Netflix (NFLX) Close To 100M Subscriber Mark?
Zacks Investment Research | Apr 17, 2017 02:54AM ET
Per Investor’s Business Daily which quoted a report by Goldman Sachs (NYSE:GS), Netflix Inc.’s (NASDAQ:NFLX) worldwide subscriber base could be close to 100 million when it reports first-quarter 2017 earnings.
Per Heath Terry, a Goldman Sachs analyst, the streaming giant is expected to add 4 million international subscribers and 1.7 million U.S. subscribers in the going-to-be reported first quarter.
Terry stated, "We expect Netflix to report subscriber additions above its original guidance driven by a strong content slate, stable pricing, and maturing international markets. While investor expectations have followed NFLX's share price higher, we expect 1Q results will be further confirmation of the long-term scale and profitability of the platform.”
Original Content – Key Catalyst
Netflix has been drawing strength from its growing portfolio of original content. This apart, it remains focused on international expansion as it battles slowing domestic subscriber growth.
Per Terry, Netflix’s international markets such as France and Germany are close to saturation but the company can expect better growth rate from India and Japan.
Further, recently added features like offline viewing and skipping opening credits reflect Netflix’s focus on enhancing user experience, which is a positive.
Meanwhile, Investopedia, which quoted research firm Comscore, stated that Netflix remains the leader in the over-the-top (OTT) services space despite stiff competition from Alphabet’s (NASDAQ:GOOGL) YouTube and Amazon.com's (NASDAQ:AMZN) Amazon Prime Video service. The study is based on data collected in the month of December last year.
Furthermore, reportedly, in Dec 2016, Netflix had the highest penetration rate of 75% when it came to OTT services, followed by YouTube with 53%. Amazon and Hulu have penetration rates of 33% and 17%, respectively. Notably, subscribers of Netflix clocked 28 hours of average viewing time per month, closely trailing Sling TV with an average viewing time of 47 hours per month.
Share Price Momentum
We note that Netflix has outperformed the Zacks Broadcasting-Radio/TV industry in the last year. While the stock returned 31.8%, the industry gained 15.5%.
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The outperformance can be attributed to the company’s continuing subscriber growth and an expanding original content product portfolio.
Currently Netflix carries a Zacks Rank #3 (Hold).
Stock to Consider
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Notably, the Zacks Consensus Estimate for Salem Media Group’s current year improved to 48 cents from 40 cents in the last 60 days.
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