In April, both Apple and Disney announced plans to launch video streaming services in the coming year. This led to a lot of debate over whether Netflix will continue to grow in the midst of this increased competition.
According to Loop Capital Markets, the answer is yes. The company upgraded Netflix, citing its “unstoppable lead” when it comes to video streaming services. Loop analyst Alan Gould upgraded Netflix from hold to buy.
Gould said that there is a fundamental between Netflix and its competitors. He predicted that Netflix’s shares could rise more than 25% and raised the company’s price target to $425 per share. The company’s shares rose more than 3% early Tuesday morning.
Things to Like About Netflix
Netflix has already achieved over 63% penetration in U.S. markets. But one of the biggest things the company has going for it is a strong customer adoption rates across international markets.
A recent survey was conducted on over 2,000 customers in Germany and France. 50% of French respondents and 49% of German respondents said they watch TV and movies on Netflix.
In May 2018, just 37% of French consumers and 35% of German consumers reported using the service. Netflix launched in both countries in 2014 and has grown those customer bases in an incredibly short period of time.
And these customers aren’t going anywhere anytime soon. 90% of Netflix’s French customers and 89% of German customers reported being very satisfied with the service. This is much higher than the reported satisfaction rates in the U.S.
This is largely due to the original content Netflix puts out. The company spent more than $8 billion on original content in 2018 alone. And the company recently increased its subscription prices so it can invest more into licensed and original shows.
Conclusion
It’s been a good year for Netflix and the company’s shares are up 30% year to date. However, the company’s shares are down roughly 5% from a year earlier.
It’s possible that competition from companies like Disney and Apple will have a limited effect on Netflix. After all, most people subscribe to multiple streaming services.
If the company can continue to grow its customer base and release more original content, it should be well-positioned in the coming years.
