Netflix, Inc.: The Big Reason to Be Bullish on NFLX Stock

NFLX StockAnalyst Says More Potential For Netflix Stock

Netflix, Inc. (NASDAQ:NFLX) stock is down from the highs of $106.28 that it touched last week. However, NFLX stock ended in green on Thursday when the overall market slipped into red.

The company is expanding globally and investing heavily in content to grow its subscriber numbers. And here comes another piece of news that bodes well for Netflix stock.

Pacific Crest Securities has reiterated its “overweight” rating on Netflix stock. Analyst Andy Hargreaves recommends that investors buy Netflix on the prospect of better subscriber growth next year. Though the imminent price increase may turn sentiments negative for NFLX stock in the third quarter, the prospect remains good going forward, on the back of higher international subscriptions. (Source: “Buy Netflix before earnings on improving international subscriber growth: Pacific Crest,” CNBC, October 13, 2016.)

Earlier, Netflix stock had suffered as the company had announced its strategy of “un-grandfathering,” whereby it will hike prices gradually over this year. But the rumors of a possible acquisition by Walt Disney Co (NYSE:DIS) had pushed up NFLX stock. There have also been reports that the video streaming company faces increased competition from, Inc.’s (NASDAQ:AMZN) “Amazon Prime Video” service.

However, these concerns seem to be overdone, as Netflix’s content strategy looks quite promising. Netflix is focused on providing original and unique content to its subscribers, and it invests heavily for this. Reports came in on Thursday that the company has paid around $40.0 million for two stand-up comedy specials by Chris Rock. This is a huge gain for Netflix, as the deal with the Emmy-nominated comedian was won after outbidding Amazon, Hulu, LLC, and Home Box Office, Inc. (HBO). (Source: “Netflix Nabs Chris Rock for Two Comedy Specials in $40 Million Deal,” Variety, October 13, 2016.)

Netflix launched its services in over 130 new countries this year, but the results were not in line with expectations, primarily because the content did not have local-language support. Netflix then worked on providing local-language subtitles and dubbing for a couple of markets, and the results were very encouraging. Netflix shall gain more subscribers as it rolls out local-language support for other international markets.

As investors look forward to the earnings report on Monday, there may be some disappointments. However, Netflix Inc’s strategies to grow its subscriber base are likely to bear fruit, and should buoy NFLX stock.