GOLDMAN: Netflix Is A Screaming Buy, Price Target $330 ...
GOLDMAN: Netflix Is A Screaming Buy, Price Target $330
Pascal-Emmanuel Gobry | Jul. 12, 2011, 6:05 AM | 1,390 | 2
NFLXFeb 13 01:51PM
Goldman has a note out upping its price target on Netflix to $330.
The big reason?
Overseas. Netflix recently announced a big expansion to Latin America, and Goldman says Netflix is going to do great there.
Latin America has 3.5X the number of broadband households as Canada, Netflix's previous international expansion, and growing fast;
US content is really popular there and Netflix can buy it cheaply;
Do they understand that Spanish Content will need to be purchased? It is not like they will be able to brush off the English versions of movies and sell them to the Latin Americans. There is a high cost of developing this.
Netflix’s Stock Plummets After Company Warns Of More Subscriber Losses
The stock price of Netflix, Inc. (NASDAQ:NFLX) has plummeted about 34% in heavy trading today. This is one day after the company announced a loss of over 800,000 subscribers. The company is also expecting to lose many more subscribers after adjustments to the new separation of DVDs and streaming services model. The stock price is trading at about $78.01 as of the time I am writing this article. Yesterday, the company’s stock was trading at about $93.30. In July, the company’s stock was at $300. Since July, Netflix has lost a market value of about $9.76 billion.
J.P. Morgan downgraded Netflix’s stock from “neutral” to “overweight.” They slashed their price target for Netflix to $67 from $205. Citigroup downgraded Netflix’s stock to “neutral.” In a letter to investors, Netflix CEO Reed Hastings wrote:
We think that $7.99 for unlimited streaming and $7.99 for unlimited DVD are both very aggressive low prices, relative to competition and to the value of the services, and they are the right place for Netflix to be in the long term. What we misjudged was how quickly to move there. We compounded the problem with our lack of explanation about the rising cost of the expansion of streaming content and steady DVD costs, so that absent that explanation, many perceived us as greedy. Finally, we announced and then retracted a separate brand for DVD. While this branding incident further dented our reputation, and caused a temporary cancellation surge, compared to our price change its impact was relatively minor. Our primary issue is many of our long-term members felt shocked by the pricing changes, and more of them have expressed that by canceling Netflix than we expected.
He also added:
Investors and members will be relieved to know we are done with pricing changes, and that at $7.99 each for streaming and DVD we can move forward for a long t
Netflix (NASDAQ:NFLX) reported their Q3 earnings after the market closed Monday, and while the company topped estimates for the quarter, their outlook for Q4 and projected losses in 2012 caused shares of the company to tumble in after hours trade. Shares of Netflix are currently trading down 33.36% to $79.20 in the pre-market session on Tuesday.As a result, many analysts have responded to the lowered guidance by downgrading shares of the company. Janney Capital said Netflix's business model is not sustainable given higher costs and weakening sub metrics. The firm slashed their price target $51 from $102 and downgraded the company to Sell From Neutral. Citigroup (NYSE:C) downgraded shares to Neutral from Buy and lowered their price target to $95 from $220, citing the company's significantly weaker than expected Q4 and 2012 guidance assumption. JP Morgan (NYSE:JPM) cut their price target to $67 from $205 and downgraded shares to Neutral from Overweight, citing higher than expected content costs and international losses.