"Management announced that the number of paid subscribers rose above 325 million for the first time in the most recent quarter. Furthermore, its advertising business is a remarkable success and gives the company two strong lines of revenue. Revenue increased 18% year over year to just above $12 billion. Net income rose 29% to $2.4 billion. The company forecast revenue for this year in a range of $50.7 billion to $51.7 billion."
"The $72 billion deal shows a weakness in Netflix management's strategic plans. It signals that it does not have faith in itself as a standalone company in its current business. It has to reach for another business to have a brighter future, management clearly thinks. Unfortunately, it is reaching for a legacy business that is dying. That makes the offer even more puzzling."
Netflix reported over 325 million paid subscribers and strong advertising growth, producing revenue above $12 billion, net income of $2.4 billion, and 18% year-over-year revenue growth. The company projected full-year revenue of $50.7–$51.7 billion. Netflix's churn is about 2% monthly, well below the industry estimate of 5%, underscoring market leadership and profitability advantages over most competitors. Management's escalating $72 billion bid for Warner Bros. Discovery's studios and HBO Max signals a strategic move into legacy media. That acquisition pursuit appears risky because legacy TV is declining, and investors punished the stock on concerns about abandoning the core streaming strategy.
Read at 24/7 Wall St.
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