Followers | 679 |
Posts | 140825 |
Boards Moderated | 36 |
Alias Born | 03/10/2004 |
Sunday, November 18, 2018 11:01:43 AM
By: The Motley Fool | November 17, 2018
And he lays out a pretty compelling case for getting there.
The recent market decline has been particularly tough on tech stocks, and Netflix (NASDAQ:NFLX) has been no exception. Since topping out in early July, the streaming giant has lost nearly a third of its value. The market's uncertainty continues, and given that reality, it might seem like an unlikely time to be calling for new all-time highs.
However, that's exactly the case being made by one analyst who thinks investors should buy Netflix while it's down -- but not out. He argues that Netflix shares could hit $531 -- 80% higher than they stand today.
The analyst
Matthew Harrigan with Buckingham Research Group gave Netflix a rare double-upgrade, raising the stock from underperform to buy and raising his price target from $349 to $406. While he had been less optimistic due to Netflix's "elevated" stock price, its recent weakness is the primary motivator behind his current enthusiasm. "We have always viewed Netflix as the continued top streaming category winner," he wrote in a note to investors.
Harrigan believes Netflix could raise prices by a little as 3.5% per year through the middle of the coming decade to achieve his price target -- but he also sees another, more intriguing possibility. "Netflix could plausibly deliver 5.1% annual price increases through 2025," he wrote. "Management may be motivated to continue [to] defer some pricing realization to foster member growth momentum but we expect eventual price increases." At that rate, Harrigan thinks the stock could be worth as much as $531.
As viewing time increases, the price will follow
As Netflix ramps up its original content spending, there will be more programming available for subscribers to watch. The more they watch, the more willing viewers will be able to endure future price increases.
"The Netflix growth flywheel is driven by subscriber growth enabling more programming spend that both attracts even more members and drives increased engagement with more new programming for current customers," Harrigan wrote. "With Netflix currently charging only about 22 cents an hour for viewing, there appears to be nice upside in monetizing these viewing gains over time."
Higher-priced tiers will add more to the bottom line
Netflix currently has several tiers with higher price points than its lowest-priced "basic" tier at $7.99, which offers standard definition viewing and just one device per subscriber. The "standard" tier is priced at $10.99, allowing two devices and high-definition viewing (HD) when available. The top "premium" tier costs $13.99 per month, allowing four devices per plan and HD and Ultra-HD when available.
As technology improves and customers upgrade to newer and better televisions, they will likely be more willing to upgrade to subscriber plans that offer higher resolution in order to obtain the best viewing experience.
It isn't all sunshine and roses...
While pricing power could result in additional subscriber revenue, it may not work across the board. Harrigan believes Netflix's ability to effectively raise prices could be limited in certain geographic and socio-economic regions, and he surmises that as many as 30% of the company's future members might pay lower monthly subscription rates -- that could represent a 40% discount to what other viewers pay, on average.
Netflix Chief Product Officer Greg Peters acknowledged during the company's third-quarter conference call that while the company is currently happy with its pricing strategy in markets like India, he signaled for the first time a willingness by Netflix to test prices:
Now, we'll experiment with other pricing models, not only for India, but around the world that allows us to broaden access by providing a pricing tier that sits below our current lowest tier, and we'll see how that does in terms of being able to accelerate our growth and get more access.
Read More »»»
• DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
Recent NFLX News
- U.S. Index Futures Surge While Wall Street Eyes Rebound on Earnings Focus, Oil Prices Slip • IH Market News • 04/22/2024 12:09:47 PM
- Nasdaq, S&P 500 Extend Losing Streaks On Tech Weakness But Dow Advances • IH Market News • 04/19/2024 08:32:14 PM
- Futures Pointing To Roughly Flat Open After Israel Retaliates Against Iran • IH Market News • 04/19/2024 01:15:30 PM
- Paramount’s Shares Surge Following Sony and Apollo’s Joint Bid; ISS Backs Berkshire Hathaway Director Re-election, and More • IH Market News • 04/19/2024 11:31:22 AM
- Nasdaq, S&P 500 Extend Losing Streaks To Five Days • IH Market News • 04/18/2024 08:40:13 PM
- Netflix Set to Unveil Q1 2024 Earnings Amid Subscription Growth and Rumors of Price Increases • IH Market News • 04/18/2024 12:27:18 PM
- U.S. Futures Rebound Amid Global Market Fluctuations, Oil Prices Decline • IH Market News • 04/18/2024 11:15:03 AM
- TSMC Revenue Rises 13% in Q1, Alcoa Exceeds EBITDA Expectations Despite Loss, and More Earnings News • IH Market News • 04/18/2024 11:14:18 AM
- Costco Increases Dividend by 14%, Meta Introduces ‘Artemis’ AI Chip, and More News • IH Market News • 04/11/2024 11:24:54 AM
- Netflix to Announce First Quarter 2024 Financial Results • PR Newswire (US) • 03/15/2024 04:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:59:55 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:59:44 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:59:31 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:59:20 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:59:04 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:58:49 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:58:27 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:58:16 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/05/2024 12:58:03 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 03/04/2024 09:36:16 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/29/2024 12:26:04 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/29/2024 12:24:49 AM
- Form 144/A - Report of proposed sale of securities: [Amend] • Edgar (US Regulatory) • 02/28/2024 10:54:49 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 02/27/2024 09:28:57 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 02/27/2024 05:49:08 PM
FEATURED Cannabix's Breath Logix Alcohol Device Delivers Positive Impact to Private Monitoring Agency in Montana, USA • Apr 25, 2024 8:52 AM
Bantec Reports an Over 50 Percent Increase in Sales and Profits in Q1 2024 from Q1 2023 • BANT • Apr 25, 2024 10:00 AM
Kona Gold Beverages, Inc. Announces Name Change to NuVibe, Inc. and Initiation of Ticker Symbol Application Process • KGKG • Apr 25, 2024 8:30 AM
Axis Technologies Group and Carbonis Forge Ahead with New Digital Carbon Credit Technology • AXTG • Apr 24, 2024 3:00 AM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM