Jason Helfstein, Oppenheimer senior internet analyst, joins 'Money Movers' to discuss his takeaways from Netflix's q2 earnings.

Following its second quarter earnings report, Netflix continues to demonstrate strong financial performance, with notable user growth and robust cash generation. Jason Helfstein, a senior internet analyst at Oppenheimer, noted that Netflix's engagement per user remains steady, and the company has aggressively repurchased shares, with $1.6 billion bought back in the quarter and significant authorization remaining.

Despite recent price increases in the U.S. and parts of Europe, Netflix has not experienced a notable rise in subscriber churn. The company plans to increase its content spending next year, which Helfstein believes positions Netflix well for continued margin growth. Netflix has also indicated it does not intend to pursue large acquisitions of legacy media assets, focusing instead on buybacks and content investment.

Netflix's outlook post q2 earnings beat

Jason Helfstein's with us. Jason, happy Friday to you. Good to have you. Hey. You too. Thanks for having me. The general take this morning about the price action is, I think, a creeping sense of just more nimble competition. Is that fair? I don't know if it's that. I mean, the only thing that you got that could have been competition-related was the comment around engagement, where they basically said, you know, overall engagement was up a percent, but users are growing more than a percent. And there's some noise with the way, you know, with account sharing. So they said organic usage, basically like on a per person basis, is basically flat. And they tried to say that this year was an unusually back-weighted content year. So they felt like they hadn't even put their best foot forward on content in the first half. So that would have been your only takeaway. But my take is just reflective of, you know, a market at highs and stocks kind of at high PEs right now, very high PEs, maybe just sell the news and we'll see as earnings play out. The buyback in Q1 was pretty aggressive relative to last year's total levels. And there were some questions going into the print last night about whether or not that is the best use of capital. Did that continue into Q2? Yes, they did buy back a good amount of stock. They repurchased $1.6 billion. They still have something like $12 million remaining on the authorization. And the company just is absolutely minting cash right now. So unless they're going to do some very large M&A, which they continue to talk about not wanting to buy legacy media assets, you know, it's going to go to buybacks, basically, or content. That's really the only place to spend the money. Of all the things working for Netflix right now, which are, you know, they have hits, they have even more coming, you said, in the back half. They have the advertising working well, user growth. How much of that is sustainable into next year? I mean, look, they just put through, right, the price increase in the U.S. and kind of more developed parts of Europe. And it's not hitting churn, right, in a period where, again, you could argue, like, not their best foot forward on content. And so I actually think that that sets them up quite well for next year because they typically raise the price every two years, not every year. So that takes kind of some of the churn risk off the table. I think when you look at street numbers, we actually have content costs going up next year on a year-over-year basis more than they went up this year. So when I look at the model, I actually see the margins look quite conservative for next year in 2027.

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Breakdown