Netflix to reinvest US$15.7bn to protect competitive advantage
In 5 years, Netflix shares have climbed from US$7.78 to US$171, giving it an equity capitalisation of around US$74 billion.
An impressive 2,200% return, but on a massive 220x PE multiple, low profits and plenty of debt.
To sustain growth and competitive advantage, it has been reported that Netflix will spend an eye-popping US$15.7 billion on exclusive content, licensing and I assume more acquisitions like the recent Millarworld buy.
Essentially, Netflix will reinvest around 22% of its market value to protect its advantage over Disney, HBO, FB and others as they look to disrupt the disrupter. Not a game for the feint hearted. Read the article.