Things are heating up in the streaming industry, and while competition keeps piling up against Netflix, Inc. (NASDAQ: NFLX), the company is holding its own for now. Here are four catalysts that could boost Netflix's stock higher.
Netflix Q4 Subscriber Numbers
"Netflix reported strong Q4 results, with global net subscriber additions beating guidance and estimates by roughly 1 million, driven largely by growth in international markets. While US net adds came in lower than company guidance, domestic streaming revenue was in line," Canaccord's Maria Ripps wrote in a note following earnings.
Diverse Content Is Paving Way For NFLX Through 2020
"Netflix's new action/fantasy series 'The Witcher' is on pace to be its biggest debut season in [Netflix] history, with 76M households viewing it in the first four weeks since its December release, while season 2 of the psychological thriller You is on pace to garner views from 54M households in its first month," Ripps said.
Free Cash Flow Improvement
"FCF burn is expected to improve by $800mm to -$2.5bn in 2020, in line with our expectations but a major improvement year-over-year. If Netflix can deliver on consensus net additions expectations while driving down FCF burn, we believe this debate will tilt towards the bulls," Morgan Stanley's Benjamin Swinburne wrote in a note.
The Competitive Landscape Might Be Overblown
"We continue to believe that fears of rising competition are overblown. The 4Q results generally reinforced that view," Swinburne said. "The other aspect to the competitive pressure concern has to do with shrinking supply, as Disney and others opt to self-distribute. Netflix Has been prepping for this, building out its own production capacity and leaning into international originals. It is worth noting that local originals were the most popular titles in 2019 in India, Korea, Japan, Turkey, Thailand, Sweden and the UK."
Ripps has a Buy rating and $415 price target on Netflix, while Swinburne has a Buy rating and $400 target.
Things To Note
Apple Inc.(NASDAQ: AAPL), Walt Disney Co (NYSE: DIS) and Amazon.com, Inc. (NASDAQ: AMZN) have yet to report earnings and Netflix could react following the respective company's earnings reports, depending on how much data on their respective streaming services is known.
Netflix changed its viewing metrics from watching "70% of" to watching "2 minutes of," which will result in a roughly 35% increase in viewership numbers.
All of these things can prove to be a bullish scenario for Netflix in 2020. Netflix shares traded around $328.50 at time of writing.