Netflix jumped to a three-month high Friday following bullish commentary from UBS. The firm’s analysts broke down several key questions surrounding Netflix and the future of streaming itself.
The analysts also outlined their long-term view that Netflix should achieve higher margins than Wall Street currently expects as its content spend is now at a scale of the “major media companies.”
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Netflix shares soared to a three-month high Friday on the back of a bullish UBS report that featured a breakdown of some of the most central questions surrounding the streaming giant.
The report offered shareholders some positive commentary at a time when Netflix is trading about 20% below its all-time high reached last June. Here’s a summary of three questions UBS analysts, led by Eric Sheridan, addressed.
“Will original content drive subscriber upside, especially in international markets?”
Sheridan and his team said they expect Netflix’s original content slate to drive accelerating growth internationally, particularly with more local, film, and non-fiction content on the platform. They also contend there’s still low broadband usage in growing markets like India, where Netflix could expand.
Last month, Netflix said over 45 million accounts watched the Netflix original movie, “Bird Box,” in the first week it was released — a record, according to the company.
“Will increasing competition threaten Netflix’s market share or pricing power?”
UBS said it expects subscription-streaming video will “come to dominate TV over time,” creating opportunities for multiple players and rising competition. Hulu and Amazon Prime Video are gaining market share in the streaming space.
Still, the firm thinks Netflix is well-positioned because of its scale and slate of original content. That’s also the driver behind their view Netflix can still command pricing power, or the ability to hold onto users while boosting prices.
“How are subscribers tracking in the …read more
Source:: Business Insider