Sands Capital Management, LLC - Global Growth on Netflix
Thesis
Netflix has faced weak sentiment as short-form video and user-generated content continue taking viewing time from premium streaming. Sands nevertheless sees evidence of pricing power because churn remained limited after the latest U.S. price increase. Advertising provides another route to grow average revenue per user beyond future price increases. The shares trade at their lowest forward earnings multiple since 2022, and Sands believes the valuation reflects substantial competitive uncertainty despite durable premium-video economics.
“Even so, Netflix continues to show pricing power, with limited churn after its most recent U.S. price increase.”
Key risks
- Short-form video and user-generated content taking viewing time
- Long-term margin and engagement uncertainty