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Netflix (NFLX) +1.2% in spite of lower equity futures as Lazard raises its PT all the way to...

Netflix (NFLX) +1.2% in spite of lower equity futures as Lazard raises its PT all the way to $325 from $250. The firm, which upgraded Netflix in January following its blowout Q4, thinks the company's margins can eventually be similar to those of HBO and Starz.
Comments (2)
  • DIgitalMediaView
    , contributor
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    NFLX can either pursue subscriber growth by building up its content offer at the expense of margins (it has $5.7B in current obligations, and has notified investors it will need to raise capital to generate more content) or pursue HBO's higher margins and suffer slow-to-no subscriber growth (HBO penetration in the US has stabilized in the 30 millions, which is how NFLX recently surpassed them). NFLX can't increase both subs and margin because their growth is being driven by the content spending that has killed their margins. If they only increase subs, or only increase margin, their valuation will stop making sense to even their most bullish investors.
    26 Apr 2013, 09:16 AM Reply Like
  • timedk
    , contributor
    Comments (16) | Send Message
     
    I still remember when Ingrid Chung of Goldman Sachs issued a price target of $350 in 2011 before it crashed. in the 2010-2011 rally at least earnings and subs were growing at a higher percentage. Now we are doing the same thing over again, except with slower growth on all fronts except money they owe. Since the 2011 rally they added less than 4 millions subs, slower profit growth, increased content costs and it's worth 12+ bil again. I am amazed at how quickly the market forgets. Wonder how far they can drag it along this time? Hopefully $250 +, and the analyst all come out in droves by then. I will wait patiently to enter my short on this. Hastings is the best stock promoter I've ever seen, true talent there. No clue when he will decide to pull the rug though. He can do that with a single brain fart like qwikster or just decide to raise the price to HBO levels since he feels he can compete with them. When they make a production like Game of Thrones, I'll consider going long.
    26 Apr 2013, 11:58 AM Reply Like
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