- 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.
Jan. 23, 2014, 12:47 PM
Jan. 23, 2014, 9:12 AM| Comment!
Jan. 23, 2014, 9:11 AM
- Analysts are full of commentary on Netflix (NFLX) after the company ran a clean sweep of besting estimates on various metrics, but Needham might have the most interesting early analysis.
- Sizzling subscriber growth and margin momentum are just the start as the investment firm is convinced that even at Netflix's lofty trading price, investors are discounting the potential for explosive profit growth with the international business.
- There's also a reminder that the DVD business, though strategically not a factor anymore, is still a driver of free cash flow.
- Shares are rated a Buy with a price target of $425.
- NFLX +17.3% premarket to $391.60.
Jan. 22, 2014, 4:10 PM
- Netflix (NFLX) soars in the after-hours session after beating on both lines with its Q4 report and showing plenty of momentum with subscriber growth.
- The company added 2.33M subscribers in the U.S., compared to the company's guidance for a gain of 1.61M-2.41M subscribers. Analysts expected U.S. subscriber additions of around 2.05M.
- International net additions during the quarter came in at 1.74M, up 300K Q/Q and down slightly from the year-ago period.
- Streaming margin was 23.4%, just ahead of guidance of 23.2% and down 30 bps Q/Q.
- The forecast for Q1 2014 is for an addition of another 2.25M subscribers in the U.S. and 1.60M international subscribers.
- Netflix shareholder letter (.pdf)
- NFLX +13.5% to $378.80 AH
Jan. 22, 2014, 4:03 PM
Jan. 21, 2014, 10:57 AM
- Ahead of tomorrow's Q4 report, Needham's Laura Martin has lowered her Netflix (NFLX -2.3%) estimates below consensus. The move comes just three months after Martin started coverage on Netflix with a Buy and $425 PT.
- Pac Crest (Sector Perform) is also out with a cautious note on Netflix: Though believing Q4 results will be in-line, the firm is worried U.S. growth will slow going forward.
- Shares remain up over 5x from their fall 2012 lows.
Jan. 15, 2014, 11:43 AM
- After trading sideways yesterday (in the face of a market rally) following an appeals court's decision to throw out the FCC's wireline net neutrality rules, Netflix (NFLX -4.9%) is diving today.
- Wedbush's Michael Pachter (Underperform) thinks ISPs could try to charge Netflix and others a fee for every GB of data transmitted over their networks. He notes each hour of SD and 1080p video streamed by Netflix to 40"-50" TV sets respectively consumes 1GB and 6.5GB of data.
- Though services such as Netflix drive demand for high-speed connections, U.S. ISPs (many of whom double as pay-TV providers) have nonetheless been upset over the streaming giant's heavy data consumption. Netflix has been trying to address the issue via its Open Connect CDN, but not all major ISPs are on board.
- FCC chairman Tom Wheeler has already said his agency might appeal yesterday's ruling, so as to guarantee "networks on which the Internet depends continue to provide a free and open platform for innovation and expression."
- Wheeler previously suggested Netflix could pay ISPs to guarantee subscribers "receive the best possible transmission." But he also reiterated his opposition to allowing ISPs to block/limit services.
Jan. 7, 2014, 7:05 AM| 4 Comments
Dec. 27, 2013, 1:54 PM
- With high-flying Twitter (downgraded by Macquarie) leading the way, several Internet momentum plays that have delivered big 2013 gains are seeing some year-end profit-taking.
- In addition to Twitter, notable decliners include Netflix (NFLX -2.8%), Pandora (P -3.6%), Trulia (TRLA -2.7%), Zillow (Z -2.4%), and Groupon (GRPN -1.9%).
- On the other hand, many Chinese Internet names are adding to this year's gains. In addition to Baidu (buying Perfect World's e-book unit) and Ctrip (received a bullish T.H. Capital note), gainers include Sina (SINA +4.9%), Dangdang (DANG +4.8%), YY (YY +4%), 58.com (WUBA +3%), and NetEase (NTES +3.4%). An overnight Shanghai rally is likely helping.
Dec. 10, 2013, 1:34 PM
- Though still generally below their mid-October highs, Internet momentum stocks are turning in what might be their best performance during a rally that has now lasted two weeks. While Twitter (previous) is the star of the show, Facebook (FB +3.5%), Yelp (YELP +1.8%), Groupon (GRPN +4.7%), Netflix (NFLX +2.1%), LinkedIn (LNKD +1.4%), and Pandora (P +3.4%) aren't getting left out.
