Many investors have shunned Netflix (NASDAQ:NFLX) as the on-demand video streaming space starts to become overcrowded. The emergence of Disney Plus and Apple TV Plus late last year spawned fears that the streaming giant would gradually lose out subscribers to its new competitors. The charts tell the story.
The stock’s 7.9% uptick in 2019 is nowhere near the growth of its fellow FAANG companies. It has also lagged behind the entire S&P 500 Index, which surged 27% last year.
Will this year be any different for Netflix? A billion-dollar hedge fund manager certainly believes so. He thinks that the streaming giant can catch up and soar above $500 in 2020.
The fear that competition would stop Netflix from obtaining more subscribers now seems to be unfounded. In the fourth quarter of 2019, the streaming company reported over 167 million paying subscribers. Netflix has also managed to surpass 60 million paid subscribers in the United States.
The tech company also eclipsed its Q4 guidelines. In October, Netflix told investors that they’re targeting 7.6 million new subscribers for the quarter ending December 2019. The company easily crushed this number with the addition of 8.76 million international subscribers. In the U.S., the company added 420,000 new users.
These figures indicate that Netflix remains strong despite the emergence of serious competitors.
I spoke with Tony Gunnarson, principal analyst at Ovum, regarding Netflix’s ability to shore up more subscribers. Tony said,
Outside major markets like US, Japan, South Korea or UK, Netflix’s household penetration rate is generally around 15% currently. For most international markets, Netflix has only just started, and there is still a great deal of growth for Netflix.
As for the competition, virtually all markets today are relatively mature in terms of the choices available to customers. Most markets are dominated by Netflix and Amazon while the rest of the market is covered by one to three services from local or regional players and a range of smaller and often niche services. In short, for most markets, there is little real competition to Netflix. Ovum certainly expects Netflix to continue to be in growth through the foreseeable future.
Netflix’s fourth-quarter performance took many investors by surprise. Jason Harris of StockHunterTrading.com humbly admitted that he made a wrong call on the streaming company. He said that Netflix “will never see $400 again.” However, the stock appears ready to crush that resistance.
I talked to Jason Harris and asked for more insights on Netflix.
In this increased competitive streaming market, they seem to be holding in there just fine, not as bad as some had feared for now.
I think NFLX will see 385 near term and over that, $400 is coming.
From a long-term perspective, Netflix looks incredibly bullish. Hedge fund manager Will Meade pointed out that NFLX ignited a strong technical breakout in the monthly time frame.
While Netflix didn’t have a big night at the Oscars, the breakout is huge. Based on the size of the pattern, NFLX can surge by $200 just as Will Meade predicts.
Fortunately, the S&P 500 continues to expand. As they say, a rising tide lifts all boats and Netflix is likely to benefit from the overall bullish sentiment. Mati Greenspan, founder of Quantum Economics, told CCN.com,
[Netflix is] a very interesting company and one of the only major tech giants that continue to innovate. I’d say that if the bullish momentum in the stock market continued, Netflix should be among the gainers.
No big night at the Oscars, no problem for Netflix. The stars appear to be lining up for the streaming giant. This might be the year that it prints a new all-time high.
Disclaimer: The above should not be considered trading advice from CCN.com. The writer does not own any shares of the companies or markets mentioned.