Monday, January 14, 2019

When Will Netflix Reach Positive Free Cash Flow?

Netflix and Amazon have been fearsome attackers of existing business models. Both firms also are equities that worry investors, often expressed as a concern over when free cash flow (and eventually actual profits) will be generated.

Eventually, as with any other company, positive free cash flow, then profits, must happen.

Morgan Stanley believes Amazon could reach free cash flow positive status could happen in 2021.

That, Morgan Stanley believes, can happen even as Netflix continues to invest heavily in content. In fact, Morgan Stanley believes Netflix is spending more than generally believed on content overall (including both original and licensed content). Other observers tend to agree with the higher figures for content rights.

Netflix spending was boosted dramatically in 2018.

NBCUniversal invests the most in original programming at the moment, to the tune of about $10.2 billion. Fox and Time Warner each spend a bit more than $8 billion. Disney has been spending nearly $8 billion, while Netflix has sharply boosted original content spending to perhaps $8 billion.

Amazon, on the other hand, has seen better free cash flow in recent years, by some estimates, even if razor thin.  

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