Business Case Studies & Business Publications

Netflix, Inc., 2007

Pfeifer, Phillip E...

Case

Netflix, Inc., 2007

Pfeifer, Phillip E.; Conroy, Robert M.

F-1592 | Published December 21, 2009 | 15 pages Case

Collection: Darden School of Business

Add To Cart Buy Now

Product Details

The protagonist in this case is an analyst attempting to value Netflix, Inc., and check whether her recent buy recommendation at a price of $20.00 per share was still valid. Recent bad news had caused the price to drop and she needed to do her best to figure out what was the future for Netflix, and was it undervalued at $17 per share? Intended for MBA students, this case contains her discounted cash flow valuation and a set of assumptions (revenues per customer, retention rates, etc.) students can use to perform a valuation of the existing Netflix customer base as another approach toward judging the $17 stock price. There are two student spreadsheets available for this case (UVA-F-1592X1 and UVA-F-1592X2).

Introduce the concept and practice of using customer lifetime value to assist in the valuation of a firm whose main source of cash flow is its cusotmer releationships.