Netflix Down on Competition Woes - Analyst Blog


Shares of Netflix ( NFLX ) plunged 5.6% ($20.07) to close at $339.50 on Jan 7, 2014, as concerns over its subscriber growth resurfaced. Netflix is expected to face significant competition from the likes of HBO Go, Hulu and Amazon 's ( AMZN ) Prime service, which is expected to hurt its subscriber base in 2014.

Apart from these services, Google 's ( GOOG ) YouTube is also expected to become a contender due to the increasing investment on original content, which has been a major growth factor for Netflix over the past 12 months.

In order to boost customer engagement, Netflix continues to expand its original series portfolio. In Dec 2013, the company announced that it will stream Mitt, directed by Greg Whiteley from Jan 24, only a week after the documentary premieres at the 2014 Sundance Film Festival on Jan 17.

Netflix's partnerships with major film studios and production houses will help it to stream original shows such as Sense 8 (some time in 2014) and Narcos over the next 12 months. The company is also expected to stream the drama series Marco Polo, produced by TWC.

Moreover, Netflix's partnership deal with Walt Disney 's ( DIS ) Marvel Entertainment will bring at least four new 13-episode series and a mini-series based on characters such as Daredevil, Jessica Jones, Iron Fist and Luke Cage on Netflix, beginning 2015.

Although international expansion is expected to be a major growth factor, continuous subscriber loss in its DVD business and higher spending on content acquisition are significant near-term headwinds.

Netflix has reported an average surprise of 77.1% over the last four quarters. The Zacks Consensus Estimate for 2013 and 2014 have remained steady at $1.74 and $4.20 per share, respectively, over the last 30 days, with no major estimate revision.    

Currently, Netflix has a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AMZN , DIS , GOOG , NFLX

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