Here we are in the final days of the decade, a perfect time for best-of lists. Music, film, TV, all get the treatment, and naturally, so do stocks.
TV and stocks, then, is the perfect segue to announce the best performing stock of the decade. Spearheading the 2010’s record breaking rally is the “killer of television as we know it”, Netflix (NFLX).
The streaming giant began the decade trading at under $8 a share and now each one is worth $333, an increase of 4131%. There have been many disrupting technologies in the last decade, and Netflix’s revolution of how we consume television and movies is up there with the most impactful. Furthermore, it has inspired fellow entertainment giants to completely overhaul their strategies in order to keep up with the disruptor. As new streaming services from Disney and Apple attempt to move in on the emerging platform, and after such a sustained rally, can Netflix keep up its expansion in the new decade?
The mega corporations are likely to get a share of the streaming market in the long run, but Netflix’s first mover advantage means it is well positioned to cushion the blows. While Disney+ recently launched to much fanfare, data has shown 80% of Disney+ subscribers also subscribe to Netflix, allaying initial fears of consumers dropping their Netflix memberships and switching over.
Starting next quarter, Netflix will transition to issuing data subscriber reports from four regional segments - North America, Latin America, Europe, Middle East, & Africa (EMEA), and Asia-Pacific. The company recently released historical revenue and subscriber data for the new international divisions.
The print shows that over 60% of Netflix subscribers are in international markets, a figure that is only growing, with the most additions from EMEA and the fastest growing subscriber base in the world’s most populous region - Asia-Pacific. Netflix’s focus on foreign language content and emphasis on localizing its platform is bearing fruit, and it will be hard for the new players to compete internationally.
RBC’s Mark Mahaney thinks the scene is set for further expansion, noting, “We believe that Netflix has achieved a level of sustainable scale, growth, and profitability that isn’t currently reflected in its stock price. This conclusion is based on our assessment of Netflix’s 61 million U.S. subscriber and 98 million international subscriber bases, which makes Netflix one of the largest global entertainment subscription businesses.”
Mahaney, therefore, reiterated an Outperform rating on NFLX, alongside a price target of $420. The target indicates upside potential of 26% in the new decade. (To watch Mahaney’s track record, click here)
Taking a rather more agnostic position, is Nomura’s Mark Kelley. Calling attention to the recent 8-K data report, the analyst said, “We appreciate the transparency that the data provides, and think the disclosure paints a positive picture of the company’s prospects outside the US (as evidenced by the 9% stock price move since the release). However, we think that competitive pressures will limit upside until reported data refutes that thesis.”
Unsurprisingly, then, Kelley keeps his Neutral rating. The 4-star analyst’s price target also remains at $330, implying downside of 1% and conveying Kelley’s belief that the streaming giant has surged enough for now. (To watch Kelley’s track record, click here)
So, where does the Street stand on Netflix’s prospects? As it happens, the analysts are mostly positive. A Moderate Buy consensus rating breaks down into 21 Buys, 8 Holds and 4 Sells. The average price target comes in at $365.94 and indicates further growth of 10% could be in store. (See Netflix stock analysis on TipRanks)