[Click e-Stock] "Smashing Success for 'Real Education,' but Shares Remain Undervalued"

There is an analysis that Netflix's stock is excessively undervalued, especially considering the company's record-high share buyback plans.

On July 21, Shim Ji-hyun, Senior Researcher at Shinhan Investment & Securities, stated, "The 12-month forward price-to-earnings ratio (PER) is 18.6 times, which represents a 40% discount compared to its previous peak."

Shim added, "Given improved profitability, the advertising business expected to grow about twofold year-on-year, and rapid growth in live sports, the long-term stock trajectory is optimistic." However, she also noted, "Although the sharp drop in share price appears excessive, it may take some time before a recovery."

Recently, Netflix shares fell from $107.79 on April 16 to $68.89 on July 20. Shim explained, "The main reasons are the slowed sales growth guidance for the third quarter of this year and disappointing viewing hour growth in the second quarter." She emphasized, "This should be interpreted not so much as a deterioration of fundamentals, but rather as an increase in uncertainty until growth is fully realized."

Shim also pointed out, "The third-quarter guidance for this year reflects a base effect, as last year's performance was concentrated in the second half, so it's insufficient to interpret this as a demand slowdown." She further noted, "In the first half of this year, viewing hours grew by 2% compared to the previous year, while the sales growth rate widened to 12%, so this gap deserves careful attention."

This content was produced with the assistance of AI translation services.