“They don’t need to increase earnings. In today’s tech market a P/E of 20 pretty awesome. The average for internet companies is almost 84. The whole market average is 90. The modern stock market doesn’t care about PE, nobody is holding stock for earnings, they’re just holding for the next rise. All this has really done is make Netflix a buy, because it will rise.”
I don’t know where you get your data. The S&P 500 foward P/E is 19 with an implied earnings growth of more than 8%.
NETFLIX will absolutely have to grow earnings to increase price.
I got it from here: https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html
20 isn’t terribly of a mark of 19. No they won’t have to increase earnings for price to increase. They just need to not have bad news. We know the market is ruled by emotion. Tons of stocks crash for 2 days on bad news then crawl back up over the next month even though nothing drastically changed. They’re still a high profile company making 30 billion a year in revenue and 5 billion profit. All this news means is that apparently they insane growth (1.6B revenue 10 years ago) has finally peaked. Unless they actually start to drop they’re still going to be a solid company with great revenue, great profit and fine earnings.