Ashton Invests
Long-Term Equity Investor, Fundamental Stock Research
Amazon, Uber, Netflix and Snap can become more valuable by earning more from audiences they already have. Amazon's ad revenue grew 26% to $19.8B last quarter; Uber's ads surpassed a $2.5B annualized run rate, growing roughly 50%; Netflix expects about $2.7B in ads this year; Snap's subscription-driven other revenue grew 85% to $316M last quarter. Investors underestimate how valuable that can become over time. x.comÂ
Amazon, Uber, Netflix, Snap and Zeta Global can grow into major advertising businesses because they already own attention, customer relationships and data, layering ads on what users already do. Amazon may have the strongest setup, reaching shoppers with purchase intent; Uber knows where people go and what they order; Netflix's ad tier could add high-margin revenue beyond price hikes; Snap is finally monetizing nearly 1 billion monthly users; Zeta helps brands use first-party data. x.com x.com x.com x.com x.com x.com x.com x.com x.comÂ
Netflix's ad tier can improve its long-run economics while the stock prices in decline. It is the second most-watched platform on US TV behind YouTube; ad-tier members pay subscriptions and generate ad revenue, with room to improve fill and pricing. Revenue growth, margins and buybacks underpin an Overweight rating and $103 target, 46% upside at the preview price. The quarter was solid, but the soft Q4 guide and ad forecast cut from $3B to ~$2.7B are setbacks the author sees as fixable. x.com … Show more
Netflix's control of its own content keeps growth avenues open even as quality and popularity ebb and flow. Production is costly, but being able to make more is hugely underrated. YouTube pays creators more than double what Netflix spends; its content is not free. Ads need time to gain traction, with live sports where they should prove their worth. Solid earnings outweigh weak short-term guidance; Netflix should become one of Wall Street's hottest stocks again, with targets well into the $150s. … Show more
Netflix's earnings growth cannot keep relying on price increases or a one-time ad-tier rollout when future ad growth depends on impressions. The password-sharing crackdown, ad tier and repeated price hikes amid declining time spent signal a mature business; podcasts and live sports look like attempts to find another growth leg. There is no reason to own the stock beyond its discount to historical valuation, which it should command. x.com x.comÂ
Their business strengths and growing revenue support a confident years-long outlook for Amazon, Uber, Broadcom, American Express and Meta. Amazon spans e-commerce, cloud, ads, logistics, streaming and robotics; Uber leads mobility and delivery; Broadcom supplies custom AI chips to major companies; American Express has a premium card business; and Meta leads advertising with 3.6 billion daily active people. x.com x.com x.com x.com x.comÂ
Netflix's slowing growth and reduced ad forecast temper the case for ads as a growth engine. Growth eased from 17% a year ago to 12%, with 11.5% expected next quarter; this year's ad revenue forecast fell from about $3 billion to $2.7 billion. Free cash flow guidance fell from $12.5 billion to $12 billion. A more appealing P/E could make adding shares worth considering. x.com x.comÂ
Netflix's competition and valuation leave its risk/reward well behind other opportunities. It competes with Amazon, Disney, Apple and YouTube, while trading at about 20x next-twelve-month earnings for roughly 14% annual EPS growth over the next few years. It is mostly a great company, but these numbers do not make it a multibagger. x.com x.com x.com x.comÂ
Amazon's AWS growth still drives its valuation, making the post-earnings decline look temporary despite misses elsewhere. AWS grew 39% to $46 billion, above the $45.4 billion expected; Jassy sees growth above 40% in both 2027 and 2028. Earnings, advertising and Q4 sales guidance missed expectations, while trailing free cash flow was negative $42.4 billion. x.com x.comÂ
Amazon's shopping ads reach customers close to a purchase, giving its advertising business an earnings opportunity alongside a more capital-intensive cloud buildout. Northwise's September forecast puts 2030 ad revenue at $185.6 billion and operating income at $81.0 billion, using an estimated standalone margin Amazon does not disclose. Video content, partner economics and advertiser returns may limit how much incremental ad revenue becomes profit. x.comÂ
Netflix's revenue growth keeps slowing, with little sign yet that the trend will reverse. Third-quarter growth fell to 11.8% from 13.4% in the prior quarter; profit beat mainly on expense timing, while slower product rollouts held back revenue guidance. Competition remains the main concern: Apple, Amazon and Alphabet can spend heavily on streaming without relying on their libraries for profit. Nothing in the report was alarmingly bad, but there is little to get excited about. x.comÂ
Amazon looks cheap against its growth and cash-generating businesses. At about 3.5 times trailing revenue and a roughly 20 trailing P/E, it has $776B in sales, AWS growing 37% year over year, plus advertising and marketplace cash engines. x.comÂ
