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Netflix is now worth more than $100B

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Re: Netflix is now worth more than $100B

#141

Post by rtpg »

brucephillips wrote: post #123
mobilefriendly wrote: post #118

Earlier quoted context omitted.

This is nonsense. P/E is a measure of earnings against the price of one share. A high P/E does show that current earnings are small (or negative) in relation to share price, but there's no time component inherent in P/E.

There absolutely is. For a company to be valuable, it must return more profit to shareholders than they put in. The P/E ratio indicates how long it will take for this to happen.

That's under the assumption that all you can do with a stock is hold onto it and pocket all the profits.

If I buy a house, put in a pool, then sell the house for $100k more than I bought it a year later, it doesn't matter too much what the initial price was, except in comparison to other investments

You can always sell the Netflix stock after pocketing some dividends or something. The purchase price is not money lost, because now you have the stock.

I get P/E being important for someone trying to buy a company.

Re: Netflix is now worth more than $100B

#142

Post by mobilefriendly »

js2 wrote: post #133
mobilefriendly wrote: post #118

Earlier quoted context omitted.

This is nonsense. P/E is a measure of earnings against the price of one share. A high P/E does show that current earnings are small (or negative) in relation to share price, but there's no time component inherent in P/E.

edpichler's description of P/E is correct. Quoting from wikipedia for a slightly more formal definition: "Trailing P/E" uses the weighted average number of common shares in issue divided by the net income for the most recent 12-month period. This is the most common meaning of "P/E" if no other qualifier is specified. https://en.wikipedia.org/wiki/Price–earnings_ratio

Yes earnings is for the past 4 quarters but by time component I mean his assertion that "P/E ratio 230.24 is meaning that you need 230 years of profits to return to you the price you are paying today" which is utter nonsense.

Re: Netflix is now worth more than $100B

#143

Post by edpichler »

iamgopal wrote: post #134
edpichler wrote: post #127

Earlier quoted context omitted.

For sure, dividends donesn't mean nothing here. If a company is profitable and don't pay dividends to shareholders, they need to do something with the money that are accumulating, and they will invest on the company (new machines, products, services, etc. all accordingly with the company strategy), and if the company grows with this investments, the stock price will follows it.

How stock price follow it ? In a hypothetical scenario, if company declare not to pay any dividend any time in the future, nobody will invest in it no matter what.

Because the money is on the bank, and it's shareholders property. The shareholders can change the administration council and hire people that will use the accumulated money to make more money, or use it paying dividends. The shareholders are the bosses, and chooses who occupies the administration council.

I don't know if my hypothetical example was clear.

Re: Netflix is now worth more than $100B

#144

Post by WoodenChair »

Retric wrote: post #87
eldavido wrote: post #42

Earlier quoted context omitted.

A lot of sophisticated financial people share your thinking. The problem is there's no growth to be found anywhere. People are cheering for 3% GDP growth in the US. Interest rates are at all-time historical lows, meaning discount rates are lower than they've ever been. These macro trends have added up to an environment where people are willing to pay staggering premiums for even a remote shot at growth. It's affectin…

Sustained 3% US GDP growth is overly optimistic. We have 0.7% population growth, and no obvious major investments. The computer boom is mostly over with the low hanging fruit taken. Prior to that we had IC engines and electricity, but nothing on the horizon seems to have that kind of potential to radically reshape society. And to double the economy every 25 years you need regular dramatic shits. PS: Look at the past…

> he computer boom is mostly over with the low hanging fruit taken. Prior to that we had IC engines and electricity, but nothing on the horizon seems to have that kind of potential to radically reshape society. And to double the economy every 25 years you need regular dramatic shits.

Then the next revolution happens. I'm sure people were pessimistic during periods of lesser innovation before electricity, telephone, phonograph, movie camera, consumer appliances, radio, television, PCs, internet, smartphones... there's always something new. There may be many reasons to believe there won't be 3% growth — "the computer boom is mostly over" is not one of them.

