Streaming giant Netflix is ??experiencing an unexpected recovery after its gloomy performance in 2019. The stock has gained momentum and has caught up with the upward trajectory of its fellow technical giants.
During the first five weeks of trading in 2020, Netflix (NASDAQ 🙂 is the best-performing name among the FAANG's, the group of five mega-cap tech stocks including Apple (NASDAQ 🙂 and Amazon ( NASDAQ :). At the time of writing, Netflix shares rose by more than 13% this year and closed at $ 369.67 yesterday.
NFLX Weekly TTM
So, what's behind the powerful advance that is slowly pushing Netflix to the highest level, $ 418.97, hit early July 2018? It is all about a re-evaluation of the competitive landscape that the video streaming service stands for after the arrival of a number of rivals on the market.
Since the company announced its fourth quarter profit on January 21, this week followed by its biggest streaming rival Disney (NYSE :), the analyst community is convinced that it will take much longer for newcomers to meaningfully hurt Netflix (NASDAQ :).
Last month's revenue report was the first of Netflix since the meaningful competition hit the market. Disney and Apple both launched their own streaming services, Disney + and Apple TV +, in November. In the future, AT & T & # 39; s (NYSE 🙂 WarnerMedia plans to launch HBO Max in May and Comcast & # 39; s (NASDAQ 🙂 NBCUniversal will launch its Peacock service in the US on July 15.
Although Netflix missed its prediction for growth in the number of US subscribers for the third consecutive quarter, overseas expansion continues unabated. The Los Gatos, California-based Netflix added 423,000 domestic subscribers in the fourth quarter, compared to its forecast of 600,000 additions.
Silver lining: international users
It also recorded an increase of 8.3 million subscribers in overseas markets, more than the 7 million the company expected. It now has 167 million subscribers worldwide, including 60.4 million in the US
Disney, on the other hand, said in its quarterly report on Tuesday that it had already collected a 28.6 million subscriber base for its Disney + streaming service launched in November, exceeding analysts' expectations of 20 million subscribers.
But some analysts see a silver lining for Netflix in these numbers. Guggenheim Partners raised its price target on Netflix last month from $ 400 per share to $ 420 per share, citing strong global growth in subscriptions.
"Annual viewing per member grew globally and domestically" consistent with recent quarters "- both support our confidence in Netflix's multi-year global growth potential," said analyst Guggenheim Michael Morris in the note.
"The company did not see any specific, significant impact on the viewing level for children or families after the domestic launch of Disney + in November."
Analysts at BofA have a similarly favorable view of Netflix and repeat their purchase valuation on the shares with a price target of $ 426.
"It is clear that Disney + involvement paths are those of Netflix and this reinforces our view that Disney + is not a replacement," said analyst Nat Schindler in a note, adding that viewing hours per Disney + subscription "those of Netflix broadly follow. "
Bottom Line
The way up for Netflix's stock has been largely unhindered in the last decade. But with increasing competition, rising costs and saturation in the domestic market, it seems the streaming giant is increasingly difficult to repeat that performance. That said, Netflix has the ability to compensate for its weakness in the domestic market by aggressively increasing its international presence.
