It’s official, Netflix stock is at an all time. It closed at $133.70 last Friday, up 3.5%. Wall Street is unusually optimistic for Netflix’s financial future. But wait, isn’t this Netflix? Historically, their stock has been a roller coaster of ups and downs so even if they’ve hit a high many people might expect it to drop soon. The reality is that Netflix stock has been relatively stable over the past few months. Since the beating they took last April, due to lower subscribers than predicted, the stock has been consistently rising. But what brought Netflix stock to reach an all time high now?
The answer comes down to one man, Bryan Kraft from the Deutsche Bank. the Deutsche Bank is a banking and financial services company that made roughly 33.5 billion euro in revenue back in 2015, they also have roughly 1.6 trillion euro in assets globally. Bryan Kraft is an analyst there and just changed his stance on Netflix stock from “sell” to “hold.” Craft still thinks the stock is overvalued but he does think Netflix will beat guidance for international subscriber additions. Basically, he thinks there will be a huge surge in global subscribers which will drive up revenue.
Kraft notes, “key driver of the stock price around earnings reports has predominantly been subscribers.” He expects 4.35 million new Netflix subscribers with concentrations in Germany, France, Spain and Italy. “Our checks… indicate broad based strength in international demand catalyzed by original content,” Kraft wrote, calling out Golden Globe-winner “The Crown,” “Marvel’s Luke Cage,” “Gilmore Girls” and “Fuller House.” But that’s not the only reason why Netflix is likely to do well. “Netflix navigated its way through the ’16 pricing increases relatively unscathed,” he wrote, which yielded higher revenue per subscriber in many markets.
Netflix has already outperformed all expectations of the little company who could. Surveys indicate that 54% of consumers use Netflix to watch movies and TV shows in the US as opposed to YouTube which only has 50% of the population and Amazon at 29%. Unsurprisingly, there is a huge adoption rate among millennials with 67% of consumers between the ages of 18 and 29 using the service. Internationally, France is up to 18% of consumers from 5% and Germany is up to 17% up from 4%. Across the board, there is an increase in willingness to pay for streaming services. If you’ve been thinking about getting into Netflix stocks, now might be a good time to buy in.
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