Netflix, Inc. (NASDAQ:NFLX)’s share price may least double by the end of the decade, says a report from The Globe and Mail by Chris Umiastowski. The plan to separate its streaming video business from the DVD-by-mail business helped the company’s share price to reach near the $300 level. Then the move of scrapping the Qwikster idea coupled with excellent business performance took the stock above $300 just a few months ago, according to the author.
Original content winning subscribers
In recent times, Netflix, Inc. (NASDAQ:NFLX) is focusing heavily on original content and expanding its geographical presence. These two factors, which the author calls “content and countries”, will help the company witness continued growth in years to come.
“This is why I’m still very much bullish on the stock, despite what many think is a sky-high price tag. (Full disclosure),” says the author.
Netflix, Inc. (NASDAQ:NFLX) is witnessing a virtuous cycle of growth, where the company is able to increase its subscriber’s base by offering new original content such as House of Cards and Orange is the New Black. Investment done by Netflix in buying the original content helps the company to win subscribers, and more subscribers means more money, and “and the cycle continues as a positive feedback loop.”
Analyst’s doubts aptly answered by Netflix
Netflix, Inc. (NASDAQ:NFLX) provides very affordable services with unlimited access priced at for $7.95 per month. The company now boasts of a subscriber base of 44 million with year over year growth of 40%, in the most recent quarter. Netflix aptly answered the analysts, who were claiming the U.S. customer base was maturing, by posting 23% domestic subscriber growth. Apart from the U.S., the streaming company recorded a 66% year-over-year growth, and “I think there is much more room to grow in the coming decade,” believe author.
Sell side analysts believe that Netflix’s growth may be hampered by rising content costs and increased competition. However, the author feels that the company is investing primarily with a long a term objective instead of boosting its quarterly results. Citing an example, author notes “Amazon invests to dominate retail ecommerce. Netflix invests to dominate in Internet video.”
In the next two years, the author expects Netflix, Inc. (NASDAQ:NFLX) to produce high-quality blockbuster movies apart from delivering original content. The strategy of the company was aptly worded by Netflix’s chief content officer, Ted Sarandos, who in an interview with GQ magazine said, “The goal is to become HBO faster than HBO can become us.”