Netflix’s Q2 results are mixed, user engagement and capital allocation continue to be controversial, and the stock price is under short-term pressure (Goldman Sachs)
Some of Netflix's (NFLX.US) Q2 results exceeded expectations, but Q3 revenue and operating profit guidance were lower than expected.
Some of Netflix's (NFLX.US) Q2 results exceeded expectations, but Q3 revenue and operating profit guidance were lower than expected. The report notes that investor controversy over participation metrics and capital allocation will continue. But Goldman Sachs is bullish on its user growth, pricing power and advertising business in the long term. One-sentence conclusion: Netflix is going through a painful period of transition from "barbaric growth" to "refined operations." Weak short-term guidance and investor controversy over capital allocation will continue to suppress the stock price in the next few quarters. Positive/negative: short-term pressure on Netflix (NFLX.US). In the long term, its advertising business and pricing power are potential benefits. The market has already expected a short-term growth slowdown, but the downward revision of Q3 guidance may be greater than expected, and stock prices will take time to digest it. Catalysts: 1) Q4 financial report to verify whether Q3 guidance is too conservative; 2) subscriber growth and ARPU improvement data for ad-supported packages; 3) the company's further clear plans for stock buybacks or dividends.