Netflix, Inc. (NASDAQ:NFLX) had an excellent year so far in 2015 with stock prices going up by more than 75% YTD. Netflix, Inc. (NASDAQ:NFLX) is showing tremendous subscriber growth, especially the overseas growth. These growth opportunities have made the stock interesting for many investors and analysts. FBR Capital Markets analyst has maintained ‘Outperform’ rating with a staggering price target of $900 on the stock. Netflix, Inc. (NASDAQ:NFLX) is also venturing into the Chinese market. Following this, the stock had surpassed the $600 mark for the first time. CNBC’s Jim Cramer talked on CNBC about Netflix, Inc. (NASDAQ:NFLX) venturing into China and the growth opportunities associated with it for the streaming company.
Cramer said that Netflix is in talks with the Chinese media company, which is backed by the Founder of Alibaba Group Holding Ltd (NYSE:BABA), Jack Ma. He pointed out that there is a $5.9 billion worth market in China for Netflix to explore. Cramer mentioned that this move by Netflix to get into Chinese market is expected. He pointed out that market cap for Netflix seems very small considering the size of this company. He called Netflix as the world TV. He said that younger generation has accepted the Netflix streaming service right away and it took some time for older generation to get out of Cable TV and get used to streaming service.
“[…] Why not? Because Netflix program seems to be uniquely loved worldwide. IFL over and over again that the market cap of this company is way too small versus the opportunity. I just think that Netflix is the world’s TV. I think that it is generational. We didn’t recognize that. We were late to Netflix. For younger person, Netflix is their TV,” Cramer said.
Chinese market has a potential 1.3 billion subscribers for Netflix to target. But is that the real target, since the broadband service plays a huge role in Netflix’s service. How many people has high speed internet into their homes for Netflix to use in China? Cramer said that the number is unknown yet. He pointed at Cisco’s CEO, John Chambers comments that digitalization is happening worldwide. He accepted that there are some political problems in China. He feels that the worldwide digitalization is playing into Netflix’s hands at the moment.
There seems to competition in China for every internet service. But will competition stand as a roadblock for Netflix to grow in China? Cramer thinks that it is quite possible that some competition might occur, but he feels that Netflix brand has the value good enough to fight against those competitions.
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