- NFLX Q4 subs add suggests considerable upside to estimate for FY15.
- Content inflation needs to be in check, making original content a top priority.
- Remain buyers of NFLX, a key beneficiary of cord-shaving trend.
Aggressive Spending Is Key To Netflix's International Momentum
- Netflix did well with international subscriber totals during the fourth quarter of 2014.
- Although U.S subscriber growth declined, the segment grew in terms of revenue and contribution profit.
- There has been a direct relationship between Netflix's cost of revenues & marketing and the increase in total international streaming members.
Netflix Pulls The Rug Out From Underneath The Bears
- Netflix may drive subscription revenue growth through increases in pricing as subscribers aren't actually that "sensitive" to pricing increases.
- China may become a potential market. Netflix indicates that the bulk of its international expansion will be completed in the next two years.
- Profitability and revenue are expected to ramp up at a very high rate, as both the cost structure and pricing structure offer meaningful room for growth.
- Netflix blew past earnings estimates, whereas sales beat consensus estimates slightly.
- Revenue will grow by 31% year-over-year in the next quarter, exceeding the 5-year average sales growth at 26%, which indicates that sales growth is accelerating.
Netflix Stock Forecast For 2015 Based On A Predictive Algorithm, Part II
- NFLX is up more than 18% Wednesday after its Tuesday earnings report.
- Strong subscription growth has been made possible because of international expansion.
- Netflix will complete its global expansion in the next two years, remaining profitable over that period.
- I Know First published a bullish forecast for Netflix on January 9th.
- NFLX beats on subs, obviously a key metric, but contribution margin for streaming hits a one year low.
- NFLX beats on profit due to a one time item and an unexplained change to a 0% (or so) tax rate.
- Why the stock is up over 10% after hours beats me.
- The forthcoming earnings report from Netflix will illuminate the importance of international growth.
- European countries like Germany, France and Switzerland should help meet subscriber growth forecasts.
- Competition from HBO Go and others will crop up in the question-and-answer session.
- Netflix is set to report Q4 earnings after-hours today.
- The market is expect 5% sequential growth in revenue and 4 million subscribers.
- Cost of sales - currently 68% - will be another key metric as competition for content is expected from CBS and HBO.
- A miss on any key metrics could cause double digit sell-off akin to Q3 2014. Netflix is a hold.
- Stuck between studios and technology giants, NFLX plays middleman to unsentimental clients.
- Now that NFLX has done everyone's R&D for them, the barrier to entry in on-demand streaming is extremely low.
- From now on, the battle will be uphill.
- NFLX is for traders, not investors. Don't buy the dip.
Does The Netflix Whisper Number Indicate Investor Confidence?
- The whisper number is $0.47, two cents ahead of the analysts' estimate.
- Netflix has a 68% positive surprise history (having topped the whisper in 15 of the 22 earnings reports for which we have data).
- The overall average post earnings price move is 'as expected' (beat the whisper number and see strength, miss and see weakness) when the company reports earnings.
- Netflix is set to report after the bell on Tuesday.
- We think subscriber growth estimates are easily beatable.
- We stick with our bullish long-term outlook and think Netflix at $459 in the long term is reasonable.
Netflix Q4 2014 Preview: International Subs In Focus, Limited Margin Upside
- NFLX will report 4Q14 on Tuesday with consensus expecting $0.45 on revenue of $1.48b.
- International growth will be in focus due to decelerating domestic subs growth.
- Margin upside limited on higher content cost and FX headwind.
- The 33% selloff since last quarter represents an attractive entry point to this fast growth company.
- Much of the bear thesis surrounding Netflix competition and content costs are imperfect arguments and hold little bearing on Netflix's future growth prospects.
- Netflix's international growth opportunities are immense.
- A conservative discounted earnings analysis based on historical trends and management expectations represents 55% upside from today’s price.
- Netflix, Inc. (NFLX) is slated to report 4Q2014 earnings after the bell on Tuesday, January 20th.
- Earnings Per Share: Company guidance is $0.44. The current Street estimate is $0.45 (range $0.39 to $0.66).
- Revenues: Analysts expect an increase of 26.3% y/y to $1.48 bln (range $1.47 bln to $1.50 bln).
- As a customer, I like Netflix - I believe the streaming model is the future of "TV." As an investor, I need more than that.
- FCF took a hit in 2012 and has not recovered; it is still negative. Increased exclusive/original programming will likely continue to be a drag on FCF.
