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Should Berkshire Hathaway Buy Netflix?

What does the future look like for Netflix (NASDAQ: NFLX)? In this clip from “The Rank” on Motley Fool Live, recorded on April 25, Motley Fool contributors Jason Hall and Matt Frankel discuss the state of the streaming giant and whether it would be a good fit for Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).

Jason Hall: So I’m just going to go out there and say that I don’t think they should just add this in the portfolio, but I think they should buy it and I’m serious about this. Ready? 
Matt Frankel: Sure. 
Hall: Netflix. 
Frankel: Hmm. 
Hall: The reason why is, a lot of times there’s the argument made about, “that doesn’t seem like it would be like a low-return, low-margin kind of business.” But look at how well BNSF Railways has done for the business in terms of a low-margin, cash cow business. I think it would be healthier for Netflix. You get it out of the financial headlines. You have wonderful management that can build a wonderful product, and it is a cash cow business. It has to put a lot of that back into CapEx for content, but I really think it would fit well within what Buffett’s built. 
Frankel: As it’s being run now, I think that’s too capital-intensive a business for Buffett to get behind with the content. There’s a lack of visibility into how much they’re going to have to spend on content going forward to remain competitive.Jason Hall has no position in any of the stocks mentioned. Matthew Frankel, CFP® has positions in Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Berkshire Hathaway (B shares) and Netflix. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. –

What does the future look like for Netflix (NASDAQ: NFLX)? In this clip from “The Rank” on Motley Fool Live, recorded on April 25, Motley Fool contributors Jason Hall and Matt Frankel discuss the state of the streaming giant and whether it would be a good fit for Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).

Jason Hall: So I’m just going to go out there and say that I don’t think they should just add this in the portfolio, but I think they should buy it and I’m serious about this. Ready? 

Matt Frankel: Sure. 

Hall: Netflix. 

Frankel: Hmm. 

Hall: The reason why is, a lot of times there’s the argument made about, “that doesn’t seem like it would be like a low-return, low-margin kind of business.” But look at how well BNSF Railways has done for the business in terms of a low-margin, cash cow business. I think it would be healthier for Netflix. You get it out of the financial headlines. You have wonderful management that can build a wonderful product, and it is a cash cow business. It has to put a lot of that back into CapEx for content, but I really think it would fit well within what Buffett’s built. 

Frankel: As it’s being run now, I think that’s too capital-intensive a business for Buffett to get behind with the content. There’s a lack of visibility into how much they’re going to have to spend on content going forward to remain competitive.

Jason Hall has no position in any of the stocks mentioned. Matthew Frankel, CFP® has positions in Berkshire Hathaway (B shares). The Motley Fool has positions in and recommends Berkshire Hathaway (B shares) and Netflix. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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