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‘Overvalued’ Netflix Stock Closes At All-Time High

PHOTOGRAPH: Instagram/schmillix/ | Resized image of Netflix remote taken from Instagram.com/schmillix/

Online streaming service Netflix has hit the headlines yet again. Only this time around, it is not launching another show. Netflix has made news because shares closed at an all-time high of $133. 70 on Friday. This has everyone excited about the streaming service. Many believe that the performance can be tied to its original content and programming. After all Stranger Things, A Series of unfortunate Events, Gilmore Girls, Narcos and other shows, have not only garnered popularity but have also increased the number of Netflix customers. These factors, a fact that Netflix has increased its customer base and favorable analyst reports helped the streaming service close on a high note on Friday.

Many believe that the share jump happened on account of reports presented by the Wall Street Journal analysts. In addition, analysts such as Deutsche Bank’s Bryan Kraft too raised their rating of the Netflix stock from ‘sell’ to ‘hold.’ An article in Investor’s Business Daily states that in addition to changing his rating to hold, Kraft also increased his price target to $110. Despite the shares rally, Kraft opines that Netflix is an overvalued stock. He adds that its increasing subscriber or customer base has been instrumental to its growth.

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Success factors and Q4 expectations

Going forward, he expects the streaming service to beat its Q4 guidance for international subscribers. An article in Variety states that Kraft expects the streaming service to add around 4.35 million international subscribers. This is way more than the company’s own forecast, which pegged the subscribers at 3.35 million.

Another Investor’s Business Daily article quotes an analyst Tony Wible from Drexel. According to Wible, what has worked for Netflix is a fact that the traditional television scenario is reeling from declining ad sales and affiliate fee pressures. Brean analyst Alan Gould added that Netflix has achieved an enviable and a dominating position in the internet TV business.

“It is creating a content moat and amortizing it over a global direct-to-consumer audience, making it the low-cost producer,” said Gould. “By 2025, Netflix could have over 230 million global subscribers, generating $15 a month in average revenue per user and $11.50 of EPS while still growing at a compound annual rate of almost 20%, he added.

Also Read: Netflix Cancels Luke Cage Season 2 For Jessica Jones – Find Out

Also Read: Netflix The OA: Here’s Why It Is Compared To Stranger Things

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About the author

Nandini loves to write about everything happening right now especially TV shows, movies, celebrities, business and news. When she is not writing, she is either reading, shopping online or watching a movie.