Bloomberg Audio Studios, podcasts, radio news. Let's bring it, Dan Morgan, He's senior portfolio manager at Sonova's trust company. They've got about nineteen billion dollars in assets under management. Dan, I know you are looking closely at your Bloomberg terminal. In terms of the news from Netflix just in the last nine minutes. What sticks out to you.

Bloomberg Audio Studios, podcasts, radio news. Let's bring it, Dan Morgan, He's senior portfolio manager at Sonova's trust company. They've got about nineteen billion dollars in assets under management. Dan, I know you are looking closely at your Bloomberg terminal. In terms of the news from Netflix just in the last nine minutes. What sticks out to you.

Hi, Tim, I'm alli. Yeah, it looks like overall from Ernie's per share and revenue number, it looks pretty strong. I heard Scarlett mentioned earlier about the expectations coming into this quarter being so high. In the stock trading way up. I believe it's up over forty five percent year to date. You know, Tim, I had a whisper number on new subs for the third quarter anywhere from six to seven million. I know they'd beat the consensus.

Hi, Tim, I'm alli. Yeah, it looks like overall from Ernie's per share and revenue number, it looks pretty strong. I heard Scarlett mentioned earlier about the expectations coming into this quarter being so high. In the stock trading way up. I believe it's up over forty five percent year to date. You know, Tim, I had a whisper number on new subs for the third quarter anywhere from six to seven million. I know they'd beat the consensus.

That's like the whisper number that Style was talking about.

That's like the whisper number that Style was talking about.

Yeah, so they came in with five point zero seven. You mentioned the stock is trading down a little bit. I just think there wasn't a lot of room for error.

Yeah, so they came in with five point zero seven. You mentioned the stock is trading down a little bit. I just think there wasn't a lot of room for error.

Well, now it's it started trading down. Now it's hired by three point five percent.

Well, now it's it started trading down. Now it's hired by three point five percent.

Okay, there we go, but go ahead. Sorry, they came up a little bit short on that whisper number and turn to pay subs on the third court.

Okay, there we go, but go ahead. Sorry, they came up a little bit short on that whisper number and turn to pay subs on the third court.

Hey, okay, Molly's a ton of questions. I know you do. Can I just all.

Hey, okay, Molly's a ton of questions. I know you do. Can I just all.

About love is blind? But you can go first.

About love is blind? But you can go first.

I just want to know what what are you going to do? What's an investor going to do when they stop with this sub number in twenty twenty five?

I just want to know what what are you going to do? What's an investor going to do when they stop with this sub number in twenty twenty five?

You know you're right, Tim, It's going to be a tough sled because you know, we really value Netflix based on these sub numbers. I hate to say this, but I think what's going to happen and you already see this with Apple. You know, Apple will give us no longer, you know, different unit volumes on iPhones and iPads and so forth, they'll get, you know, they we'll get estimates based on revenue by segment, but then a lot of analysts will back you know, through average selling prices and come up with a unit projection. And I hate to say it, guys, but I don't think this is going to go a way. I think what you're going to see is some estimates based on the revenue numbers in terms of what that sub number is, because you know, in the past, we've just always traded the stock based on how many new members did you sign up for the quarter and how many were you signed up next quarter? Right?

You know you're right, Tim, It's going to be a tough sled because you know, we really value Netflix based on these sub numbers. I hate to say this, but I think what's going to happen and you already see this with Apple. You know, Apple will give us no longer, you know, different unit volumes on iPhones and iPads and so forth, they'll get, you know, they we'll get estimates based on revenue by segment, but then a lot of analysts will back you know, through average selling prices and come up with a unit projection. And I hate to say it, guys, but I don't think this is going to go a way. I think what you're going to see is some estimates based on the revenue numbers in terms of what that sub number is, because you know, in the past, we've just always traded the stock based on how many new members did you sign up for the quarter and how many were you signed up next quarter? Right?

I mean, what's like the next natural key metric then for you both to predict and then also to trade off of.

I mean, what's like the next natural key metric then for you both to predict and then also to trade off of.

You know, Molly, It's kind of funny because you know, we think about like how we trade Microsoft and Amazon and all these different stocks based on their ability to generate AI revenue, right, And I think it's gonna be the same thing here with Netflix. Instead of AI, we're going to just be zeroing in on that advertising. You know, if we think of what are the catalysts going forward for this company. You guys mentioned earlier about a potential price increase that's in the mix. They also have that paid sharing which we've talked about before and migrating people over that. But I think there's a lot of people who are hopeful that this AD model will be a big generator for them. We have to bear in mind about forty five percent of their sign ups, their new sign ups are going towards the AD tier model. It's about six ninety nine a month.

