There are catalysts ahead for Netflix, says TD Cowen's John Blackledge

Summary

TD Cowen analyst John Blackledge discusses Netflix's quarterly earnings, viewing the sharp premarket sell-off as overdone despite mixed results. He highlights ad revenue doubling, content expansion, and buybacks as catalysts, maintaining a Buy rating. The host raises questions about AI disruption favoring YouTube.

• Netflix reported mixed Q2 results with a small Q3 revenue and earnings miss, and unchanged operating margin guide.
• The stock dropped over 11% premarket; Blackledge calls the reaction overdone.
• Engagement hours grew 2% in H1, not negative as some feared, and historically low engagement growth didn't stop 12-16% revenue growth.
• Ad revenue is doubling this year, expected to scale to >10% of revenue and drive margin expansion.
• Netflix is broadening content with podcasts and vertical video clips to boost engagement.
• The company repurchased nearly $5 billion in shares, reducing M&A risk perceptions.
• Host Joe Kernen questioned whether AI could privilege YouTube over Netflix as a disruption risk.