Netflix, Inc. (NASDAQ:NFLX) is certainly one of the great comeback stories of the stock market. Almost two years ago, the stock was trading at close to $300 per share. Then it plummeted as concerns about a significant price increase and changes to the company’s subscription plans grew. Now after smashing earnings expectations earlier this year, Netflix, Inc. (NASDAQ:NFLX) is closing in on the $200 per share mark again, and investors and analysts are questioning whether it can continue its upward trajectory.
CNBC interviewed Lazard Capital Markets analyst Barton Crockett on Monday. Crockett said Netflix, Inc. (NASDAQ:NFLX) is getting “tremendous traction with consumers.”
Recent surveys indicate that approximately 40 percent of consumers either already have Netflix, Inc. (NASDAQ:NFLX) or want to get it. And the company shows no signs of slowing down as it continues to sign deals for exclusive content with major providers like The Walt Disney Company (NYSE:DIS) and Time Warner Inc (NYSE:TWX) and even create its own content. The company’s own series “House of Cards” is turning out to be a major success.
But not everyone is as optimistic about Netflix, Inc. (NASDAQ:NFLX) as Crockett. MSN Money came out in strong opposition to the stock and CNBC’s interview with Crockett.
In the post, Rocco Pendola said he doesn’t buy CEO Reed Hastings’ assurance that Netflix, Inc. (NASDAQ:NFLX) collects valuable information about what its viewers watch and can use it to target its consumers better. He doesn’t believe that the information Netflix, Inc. (NASDAQ:NFLX) has about what its viewers want is as valuable as Hastings says.
He said that Netflix, Inc. (NASDAQ:NFLX) didn’t just decide to temporarily remove Sony Corporation (NYSE:SNE) (TYO:6758) content. According to Pendola, Sony decided it didn’t want to offer its content for only $8 per month to a subscriber base that has grown incredibly large. As a result, he said Starz decided to not even negotiate with Netflix, Inc. (NASDAQ:NFLX) to keep its content with the company. Starz and Sony Corporation (NYSE:SNE) (TYO:6758) then made a deal together, leaving Netflix out in the cold.
In Pendola’s view, Netflix is now unable to secure premium content because of its pricing structure, so the content provider of one show he watched the first two seasons of chose Amazon.com, Inc. (NASDAQ:AMZN) instead of Netflix to distribute it.
However, it’s important to ask another question if going down this road. Are viewers willing to pay $1.50 to $2 per episode of a television series to watch it? Some shows might be able to get away with it, but certainly not all shows could. A pricing structure like this might be enough to keep regular cable companies in business.
So arguments could be made for Netflix, Inc. (NASDAQ:NFLX) to go either way. There’s no denying that it’s a leader in the world of streaming content. As more and more people opt to stream instead of choosing other ways to view content, being the one of the first providers to offer streaming content is essential for success. The company could even move into offering higher priced premium packages in addition to the standard subscription down the road if it begins to see difficulties securing premium content.