The graph in your link appears to show an operating profit of over $6 billion.
What has gone wrong with our world that making a 6 billion dollar a year profit is considered a problem?
What has gone wrong with our world that making a 6 billion dollar a year profit is considered a problem?
Because it is a problem.
Firstly, it's a problem because stock prices are a measure of predicted future value. The profit today is mostly irrelevant. In order to make a profit on shares the business has to be in a position to do better in the future. If it doesn't then people won't believe it'll do better even farther in to the future, so they won't bid more for the shares than they're worth today. That means investors can't make a profit. If you bought Netflix shares in the past you'll lose money. That's a problem.
Secondly, and in my opinion more importantly, Netflix (and every other tech unicorn) use their shares as a hiring incentive. If the shares are going the wrong way then good hires will refuse offers and go elsewhere. A big chunk of renumeration in tech is predicated on people getting stock instead of cash because that's worth more to the individual and cheaper for the business. If that fails then the business has to start dipping in to that $6bn profit to replace people who leave, or to acquire businesses, or just to maintain the status quo.
It isn't hard to imagine a scenario where a $6bn profit turns into a loss within a decade or less. The driving force behind people saying Netflix has a problem is that they're predicting that the future of the company isn't good.
I mean, they might be wrong and Netflix might be fine, and ultimately even if things go badly Netflix is never going to "fail" because it'll get bought long before that happens, but if you hold Netflix stock it's entirely reasonable to be worried despite the healthy profit they make.
As far as I know, Netflix shares, much like shares in many other tech companies, do not pay any dividend. Perhaps it's time they begin.
I do not want dividends if I think the business can invest the money with a higher probability of better ROI than I can. If shareholders want dividends, they can vote for them.
A better ROI to whom—itself, or to you? Do you own Netflix stock to make money for yourself, or for Netflix to make money for itself?
https://www.investopedia.com/articles/stocks/07/ex_dividend....
With a dividend, you have to pay taxes now. Without the dividend, the stock price remains higher so you sit on higher unrealized gains. But assuming you can sell it anytime (it is liquid), the ROI is still there without the dividend.
That's not quite true. It means investors can't plan to make a profit by selling future shares based on the price growth beating inflation.
But...investors can still make a profit from dividends. There are plenty of large companies that are much less growth focused, and much more dividend focused.
Its $6bn in profit still at a $96bn valuation. Down from $150bn. Quite high if only looking at profit. But I definitely like the revenues under the idea they can reduce overhead
I can see the business being fine, definitely watching for lower prices. netflix has always been a fun casino, super leveraged rocket.
As a consumer, the company will still provide real economic value
It is not considered a problem by anyone other than those who were invested in Netflix equity and expected it to be at a higher price.
Now that the US money hose decreased it's flow a little bit, the insanity of those valuations is hurting.