As the internet is abuzz with a new customer satisfaction report from customer analytics company ForeSee, we think that many might be missing the silver lining regarding Netflix’s (NASDAQ:NFLX) results. While companies like Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) have climbed up the customer satisfaction rankings, Netflix has been one of the biggest losers. [1] These results should not come as a surprise to anybody who has been following Netflix for last few months. So where is the silver lining? Despite registering a significant drop, Netflix’s customer satisfaction score stood 79, which is the average for internet retailers. [1] Additionally, Citigroup’s (NYSE:C) consumer survey demonstrates that satisfaction among Netflix’s customers remains high. [2]
See our complete analysis for Netflix
We have to appreciate the fact that despite the extreme customer backlash, the sudden reversal of subscriber additions and the shower of negative comments and news, Netflix has still maintained an average customer satisfaction rating. What it shows is that the company’s service remains as good as ever, management miscalculations notwithstanding, and the temporary shakeup due to pricing changes should not be a lasting one. In other words, we think that Netflix will be able to rebuild its image over the course of 2012. The company still enjoys a content advantage over its competitors, though some are beginning to catch up, and the market potential is immense – especially if we include international markets.
For 2012, our primary concern is how Netflix will perform in the U.K. While it may not be an easy market to expand into, should the company make inroads over the next few years it should start seeing some healthy subscriber growth provided that it can continue to enhance its streaming content.
Our price estimate for Netflix stands at $126, implying a premium of about 70% to the market price.
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Notes:- Amazon, Apple Soar In Customer Satisfaction In 2011; Netflix Plummets, TechCrunch, Dec 27 2011 [↩] [↩]
- Netflix Price Target Lowered to $80 From $94 at Citigroup, Financial News Network, Dec 22 2011 [↩]
