The attractiveness of technology companies like Netflix Inc. (NASDAQ:NFLX) does make sense from a consumer perspective. The "Netflix and chill" phenomenon has permeated the globe, and subscriber growth for the leading streaming platform has continued to be impressive. Shares of Netflix have rallied nearly 50% from a trough in late 2018, as investors have piled into the growth story at the streaming giant once again.
Growth is certainly important, and investors will continue to keep an eye on earnings results from Netflix in the near and medium term, as so much of the company's current valuation is predicated on growth. From a valuation perspective, most conservative long-term investors simply cannot justifiably make an investment in a company with a price-to-earnings ratio of 135 and a massive debt load which continues to grow, but top line growth keeps the dream alive for many who view Netflix as the long term market leader in this space.
My particular issue with the company's current valuation is the rise of excellent alternatives which have been launched by competitors with very deep pockets. Both Walt Disney Co. (NYSE:DIS) and AT&T Inc. (NYSE:T) are launching new streaming services, adding new entrants to a market which already has multiple offerings from other subscription services which have continued to expand and invest in content production.
Given Netflix's incredibly high valuation, I would caution investors intent on putting some hard earned capital into companies like Netflix at this point in time.
Invest wisely, my friends.
