This Is Big News for NFLX Stock
When you look at the performance of stocks listed in the U.S. this year, Netflix, Inc. (NASDAQ:NFLX) definitely stands out. While the S&P 500 index has returned less than 1.5% year-to-date, the NFLX stock price surged an astonishing 153.5%!
Here’s something exciting for Netflix stockholders: more than half of Americans now watch Netflix. According to a survey conducted by RBC Capital Markets, 51% of Internet users in the U.S. said that they watched movies or TV shows on Netflix in the past 12 months. (Source: “More than Half of Americans Now Watch Netflix,” Quartz, November 20, 2015.)
More Than Half of Americans Now Watch Netflix
The survey also shows that Netflix has surpassed YouTube to become America’s favorite site for streaming videos. Note that YouTube is mostly free and is full of “shorter, native content.” Compared to other subscription-based streaming services, NFLX is way ahead in the game. By the third quarter of 2015, Netflix reached more than 69 million members across the globe. (Source: “Q3 15 Letter to Shareholders,” Netflix, Inc., October 14, 2015.) In comparison, Hulu, one of Netflix’s biggest competitors, had just nine million subscribers.
Netflix is revolutionizing the TV-watching experience. When you talk about watching TV today, Netflix often comes to mind. This universal awareness of Netflix stems from both the company’s huge subscriber base and its vast amount of content.
Additionally, Netflix’s focus on original content helped to create a loyal following. In July, Netflix earned a career-high 34 Emmy nominations, led by House of Cards and Orange Is the New Black. The company is also not standing still, but continues to bring fresh content to its subscribers. Recent additions to Netflix’s collection include its original series Narcos and Netflix’s first original feature film Beasts of No Nation. Next month, the company is going to release Adam Sandler’s film The Ridiculous Six.
Original content is also helping with Netflix’s international expansion. For instance, 52% of survey respondents in France and 64% in Germany say they have watched House of Cards.
Netflix expanded its global subscribers by 3.62 million in the third quarter of 2015. Among the additions, 0.88 million came from the U.S., while international subscribers grew by 2.74 million. New international subscribers have been the main force behind the company’s membership growth: in the second quarter, the company added 0.9 million members in the U.S. and 2.4 million internationally.
Netflix made its first foray into Asia by launching its on-demand video streaming service for Japan this September. In the fourth quarter of this year, NFLX is launching in Spain, Italy, and Portugal. The company has also announced expansion plans to South Korea, Hong Kong, Taiwan, and Singapore in early 2016.
The Bottom Line on NFLX Stock
Investors should not forget that continued investments in original content will put pressure on Netflix’s cash flow. In the first three quarters of 2015, free cash flow came in at -$163 million, -$229 million, and -$252 million, respectively. Nevertheless, interest in NFLX stock has never been higher.
Netflix is revolutionizing the TV-watching experience. Should its success continue to carry over to other regions in the world, the company’s stock price could climb even higher.