Netflix stock was down yesterday following reports (twice in the last few days) from Barron’s that mentioned the streaming firm negatively. Barron’s suggested that the streaming firm is overvalued, especially if we consider competition from Google’s YouTube.
Rising competition a serious concern
The report noted that Netflix may have already taken the advantage of the maximum revenue per user it could get. In contrast, YouTube has almost 15 times the number of users than Netflix but earns only 6.5% of the revenue per user as Netflix does.
Apart from the YouTube factor, there are other reasons that could worry the streaming firm’s investors. Amazon Prime is emerging as big competition with subscriptions rising every week. Amazon’s growing user base will help the firm get rights to additional TV shows and movies.
Along with Amazon, another rival that could pose a serious challenge is Hulu. Though Hulu still has a lot of catching up to do, many believe it could pose a serious concern to Netflix in 2016. This year, Hulu got its first Golden Globe nomination. It’s a big deal for the service as it shows that its investments in original content are starting to pay off.
“It elevates Hulu in stature,” Michael Callahan, former director of customer service at Hulu, said previously.
Over the next two years, competition is expected to heat up further for Netflix with more players joining the streaming race.
Analysts bullish on Netflix
Many analysts have released their verdicts on the streaming firm in the last few months. In a note on Nov. 16, Topeka Capital Markets maintained its Buy rating on the stock. BMO Capital Markets, in a report on Oct. 9, gave the streaming firm a Market Perform rating with a price target of $115. In a report on Oct. 15, Oppenheimer gave an Outperform rating to the stock. JPMorgan maintained its Overweight rating on the stock in a report on Oct.15. Vetr analysts, in a report on Sept. 1, upgraded the stock to Hold with a price target of $122.24.
Presently, Netflix has an average rating of Buy and an average price target of $132.72. The stock‘s highest target price is $175, while the lowest is $72. At 9:33 a.m. Eastern, Netflix stock was up 0.75% at $117.90. Year to date, the stock is up by almost 142%, while in the last one month, it is down by almost 6%.