Is Netflix a Buy After Potential Roku Rumors?


It is rumored that streaming giant Netflix (NFLX) is acquiring the independent streaming platform Roku (ROKU), which could support the company’s growth. However, with the company currently struggling with subscriber losses, will it be prudent to invest in stocks now? Keep reading to find out ….



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Popular Entertainment Service Provider Netflix, Inc. (NFLX) offers television series, documentaries, feature films and mobile games of various genres and languages ​​to its members through a large number of devices connected to the Internet.

Recently, rumors have spread Potential acquisition of the NFLX of independent streaming platform company Roku Inc. (COURSE). ROKU employees have been speculating about this possibility since the company closed its inside information window, which is taken as an indication of a major commercial announcement.

If that move materializes, the NFLX could make up for it subscriber losses and restart growth with the ad-based revenue model.

Shares have fallen 69.2% year-over-year and 51.1% over the past three months to close their last trading session at $ 185.88. However, it has gained 3.5% over the past five days and 3.3% intraday.

Here are the factors that could affect the short-term performance of the NFLX:

Mixed finance

For the first fiscal quarter ended March 31, NFLX revenue rose 9.8% year-over-year to $ 7.70 billion. Operating income increased 0.6% year-over-year to $ 1.70 billion.

The company’s net income and EPA decreased 6.4% and 5.9% from the same period last year to $ 1.6 billion and $ 3.53.

Mixed valuations

As for its future non-GAAP P / E, NFLX is trading at 16.58x, 2.5% lower than the industry average of 17.00x. Your future is not GAAP PEG multiple of 0.79 is 41.1% lower than the industry average of 1.35.

However, in terms of its EV / advance sales, shares are trading at 2.82 times, 45% more than the industry average of 1.95 times. Its multiple EV / EBITDA in the term of 12.90 is 57.9% higher than the sector average of 8.17.

Mixed expectations of the analyst

BPA consensus estimates of $ 2.80 for the quarter ended September 2022 and $ 10.90 for fiscal year 2022 indicate a decrease of 12.2% and 3% from their respective periods of the previous year. On the other hand, street revenue estimates for the same periods of $ 8.12 billion and $ 32.38 billion reflect year-on-year increases of 8.5% and 9%, respectively.

POWR ratings do not indicate sufficient advantages

NFLX has an overall rating of C, which equates to Neutral on our property POWR ratings system. POWR scores are calculated taking into account 118 different factors, with each factor weighted to an optimal degree.

NFLX has a degree of C growth synchronized with its mixed financial performance in the last reported quarter. The stock has a C rating per value, consistent with its mixed valuations.

The stock also has a C rating for stability in sync with its five-year monthly beta of 1.28.

In stock 65 Internet industry, ranks number 16. The sector is ranked F.

Click here to see additional POWR ratings for NFLX (Sentiment, Momentum, and Quality).

See all the major actions in the Internet industry here.

Bottom line

The possible takeover of ROKU could increase their prospects. However, no official announcement has yet been made by the companies. Meanwhile, investors have been worried about the company’s subscriber losses. Although the company’s results grew during the first quarter, its results declined. Therefore, I think it would be prudent to wait for a better entry point into the stock.

How Netflix, Inc. works (NFLX) Stacking up against your teammates?

While NFLX has an overall POWR rating of C, you might consider looking at your industry peers, Yelp Inc. (YLP), which has an overall rating of A (Strong Buy) and trivago NV (TRVG) i Travelzoo (TZOO), which have a general rating B (Purchase).


Shares of NFLX were trading at $ 182.48 per share on Wednesday morning, down $ 3.40 (-1.83%). For the year, NFLX has decreased by -69.71%, compared to an increase of -19.29% in the S&P 500 benchmark index during the same period.


About the author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

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