- I ran two scenarios: one sees Netflix as overvalued, the other sees Netflix as fully valued.
Netflix Stock Forecast For 2015 Based On A Predictive Algorithm
- Netflix stock fell over 20% immediately after its earnings report on October 15th, 2014, because of consumer growth not reaching expectations.
- Investors have expressed concerns over international expansion and content costs, but these are necessary for the company’s future.
- Expansion in European markets and new, attractive original content means Netflix stock is poised to make a strong recovery by the end of the year.
- The I Know First algorithm is bullish for Netflix in the three-month and one-year time horizon.
Netflix Unveils Key Dates For New 2015 Programming
- This week, Netflix unveiled launch dates for a number of new original series of shows.
- This roster of new shows is very important to Netflix as it represents the results of what has been a $3 billion investment in new programming.
- Netflix has deals with a number of top producers, actors and brands that combined should give subscribers a glut of new content.
Debunking Misconceptions Around Netflix Heading Into 2015
- Netflix remains a powerful force in the media industry going into 2015, after making some shrewd moves in 2014.
- Many believe Netflix is going to have a hard time launching new original series after just two breakout hits in recent years, but that theory has flaws.
- Netflix has the potential to make its slate of originals so powerful that its library of acquired series and movies becomes supplemental value.
- While Netflix has a number of competitors, it still has the most attractive pieces in place to draw in new subscribers.
3 Things You Need To Know About Netflix In 2015
- 2014 saw a number of major wins for Netflix through its original programming and new acquisitions.
- 2015 will see the results of all the hard work the network has put in over the previous year to help bolster its roster.
- In addition to returning shows like "House of Cards," the network has an arsenal of new originals in queue that could be just as popular.
- Given all the “firsts” achieved by Netflix this year, it stands to reason we will see a lot more in the not-too-distant future.
Netflix: Great For Subscribers, Terrible For Shareholders
- We believe Netflix is priced for a perfection that won't materialize and recommend investors avoid or sell.
- The company has suffered volatile earnings in spite of continued revenue gains.
- Investors buy profits, so they should not be seduced by the siren call of "growth".
- The company is in a competitive space, where consumers are fickle and where the capital costs are too high.
Oct. 14, 2013, 3:31 PM
- Netflix (NFLX +7.9%) signs a deal with Sony (SNE +0.1%) for a new original content series, reports Deadline.com
- The new psychological thriller will be created by the same team that produced Damages for the FX network.
- The deal is significant because it marks the first time the streaming concern had to work a traditional network agreement with a major studio.
Oct. 14, 2013, 1:12 PM
- On a day when reports of MSO talks have helped Netflix (NFLX +6.3%) shoot higher, the FT reports the streaming giant is partnering with Nokia to offer 6-12 months of free service to U.K. buyers of Nokia's Lumia Windows Phones.
- Vodafone subs buying Lumias will get a free one-year subscription; sources tell the FT the promo is "being funded predominantly by Nokia." Consumers buying Lumias via retailer Phones4U will get free 6-month subscriptions. Nokia is running similar Netflix promos in Finland.
- Strong U.K. growth has contributed to Netflix's international momentum (610K international net adds were seen in Q2). But the company still faces strong competition in the country from Amazon's Lovefilm unit, and also has to contend with BSkyB's streaming services.
- Meanwhile, JPMorgan's Doug Anmuth has raised his Netflix PT to $340 from $290. He expects Netflix to report it closed Q3 with 31M domestic streaming subs (above a guidance midpoint of 30.9M), and is raising his 2015 domestic streaming estimates on account of the business' strong momentum.
- Netflix's Q3 report arrives a week from today.
Oct. 14, 2013, 10:29 AM
- Netflix (NFLX +3.5%) moves higher after reports break on the company's efforts to work out an agreement with Pay-TV providers which would allow its service to be easier to access through set-top boxes.
- Though the company struck a similar deal last month with Virgin Media, analysts think it needs to land a deal with one of the U.S. cable majors to swing the pendulum to the side of a friendlier relationship with the industry.
- The take on Pay TV vs. Netflix: If one domino falls, the rest could follow.
Oct. 14, 2013, 3:45 AM
- Netflix (NFLX) is reportedly in talks with Comcast (CMCSA), Time Warner Cable (TWC), Suddenlink Communications and other cable TV providers to make its service available to their customers via an app on their set-top boxes. However, one snag is that Netflix wants its potential partners to use its technology.
