Netflix is investing heavily in its future by acquiring Warner Bros. Discovery for $82.7 billion. The deal would boost Netflix’s content library and original content creation capabilities. However, investors have been negatively affected by the news, with the stock down over 22% in the last three months.
Despite the uncertainty surrounding the deal, Netflix remains a high-conviction buy due to its steady growth prospects and strong financial performance. The company has built its streaming empire from scratch and disrupted the entire movie and television industry.
Netflix’s content strategy is crucial, but so is content distribution. Leveraging Warner Bros.’ franchises on Netflix’s platform could be widely successful. If the deal goes through, Netflix would gain access to popular titles like Harry Potter, DC universe, and HBO content.
The company has a well-oiled machine that has become a staple in many households. It has achieved considerable success in developing its own content, producing several standout films, and steadily boosting its subscriber base despite reduced spending.
Netflix’s financial performance is also strong, with a low debt-to-equity ratio and consistent profitability. The company’s price-to-earnings ratio is 40.4, which is still on the expensive side but represents a better value than its 10-year median price-to-sales ratio.
If the Warner Bros. deal doesn’t go through, Netflix remains a high-margin industry leader at a reasonable valuation. It has continued to grow earnings even as people have pulled back on discretionary goods and services.
In conclusion, Netflix is a no-brainer buy for long-term growth stock investors despite the uncertainty surrounding its acquisition of Warner Bros. Discovery. The company’s steady growth prospects, strong financial performance, and solid content strategy make it an attractive investment opportunity.
Source: https://www.nasdaq.com/articles/prediction-or-without-warner-bros-netflix-will-crush-sp-500-2026-through-2030