Netflix shares present substantial upside potential based on current market pricing relative to fundamentals, according to the CEO of wealth management firm Capital Wealth Planning, Kevin Simpson.
The streaming leader trades significantly below its intrinsic value, reports CNBC.
Says Simpson,
“If you look at the subscribers… 325 million subscribers is more than Disney, it’s more than HBO, it’s more than Max, all combined. So I think there’s a lot to like here…
…I don’t want to lose sight of the fact that the stock is down almost 40%. It’s down for a reason. There’s a lot of things that Netflix needs to get right. I think they sat on their laurels a little bit. Maybe the content has suffered maybe more than a little bit. But there’s a lot of things they can do with improved margins, improved content, live sports, advertising. This is a setup here that I think is very undervalued.
If you look at where it was trading recently before the decline, you were at a 40 PE (Price to equity). Everything had to go right for Netflix. It didn’t. And that’s why the PE now, I think a forward of around 20/21 is very, very valuable and I really like the stock down here.”
Bill Ackman recently disclosed a new stake in the company through Pershing Square as part of a broader portfolio overhaul that includes several other major holdings.
Netflix stock advanced following the announcement, reflecting investor interest in the firm’s position after it reportedly won the streaming wars.
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