One continuing risk for Netflix stock is its negative free cash flow, which is why so many analysts are concerned about original content spending.
With more than 90% of all its available cash overseas, a one-off 10% repatriation tax would net Apple about $220 million for buybacks or mergers and acquisitions. To date, Apple has over $250 billion in cash, most of it sitting overseas. Adding the two scenarios, Apple will have enough cash to acquire new companies.
According to Citi, Apple's second most likely acquisition target is Disney at around 25% probability; however, the investor note was written before Disney announced its Fox acquisition. But prior to that event, Citi gave an Apple-Disney tie-up a 20-30% chance. Although there's no such indication as of now.
It was reported a year ago that it planned to rent California's Culver Studios for the shooting of original TV shows and movies, as it has plans to invest up to $1 billion in TV and movie productions. However, while Apple has tried to lure streaming customers with original content, viewers still flock to other services, like Netflix, Hulu and Amazon Prime Video. That money helped Apple lock down an order for a reboot of the Steven Spielberg executive-produced Amazing Stories, as well as a coveted scripted drama about morning TV shows set to star Jennifer Aniston and Reese Witherspoon.
Subscribe to our mailing list and get interesting stuff and updates to your email inbox. Apple is said to have as much as $250 billion dollars at its disposal, and Suva and Merchant figure that it would need only a third of that hoard to buy up Netflix. This is a good problem to have. As such, this new tax reform might allow the company to put the cash to good use. However, a tax crackdown in that country led the tech giant to move its profits to the small island nation of Jersey.
It's no denying that Apple has been doing a lot lately to see itself among the most popular streaming services in the world.
Nollen believes that Netflix "changed the way people watch TV and notes that it is pushing even further into the film industry".