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Is Netflix A Buy? Analysts Continue To Remain Optimistic

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Online streaming giant Netflix is one of the top internet stocks across the globe. Shares of the media company have soared 125% in 2015, 13% in 2016 and 55% in 2017. The stock is already up over 80% in 2017. Shares of Netflix peaked to an all-time high of $423.21 last month and have since declined after it released its Q2 2018 earnings results.

Why Did Netflix Shares Decline Recently?

Though Netflix beat earnings estimates, it reported Q2 revenue below analyst projections. Netflix also added 5.2 million new subscribers in the second quarter, below estimates of 6.2 million in Q2. In the United States alone, Netflix added 700,000 subscribers which were below the estimated figure of 1.2 million.

At the end of Q2, Netflix had 130 million subscribers, an increase of 25% year-over-year compared to 104 million subscribers at end of the second quarter in 2017.

Has User Growth For Netflix Started To Decline?

In the last seven out of the nine quarters, Netflix has been able to beat user forecasts. The last time Netflix reported user subscription below estimates was in Q1 2017 when it added 5 million users, compared to a forecast of 5.2 million. What’s more, Netflix expects to add 5 million subscribers in Q3 including 650,000 in the United States. This indicates an addition of 4.35 million global subscribers.

Netflix has stated that its subscriber base can grow between 60 million and 90 million in the United States, indicating an addition of approximately 30 million subscribers at the high end of its projection. After significant expansion, Netflix now has approximately 57 million domestic subscribers. With this comes the hiccup – it has practically no room to grow subscribers if we take the conservative estimate of 60 million subscribers.

The company is also facing challenges by bigger players with more cash in hand such as Amazon Prime and Amazon Studios. Further, Disney is looking to launch its streaming platform in 2019.

Key Drivers For Netflix

Yes, Netflix’s stock has been negatively impacted post Q2 results. But Netflix’s growth story is far from over. The company expects revenue to grow by 33.6% in Q3 with earnings growth of 134%. Netflix again expects to add 5 million subscribers in Q3.

Netflix can approximately double its subscriber base to 250 million over the next 10 years, given the total available market. Netflix currently has 300 million user profiles across 450 million devices.

There are growth opportunities in emerging markets like India where Netflix has about 5 million subscribers compared to the market leader Hotstar which has 75 million subscribers. The Indian online streaming market is estimated to grow by 35% year-over-year. Netflix has been targeting market share by generating original content.

The first two seasons of Narcos scored massive hits while Sacred Games has also been popular among the Indian audience. Production on the first Arabic series Jinn has reportedly begun. Netflix will be spending around $8 billion in original content for 2018.

Though there are concerns over Netflix, the company’s revenue is still estimated to grow by 35.6% in 2018, 24.8% in 2019 and 21.6% in 2020. Comparatively, its bottom line or earnings is estimated to grow by 116% in 2018, 61.9% in 2019 and at a CAGR (compound annual growth rate) of 62.5% over the next five years.

Does This Provide An Opportunity For Investors To Buy Netflix?

Although Netflix has generated spectacular returns over the last few years, potential investors might be wary about entering at current levels. However, the recent stock decline post Netflix’s quarterly results indicate that the stock is trading at a discount of over 10% to average analyst price targets of $377.60.

Out of the 40 analysts tracking Netflix, 60% of analysts (or 24 analysts) recommend a “buy” while 35% recommend a “hold” and only 5% recommend to “sell” the stock. Netflix has a high 12-month price target estimate of $503.

Money

CHART: How Blockchain Powers Bitcoin

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Blockchain, Bitcoin. Bitcoin, blockchain.

The two terms go hand in hand—and have become almost ubiquitous with this year’s insane rise (and fall) of Bitcoin.

But what does it all really mean? How does it come together? In this week’s chart, our friends at CB Insights break down exactly how blockchain powers Bitcoin.

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This Mogul Became America’s 1st Black Billion-Dollar Businesswoman

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Sheila Johnson.

Where to start?

She’s the first black billion-dollar businesswoman. Before Oprah Winfrey.

She started as a TV executive, founding Black Entertainment Television (BET), the first TV network targeting African Americans. She then became a real estate mogul.

