Why Alphabet's YouTube Could Be Worth More Than Netflix

Core Insights - Netflix has seen a significant increase in its share price over the past decade, leading to a market capitalization of $505 billion as of October 7 [2] - YouTube, a division of Alphabet, has an estimated 2.5 billion monthly active users, indicating its extensive reach and potential value [2] Valuation Comparison - Netflix's price-to-sales ratio of 12.5 can be applied to YouTube's trailing-12-month ad revenue, suggesting YouTube's worth could be around $476 billion, which is close to Netflix's valuation [3] - YouTube's revenue figures do not account for subscription income, which is a significant revenue source for the platform [3] Business Advantages - YouTube benefits from a strong network effect, capturing 13.1% of daily TV viewing time in the U.S. as of August, surpassing Netflix [4] - The platform does not incur upfront content costs, which mitigates financial risk [4] - YouTube offers a vast array of content catering to diverse interests across different age groups, enhancing user engagement [4] Investment Considerations - There are arguments supporting the notion that YouTube may be valued higher than Netflix on a standalone basis due to its unique advantages [5][8]