Netflix, Inc. (NFLX) Message Board
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Let us do a calculation on the valuation (analysis)
NFLX has more than 20 million streaming subscribers, with annual revenue about $100 per subscriber. That is $2 billion subscribing revenue annually.
If Amazon buys NFLX and bring these 20+ million customers along, that would be $2 billion plus other potential sale from cross-selling, such as music, shopping, etc., $4 billion if we assume $200 per person per year on other Amazon products and services.
That is $6 billion straight-forward annual revenue for Amazon.
How much is that worth?? $6 Billion, $7 Billion, $8 Billion, or $10 Billion??
Ask yourself, imagine you are Amazon.com-
Amazon won't pay a cent for NFLX, they will instead use that same money to build out their own video streaming service.
- 2 Replies to drfd1
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You prolly don't know who the Great Karnak was.:)
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I agreed. $ 8 billions can buy a lot of content.
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Amazon's revenue per share is about $90. Netflix's current one is about $50.
Amazon's current revenue/price ratio is about 2.59; NFLX's is about 2. -
I'm sorry, but didn't you miss part of the equation..COST for all of that revenue. Revenue in and of itself isn't worth alot if your costs are higher than your revenue....
One of NFLX's problems is that it has a huge off-balance sheet liability. Once you factor that in, the value goes way down.
I think AMZ is doing quite well without NFLX.- 1 Reply to ndavid975
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I was talking about revenue, not net profit.
I agree that Netflix's current business model is not sustainable and it has to be sold some major strategic players, who has deep pocket and could build a profitable business model around streaming and other services.
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I don't agree that Amazon is the most likely suitor, but I do agree with the premise that the subscriber base throws off a lot of revenue and is very valuable for cross-selling opportunities. If they were to put themselves up for sale, they would get quite a bit. Definitely, over $200 and maybe toward $300. The Forward PE is only 17 at the moment.
- 1 Reply to awannick
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Agree.
Netflix's business model is too transparent, and could easily become the hostage of the Hollywood movie studios -- they want a bigger cut if they see you are making more money.
But Amazon can use the streaming service as one of the selling point to attract and retain customer to its website -- to shop, stream, read, download apps, etc.
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Doesn't it depend on the profit AMZN makes on the $200. Also, aren't some of those people already AMZN customers? If so, AMZN doesn't get 20 million new they get something less, potentially much less.
- 1 Reply to ekark9
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You are right. Many people, like me, have Amazon account but do not have PRIME account. If Amazon buys Netflix streaming service and there is no change in pricing, then I would be able to stream from Amazon and enjoy free two-day shipping at $100 per year. I am happy.
I think that the problem with Netflix is that its business model is not sustainable as the Hollywood studios are hiking their license fees. It does not have the economy of scale.
But a multiple platform player, such as Amazon, would be able to build a very profitable model around the streaming services.
My point is that, if Amazon indeed buys Netflix, $7-$8 billion is possible.
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