Netflix investors are worried after the FCC voted to repeal net neutrality rules. Netflix is also under pressure after Disney’s $52 billion acquisition of 21st Century Fox. However, Netflix stock is an excellent investment opportunity despite the temporary problems, amid several factors that will be discussed in this article.
Netflix revenues are soaring. The stock has gained more than 52% since the start of this year. Netflix’s revenues in the third quarter increased by 30% year over year. The company added a whopping 850,000 domestic subscribers, versus the consensus estimate of 774,000. Netflix’s total subscriber count has crossed 109.25 million. Analysts predict that Netflix’s total subs will reach about 200-300 million as the company’s global efforts will start bearing their fruit in the coming quarters.
Netflix’s debt and expenses are growing at a worrying pace, but analysts think that this heavy spending will help the company increase its revenue in the future.
International markets remain Netflix’s biggest strength. In October, the company added 4.45 million international subscribers. Morgan Stanley upped its price target for Netflix stock to $235 from $225. The firm said in a report that it is bullish on Netflix’s international subscriber count. The report also said that Netflix is offsetting its problems by partnering with local players in the US. Morgan Stanley’s analyst Ben Swinburne recently said in an interview that Netflix could succeed in diverse markets. He cited Brazil as an example, where Netflix growth is increasing despite slow internet and English language problems.
Netflix subscribers have watched about 1 billion hours a week of its content so far this year. The company is in an excellent position to increase its monthly fees as it is providing customers top-notch content. Analysts think that in 2018, Netflix will double its earnings. The company is exploring new forms of interactive content that will open new horizons in 2018.
On Dec. 6, Piper Jaffray analyst Michael Olson said in a report that Google search results show that Netflix local and international subscribers are set to grow. Olson has an “Overweight” rating for the stock. According to his estimates, Netflix’s domestic subs will grow 9.3% year over year in the fourth quarter. Similarly, on Dec. 4, Monness, Crespi, Hardt started covering Netflix stock with a “Buy” rating and a price target of $250.00.