Netflix’s share price is spiking, but some analysts still believe the stock is undervalued. On Tuesday, the streaming company’s share hit an all-time high of $628.50 following an analyst upgrade of the year-end price to $850, says a report from Market Watch. However, despite hitting an intra-day all-time high, the streaming company closed down 0.22%, while year-to-date the stock is still up almost 80%.
Is Netflix the next $100 billion tech firm?
Pivotal Research Group analyst Jeffrey Wlodarczak revised his prior 2015 estimates from 78 million to 95 million paying subscribers internationally, with overall subscribers increasing from 138 million to 160 million.
Chilton Capital's REIT Composite was up 6.1% last month, compared to the MSCI U.S. REIT Index, which gained 4.4%. Year to date, Chilton is up 6.3% net and 6.5% gross, compared to the index's 8.8% return. The firm met virtually with almost 40 real estate investment trusts last month and released the highlights of those Read More
A recent report suggested that Netflix is working on plans to enter the lucrative Chinese market. The U.S. company is reportedly in talks with Wasu Media led by Alibaba Group chairman Jack Ma, to explore the Chinese market. If things go smoothly, then the streaming company could have access to 90 billion yuan or $1.45 billion by the end of the year 2018, claims the analyst. Wlodarczak expects Netflix to gain 13.5 million subscribers from China and another 2.5 million subscribers from South Korea. Separately, Apex Capital is hoping Netflix will become the next $100 billion tech company.
Netflix expanding, but needs to constantly improve
Netflix claims that its customer base grew to 40 million customers at the end of the quarter. Moreover, Netflix is now producing 320 hours of original programming including hit shows such as House of Cards and Orange is the New Black. At present, the company has launched its service in over 50 markets including New Zealand, Australia and Cuba. Netflix plans to operate in over 200 markets by 2017.
Last month, Netflix CEO Reed Hastings, during a conference call, said that Internet TV is increasing around the world at an incredible pace, and therefore, the company will move ahead by following the macro trend.
No doubt, Netflix is aggressively following its expansion strategy, spreading gradually across Europe, but the market keeps the company reminded of the competition and the requirement for constant improvement in service. The online streaming company is facing an internet speed glitch in the European market, which is in turn affecting the performance of the service. Hastings replied negatively when asked about giving an option of download instead of streaming in regions where the internet drags. Moreover, in Europe, Netflix users have limited options compared to their U.S. counterparts. These issues need to be resolved to keep the positive momentum going.