Netflix (NASDAQ:NFLX) posted Q4 revenue growing 30.5%. Despite the growing competition that started in the last quarter, the streaming giant looks healthy. Yet it must do more. The company takes on more debt to buy more original content but now Disney (NYSE:DIS) and Apple (NASDAQ:AAPL) are getting into this space. The competition will only worsen.
Netflix posted revenue of $5.47 billion while posting $1.30 a share in earnings. But strip out the one-time tax adjustment and Netflix earned just $0.22 a share. When Netflix stock is valued at the 100 times P/E, it needs to sustain revenue growth of at least 35-40% over the next several years.
Disney Plus will nip at the subscriber growth in North America in the near-term. In the medium term, though, customers may flock back to the diverse range of quality content Netflix offers. Disney offers just family-friendly content. Its Mandalorian is a hit with an 8.8 rating on 121,200 votes. Yet that is all that Disney has to offer.
Apple is spending large amounts to build a core offering to attract the mainstream crowd. Offered for free at first, Apple users may cancel Netflix to try out Apple TV streaming. Still, if these viewers are unsatisfied and return to the Netflix service, the company’s revenue growth will trend higher.
In the longer term, Netflix needs to figure out how to add original content without paying so much. Higher earnings will matter more than revenue growth.
