Is Netflix, Inc. (NFLX)’s Growth Built on A House of Cards?

The battle between these two types of business models has been going on for a long time and it’s still unclear which model will prevail. Perhaps there will never be one model that will be inferior to the other.  Nonetheless, it’s worth considering a company that integrates both business models such as Comcast Corporation (NASDAQ:CMCSA) that has subscribers to its content and also sells advertising via its national TV channels. The company’s revenues grew in the third quarter by 15.4% and its profit margin was at 18.4%. This company has a higher profit margin and higher growth rate than Netflix and again it manages to integrate both types of business models.

I understand that the higher than expected growth in revenues of Netflix along with the speculation around its entrance to the Nasdaq-100 index are among the reasons for the spike in shares of Netflix; but when considering the fundamentals, the company isn’t showing a higher growth in revenues than its competitors, it has a very low profit margin and its business model is mostly based on paid content, which might not hold out in the long run. I think there are much more compelling companies that could keep you in the content business and won’t be so expensive.

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The article Is Netflix’s Growth Built on A House of Cards? originally appeared on Fool.com and is written by Lior Cohen.

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