Oh, she also owns a stake in three major sports franchises, the NBA Wizards, NHL Capitals and the WNBA Mystics, the African American, period, to boast that claim.

In honor of Black History Month, let’s dive into her remarkable career.

FAST FACTS:

  • Born Sheila Crump in McKeesport, Pennsylvania, Johnson co-founded BET in 1979 with then-husband Robert Johnson. The couple sold it to Viacom in 2000 for $2.9B
  • Sheila Crump Johnson became the first African American woman on the Forbes’ Billionaire list in 2000—beating Oprah Winfrey to the distinction.
  • Per Forbes, Johnson has an $820M net worth as of 2019

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Foray into real estate…

After closing the sale to Viacom, Robert and Sheila pocketed around $1.5B each. Johnson used that windfall as seed money to build a hospitality real estate empire in 2005.

“There’s a disparity in paychecks between whites and blacks,” she told the Wall Street Journal. “I will never forget that.”

As CEO of Salamander Hotels and Resorts, Sheila controls a spectacular portfolio of six luxury hotels in Florida, Virginia and South Carolina. And she’s built it from the ground up—literally—in her own spirit.

“I’ve been to many hotels, not only in the US, but all over the world,” she told Forbes last year. “And I wanted to find something that was going to really make Salamander stand out beyond all of these hotels.”

So what does that mean?

“You have to understand, there are a lot of people, investment companies, with very deep pockets,” she says. “They can do it, but they don’t have the experiences that we’re able to bring. I am constantly trying to find a way to help Salamander Resort & Spa stand out head over heels above any other hotel — not only in the area, but in the nation.

“I want them to leave that resort wanting to come back and not just say, ‘I’ll be back in six months.’ I want them to come back all the time.”

And so far it’s worked. In fact, on Forbes Travel Guide’s 61st list of Star-Rated hotels, Johnson’s Salamander Resort & Spa outside of Washington, DC earned a Five-Star distinction.

Image Credit: Salamander Resort & Spa

Forbes: “Everything [she] touches turns to gold.”

That’s a real quote. From Forbes. Last year. It’s also true.

BET? Billion-dollar exit. Washington Capitals? Stanley Cup.

And Roma. Won 10 Oscars. Who showed it before a single soul started caring? Johnson’s Middleburg Film Festival. (Which, by the way, has 32 films and counting in Academy Award contention.)

Remember her golf resort at Innisbrook? Oh, yeah. Hosts the Valspar Championship, one of the PGA calendar’s most-anticipated tournaments.

Becoming a billionaire comes with a new level of clout as well. “When you don’t have money, you’re not invited to special events; you really don’t matter,” she told WSJ. “It’s a society thing.”

So instead, she’s turned to giving back. Her Sheila Johnson Fellowship’s paid for more then 40 scholarships at Harvard University for students who otherwise wouldn’t afford to attend.

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Breaking glass ceilings. 

There’s an alarming statistic in business and diversity—especially as it pertains to women. According to research by investor Richard Kerby, 18% of all VCs are women—and only 3% are black. In addition, less than 50 black women ever have raised $1M in funding.

“When I got started,” Johnson says, “I couldn’t get a loan. I had to use my own money to get Salamander Resort and Spa.”

She explained to WSJ last year that men can go to any bank with a bank proposal. And no matter how “wacky” the idea is, she said, “they’re going to get the financing. Women do not have that ability.”

Johnson’s taken it upon herself to do something about that, becoming one of the founding partners of WE Capital, an investment firm that invests in female entrepreneurs.

“I started out in a very unique position where I had my own capital to be able to get started,” she says. “But there have got to be banks and investors that believe in helping women who want to be entrepreneurs in the hospitality business.

“And it’s just really, really important that they really take a look at this.”

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Money

VIDEO: How Far Does $150K A Year Get You In New York City?

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Source: HuffPost

No matter what metric or list you look at, it goes without saying: New York City is one of the most expensive places in the world to live in.

In this video, CNBC spoke to a Millennial who runs her own brand consulting agency and wants to #WealthHACK her way to retirement by 40.

She makes $150K a year. But how far does that actually get her? Check it out.

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