In the case of Netflix stock, analysts are apparently getting into a “my price target is bigger than your price target” fight. Last week one firm upped its price target to a seemingly ridiculous $800 per share, but now we have an even more ridiculous target of $950 a share. Come now. Do I hear $1,000? How about $1,050?
A poker game on Wall Street
Perhaps the big question now is whether a firm will top BTIG’s $950 price target. It’s a bit like watching a poker game, isn’t it? Are the analysts just bluffing with their enormous price targets, battling for headlines as they seek attention and headlines?
But then again, who would have ever guessed that Netflix shares would climb from less than $100 a share at the end of 2012 to nearly $700 a share in only two and a half years? After today’s bullish report from BTIG analysts Richard Greenfield, Brandon Ross and Matthew Krandel, shares of Netflix rose as much as 2.09% to $670.87 per share.
Netflix price target to $950
The BTIG team noted that Netflix has since soared past their previous $600 per share price target, putting them underwater. As a result, they raised their target 45% to $950 per share. Their October upgrade of the streaming TV provider was based on the expectation that Netflix would benefit from the shift away from traditional TV.
Indeed, the company has, and the analysts think Netflix’s business model is starting to show “meaningful momentum.”
Netflix aims to replace linear TV
The BTIG team states that linear TV providers are just not ready to deal with the transition toward on-demand TV. They say traditional TV providers “rely on untargeted, heavy ad loads and large, expensive bundles of broadcast/ cable networks without the technical expertise to build direct-to-consumer businesses.”
They also say that it’s “almost comical” that the biggest innovation traditional TV providers have made in their shift from linear TV to on-demand offerings is to make it impossible for viewers to fast-forward through commercials. Netflix has clearly not only benefited from the transition away from linear TV but also from traditional TV’s disabling of fast-forwarding.
Netflix puts customers first
Netflix doesn’t put ads in its content, so viewers appear to be increasingly turning to it for their TV watching because they don’t want to be forced to sit through ads. There were reports that Netflix was testing out ads in its content but surveys suggest that there could be significant fallout in subscriber numbers if the company does put ads in. Greenfield and his team say Netflix is putting consumers first, while traditional TV providers are putting their business models ahead of their customers.
Only a few years ago, Netflix’s problem was a lack of content, but that has quickly changed, and viewers are now making lists of the shows or movies they want to watch on the platform. The BTIG team thought previously that Netflix would struggle to go far beyond 50 million U.S. subscribers, however, that’s changed as the company now offers more programming than HBO and Showtime combined.