🍿 Netflix (NFLX): From Cash Burner to Profit Machine

🔥 Netflix’s Big Money Shift: What’s Driving Growth?

💰 Profitability & Cash Flow: Making Real Money

Netflix isn’t just collecting subscriptions anymore—it’s maximizing every dollar. In 2024, it pulled in $7.36B in operating cash flow and sits on $9.58B in cash reserves. That’s a lot of cheddar. 🧀

Netflix CFO Spencer Neumann:
"We are focused on growing our profitability while investing in content and innovation to drive long-term engagement and revenue."

Translation? Netflix is printing money while competitors (looking at you, Disney+) are still figuring out how to stop bleeding cash.

📉 Old Netflix: “Spend, spend, spend! Growth at all costs!”
📈 New Netflix: “Let’s actually make some profit and use our cash wisely.”

🔄 Stock Buybacks: Netflix Thinks It’s Undervalued

Netflix bought back $6.2B of its own stock in 2024—one of the biggest buyback programs in its history.

Why does that matter? Companies don’t throw billions at buybacks unless they think their stock is cheap. It’s like your friend buying up all the limited-edition sneakers before the price skyrockets. Smart move. 👟💸

Co-CEO Greg Peters:
"We believe in our long-term trajectory and see buybacks as a way to return value to shareholders while reinforcing our confidence in the business."

📊 Financials: The Numbers Are 🔥

Netflix’s balance sheet is flexing:

• Revenue: $39B (+16% YoY) 📈

• Operating Income: $10.41B (+50% YoY) 🏆

• Net Income: $8.71B (+61% YoY) 🚀

• Operating Margin: Expanded from 21% → 27% (That’s huge!)

Netflix is efficient and profitable, which means long-term investors get rewarded.

🌍 Netflix vs. The Competition: Who’s Really Winning?

Let’s talk numbers—because in the streaming wars, size matters. 📺💥

📊 Total Global Subscribers (as of Q4 2024):

• Netflix: 260M+ 🌎 (Still the undisputed king 👑)

• Disney+ (incl. Hulu & ESPN+): 220M

• Amazon Prime Video: 200M (but let’s be real, many people have Prime for the free shipping 🚚)

• Max (formerly HBO Max): 95M

• Apple TV+: 40M (…does anyone actually pay for it? 😆)

• Paramount+: 63M

Netflix is leading the pack by a solid margin, and it’s not slowing down.

Greg Peters (Co-CEO) on Netflix’s dominance:
"We continue to see strong subscriber growth across regions, reinforcing our position as the world’s leading entertainment service."

Unlike Disney+—which lost subscribers in 2023-24—Netflix is growing at a steady clip. The international expansion is a game-changer, and ad-supported plans are bringing in new users who wouldn’t have subscribed before.

Why does this matter?
More users = more revenue = more profit = higher stock price. 📈

While other services are cutting costs and scrambling for profitability, Netflix is already there—and the market still isn’t giving it full credit.

Could Netflix’s stock double from here? 🤔 With 260M+ users and a growing ad business, it’s not impossible.

🌎 International Growth: The World is Binging

If you think Netflix is just a U.S. phenomenon, think again.

• Asia-Pacific: +27% growth 📈

• Latin America: +16% growth 🌎

Turns out, people everywhere love binging great shows (who knew? 😆).

Co-CEO Ted Sarandos:
"Our international expansion continues to be a key driver of growth, and we’re investing in local content that resonates with global audiences."

Netflix is dominating markets where competitors struggle—and these regions have tons of room to grow.

🎯 Netflix’s Ad-Supported Tier: The Secret Growth Weapon

Netflix was once adamantly against ads—remember when Reed Hastings said, "No commercials. Ever."? Well… times change. Now, ads are a massive growth driver, and Netflix is leaning in hard.

📈 The Numbers: Why Ads Matter

• 55% of new sign-ups in ad-supported markets choose the ad tier.

• Ad revenue doubled in 2023 and is expected to double again in 2024.

• Ad-supported subscribers are more profitable than basic-tier subscribers (yes, even though they pay less).

