Netflix: The Market Still Isn't Pricing In The Ad Business

Dustin Quasney 58 Followers Follow Summary Netflix now trades at $70, but with 67% more revenue, 2.5x operating income, and much higher margins than at this price in 2021. Despite recent de-rating due to missed guidance and slower engagement, NFLX offers a historically cheap valuation—46% below its 5-year average P/E and PEG below 1. The advertising segment, now 6% of revenue and rapidly scaling, could add $5–$7 billion in high-margin revenue over three years, yet is priced at zero. I see a compelling risk/reward setup: 13–14% revenue growth, 20%+ EPS growth, robust buybacks, and a margin of safety rarely seen in NFLX. Ethan Miller/Getty Images News I first bought Netflix ( NFLX ) in March 2020, right in the middle of COVID, at around $36 a share (split-adjusted). My portfolio was tiny back then compared to what it is today, and to be completely honest, I didn't really know This article was written by Dustin Quasney 58 Followers Follow I was a business intelligence (BI) analyst and used build tools that help people make better decisions. After that I ran an e-commerce dropshipping business that fortunately worked out very well for me. That experience gave me my first real opportunity to build meaningful savings and begin thinking seriously about long-term investing and financial independence.After stepping away from the business, I spent time traveling and later took a career break to manage a family property following my grandfather’s passing. When COVID slowed everything down, I finally had the time and the capital to study investing in depth.I became especially interested in portfolio management, retirement planning, long-term compounding and high-yield dividend investing. I am here to share my personal investing experiences, research and opinions but not to pretend I have every answer. My writing will reflect how I actually invest, including what I like. If you find it helpful then you’re welcome to follow along. Analyst’s Disclosure: I/we have a beneficial long position in the shares of NFLX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.