Shares of Netflix, Inc. (NFLX) — a onetime momentum favorite that enjoyed an epic rise out of its 2012 low of $7.53 to a late-2015 high of $133.27 — has been mired in a lazy downtrend for the last six months. Excitement over its international prospects has been eclipsed by worries about its domestic U.S. business and increasing competition from Amazon.com, Inc. (AMZN), Apple Inc. (AAPL), and Alphabet Inc (GOOG, GOOGL).
Two weeks ago, shares once again tested support down in the mid-$80s, a level hit in August and again in February, and is trying to push up and out of its five-week consolidation range.
Could we see a run at its 200-day moving average, 10%-plus from here, to return to levels last seen in early April?
Shares are up 1.8% in trading on Monday after Piper Jaffray issued positive comments about its global expansion opportunities. Analyst Michael Olson focused on the exciting takeaway from survey responses out of Brazil and Mexico suggesting market share gains to be had.
Netflix: Housing Disney’s Mouse
Currently, the company has nearly 35 million subscribers outside the United States, which is about 5% of the total market of broadband households. Here at home, the company holds a 45% share of the U.S. market.
Click to Enlarge By 2020, Olson believes the company could hit around 141 million subscribers worldwide of which 63.2 from the United states and 77.3 million overseas.
There’s more: The big exclusivity deal the company signed with Walt Disney Co (DIS) back in 2012 will take effect in September. Netflix will be allowed to stream all Disney films — including Marvel, Pixar and “Star Wars” titles — in the same timing window they are usually made available to other paid TV networks like HBO.
While this is still well after digital and Blu-ray release dates, it’s a much quicker turnaround than Netflix subscribers are normally used to on seeing new releases. For all new movies from Disney going forward, Netflix will enjoy exclusive streaming rights in the first-run pay TV window — squeezing out Amazon Prime, Hulu and others.
Bottom Line on NFLX Stock
This further cements the impression that the company is focusing its efforts and finding success as being an indispensable part of people’s entertainment choices.
Mark Mahaney at RBC capital noted high levels of usage and satisfaction of NFLX subscribers based on survey data. Some 50% use Netflix to watch movies and TV shows vs. 27% at Amazon. Around 66% are “extremely” or “very satisfied” with their service. And 74% say they are unlikely to cancel their service even if the company raises subscription rates.