Why is this a big deal? 🤔 Because Netflix has pretty much maxed out subscriber growth in the U.S. and other mature markets. Instead of just trying to squeeze higher fees from existing users (which can cause churn), Netflix now has a new, scalable revenue stream.

🎬 How Netflix Wins With Ads (And Why It’s Different From Cable)

Traditional TV ad breaks make you suffer through 5-minute blocks of boring commercials—Netflix isn’t doing that. Instead, they’re keeping ads short, targeted, and valuable to advertisers.

• Premium Ad Prices: Netflix’s ad inventory is expensive, but advertisers are paying top dollar because of its massive reach.

• Better Targeting: Because Netflix knows exactly what people watch, it can sell ad space that’s way more effectivethan old-school TV.

• Higher Engagement: People don’t mind a few ads if it means a cheaper subscription (hello, $6.99/month plan).

Co-CEO Greg Peters on the ad business:
"We’re not just playing catch-up. We’re building an ad business that’s better and more effective than what traditional TV ever had."

Netflix is also developing its own ad tech stack in 2025, meaning it won’t have to share revenue with outside partners (like Microsoft, which currently helps power its ads). That means higher margins and better control.

💰 How Big Can This Get?

Right now, Netflix’s ad revenue is still small compared to its subscription business—but the potential is enormous.

• YouTube makes ~$40B a year in ad revenue. If Netflix captures even half of that, its valuation could skyrocket. 🚀

• Netflix’s ad-supported tier could eventually become the default option for new users, pushing margins even higher.

Netflix used to rely entirely on subscription fees. Now, it has a second engine powering its revenue growth—just like Google (search + ads) or Amazon (retail + AWS).

The market hasn’t fully priced in how big this could be. And that’s why smart investors are paying attention. 📊

🎬 Content Strategy: Smart Spending, Big Hits

Netflix isn’t just throwing money at everything anymore—they’re focusing on what actually works:

• Franchise building (think Stranger Things, The Witcher)

• International blockbusters (Squid Game, anyone? 🦑)

• Live events & sports (without overpaying for full seasons)

The goal? Create must-watch content without lighting billions on fire. 🔥💸

Ted Sarandos:
"We’re doubling down on franchises and international hits while being disciplined with our content spend."

🎮 Gaming: The Next Frontier?

Netflix is dipping its toes into gaming—but will it be the next PlayStation? Probably not.

Instead, they’re building games tied to their shows (think Black Mirror or Stranger Things), creating new ways to keep people engaged. Smart move or just a side hustle? Time will tell.

⚠ What Could Go Wrong? (AKA, The Risks)

🚨 Content Costs: Great shows aren’t cheap. If Netflix spends big on flops, it could hurt margins.

🏆 Competition: Disney+, YouTube, TikTok… the battle for screen time is brutal.

💰 Debt: Netflix holds $13.8B in debt. Not a problem now, but worth watching.

🌍 Foreign Exchange Risk: Currency shifts cost Netflix $1.42B in 2024 alone. Global reach = global headaches.

📢 Ad Revenue Risk: Will advertisers keep paying up? If Netflix can’t prove ads lead to sales, big brands might walk.

Spencer Neumann:
"We remain mindful of macroeconomic factors, including foreign exchange and content investment efficiency."

🔮 Final Take: Is Netflix a Buy?

Netflix has gone from a wild spender to a disciplined, profitable powerhouse. The numbers back it up, but the market hasn’t fully caught on yet.

With strong financials, growing international markets, and a booming ad business, Netflix is set up for long-term success.

Considering all these factors, Netflix is strategically positioned for long-term growth. They’ve built a strong foundation and are now unlocking new revenue streams. Ads represent a massive opportunity, yet the market has been overly fixated on subscriber growth. With Netflix shifting its focus to reporting revenue rather than just subscriber numbers, it’s clear they’re evolving into a multi-vertical powerhouse. Between a thriving ad business and continued subscription growth, there’s still plenty of runway ahead. 🚀

That’s a wrap! 🤔 Drop your thoughts below! 👇

Until next time,

Henry Dalsania