Netflix Revenue Down Q2 2024 Full Analysis

20% margin. So that elevates margins going forward. Um their revenue growth is still really strong, strongest in the industry um at uh 12 and 13% and they have a 32% operating margin which by far and about a billion for of cash flow in the quarter. So they uh rep purchased $4.7 uh billion dollars worth of shares. So they really are putting a floor under those shares all of which protects downside risk from shareholders. in the stocks are stock is down 10% which we think is just overdone. >> Yeah. I mean down 10% on top of already a pretty weak year. Laura, does it does it not bother you as an analyst that that they're changing the way they report and the metrics already took away the subscriber numbers. Um now different on the engagement numbers as well raising questions about whether those are just slowing and that's and that it's not good to not have that information. >> Yes, absolutely. They took away subs and arpoo and now they're taking away engagement which heightens investor. It takes away metrics that bulls or bears can use to argue whether to buy or sell Netflix. The problem is it focuses people people on the P&L because that's the only metrics left and the P&L is deteriorating. We're showing slowing EPS growth. They just missed the third quarter guidance. So yeah, when you focus people on things and then those things are deteriorating, it's bad they're taking away other metrics so that there's less granularity about why to buy these shares >> at a time where growth is slowing and and re particularly revenue growth. So what so where are you optimistic on the growth part? The ads you said. >> Yep. Ads were really optimistic. We think they have pricing power. They just put in a price increase that doesn't seem to have elevated churn. I think the World Cup was specifically bad for them and all streamers. I think the read through to all streamers is that content viewing will be down or let's say at a different engagement hours will be down because the World Cup really did aggregate global viewers. So these global streamers are hurt the most because people weren't watching their content as much as normal because we had this these amazing World Cup viewing hours. Speaking of content, Laura, and live events, I mean, I live events, I think, account for what, half of their top 10 signup days, but it's still a minimal part of their overall content spend. How aggressive can they get on that? >> Yeah, I think that was a really interesting new disclosure. They said they're spending 5% of their content spend on live um live, like really sports basically, and it's only 1% of their viewing hours. Whereas anime, they spend 5% of their content budget on anime and it's 8% of their viewing hours. And you can tell to me what that says is they are going to buy more live sports. And I think this is a slippery slope. They're going to which means their content budget by necessity will have to go up because live sports have such an expensive because they're exclusive content. They have such an expensive um base cost in licensing fees. Huh? If they if they made an aggressive bid for some rights, do you think the stock would would go up or down? >> Yeah, good question. It would depend on how much they take out of the rest of the content budget. They've been pretty good about offsetting the live sports.