Netflix Stock Still Has A Profit Problem

If you enjoy movies and TV sitcoms, Netflix (NFLX) offers one of the best tradeoffs for consumers in Western Civilization’s entire experimentation with capitalism. If you watch 50 hours per month, your effective cost of entertainment is only twenty cents per hour. I don’t there’s a better value proposition in the market than that.

Consumers know a good deal when they see one, and Netflix reported yesterday that it picked up 5 million new subscribers to brings it total subscriber count to 93 million. Adjusting for the lower subscriber charges abroad, this means that Netflix is bringing in $5.5 billion per year from its subscriber base.

When you see the price of Netflix stock climb to $143 per share in after-hours trading, the $60 billion valuation for the streaming giant at first sounds reasonable.

But the reality is more complicated than that. Netflix is distinguishable from firms like Pepsi, … Read the rest of this article!