Netflix stock has been gaining this week following a report from Ericsson noting that mobile data traffic could jump 10 times by 2021. On Wednesday, the stock closed up 3.01% at $120.63.
Rise in mobile traffic good for Netflix
As per the report, 70% of the total mobile traffic will be video, compared to 50% estimated earlier. Though YouTube will account for the 70% of the total video traffic on majority of the mobile networks, Netflix could hit 20% in the regions, where it operates.
Another report that pushed Netflix stock up came from Australia. According to Australian Communications and Media Authority, 2.5 million users subscribed Netflix in the first six months of 2015. As per the report, 3.2 million or almost 17% Australians used the streaming service in the period, of which 78% used Netflix’s service.
Netflix presents an impressive growth opportunity, says Zacks. The U.S. firm is aggressively expanding overseas with a focus on emerging markets now. The streaming firm plans to expand to 200 countries by 2016, and presently, covers 50 countries (excluding the U.S.), including 13 countries in Europe.
Focus on emerging markets
Zacks analysts believe that “capitalizing on growing markets is the right strategy for the company to expand its reach as domestic markets are getting saturated.”
Netflix launched its services in the Canada in late 2010, and since then has expanded its operations to the Caribbean (in September 2011), the U.K. and Ireland (in January 2012) and the Netherlands (in September 2013). In 2014, the streaming firm launched its services in six new European nations – Belgium, Austria, France, Germany, Luxembourg and Switzerland.
Recently, the U.S. firm entered its first Asian market, Japan. By early 2016, the streaming firm will expand to more Asian markets such as Hong Kong, Taiwan, Singapore and South Korea. Also, the company is known to be in talks with Chinese broadcasting executives for making a debut in China.
For the current quarter, Netflix expects to gain 1.65 million U.S. subscribers, and 3.5 million subscribers globally. However, Zacks believes rising content acquisition costs and increasing competition are an “area of concern.”
The year 2015 has been a roller-coaster ride for Netflix. After the stock split in July 2015, the stock hit a high of $129.29 and has a low of $85.50. Year to date, the stock is up over 147%, while in the last month, it is up almost 29%.