To recap, Netflix is an online streaming company that took off in the last decade. It was the ‘N’ in the original FAANG. It benefitted from the once-in-a-generation transition from DVD to online viewing, and made some popular series like The Crown.
As of this week, Netflix is the 31st largest company in the world, worth a staggering $290 billion. Its market cap is ahead of some old blue-chip stocks like Pfizer (PFE) and Exxon Mobil (XOM).
While Netflix is battling new entrants like Disney+ and Apple TV, the market anticipates that the company will continue to hold its ground for the time being, especially with big hits like the Squid Game.
One concern, however, is that the streaming market may become saturated over time. This is only natural because most household would have one or two streaming subscriptions.
Netflix’s share price closed at $657 on Thursday.
Netflix (NFLX) share price has been a star performer during the pandemic. Its share price dipped to $295 during March 2020 but rebounded to new highs soon after.
After a period of consolidation, Netflix is now roaring into new all-time highs on a regularly.
When a stock is rising at a fast pace, all you have to do is to enjoy the ride. You don’t need to do much because there is nothing much you can do. Selling now entails buying back at a higher price – unless you can time the correction extremely well.
Of course, Netflix will not go up forever. Prices will fall once the last marginal buyer has bought. For now, Netflix is basking in a strong uptrend. Move stop losses up on further price appreciation.
Netflix is a widely-followed stock in the States. Its hyper-growth profile, large-cap status, and the ability to beat market forecast make it a favourite stock to trade. Long-term investors have reaped enormous gains from the stock.
Among the panel of 44 analysts tracked by the Financial Times, 33 of them have put the streaming company on a ‘Buy’ or ‘Outperform’ categories. Only 1 analyst has a ‘Sell’ rating on the stock. This is a very bullish consensus. The median price target is $700.
Netflix’s 2020 revenue was about $25 billion – a figure that is expected to grow to $29 billion this year.
Another positive factor behind Netflix is that it is about to turn cash flow positive for the first time in a decade. It no longer needs to borrow to invest in the business. The company had borrowed about $15 billion over the past ten years. Armed with more financial resources, the market expects Netflix to start buying back its shares in 2022.