Re: Netflix is now worth more than $100B

#145

Post by kondro »

joering2 wrote: post #69
spyspy wrote: post #54

Earlier quoted context omitted.

CDNs will reduce bandwidth costs per user to essentially nothing. Content creation is the lion's share of their costs.

Biggest CDN charge $9 per 1TB of transfer... how is watching 20TB per month worth less than netflix fee so that they actually make some profit?

I really doubt people are watching 30+ hours of video per day per user (ca. 1TB/month).

Re: Netflix is now worth more than $100B

#146

Post by edpichler »

brucephillips wrote: post #119
brown9-2 wrote: post #109

Earlier quoted context omitted.

If netflix doesn’t pay a dividend, does a P/E analysis still make any sense?

Yes. Any public company must ultimately pay a dividend to be valuable. Edit: All of my responders are ignoring my use of "ultimately". A company can certainly invest in growth, but growth only matters if the company eventually returns money to shareholders, and the only way to do that is a dividend.

Also, some companies pay dividends, and after make loans to the bank (paying interests), to do investments.

Re: Netflix is now worth more than $100B

#147

Post by Jach »

niyazpk wrote: post #80
aphextron wrote: post #62

Earlier quoted context omitted.

>Cryptocurrencies and ICOs. What value is being created here, exactly? There's plenty of idealistic notions being thrown around, but I've yet to see a single, real, useful product or service materialize >Applied neural networks. Same. >Automation. This is way too broad to be invested in. Of course the world is automating at a greater rate, but is this a cause for growth? Will automated factories produce more goods fo…

>> Real inflation is 10 times the official rate. ELI5 please?

http://www.shadowstats.com/alternate_data/inflation-charts and links from that page explain further. (The difference has been ~5% understated inflation rather than 10 or 5 times as much, but whatever.)

Re: Netflix is now worth more than $100B

#148

Post by telchar »

lobster_johnson wrote: post #43
amelius wrote: post #3

My only fear: soon there will be no BitTorrent seeders left.

On the other hand, as long as the current streaming services' back catalog of available movies and TV shows is so ridiculously meagre, BitTorrent will do pretty well, I suspect. I wonder who's going to supply that back catalog. Both Apple and Amazon have a fairly lackluster collection. For the real good stuff, there's FilmStruck (which has a small but revolving portion of the Criterion Collection), MUBI and Fandor. B…

This right here is extremely frustrating to me. There is approximately zero marginal cost to distribute that back-catalog, but they just keep it locked away. I think Amazon does the best job of the legal sources I have seen, though I find it hard to stomach paying $4 to watch a movie made before my parents were born.

Re: Netflix is now worth more than $100B

#149

Post by jonknee »

edpichler wrote: post #130
bulldoa wrote: post #111

Earlier quoted context omitted.

What does this mean for amazon (currently pe ratio of 300+)

I wouldn't put my money there. There is a lot of better choices with more return of investment. But, it's my money, you can do whatever you want with yours.

> There is a lot of better choices with more return of investment.

Except it has actually been one of the best choices to put your money for quite some time. Things can always change, but an average annualized return of 38% over the past five years is really hard to complain about.

Re: Netflix is now worth more than $100B

#150

Post by edpichler »

rtpg wrote: post #141
brucephillips wrote: post #123

Earlier quoted context omitted.

There absolutely is. For a company to be valuable, it must return more profit to shareholders than they put in. The P/E ratio indicates how long it will take for this to happen.

That's under the assumption that all you can do with a stock is hold onto it and pocket all the profits. If I buy a house, put in a pool, then sell the house for $100k more than I bought it a year later, it doesn't matter too much what the initial price was, except in comparison to other investments You can always sell the Netflix stock after pocketing some dividends or something. The purchase price is not money lost…

You are right, but I am talking about investing for long term. For short term, most of the time, just the price chart is analysed. Just to write here, long term and short term (speculation) is totally different. I was talking just about very long term.
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