Netflix’s stock price performance
Netflix (NFLX) stock was down as much as 5% on January 17 after it reported mixed fourth-quarter earnings results. The stock had risen ~32% year-to-date as of January 17.
In 2018, Netflix was the best-performing stock in the so-called FAANG group, which is made up of Facebook (FB), Amazon (AMZN), Apple, Netflix, and Alphabet (GOOGL) subsidiary Google. Netflix stock returned 33.1% in 2018, followed by Amazon, which rose 26.3%. Facebook, Apple, and Alphabet fell ~27.7%, 7.1%, and 2.6%, respectively, in the year.
Analysts’ recommendations for Netflix
Of the 42 analysts currently covering Netflix, 29 have rated the stock as a “buy,” while only three have rated it as a “sell.” Ten analysts have rated the stock as a “hold.” Analysts have a target price of $390.77 and a median consensus estimate of $410.00 on the stock. On January 17, Netflix was trading at $353.19, 13.9% below the consensus median target estimate.
Netflix’s earnings crushed Wall Street’s consensus estimate in the fourth quarter, but its revenue missed the estimate. Though the company managed to beat the estimate in terms of paid subscriber numbers in the quarter, it anticipates sluggish growth in paid subscribers going forward as a result of its recently announced price hike. Nevertheless, Netflix is consistently spending on original content to attract subscribers.
Several analysts, including UBS, Raymond James, and Morgan Stanley, maintained a bullish tone on Netflix just ahead of its earnings announcement. UBS, Nomura, and Oppenheimer have raised their price targets on Netflix stock. Many analysts believe that the company’s international growth will drive its total subscriber numbers. According to Cowen analysts, the company’s revenue is expected to rise 14% annually for the next ten years driven by a 10% rise in the United States (SPY) and a 16% rise internationally.
Netflix is keen on aggressively investing in original content across the world—especially in international markets—to boost its subscriber base. For example, the company has plans to double its investment in France by producing 14 local shows for its French audience in late September.