Look Here: The Prestige and Netflix

Magic tricks are great.  The key to a good magic trick is to get the audience focused on one thing, while performing the actual “trick” somewhere else.

In other words, Pay no attention to the man behind the curtain!

I have no real interest investing in Netflix, but it provides a well-known and timely example of financial reporting that appears to me as if I were attending a magic show not reading an SEC filing.  Their latest earnings report focuses on two main numbers, Subscribers and Contribution Profit. Both of these numbers resemble the attractive female assistant any magician has at his side.  Look here (Subscribers), don’t look over there Free Cash Flow (buried at the bottom of page 11 of 12 of their report–sneak peak, it is negative for the current and last year).

If you want to check out a good magic show, watch The Prestige (not available on Netflix), but when it comes to SEC filings, look behind the curtain at the real numbers.





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