Video streaming service Netflix (NFLX) has basically changed the way we consume entertainment, and the impact the company is having on the entire old guard media delivery mechanisms has been both revolutionary and ridiculously rapid. I don’t know anyone who doesn’t regularly “binge watch” TV series such as House of Cards or Breaking Bad, and one of the only ways to do this is via Netflix.
Now, for the past five years, investors have been binging on NFLX stock, which has posted a five-year total return of more than 800%. Yes, that ride has been fraught with a lot of volatility, but like any good TV action hero, NFLX stock has proven it can overcome adversity. The latest round of dings has come since NFLX stock hit its March 4 high. Shares are down some 23% since then, partly due to the wider selloff in tech, but also due to talk of competition from a new streaming service created by powerhouses Apple (AAPL) and Comcast (CMSCA).
The way I see it, competing tech stocks had better get to it soon, because news today from network services firm Sandvine revealed that Netflix continues to increase its share of fixed-line web traffic in North America. A Sandvine report said that, so far in 2014, Netflix has accounted for 34% of data flowing to consumers during peak times (a 2% bump from the second half of 2013).
The growth of Netflix is a trend that shows no signs of abetting anytime soon, and if the company can execute in markets such as Europe, NFLX stock could easily bounced back into the $450 range — about a $100 (nearly 30%) higher than its current price level.