⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Netflix bonds retain Outperform rating at Gimme Credit amid strong content ROI

Published 04/23/2024, 01:27 PM
Updated 04/23/2024, 01:29 PM
© Reuters Netflix (NFLX) bonds retain Outperform rating at Gimme Credit amid strong content ROI

On Tuesday, corporate bond research firm Gimme Credit maintained its Outperform recommendation on Netflix (NASDAQ:NFLX) bonds, specifically highlighting the 2030 notes, which are currently trading at a spread of +78 to the 5-year Treasury. The firm said the streaming giant's strategic focus on original content, supported by licensed material, is proving to be effective in driving revenue growth and subscriber engagement.

Netflix's investment in content, which amounts to $17 billion annually, has yielded impressive results, according to Gimme Credit. The streaming giant has consistently dominated the charts, with its offerings ranking as the #1 film in streaming for eight of the first eleven weeks of the year, and the #1 original series for nine of the same eleven weeks. This success is attributed to a mix of global and domestic content that resonates with a wide audience.

Furthermore, the corporate bond research firm notes that the company's revenue growth is projected to exceed 14% for the current year, a significant increase from the 6% to 7% growth experienced in the previous two years. They believe Netflix's initiative to crack down on password sharing supports the optimistic forecast, which is expected to contribute positively to the revenue stream.

In terms of financial performance, Netflix is outpacing its competitors with a substantial lead in subscribers, earnings, and free cash flow. The company has reversed its negative free cash flow from 2021, reaching an approximate $6 billion. This financial turnaround is accompanied by a rapid decrease in leverage and the accumulation of more than $7 billion in cash reserves, highlights Gimme Credit.

The firm's reiteration of the Outperform rating for Netflix's 2030 notes reflects the firm's confidence in the company's financial health and its strategic direction. The performance of these notes against the 5-year Treasury serves as an indicator of the market's positive reception to Netflix's robust content strategy and improved financial metrics.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.