise. However, the point of forecasting is not to be right but to be reasonable. Our projections are based on the company's fundamentals. We try to determine what growth rates the company can fundamentally sustain up until 2025.\nWe will begin with the growth rate we expect for fiscal year 2021. The first thing we need is to determine what will constitute as reinvestment. For Netflix, it will be research and development, marketing, capital expenditures, net investment in content, and change in net working capital.\nPlease note that we measure net investment in content as the cash spent on developing content subtracted by the amortization of previously developed content. Our assumption is that the amortized amount is the \"maintenance content\" needed to maintain the interest of current users and doesn't contribute to growth. The net investment in content is what we consider the \"growth content\" that contributes to attracting new users or justifying price increases.\nIn addition, that depreciation and amortization expense is subtracted from the reinvestment rate as it is used as a proxy for maintenance capex that does not contribute to growth.\nThe next step is to find the revenue-to-capital ratio. This measures how much revenue a company generates for each dollar in capital. Once we have both numbers, we multiply them to calculate the fundamental growth rate.\nSource: Author\nIn the picture above, we see that the reinvestment rate was 21.44% of revenue and revenue to capital was 93.39%. Therefore, the fundamental growth rate for fiscal year 2021 equals 20.02%. This is slightly above analysts' expectations but by very little.\nThe next step is to determine the degree of operating leverage, which is a multiple that measures how much the operating income of a company will change in response to a change in sales. Netflix has had a ratio of over 2 over the past several years. To be conservative, we will use 2 and reduce it each year. In addition, we did the same thing with gross margins using a starting point of 1.08.\nAs the EBIT margin increases, the reinvestment rate decreases because R&D and marketing expenses become a smaller percentage of revenue, resulting in a slowdown of growth. We measure this slowdown by setting R&D and marketing to 70% of total operating expenses (percentage in fiscal year 2020). We then calculate the future fundamental growth rates with the projected numbers as follows:\nSource: Author\nWe used the average capital expenditure and D&A margins of the last three years. Now we will input these numbers into a DCF using the company's weighted average cost of capital of 5% based on current market conditions.Please note that we grouped net content investment with capital expenditures.\nSource: Author using Finbox tools\nAs you can see, with a 5% discount rate, 21% tax rate, 2% terminal growth rate, and a forecast based on fundamentals, the company has the potential for 24.6% upside. Of course, discount rates are always changing and not everyone likes to use current discount rates. Therefore, we made the chart below to demonstrate the fair value at each discount rate and terminal growth rate:\nSource: Author\nAs you can see, if interest rates stay low for an extended period of time, Netflix can potentially see solid upside. However, there isn't much room for changes in the discount rates, and therefore should be careful if you believe discount rates are going up.\nChecking for Consistencies in the Forecast\nLet's make sure everything makes sense in the forecast. We'll begin with revenue growth. You can see that we expect revenue growth to accelerate in 2022 before gradually decreasing in the following years. This is because we expect Netflix to increase its net content investment in 2021. The company has stated that it willincrease overall investment in contentto $17 billion, up from $11.8 billion in 2020. This consequently leads to a higher reinvestment rate and the potential to accelerate revenue growth. This seems reasonable to us because it has happened to Netflix in the past where revenue growth has accelerated.\nSource: Author\nIn addition, the net content investment in our forecast is similar to the absolute amounts Netflix spent pre-pandemic.\nFurthermore, management expects free cash flow for this year to be break even or slightly higher. It's hard to say what slightly above means for the management team. Although $119 million is exactly slightly above breakeven, it is still significantly less than what it was in 2020. However, management hasn't specified whether it is unlevered or levered free cash flow and it is possible that unlevered free cash flow (which is what we used) might be higher. It is also possible that Netflix might have a stronger than expected second half. Regardless, the $119 million is immaterial to the valuation overall.\nGrowth Catalysts\nAn obvious growth catalyst that impacts our forecast is the company's increase in content spend. Content is the most important factor when it comes to entertainment-based businesses. Netflix can have the most technologically advanced platform in the world but, if the content is boring, then nobody would use it.\nIn addition, although streaming has become increasingly popular, cable still accounts for the largest share of total tv time in the US:\n\nAs you can see, the streaming market as a whole is only 27% of the total share. Despite all the talk about increasing competition, there is still plenty of room for the streaming segment to grow as a whole. Therefore, even if Netflix loses market share to other streamers, it will still be able to grow in absolute terms.\nFinally, Netflix's venture intovideo gamescould be beneficial if executed correctly. However, we don't have too much conviction in this idea just yet, which we talk more about in the \"risks\" section below.\nRisks\nWe will begin with video games. The video game industry is very tough. With all the money that Amazon.com Inc (AMZN) generates, it hasstruggled to releasea successful game since starting the division in 2014. Likewise, Alphabet Inc (GOOG) has suffered asimilar problem. This implies that developing successful video games is not as easy as throwing money at developers and requires a certain level of specialization.\nSpeaking of throwing money, Netflix's increased spend on content may not yield positive results if it is rushed. Thisarticledemonstrates that people can notice when projects are rushed. Although the article is from 2019, it is an important reminder that the quality of the content is likely to be more important than the quantity. If Netflix fails to deliver on quality, it could see subscriber counts drop.\nFinal Thoughts\nNetflix is undervalued under current market conditions; however, it doesn't provide enough of a margin of safety if the interest/discount rates increase. Thus, although Netflix may continue to do well, we will stay on the sidelines for now.","news_type":1,"symbols_score_info":{"NFLX":0.9}},"isVote":1,"tweetType":1,"viewCount":753,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":2,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/809598340"}
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