Expert Sees Buffett Buying Netflix at 23 Times Earnings as Stock Sits 41% Below High
Updated
Updated · The Motley Fool · Aug 10
Expert Sees Buffett Buying Netflix at 23 Times Earnings as Stock Sits 41% Below High
1 articles · Updated · The Motley Fool · Aug 10
Summary
Ross Gerber said Netflix could be Berkshire Hathaway’s next buy, arguing the streamer now fits Warren Buffett’s value discipline after a 41% share-price drop.
23 times earnings is the key draw: Gerber says that multiple is unusually low for Netflix, while Wall Street projects earnings growth of about 20% annually over the next three years.
Netflix also posted solid second-quarter results, with revenue up 13% to $12.5 billion and full-year guidance calling for another 13% to 14% increase.
Buffett has recently shown more willingness to own select tech names such as Apple and Alphabet when strong consumer loyalty creates a durable moat, a case Gerber says also applies to Netflix.
Less than 50% of TV viewing and TV ad spending has shifted to streaming, leaving Netflix room to grow even after missing a bidding war for Warner Bros. Discovery and Roku assets.