Equity valuation: Netflix, Inc.

• Autor(a) principal: Timóteo, Pedro Miguel Nunes
• Data de Publicação: 2023
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/31118
• topic: Equity valuation; Netflix, Inc.; Video streaming; Entertainment and media; DCF Discounted Cash Flow --; Avaliação por múltiplos Valuation using multiples; Avaliação patrimonial; Streaming de vídeo; Entretenimento e média

This thesis aims to determine the fair value of the Netflix, Inc. share with reference to the date of December 31, 2022. To this end, and based on the literature review, the analysis of the entertainment and media industry, and the historical financial and operational performance of the streamer, an equity valuation was developed in order to guide investors with a recommendation on the option to buy, sell or hold the company's shares, based on the potential appreciation or devaluation of the market and the potential risks, given the volatility of the stock exchange. To this end, the Discounted Cash Flow model was adopted as the primary valuation methodology, using WACC as the discount rate alongside, with a Relative Valuation. Furthermore, a sensitivity analysis was conducted on the most significant components of our projection to consolidate the robustness of the analysis. Consequently, the application of the DCF model culminated in a target price of $319.97 compared to the Relative Valuation, where the price was ~14.7% lower. However, given the specificities of the model and the projected long-term assumptions, it was decided to consider only the first approach for recommendation proposed in this thesis. Accordingly, we considered that Netflix was undervalued, recommending investors take a Hold with tendency to Buy position in relation to the asset in their investment portfolio.