Fast Money Blog- 4/21/23

On Wednesday, April 19th, Netflix, Inc. (NFLX) released their Q1 2023 earnings report. The company posted quarterly revenue of $8.1 billion, up 3.8% year-over-year. Netflix also added 1.75 million subscribers in Q1, ending with a total of 232.5 million worldwide. 

In case you didn’t know, Free Cash Flow (FCF) is an indicator of a company’s financial strength. It’s kind of like a corporate savings account. Cash in a company’s corporate savings account can earn millions of dollars in interest.

It was the announcement of Netflix’s improving free cash flow that really had Wall Street abuzz. Their free cash flow in the quarter totaled $2.1B up 162% year-over-over. For 2023, Netflix is projecting a total of $3.5 billion. 

I’m sharing this information so that when we talk about Dow component The Walt Disney Company (DIS) you’ll be able to compare Disney’s streaming income to that of Netflix. When a company’s free cash flow is non-existent or low, it’s an indicator that a company’s financial health is questionable. But when a company like Netflix experiences improving cash flow, its stock becomes more desirable to long term investors.  That is why NFLX stock price over the last 52 weeks has gone from a low of $167 to over $325.

I still consider NFLX stock to be in the high risk category, but because of its recent positive news I expect its price to accelerate over the next 52 weeks. 

Tyrone Jackson

The Wealthy Investor