You know, Molly, It's kind of funny because you know, we think about like how we trade Microsoft and Amazon and all these different stocks based on their ability to generate AI revenue, right, And I think it's gonna be the same thing here with Netflix. Instead of AI, we're going to just be zeroing in on that advertising. You know, if we think of what are the catalysts going forward for this company. You guys mentioned earlier about a potential price increase that's in the mix. They also have that paid sharing which we've talked about before and migrating people over that. But I think there's a lot of people who are hopeful that this AD model will be a big generator for them. We have to bear in mind about forty five percent of their sign ups, their new sign ups are going towards the AD tier model. It's about six ninety nine a month.

Is that is that around the world.

Is that is that around the world.

Which is about fifteen ninety nine.

Which is about fifteen ninety nine.

I'm sorry, is that around the world.

I'm sorry, is that around the world.

Or is that yeah?

Or is that yeah?

No, is that just an ul like what markets? Is that in Dan?

No, is that just an ul like what markets? Is that in Dan?

That would be across the board to him in terms of any new subs that they're signing up. In terms of across the board, like I said, about forty five percent. And you know, as of the end of this year, they're projecting now let's say they've got two hundred and eighty two hundred eighty five million total subscribers, they should have about thirty one million advertising subscribers. So it is becoming a bigger piece of the pie for them. It's not quite huge, but at least it's over ten percent.

That would be across the board to him in terms of any new subs that they're signing up. In terms of across the board, like I said, about forty five percent. And you know, as of the end of this year, they're projecting now let's say they've got two hundred and eighty two hundred eighty five million total subscribers, they should have about thirty one million advertising subscribers. So it is becoming a bigger piece of the pie for them. It's not quite huge, but at least it's over ten percent.

Shares now hired by five percent in the after hours.

Shares now hired by five percent in the after hours.

Just how do you think though about Like I just I still find like this decision. I know that this is and this isn't the new thing here, but the decision to not publish the subscriber numbers so interesting, like.

Just how do you think though about Like I just I still find like this decision. I know that this is and this isn't the new thing here, but the decision to not publish the subscriber numbers so interesting, like.

Every quarter, even though they announced it a few quarters ago, right, just like a harp on it.

Every quarter, even though they announced it a few quarters ago, right, just like a harp on it.

I mean, it just sounds to me like you're almost like acknowledging like that the company is moving into like a new phase, like maybe like you know that you were like maybe a growing company, now you're a more developed, mature company.

I mean, it just sounds to me like you're almost like acknowledging like that the company is moving into like a new phase, like maybe like you know that you were like maybe a growing company, now you're a more developed, mature company.

I think that is absolutely the correct take.

I think that is absolutely the correct take.

Yeah, I mean, but you obviously, like from an investor perspective, like, I don't know, Dan, like, do you accept that or do you I mean, it just kind of to me sounds like I'm almost a little sad in a way, like I kind of I always look forward to that number is kind of like new and exciting, And I mean, how do you view it? Do you think this is just a natural maturation of the company.

Yeah, I mean, but you obviously, like from an investor perspective, like, I don't know, Dan, like, do you accept that or do you I mean, it just kind of to me sounds like I'm almost a little sad in a way, like I kind of I always look forward to that number is kind of like new and exciting, And I mean, how do you view it? Do you think this is just a natural maturation of the company.

I think so, Mollie. And nothing to remember too is that the you know, the average revenue they get per subscriber in terms of advertising subscriber versus let's say a standard subscriber is less. So that could be another reason they felt they wanted to migrate to kind of a revenue volume based you know, matrix opposed to subs, because the subs didn't have as much value that they might if it was purely a standard. But you know, Tim and Molly, I would agree with you that. I think at this point we have to look at Netflix much differently than we did two or three years ago. They have become a more mature company. You mentioned the cash flow numbers that they gave for the physical year being above expectations. I think with six to six point five billion. They also beat for the quarter. So they they're just kind of a different animal than they were let's say two or three years ago. Was kind of just add as much content as you can, try to get as many subs as you can, and don't worry about it. And now they've become more kind of a cash flow you know story, more of a story of slower top line growth. I know Romain mentioned top line growth slowing down in subsequent years going forward, and I think the streets kind of accepted that. And you know, you look at the current multiple, you're looking like thirty five, you know, to forty times earning. This stock used to trade, you know, close to over one hundred times earning. So the multiple has come down in line with the expectations in terms of growth.

