Netflix Pairs Streaming Dominance With Capital Returns – Buyback Wednesdays

In the year 2000, Netflix (NFLX) co-founder Reed Hastings flew to Dallas and pitched Blockbuster, the once-dominant video rental giant with thousands of stores across America, on buying his small DVD-by-mail startup for $50 million. The offer was laughed off. Twenty-six years later, Blockbuster exists only as a relic with a single remaining store in Bend, Oregon, and Netflix is a $383 billion entertainment empire that recently authorized a $25 billion share buyback. Netflix is pledging more capital to repurchasing its own stock than the $20 billion it plans to spend producing every film, series, and game on its platform this year. I have had the distinct experience of investing in both Blockbuster and Netflix. While the Blockbuster loss early in my investing journey was painful, the Netflix investment that was initiated in 2022 has made up for it manyfold.

From mailing red envelopes to killing the video store, from pioneering streaming to producing Oscar-winning films, from surviving a subscriber crisis in 2022 to reaching 325 million paid subscribers worldwide by 2025, Netflix has shapeshifted through every era of media and emerged stronger each time. The narrative keeps changing, but the execution has remained steady and disciplined. 

We covered Netflix in our Special Situations Podcast, where our guest, Luis Sanchez, Founder and Managing Partner of LVS Advisory, shared how his view on the company shifted from bearish to bullish after conducting scuttlebutt research with former employees.

In his words,

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