Netflix Stock Bears Are in for More Surprises
Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings has just laid down all of his cards on the table and it seems like he won’t be splitting the pot with anyone. NFLX stock investors are now in the clear to take their winnings home.
From a local movie rental web site to a full-blown online streaming service, Netflix has come a long way. But if you think this is the end, you’re living in a fool’s paradise.
For Netflix, this is the beginning. The company’s move from licensing content to producing its own original content is the next step in its business evolution. And the evolution will continue as it finds more avenues.
Call it my wishful thinking, if you may, but write it down somewhere for future reference; Netflix will surprise the world again with yet another venture. I’m seeing it treading down Disney’s path—hint, hint: merchandise, gaming partnerships, studios, and more.
This evolution has begun as Netflix goes global. The company has just gone all in with its expansion strategy. Yes, two days after Baird downgraded the stock on fears of its international execution, Netflix shocked the market with a global expansion in 130 new markets that will make it, hands down, the biggest Internet TV company in the world.
Company skipper Reed Hastings’ timing could not have been better. The announcement has come on the heels of its new corporate strategy in play, which is taking the online streaming industry by storm.
Bears have long believed that Netflix’s subscription-based revenue structure will not be able to cover the high costs associated with its latest business strategy to produce its own original content. But Netflix is already proving the bears wrong.
Netflix’s original shows like House of Cards, Narcos, Jessica Jones, Orange Is the New Black, and Master of None have all become household names now.
Meanwhile, Netflix’s original movies are also raking in international critical acclaim and massive viewership. Beasts of No Nation managed to bag numerous national and international awards. Meanwhile, recently released The Ridiculous Six has become the most watched movie in the shortest time in the history of Netflix.
Take note that Netflix is maintaining profitability even with all the billions being poured into original content production. How? By spreading its tentacles across the world! The latest expansion may take time to achieve the kind of penetration it has in the U.S., but being the first mover, Netflix will definitely have an added advantage.
Now, this past year, Netflix streamed an unprecedented 42.5 billion hours, which marked a whopping 46% increase from 2014. But mark my words, 2016 will be even bigger and better. (Source: “People watched 12 billion hours of Netflix in the last 3 months of 2015,” Yahoo! Finance, January 6, 2015.)
I say this not only for its new original content launches, with over 30 original titles in the making, but also for its partnerships with studios like Disney and DreamWorks, which will be exclusively releasing big titles on Netflix in 2016.
The Bottom Line on NFLX Stock
The international expansion will lend to Netflix’s growing dominance and recouping the billions it is investing in content. Plus, this move will further add to Netflix’s lead against Hulu, “Amazon Prime,” and HBO in the on-demand TV streaming race. From where I stand, NFLX stock might see more good times ahead.