Netflix, Inc.Short
NFLX overpriced
Updated
- Short at $320 but expect a further leg up possibly to $360
- Price to Book 35.64 vs Industry AVG 1.89
- NFLX faces huge competition from AMZN Prime Instant Video, Hulu and TWX 's HBO. All these competitors are undergoing huge operations to ramp up their subscribers by getting more content. AMZN being the biggest concern with their ongoing monopoly effect on every market - they are undertaking a number of initiatives to enhance their content and into originally programming which will cause further threats for NFLX. AMZN recently ventured into the live streaming of sports with a huge NFL deal. On the other hand, Hulu has partnered with Sony to broaden its content. TWX 's HBO is focusing largely on expansion. FB , SNAP and TWTR are also making efforts into breaking into this market and putting lots of effort into video viewing on their platforms. On top of this, AAPL also is gearing up for a boost on its content on AppleTV and iTunes.
- Costs escalated after international expansions and content additions for NFLX due to technology investments and marketing costs. These recent expansions/investments will most likely continue to affect the company's profitability in the near future.
- Netflix is also expecting a significant amount of debt
- The company plans on spending $7.5-8bn on content and it is also likely to spend a further $1.3-2bn on marketing its content in 2018.
- Netflix expects it's free cash flow to be negative for years to come as it continues to push capital into producing content.
- NFLX has a huge dependence on ability to to deliver, create and update content - this remains a challenge for the company as it continues to face cost escalation from higher licensing and renewal fees. If this was to heavily weigh on the company's balance sheet, it could in-fact lead to a price increase for subscribers which they have already done in recent months - which could see subscriptions decline.
- NFLX share price has already done 122.38% in the past year and 67.26% YTD
- Short Interest - 6bn
NeroTree Capital rates Netflix Inc as a SELL with a price target of $275 over the next 52w.
- Price to Book 35.64 vs Industry AVG 1.89
- NFLX faces huge competition from AMZN Prime Instant Video, Hulu and TWX 's HBO. All these competitors are undergoing huge operations to ramp up their subscribers by getting more content. AMZN being the biggest concern with their ongoing monopoly effect on every market - they are undertaking a number of initiatives to enhance their content and into originally programming which will cause further threats for NFLX. AMZN recently ventured into the live streaming of sports with a huge NFL deal. On the other hand, Hulu has partnered with Sony to broaden its content. TWX 's HBO is focusing largely on expansion. FB , SNAP and TWTR are also making efforts into breaking into this market and putting lots of effort into video viewing on their platforms. On top of this, AAPL also is gearing up for a boost on its content on AppleTV and iTunes.
- Costs escalated after international expansions and content additions for NFLX due to technology investments and marketing costs. These recent expansions/investments will most likely continue to affect the company's profitability in the near future.
- Netflix is also expecting a significant amount of debt
- The company plans on spending $7.5-8bn on content and it is also likely to spend a further $1.3-2bn on marketing its content in 2018.
- Netflix expects it's free cash flow to be negative for years to come as it continues to push capital into producing content.
- NFLX has a huge dependence on ability to to deliver, create and update content - this remains a challenge for the company as it continues to face cost escalation from higher licensing and renewal fees. If this was to heavily weigh on the company's balance sheet, it could in-fact lead to a price increase for subscribers which they have already done in recent months - which could see subscriptions decline.
- NFLX share price has already done 122.38% in the past year and 67.26% YTD
- Short Interest - 6bn
NeroTree Capital rates Netflix Inc as a SELL with a price target of $275 over the next 52w.
Trade closed: target reached
Closed at 279.17 (+12.33%)
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