I think so, Mollie. And nothing to remember too is that the you know, the average revenue they get per subscriber in terms of advertising subscriber versus let's say a standard subscriber is less. So that could be another reason they felt they wanted to migrate to kind of a revenue volume based you know, matrix opposed to subs, because the subs didn't have as much value that they might if it was purely a standard. But you know, Tim and Molly, I would agree with you that. I think at this point we have to look at Netflix much differently than we did two or three years ago. They have become a more mature company. You mentioned the cash flow numbers that they gave for the physical year being above expectations. I think with six to six point five billion. They also beat for the quarter. So they they're just kind of a different animal than they were let's say two or three years ago. Was kind of just add as much content as you can, try to get as many subs as you can, and don't worry about it. And now they've become more kind of a cash flow you know story, more of a story of slower top line growth. I know Romain mentioned top line growth slowing down in subsequent years going forward, and I think the streets kind of accepted that. And you know, you look at the current multiple, you're looking like thirty five, you know, to forty times earning. This stock used to trade, you know, close to over one hundred times earning. So the multiple has come down in line with the expectations in terms of growth.

Well let's stick on that multiple for a second, because we had a great story on the terminal earlier about this today about just how expensive Netflix trades right now relative to earnings. I mean, if you're like somebody who's looking to get in on this stock, right now that's up like three hundred and fifty percent in the last two years. Like, I don't know, is there a good entry point or did you miss it?

Well let's stick on that multiple for a second, because we had a great story on the terminal earlier about this today about just how expensive Netflix trades right now relative to earnings. I mean, if you're like somebody who's looking to get in on this stock, right now that's up like three hundred and fifty percent in the last two years. Like, I don't know, is there a good entry point or did you miss it?

Yeah, So right now you're trading about thirty seven times twenty four estimates and you're about thirty times physical year twenty twenty five. So that's kind of where your multiples are right now based on earnings. You mentioned that the current multiple has moved up dramatically from where it was. Again, the stock is up forty five to fifty percent for the year, and again we're expecting growth to kind of slow down a little bit, right and going into twenty five at least top line growth. So, you know, Molly and Tim, the stock is definitely a little stretched here in terms of, you know, the recent run that it's had, and obviously the stock is, you know, trading a bit of a premium to what the expectations are going forward terms of earnings growth and the remainder of twenty four and twenty five.

Yeah, So right now you're trading about thirty seven times twenty four estimates and you're about thirty times physical year twenty twenty five. So that's kind of where your multiples are right now based on earnings. You mentioned that the current multiple has moved up dramatically from where it was. Again, the stock is up forty five to fifty percent for the year, and again we're expecting growth to kind of slow down a little bit, right and going into twenty five at least top line growth. So, you know, Molly and Tim, the stock is definitely a little stretched here in terms of, you know, the recent run that it's had, and obviously the stock is, you know, trading a bit of a premium to what the expectations are going forward terms of earnings growth and the remainder of twenty four and twenty five.

I own Githa ragnathin earlier today, Dan telling us that it's been a while since we've seen a price increase here in the US. I would imagine investors want to see prices go up, customers might not want to how much pricing power does Netflix have just in the last forty seconds we have with you, because there is this balance between making sure to raise prices not so much that people quit.

I own Githa ragnathin earlier today, Dan telling us that it's been a while since we've seen a price increase here in the US. I would imagine investors want to see prices go up, customers might not want to how much pricing power does Netflix have just in the last forty seconds we have with you, because there is this balance between making sure to raise prices not so much that people quit.

You're right, Tim, you know we mentioned the ad tier six ninety nine, standard fifteen ninety nine. They drop the basic. But you know what's kind of interesting Tim and Molly is if you look at where Netflix stands right now in terms of pricing versus their competitors like you know, Disney plus Paramot all these other major you know streamers, they're right in that pack. And you might make a case to And that people are willing to pay a premium for Netflix because of the content

You're right, Tim, you know we mentioned the ad tier six ninety nine, standard fifteen ninety nine. They drop the basic. But you know what's kind of interesting Tim and Molly is if you look at where Netflix stands right now in terms of pricing versus their competitors like you know, Disney plus Paramot all these other major you know streamers, they're right in that pack. And you might make a case to And that people are willing to pay a premium for Netflix because of the content