Doug Anmuth, an analyst at JPMorgan (NASDAQ:), reflected on recent weaknesses in Netflix stock.

Netflix traded at 70% less YTD, and 75% lower than its record high. Anmuth reminds investors that “this is a 20% GAAP operating margin business that should still have positive FCF this year.”

Analysts are currently looking for $772 million in FCF for 2022, much higher than JPMorgan’s estimate of $500 million.

“We’ve seen NFLX go through tough times in the past—2007/2008 w/Blockbuster & 2011/2012 post Qwikster—among others. We’d never count them out,” Anmuth told clients in a note.

He shared with investors 3 main concerns regarding Netflix while he was still speaking.

1. Lack of clarity on timing & the range of outcomes around account sharing efforts & advertising;
2. Lack of visibility on 2H22 subscribers & limited catalysts near term;
3. Many still don’t understand how NFLX flipped from interpreting recent soft subscriber numbers as pandemic hangover to a function of competition & higher penetration due to account sharing.

Anmuth was particularly attentive to the first topic.

“We believe an ad-supported tier is somewhat more complicated as NFLX does not have advertising in its DNA. But it does have several hundred million viewers, & the average member HH still likely spends 2+ hours/day on the platform. NFLX is able to partner with third-parties and also build a sales team 1st for larger brands. What’s less understood is how many existing subscribers across Basic/Standard/Premium would trade down to an ad-supported tier,” the analyst added.

By Senad Karaahmetovic