Netflix: Coronavirus Cements the Company as Untouchable
Netflix: Coronavirus Cements The Company As Untouchable
HomeStock IdeasLong IdeasCommunication ServicesSummaryI explain why Netflix is able to maintain its lead despite there being over 190 OTT providers in the United States.I believe Netflix’s addressable market stands at 50-70% of the developed world and 20% of the developing world based off of 1.6 billion television households worldwide.By 2025, digital growth will add over 1 billion middle-tier consumers for telecom companies, which will help open up the market for OTT players.Looking for a portfolio of ideas like this one? Members of Tech Insider Research get exclusive access to our model portfolio. Get started today » Source: Quote Catalog In October, many analysts predicted Netflix (NASDAQ:NFLX) would be crippled by the launch of Apple Plus (AAPL) and Disney Plus (DIS). The new over-the-top services were called “Netflix-killers.” Around this time, I published a series of analysis on Netflix that discussed why competitive over-the-top applications would not be able to dethrone the original streaming media company even after Netflix had missed on subscriber numbers both domestically and globally. Now that Netflix is up 32% while the broader market is down 13%, it’s important to discuss valuation and the longer-term prospects for this high-yielding growth stock. Netflix is Unshakeable: Macro Overview There are key reasons as to why Netflix is able to maintain its lead despite there being over 190 OTT providers in the United States. The main reason is that Netflix is a global media company whereas the majority of OTT providers are domestic. Netflix has over 60 million subscribers in the United States compared to 128 million households. Of the households that subscribe to OTT services, 87 percent have a Netflix subscription. At the time, I had stated that the market had been myopic with Netflix by overlooking broadband penetration rates and the lack of viable competitors on a global scale. For instance, outside of the United States, Netflix outperforms globally with 70-87% of subscription OTT video service users in European English-speaking countries using the service and 55-64% of non-English speaking countries. The global user data helps cut through the speculative noise as to whether Apple Plus or Disney Plus could dethrone Netflix. While many analysts were busy considering the domestic competition, they missed how little competition there is globally. Asia-Pacific and India remain growth opportunities for Netflix, although pricing could be an issue due to high rates of piracy. For entry into China, Netflix secured a licensing dealCheck out my premium service "Tech Insider Research"My weekly PDF reports are 10-20 page deep dives on individual stocks.In the past year, my free analysis predicted Roku’s meteoric rise, Microsoft's rise, Nvidia's rise, Uber’s IPO flop, Zoom’s triple-digit success. My paid service has done much more.Last quarter, we provided many entries for cloud stocks at their bottoms and stock tips set up for near-term gains.Knox Ridley, technical analyst, helps guide entries and exits. Give your tech portfolio an edge.Learn more.Analyst’s Disclosure: I am/we are long NFLX.   I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.I trade in/out of NetflixSeeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You