Do you foresee Netflix's stock depreciating in value?

Likely. More competitors are entering the market. Some of which, e.g. Apple have strong backing. Accordingly, they are able to 'burn' some money to get market shares to push competition further.

The survival of Netflix will depend on how fast it can adapt and create stronger unique selling points to keep its customers.

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Hello! I wrote an article on my blog a few weeks ago on Netflix. My family’s portfolio has owned Netflix shares for eight years, and we still continue to own it. My conclusion in the article is this:

"Despite already having more than 158 million subscribers worldwide, Netflix still has a large market opportunity to conquer. The company also has an excellent management team with integrity, and has an attractive subscription business model with sticky customers. Although Netflix’s balance sheet is currently weak and it has trouble generating free cash flow, I think the company will be able to generate strong free cash flow in the future.

There are certainly risks to note, such as a high debt-burden, high cash-burn, and an increasingly competitive landscape. Key-man departures, if they happen, could also significantly dent Netflix’s growth prospects.

But in weighing the risks and rewards, I think the odds are in my favour."

Hi anon,

Definitely. Netflix is moving fast to create original content, but the House of Mouse has the advantage of a massive library of classic shows/movies etc that will help them cement their dominance. That's not to mention Apple TV, Amazon Prime, etc.

When Netflix came out, it was a game changer, but the other competitors have caught up and the blue ocean has become red. Only if they present a strategy that will help them navigate out of the situation, will there be a chance for their shares to continue their meteroic rise.

In my opnion, it is very possible. The high debt structure of netflix means a lot of cash has always been used to service the interest rather than pay down the capital.

Furthermore, with so many streaming compeition coming online, I dont think its current P/E of 100 times justifies its share price