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    Valuation of Netflix, Inc.

    Pfeifer, Phillip E. ; Conroy, Robert M.

    • Reference: DARDEN-F-1610-E

    • Number of pages: 13

    • Publication Date: Dec 21, 2009

    • Fecha de edición: Oct 4, 2013

    • Source: Darden University of Virginia (USA)

    • Type of Document: Case

    • Industry Setting: Entertainment/Leisure/Sports

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    Description

    Intended for MBAs, this case concerns the valuation of Netflix, Inc., which was the largest U.S. online movie rental subscription service in early 2009. After reviewing Netflix's historical financial and customer relationship performance, this case presents three approaches for valuing the firm in early 2009. The first is a company-level discounted cash flow analysis based on pro forma projections of revenues, earnings, and cash flow. The second approach attempts to judge whether Netflix's prevailing market value was reasonable by comparing selected company ratios with those of comparable companies. The final approach is based on the assumption that Netflix's enterprise value (EV) was the sum of its current and future subscribers' values (discounted present values, to be exact). There is also a spreadsheet available for students (UVA-F-1610X).

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    Keywords

    Cash flow enterprise value spreadsheet