Netflix, Inc. (NFLX) Can’t Be Bothered With the SEC

In quarter 4 2011, the company’s international subscription base had 1.86 million subscribers, in Q4 2012 the company had 6.12 million international subscribers. The growth in subscribers will contribute to the company’s revenue. The increases in viewership statistics, further supports the assumption that Netflix’s international growth is well on track. Netflix’s international viewership grew 229% year-over-year.

Source:


International Telecommunication Union


with the data from 2012-2020 forecasted by Alex Cho

I anticipate that globally the number of internet users will grow to approximately 54.55% by 2020. The estimate is fairly conservative. I assume that Netflix, Inc. (NASDAQ:NFLX)’s potential market size is going to be 3.5 billion (not taking into consideration population growth). Currently Netflix currently has 27.15 million subscribers. Netflix’s global market share is less than 1%. Netflix markets its streaming services for $7.99/month making it a highly affordable alternative for consumers in emerging/developing markets. In summary, I believe Netflix is in the early stages of the product growth cycle. Suppose Netflix were to increase its market share to 10% of its potential market (350 million subscribers), Netflix will then generate $33.6 billion in revenue. Netflix will be able to operate at economies of scale and will grow its subscriber base substantially.

The movie streaming service is still in its growth phase, with analysts on a consensus basis estimating sales growth of 18% for fiscal year 2013. Analysts on a consensus basis anticipate EPS growth of 362% for 2013. Analysts expect a sudden surge in profitability due to cost-cutting initiatives.

The primary growth catalysts involve international expansion, improved content collection and improving profit margins due to price hikes on its streaming services. I believe that Netflix, Inc. (NASDAQ:NFLX) is well positioned to grow in the future, and while the price of the stock is currently $173 and well-above my conservative price forecast of $125.10. I assume that the stock will eventually grow earnings at a rate that will justify a valuation of $200 by 2014. The stock’s upside potential far out-weigh the risks of losing money on a short-term pull-back.

The article Netflix Can’t Be Bothered With the SEC originally appeared on Fool.com.

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