- Talks are most advanced with regional operators and smaller providers that use TiVo's (TIVO) devices. Any deals would add to two that Netflix has in Europe.
- The negotiations indicate how telecom / cable TV providers could use Netflix as a way to draw in and keep subscribers rather than just viewing the company as a threat.
Oct. 10, 2013, 3:25 PM
- Media stocks outperform the broad market with comments from Liberty Media's (LMCA +2.5%) John Malone on the monetization possibilities in the industry not hurting the festive mood one little bit.
- If Malone is to be believed, new forms of content distribution will lead to riches across the sector.
- Advancers: Time Warner Cable (TWC) +5.6%, Charter Communications (CHTR) +3.9%, CenturyLink (CTL) +3.3%, CBS (CBS) +3.9%, Netflix (NFLX) +5.5%.
- Liberty Media Analyst Day webcast
- Related ETFS: PBS
Oct. 10, 2013, 6:47 AM
Oct. 8, 2013, 1:20 PM
- Shares of Netflix (NFLX -5.3%) dip below $300 in a broad sell-off of Internet-related stocks.
- It's no small surprise that momentum-driven Netflix would see some increased volatility with the budget drama playing out in Washington.
- Investors who like to trade the dips and bumps in Netflix should circle October 21 on their calendar. That's the day the company reports FQ3 numbers and research from Bespoke shows Netflix stands as the most volatile stock in the S&P 1500 on earnings day.
Oct. 8, 2013, 11:48 AM
- With the government shutdown having reached day 8, many U.S. and Chinese Internet stocks that have seen giant 2013 gains (often with the help of momentum traders and/or short squeezes) are falling sharply.
- U.S. decliners include Facebook (FB -5.2%), Yahoo (YHOO -5.2%), Netflix (NFLX -4.7%), LinkedIn (LNKD -7%), Zillow (Z -5.3%), Trulia (TRLA -7.5%), Yelp (YELP -9.3%), Groupon (GRPN -4.9%), and Web.com (WWWW -10.2%).
- Chinese decliners include Baidu (BIDU -6.2%), Sina (SINA -7.5%), YY (YY -7.3%), Sohu (SOHU -5.1%), Renren (RENN -9.2%), Youku (YOKU -9.6%), Vipshop (VIPS -6.9%), and Dangdang (DANG -10.7%).
- A chart of the YTD performance of some key names speaks for itself.
Oct. 5, 2013, 9:00 AM
- "We're making it up as we go along," says Wedbush's Michael Pachter, trying to model estimates amid Amazon's (AMZN) famous lack of detail regarding the costs of ventures like cloud-computing, Kindle, and same-day delivery of groceries. "Revenues are growing quickly so there's progress, but what are the costs for all these businesses? You tell me."
- That investors give a free pass to nearly-profitless Amazon is great for consumers and bad news to the owners of companies like Netflix (NFLX), Best Buy (BBY), Staples (SPLS), RadioShack (RSH), Wal-Mart (WMT), and even Kroger (KR). But what happens to Amazon once the pass is revoked?
- Analysts willing to venture a guess see earnings of $10.61 per share in 2016. To hit it, Amazon would need to continue to grow revenues at more than a 20% annual pace while expanding operating margins to 4% from 1% now. Plausible? Sure. But if the stock were to climb 10% per year over the next three, shares for the far more mature company would still trade at 40x those hopeful earnings.
Oct. 1, 2013, 1:27 PM
- Carl Icahn says he hasn't sold any shares of Netflix (NFLX +3.9%) just yet, but that holding on to his sizable profits isn't such a "no brainer" anymore.
- It's a rather grounded look at Netflix with valuation seeming to be outrunning the company's ability to grow profits in an increasingly competitive streaming market.
Oct. 1, 2013, 8:40 AM
- Netflix (NFLX) lands a generous price target hike from MKM Partners on its view the streaming service's international subscriber totals will surprise.
- The investment firm's thesis on Netflix is more focused on global mass penetration than pricing in the U.S.
- NFLX +1.9% to $315, 17.5% short of MKM's new PT of $370.
Sep. 28, 2013, 11:30 AM
- The final episode of Emmy-winning Breaking Bad tomorrow will mark the end of a show that helped show the power of Netflix (NFLX) and the resiliency of the Pay TV model all at once.
- The cult favorite owes a debt to Netflix for helping viewership catch up to critical acclaim - while also serving as an example of the power of bundling TV networks with the show unlikely to have survived an a la carte system.
