Netflix, Inc. (NASDAQ:NFLX) had a phenomenal run in 2013 and closed the year with a 300 percent return. The strategy from the maker of the popular series House of Cards and Orange is the New Black, of investing more on new, high-quality series, has certainly paid off. The streaming company’s House of Cards won the Emmy last year for the best political drama. However, some analysts question the likelihood of a similar run in 2014.
2014 may not go Netflix’s way
Many believe that Netflix, Inc. (NASDAQ:NFLX), which have been a favorite of investors, is now facing challenges in getting enough users to pay for the costly new productions, says a report from The Globe and Mail. According to some of the analysts, a $300 share price for Netflix is unsustainable, and the company may have to limit the amount of bandwidth it uses owing to a pending U.S. federal appeal. These issues will be closely examined when the online video distributor reveals its fourth-quarter earnings and holds a conference call Wednesday.
Paul J. Isaac's Arbiter Partners returned -19.3% in the third quarter of 2021, according to a copy of the hedge fund's quarterly investor correspondence, which ValueWalk has been able to review. Following this performance, the fund's return sits at -1.6% for the year to the end of September. In comparison, the S&P 500 returned 15.9%, Read More
Recently, analyst Scott Devitt from Morgan Stanley lowered his rating and price for Netflix to $310 per share from $333. He argued that rival HBO and Amazon have better opportunities to expand their respective video streaming services.
“We believe digital video distribution has become largely commoditized and it may be easier for some Netflix competitors to gain their next five million users than it will be for Netflix,” he said. Another rival, Hulu with impressive TV catalogue from ABC, NBC and Fox, is also a threat to Netflix.
Wedbush Securities analyst Michael Pachter believe that Netflix, Inc. (NASDAQ:NFLX) would record a lower number of new subscribers “than last year and the Street is not going to like that.”
A solid 4Q expected
Colin Dixon, chief analyst at OnScreen Media, expects a better fourth quarter for Netflix, Inc. (NASDAQ:NFLX). According to the analysts, the company would report between 33 million and 34 million U.S. subscribers for 2013, and “will probably have an even better international year – just shy of 11 million.”
According to media research firm SNL Kagan, the streaming service company had 31.1 million subscribers and 9.2 international subscribers, last quarter. Netflix’s chief executive Reed Hastings has been focusing on transforming Netflix, Inc. (NASDAQ:NFLX) into a major content provider, which would put the company in direct competition with established players such as HBO and Showtime.