Where will Netflix go in 2014?

2nd January 2014 No Comments

stocks 2Our friends at The Buzz had an interesting article today about whether we can expect Netflix to continue soaring as it did in 2013 during the new year or drop precipitously as a result of the stock being overvalued, as some suspect?

As CNN’s Paul LaMonica says, the answer will likely lie somewhere in between.

Everyone enjoys going to extremes, but people have been doubting Netflix since the streaming company first divided its disc by mail and streaming options years ago. They doubted some more when Netflix revealed its plan to retain subscribers in the midst of catastrophic increases to streaming licensing fees- original programming. And even when the first show, Lilyhammer, started to get pretty good reviews, skeptics thought that people would just sign up for one month, “binge” on their shows, and then cancel.

Here’s the thing- they didn’t. Turns out that $7.99 isn’t that much per month, and even if the newest movies aren’t available, they are available enough other places that it’s not a big deal anymore. Plus, Netflix has retained access to other television programming for its subscribers to get their fixes. Shows like FX’s American Horror Story, Showtime’s Dexter and many network sitcoms are available through the streaming service.

Plus, other than Hulu, no other streaming service, including Amazon Prime’s instant viewing service, has been able to really differentiate from Netflix successfully. And Hulu does so mainly by offering network television content that many people already have access to, anyway. Hulu also lacks original programming like that of Netflix.

So, how high can Netflix (NFLX) go? That’s the funny thing- the price target according to FactSet is already 10% below the current market price. Investors are waiting for the other shoe to drop, but if earnings continue to rise, it won’t happen, and it will mean that the stock is somehow still undervalued, even at its current high price. That means there’s room for growth still, folks.

Share this post:
Leave a Reply