Netflix, Inc. (NFLX) Approaching Its Apple Inc. (AAPL) Moment

Netflix ended Q1 with 29.2 million U.S. streaming subscribers and projected that this would grow to as many as 30 million subscribers by the end of Q2.

This may seem like a much lower market penetration than the iPhone. However, Netflix allows — and even encourages — family members to share an account, whereas smartphones obviously cannot be shared effectively. As a result, Netflix’s addressable market in the U.S. is, at most, the 115 million households here, whereas there are already 141 million U.S. smartphone users.

If you limit Netflix, Inc. (NASDAQ:NFLX)’s addressable market to households with broadband Internet, the market size drops to 88 million households. By that standard, Netflix has already captured 34% of its addressable market, whereas the iPhone has 39% of the U.S. smartphone market, and smartphones overall have 59% of the U.S. mobile-phone market.

So what?
All of these statistics may seem meaningless out of context. The key point for investors is that Netflix, Inc. (NASDAQ:NFLX)’s domestic streaming business is just a year or so behind the iPhone in terms of market saturation. Both products entered the U.S. market around the same time, and the iPhone’s growth trajectory has been just slightly ahead of Netflix’s.

Just one year ago, Apple Inc. (NASDAQ:AAPL) stock was rocketing higher on the back of high hopes for the upcoming iPhone 5. Today, Netflix stock is rocketing higher on the back of high hopes for its recent foray into original programming. However, just as Apple investors have received a harsh reality check in the last year, Netflix, Inc. (NASDAQ:NFLX) investors are likely to get one in the next year or two as the company approaches saturation of the U.S. market. When the saturation issue comes to the fore of Netflix investors’ concerns, the stock could take a long tumble due to its rich valuation.

The article Netflix Approaching Its Apple Moment originally appeared on Fool.com.

Fool contributor Adam Levine-Weinberg owns shares of Apple and is short shares of Netflix. Adam Levine-Weinberg has the following options: long January 2015 $390 calls on Apple and long December 2013 $275 puts on Netflix. The Motley Fool recommends Apple and Netflix. The Motley Fool owns shares of Apple and Netflix.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.