WBD - Decoding Netflix's Market Dominance (Rating Upgrade)
2024-04-16 00:09:56 ET
Summary
- Netflix is positioned to dominate the streaming-video-on-demand space, despite decreasing market share.
- The company has low churn, high retention rates, rapid user growth, and industry-leading average revenue per user.
- NFLX's crackdown on password-sharing further solidifies its dominance in the market.
- Exciting award-winning content and reinvestment into the original and licensed content wheel keep subscribers indulged.
- 1-year price target of $710 with a reinstatement of a buy and overweight rating.
Investment Thesis
I am writing this article to reinstate Netflix ( NFLX ) as a buy and overweight. Netflix is a clear market leader, being the only pure play streamer with a first-mover advantage in paid sharing monetization. Netflix is at the forefront and the primary beneficiary of the disruption in linear TV. With over 260 million paid members, Netflix has the most expansive reach of views. Its pricing power and content offerings continue to drive margins higher and create a moat for the firm. Netflix's recent move to crackdown on password sharers has monetized millions of additional subscribers for $7.99/month. Moreover, Netflix's move to drop its basic subscription tier ($11.99/month) has forced new users towards its pricier standard subscription for $15.49/month or standard with ads tier for $6.99/month. Additionally, Netflix's shift into live entertainment with its 10-year deal with TKO (NYSE: TKO ) to acquire the exclusive rights to Raw will considerably scale its advertising footprint. Content remains king in media, so Netflix will remain the apex of streaming....
Decoding Netflix's Market Dominance (Rating Upgrade)