Stock of the day 14/04/2015 – Netflix Inc

Netflix had a blockbuster fourth quarter announcement back in January; the streaming subscription service will be hoping to match its own high bar when it announces its Q1 2015 earnings release on Wednesday.

After a few wobbles in 2014, where it started at $363.89 and closed at $341.58, Netflix is having a dream 2015 so far. A low of $316.90 in mid-January was quickly forgotten amount when Netflix announced its excellent fourth quarter results, seeing the stock jump nearly 20% to $404.30; in contrast, disappointments in its third quarter results back in October 2014 had seen the stock crumble by 26.5% to $332. This growth managed to sustain itself until it reached a peak price of $484.80, tantalizingly close to the company’s all-time record price. It almost reached this price again on Monday, with talk of a potential stock split spurring on Netflix to close at $477; this good will continued into Tuesday, with the stock now trading at $481.37.


(Source: IT-Finance.com 14/04/2015)

Orange is the New Black, House of Cards, Arrested Development, Unbreakable Kimmy Schmidt, Daredevil, premiering Breaking Bad and then Better Call Saul in the UK, alongside the myriad of comedy specials it also debuts; the list of self-produced, zeitgeist grabbing and critically acclaimed TV Netflix is producing is only growing. In a few months it will see the third season of OITNB, whilst later in the year will debut a new film from Ricky Gervais alongside having 4 more Marvel TV shows and a new season of Arrested Development on the horizon.

Combine this with its huge back catalogue of shows, and Netflix is in an interesting position. Does it want to be real competition to the traditional US networks, or does it intend to be a complimentary service? For now Netflix is able to have its cake and eat it; it can plunder the resources of other networks to stream their shows as its core base, whilst then providing its own content that goes on to snatch nominations and awards away from television’s old guard. For now that is fine; it will be interesting to see whether Netflix feels more drawn to one path or the other as it continues to expand.

In terms of its first quarter figures, analysts are expecting around 1.8 million new domestic subscribers, slightly below the fourth quarter’s 1.9 million; internationally, predictions point to around 2.25 million new subscribers, lower than the record-breaking 2.43 million in Q4. This is the company’s biggest area for growth with recent debuts in Australia and New Zealand, a debut in Spain on the horizon and potential to appear in lucrative regions like Japan and China. Almost as an afterthought, revenue forecasts suggest a 24% year on year increase to $1.57 billion.

Yet hot on the tail of its most recent success, Marvel’s Daredevil, it seems apt to paraphrase a different set of Marvel characters: with great successes come great expectations, something that Netflix felt the sting of in October, and could fall prey to on Wednesday.