Recently we wrote about increased competition for Netflix (NASDQ:NFLX) from Amazon (NASDAQ:AMZN), and how that might impact it in the longer run (see Amazon Is About To Rain On Netflix’s Parade With Original Content). To add to that, Lovefilm has bagged an exclusive deal with News Corp’s (NASDAQ:NWS) Fox Studios to stream some movies to its customers in the U.K. that Netflix cannot. [1] While competition seems to be increasing all around, customers are still willing to consider Netflix as one of their top choices in the U.S. [2]
In a survey conducted by Parks Associates, a research firm, about 17% of the respondents indicated that they consider using Netflix over premium cable networks and about 16% think of Netflix as an alternative to on-demand video services. [2] While competition may be increasing, the survey results show considerable demand for Netflix in the U.S., which accounts for roughly 60% of our estimated $110 stock value. The results, considering the sample size was appropriately chosen, indicate strong preference for Netflix even when premium networks and on-demand services are better equipped to provide newer content.
See our complete analysis for Netflix
Netflix appears to be surrounded by mixed developments which indicates that the stock is unlikely to swing either way until the company shows some that earnings will support its outlook.
Our price estimate for Netflix stands at about $110, implying a premium of over 60% to the market price.
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Netflix shut out again as Lovefilm signs with Fox, paidContent, June 25 2012 [↩]
- Netflix Nets Premium Networks’ Viewers, Barron’s, June 25 2012 [↩] [↩]