- Ratings for Sunday night's finale of the AMC show are expected to be sky high and parent AMC Networks is reported to be landing $250K per 30-second spot.
- Life after Breaking Bad: Shares of AMCX Networks (AMCX) are already up 35% YTD, but Barron's thinks there is more upside potential. Cable properties AMC, IFC, Sundance, and We TV are all underutilized and could use original programming to launch to new heights. All it takes is one hit and a dose of Netflix.
Sep. 27, 2013, 6:25 PM
- Netflix (NFLX) has made its Super HD streams, made available in January Open Connect CDN users, available to all subscribers. Like other HD Netflix streams, Super HD offers a max resolutions of 1080p, but it improves image quality by cutting down on compression. Netflix recommends Super HD viewers have at least 7Mbps of bandwidth.
- Netflix is also extending 3D film access to all subscribers, but its 3D library is limited for now. Long-term, the company wants to stream 4K video, which is expected to require 15Mbps connections.
- CFO David Wells says Netflix has had an "open offer" to pay-TV providers to strike set-top integration deals. Though deals have recently been made with Virgin Media and Sweden's Com Hem, many in the industry are still wary of drawing closer to a perceived rival.
- A source tells Variety Intel approached Netflix regarding a deal related to the former's Web-based TV service, which is having trouble getting off the ground. But another source states no serious talks have been held.
- Tero Kuittinen observes ratings for several TV shows that had season debuts on Wednesday and Thursday were dismal, and that they follow a weak autumn 2012 performance. He sees a shift to mobile and streaming content consumption being responsible, a shift he thinks strengthens Netflix and Hulu's hands.
Sep. 26, 2013, 6:15 PM
- Hulu (DIS, FOX, CMCSA) acting CEO/content chief Andy Forssell: "Allowing people to pay more and not have advertising at all, I think that’s the right path long term." Forssell nonetheless defends the ongoing inclusion of ads within Hulu Plus ($7.99/month), arguing the revenue they generate helps the streaming service buy more content.
- Somewhere, Reed Hastings (NFLX) and Ted Sarandos might be chuckling. The presence of ads is one key reason Hulu Plus' subscriber base (4M as of April) remains much smaller than that for Netflix's comparably-priced streaming services (37.6M at the end of Q2, 29.8M domestic).
- If Hulu ever offers an ad-free subscription option with pricing competitive with Netflix, it could prove to be a tough rival, given Hulu Plus' TV content library is arguably superior, and offers access to many episodes shortly after they air. Netflix, however, has a superior movie library.
Sep. 25, 2013, 7:17 AM| 1 Comment
Sep. 25, 2013, 1:01 AM
- Amazon (AMZN) has launched two new tablets under the Kindle Fire HDX name - a 7" model and 8.9" model - and has also given the Kindle Fire HD a price cut and slight refresh.
- As rumored, the HDX tablets sport high-res displays - 1920x1200 for the 7" model, 2560x1600 for the 8.9" model - and Qualcomm's (QCOM) quad-core Snapdragon 800 CPU. Amazon also claims the displays offer perfect color accuracy and the ability to optimize pixels based on the amount of available light.
- Other features include Dolby (DLB) audio, improved battery life, thinner/lighter form factors, and a 24/7 live video customer support service called Mayday.
- The Wi-Fi-only 16GB 7" HDX goes for $229 (same as the new Nexus 7), and a comparable 8.9" HDX for $379. Higher-capacity and 4G models are also offered.
- Amazon has also given the Fire HD a refresh, making it thinner and adding a faster CPU. More importantly, an 8GB model is now available for just $139, and a 16GB model for $169. The 16GB Fire HD sold for $199 when Amazon launched it a year ago. The standard 8GB Kindle Fire (now discontinued) sold for $159.
- All of the tablets run on an updated version of Amazon's custom take on Android. The update adds a slew of enterprise-friendly management and security features.
- The 7" HDX begins shipping on Oct. 15, and the 8.9" model on Nov. 7. On one hand, Amazon has put some clear effort into making its latest hardware stand out. On the other, tablet competition remains intense, and Amazon can't offer the the popular Google apps (Play, Maps, YouTube, Now, etc.) that come bundled with Google-approved Android devices.
- Also: Amazon is adding offline viewing support to Prime Instant Video, a feature that (for now) gives it some ability to differentiate from Netflix (NFLX). Prime subs can download certain movies and shows for free to watch within 30 days.
- Initial offline partners include NBC, Viacom, Sony, CBS, and Warner Bros.
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