Insider Buying

Insider Buying Report: Netflix Inc (NFLX:US)

Netflix Inc
(NFLX:US)
12 months:
-27%
Activity:
Bullish
Pattern:
Large purchase from Founder/Co-CEO
News:
Q4 results
Netflix Inc
(NFLX:US)
12 months:
-27%
Activity:
Bullish
Pattern:
Large purchase from Founder/Co-CEO
News:
Q4 results
A cheerful family sits on a sofa, popcorn in hands, watching Netflix series.

If a CEO is spending millions on company shares, it’s often worth investigating the stock further. CEOs tend to have an intimate understanding of their businesses and are usually way ahead of analysts and portfolio managers when it comes to revenue and earnings trends.

In this report, we are going to highlight a large CEO buy at Netflix Inc (NFLX:US). Netflix is an American company that provides streaming services. Operating in 190 countries, it currently has over 200 million paid memberships globally. The company is listed on the NASDAQ Global Select Market and has a market capitalization of $170.6 billion at present.

Netflix Inc: Insider Buying

Our data shows that between January 27 and January 28, Netflix Founder and Co-CEO Reed Hastings bought 51,440 NFLX shares at an average price of $388.83 per share. The purchase cost the insider approximately $20 million.

The chart shows the price history of Netflix Inc, with important purchase and sell events highlighted.

First Insider Purchase Since 2019

This trading activity is worth highlighting due to the fact that insider purchases at Netflix are not very common. Our records show that this purchase represents the first buy from an insider since August 2019.

It also represents the first open-market purchase from Mr. Hastings ever. This indicates that the insider – who co-founded the company back in 1997 – sees considerable value in the stock right now.

Attractive Valuation

Netflix stock recently plummeted after the company posted its results for the final quarter of 2021. Investors didn’t like the fact that subscriber additions were lower than expected, and that guidance for Q1 2022 was underwhelming.

However, overall, the results didn’t look too bad. For the year, revenue came in at $29.7 billion, up 19% year on year. Meanwhile, net income amounted to $5.1 billion, up from $2.7 billion a year earlier. These numbers suggest that the growth story here is still intact. It’s worth noting that management was relatively optimistic about the future. “We’re optimistic about our long-term growth prospects as streaming supplants linear entertainment around the world,” wrote the company in its results.

After the recent share price fall, the valuation on the stock is not that demanding. With analysts expecting earnings of $11 for 2022, the P/E ratio is now around 38. This is attracting value hunters. For example, Bill Ackman – who runs Pershing Square Capital Management – recently spent over $1 billion on the stock.

In light of the big share price fall, and the lower valuation, we see the insider buying here as a bullish indicator. It suggests that the Co-CEO expects the stock to bounce back.

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