Netflix Stock Nears Record High as Content Remains King
NFLX Stock to Gain on Popular Content
Netflix, Inc. (NASDAQ:NFLX) is gradually inching toward another record high as sentiments remain bullish around the company’s growth prospects.
It was also a historic week for the Internet TV company that won its first Oscar last Sunday in a glittery ceremony. Netflix stock price gained about 0.4% on Wednesday and closed at $142.65.
But Netflix is in no mood to rest on its laurels. It has announced new offerings that prove its commitment to dominate the world and be the leader in original programming.
Netflix announced on Wednesday that it is bringing the best in entertainment to Europe, as well as the best of European entertainment to the world. The leading Internet TV provider is among the top producers and distributors of high-quality European entertainment. Since 2012, the company has made a commitment of more than $1.75 billion to European productions, amounting to over 90 original productions in various stages of development. (Source: “Netflix Champions European Entertainment,” Netflix, Inc., March 1, 2017.)
The original European content is comprised of series, films, documentaries, kids shows, and stand-up comedy specials. The upcoming titles showcased at a press conference in Berlin included Dark, the first original series from Germany, and Suburra, a crime thriller series from Italy.
NFLX stock is already up 15% year-to-date as compared to the S&P 500, which is up about seven percent. The online streaming network is nearing the 100-million-subscriber mark, and expectations are high with the planned global expansion.
Soaring Subscriptions to Help Netflix Stock
In January, Netflix had surprised investors with strong growth in subscriber numbers, which had boosted NFLX stock. Netflix added 7.05 million net new members globally in the fourth quarter against the forecast of 5.2 million. This was the largest quarter of net additions in the history of Netflix and was driven by strong acquisition trends in both the U.S. and International segments.
The company’s third-quarter results were also impressive, and Netflix had beaten investor expectations on subscriber numbers as well.
With Wednesday’s preview of its first German, Spanish, and Italian original TV series, Netflix is confident about enhancing its subscriber base in Europe. The company expects a greater membership impact from its content slate in the second half of 2017. Since the global expansion is proceeding as planned, Netflix intends to grow its global operating margin for many years. This would likely further push NFLX stock higher.
The last three months have been phenomenal for Netflix stock, which rose almost 22%. In contrast, the S&P 500 Index gained 10% in the same time period. The following NFLX stock chart shows this impressive run.
Chart courtesy of StockCharts.com
Investors are excited about the subscription growth posted by the company and expect the same to continue as the streaming platform invests heavily in global expansion and unique content. The Oscar win could not have come at a better time for Netflix. Its documentary The White Helmets won the award for the best short subject documentary.
On Monday, Netflix CEO Reed Hastings delivered a keynote address at the Mobile World Congress in Barcelona, and was optimistic that Netflix will be able to cross the 100-million global subscribers mark soon. Hastings was confident that the streaming video giant will be in a stronger position than the emerging competitors in the field. (Source: “Keynote 4: Reed Hastings, CEO and Founder, Netflix,” Mobile World Live, February 27, 2017.)
With its focus on innovative content, Netflix is likely to do well as the battle for Internet TV heats up. Netflix stock is likely to hold strongly on the back of an impressive lineup of shows and movies.
Hastings is aware of the challenges that come with the dependency on the Internet and mobile networks in different parts of the world. However, with time, he is hopeful of making the Netflix experience more enriched. He is also not worried about the likely merger of AT&T Inc. (NYSE:T) and Time Warner Inc (NYSE:TWX).
As reported by TechCrunch, the Netflix CEO said that the real challenge was figuring out what the next thing was to capture consumer attention, “Is it VR, is it gaming, is it pharmacological?” (Source: “Netflix’s Reed Hastings believes AT&T Time Warner merger could be good for consumers,” TechCrunch, October 24, 2016.)
The Bottom Line on Netflix Stock
Netflix faces increasing pressure as linear TV makes way for Internet TV, with Amazon.com, Inc. (NASDAQ:AMZN) getting big-time into original programming and Apple Inc. (NASDAQ:AAPL) also expected to jump into the fray. However, Netflix, Inc.’s impressive record in original programming and strong global presence are likely to help it maintain its lead in the streaming industry.
And, as long as the company continues to beat subscriber expectations, investors will continue to reward the stock. Given the amount of money it is pouring into building innovative content and how aggressively it is pursuing its strategy, NFLX stock may well be on its way to another record high soon.
