Netflix, Inc. (NASDAQ:NFLX) shares have jumped more than 135% over the past 12 months. Bears continue to argue that the Los Gatos-based company is going to suffer from increased competition and rising content costs. But Chris Umiastowski of the Globe Investor says that the stock will at least double by the end of this decade.
Netflix’s “content and countries” strategy is the key
Bears don’t realize that Netflix, Inc. (NASDAQ:NFLX) is investing heavily in content to win the long-term battle. Its strategy is more clear now, as demonstrated by the latest Q4 results. Today, the company has more than 44 million streaming subscribers, up 40% from the previous quarter. Netflix’s U.S. subscriber base grew 23% while the number of international subscribers increased 66%. What’s more, users can easily afford its services at just $7.95 per month.
Over the past two years, Netflix, Inc. (NASDAQ:NFLX) has been focused on expanding its geographical coverage and original content. Umiastowski says the company’s “content and countries” strategy is the key to its long-term growth. Netflix has already proven its mettle with original content like Orange is the New Black and the House of Cards. The company spends money on the great content, which brings new subscribers, which means increased inflow of money. And this cycle continues.
Netflix executive hints at movie production
Solid subscriber growth allows the company to spread its content-production costs across the world. Umiastowski expects Netflix, Inc. (NASDAQ:NFLX) to start producing blockbuster movies along with TV series in the next two years. That looks realistic because the company’s chief content officer Ted Sarandos said in an interview with GQ magazine that Netflix aims to become HBO much faster than HBO can become Netflix.
The world is shifting rapidly to the customer-controlled Internet offering from the traditional TV. And Netflix, Inc. (NASDAQ:NFLX) has gained a significant lead in this niche. The leader in this business will definitely be a company that invests heavily in content and establishes a global brand. Netflix is doing both.
Netflix, Inc. (NASDAQ:NFLX) shares surged 1.25% to $386 at 10:10 AM EST.