Netflix shares are up, but some analysts are concerned about the streamer
Netflix shares are up, but some analysts are concerned about the streamer
Netflix shares surge, but its stock is expensive while its advertising initiative and its pricing ability may be stalled.
BY Tiernan Ray
This story originally appeared in The Technology Letter and is republished here with permission.
Netflix shares are rising by nine percent early Friday after the company Thursday evening beat with its revenue and profit, and forecast 2025’s revenue will be about in line with consensus, and that operating profit will continue to expand.
This was a turn-around from the last report, July 18th, when the shares sold off slightly as the revenue outlook at the time came up short. (I would note that Netflix shares rose over seven percent from then to now, which was better than the Nasdaq in that time, so, buying the stock after the selloff was a good tactic.)
It’s worth asking, however, whether the company’s trends have in some sense stalled. At least one observer is asking that.
I’ll come back to that, but, first, investors this morning seem to be focusing on better-than-expected subscriber numbers, just over five million versus four and a half million expected, for a total of 282.7 million paid memberships.
The profit outlook is the star, to my mind. The company’s operating profit margin of 29.6% was well above the 28.1% the company had forecast back in July.
The company raised its outlook for this year’s operating profit margin to 27% from what had been a 27% outlook, and for next year, it sees that rising to 28%. Not too shabby, considering the company ended 2023 with a 21% margin. Profitability has been one of the pleasant surprises of Netflix in the last several years, given what we all thought, at one time, was going to be a perennial money-loser.
So, even a single star—a single, bright pixel—generates an immensely complex neural response in the visual cortex. Imagine the even more complex pattern of cortical stimulation needed to accurately reproduce natural vision.
Some scientists have suggested that by stimulating exactly the right combination of electrodes, it would be possible to produce natural vision. Unfortunately, no one has yet suggested a sensible way to determine the receptive field of each individual neuron in a specific blind patient. Without that information, there is no way to see the stars. Vision from cortical implants will remain grainy and imperfect, regardless of the number of electrodes.
Sight restoration is not simply an engineering problem. Predicting what kind of vision a device will provide requires knowing how the technology interfaces with the complexities of the human brain.
How we created our virtual patients
In our work as computational neuroscientists, we develop simulations that predict the perceptual experience of patients seeking to restore their sight.
We have previously created a model to predict the perceptual experience of patients with a retinal implant. To create a virtual patient to predict what cortical implant patients would see, we simulated the neurophysiological architecture of the area of the brain involved in the first stage of visual processing. Our model approximates how receptive fields increase in size from central to peripheral vision and the fact that every neuron has a unique receptive field.
Our model successfully predicted data describing the perceptual experience of participants across a wide range of studies on cortical stimulation in people. Having confirmed that our model could predict existing data, we used it to make predictions about the quality of vision that possible future cortical implants might produce.
Models like ours are an example of virtual prototyping, which involves using computer systems to improve product design. These models can facilitate new technology development and evaluate device performance. Our study shows they can also offer more realistic expectations about what kind of vision bionic eyes might provide.
First do no harm
In our almost 20 years researching bionic eyes, we’ve seen the complexity of the human brain defeat company after company. Patients pay the cost when these devices fail, left stranded with orphaned technologies in their eye or brain.
The Food and Drug Administration could mandate that sight recovery tech companies must develop failure plans that minimize harm to patients when technologies stop working. Possibilities include requiring companies implanting neuroelectronic devices into patients to participate in technology escrow agreements and carry insurance to ensure continuing medical care and technology support if they go bankrupt.
If cortical implants can achieve anything close to the resolution of our simulations, that would still be an accomplishment worth celebrating. Grainy and imperfect vision would be life-changing for many thousands of people who currently suffer from incurable blindness. But this is a moment for cautious rather than blind optimism.
Ione Fine is a professor of psychology at the University of Washington.
Geoffrey Boynton is a professor of psychology at the University of Washington.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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