Netflix Earnings: Another Exquisite Quarter, Almost Nothing to Nitpick; Fair Value Up 14% to $500

Narrow-moat Netflix reported another outstanding quarter despite diminishing tailwinds from the crackdown on password sharing and the introduction of ad-supported plans. Revenue growth accelerated, and subscriber additions and margins remained at historically high levels. We still believe that recent results represent an especially booming period rather than a durable new norm. However, the firm's current momentum has proven longer lasting than we originally anticipated. We are raising our fair value estimate to $500 per share from $440. We believe the stock is pricing in a continuation of recent trends, and while we maintain that Netflix is best-in-class, we still expect the firm to experience slower periods, making the shares overvalued.