- Several Chinese Internet names are also higher. In addition to Baidu, which is benefiting from a bullish Pac Crest note, Sina (SINA +6%), Ctrip (CTRP +6.1%), Qunar (QUNR +6.3%), and Youku (YOKU +3.9%) are staring at big gains.
- Morgan Stanley's Scott Devitt is out with another bullish note on Groupon. Devitt notes an MS survey of 358 SMBs found only 26% of merchants have run Groupon deals in the last 12 months, something he thinks suggests there's "a long run way of merchants" that can still be signed up.
- He also sees room for Groupon to improve its customer targeting - the company still isn't able to track which deals were shown to customers, or were clicked on, in prior e-mails - and expects its new site (allows deals to be browsed without an e-mail address being given) and a revamped e-mail layout to boost growth.
Oct. 22, 2013, 5:16 PM
- In a new 13D, Carl Icahn discloses he has lowered his stake in Netflix (NFLX) to 4.52%. Icahn had nearly a 10% stake in the company when he first disclosed his investment a year ago.
- Shares are up over 4x since Icahn first bought in. He admitted earlier this month Netflix's run-up meant shares are no longer a "no-brainer."
- NFLX -2.2% AH after falling 9.2% in regular trading.
- Earlier: Netflix turns negative post-earnings
- Update: Icahn pared his stake in part by unloading 2.4M Netflix shares earlier today at $341.44. Shares are currently at $317 AH.
- Update 2: Icahn on Twitter: "Sold block of NFLX today. Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey."
Oct. 22, 2013, 11:04 AM
- That "momentum investor-fueled euphoria" Reed Hastings (NFLX -4.1%) referenced in Netflix's Q3 shareholder letter is dissipating just a bit today, as investors take profits in spite of strong Q3 U.S. and international subscriber adds, and above-consensus Q4 EPS guidance. Evercore has upgraded shares to Equal Weight, but S&P has cut them to Sell.
- Two possible concerns: Hastings' remarks about "low quality" Latin American free trial promotions boosting Q3 international adds, and the fact free cash flow fell Q/Q to $7M thanks to major content investments. Of course, shares remain up 268% YTD.
- Janney's Tony Wilbe remains quite bullish, arguing shares could reach $700 with the help of continued sub growth and a $1/month price hike. JPMorgan's Doug Anmuth has raised his PT all the way to $460 from $340, and Needham's Laura Martin (Buy, $425 PT) thinks margin expansion is ahead of schedule, given Q3 margins hit estimates in spite of an extra $27M in amortization costs.
- CC transcript
Oct. 22, 2013, 9:14 AM
Oct. 21, 2013, 4:12 PM
- Netflix (NFLX) reports it added 1.29M subscribers in the U.S. during Q3, compared to a 630K gain for Q2 and guidance for 700K-1.2M adds. Some analyst estimates pegged the quarterly net adds higher, but the upward momentum is more than enough to satisfy investors.
- Total U.S. subscribers at the end of the quarter was 31.09M vs. 30M expected and 28.7M for rival HBO.
- The company says it expects to double its investment in original content, although still keeping the spend below 10% of total content expenses.
- Q4 guidance is for net additions of 2.01M which is above the estimates of some analysts.(shareholder letter .pdf)
- NFLX +9.5% AH.
Oct. 21, 2013, 4:01 PM
Oct. 16, 2013, 9:56 AM
- Intel (INTC +0.3%) has been upgraded to Buy by B. Riley following its Q3 beat and light Q4 revenue guidance.
- Yahoo (YHOO +1.7%) has received a two-notch upgrade to Outperform from CLSA after it posted mixed Q3 results and soft Q4 guidance, but also strong Q2 numbers for Alibaba.
- Cisco (CSCO +0.4%) has been cut to Neutral, and Juniper (JNPR +3.6%) upgraded to Buy, by MKM. Juniper reports on Oct. 22.
- Netflix (NFLX -0.2%) has been cut to Hold by Hudson Square ahead of its Oct. 21 Q3 report.
- Vimpelcom (VIP +3.9%) has been upgraded to Overweight by Morgan Stanley.
- BT (BT +1.7%) has been upgraded to Conviction Buy by Goldman.
- CyrusOne (CONE +2.7%) has been upgraded to Buy by BofA/Merrill. However, the firm is maintaining its $23 PT.
- Ultimate Software (ULTI +1.6%) has been upgraded to Overweight by Evercore.
- Ellie Mae (ELLI -6.5%) has been cut to Market Perform by JMP.
- Super Micro (SMCI -2.7%) has been cut to Hold by Stifel.
NFLX vs. ETF Alternatives
Other News & PR