Netflix has had an extremely successful decade, both culturally and financially, and it looks like that trend will continue over the next few years.
“[Netflix has] more than ample opportunity to continue to scale up [its] content investment on a global basis… the subscriber opportunity is sufficiently large,” said Rob Sanderson, a research analyst who covers the stock market for MKM Partners.
According to CNBC, Sanderson predicts that Netflix stock will significantly increase over the next few years, jumping up approximately 67%.
Currently, Netflix is the single largest bandwidth user on the Internet, accounting for more than 38% of all online traffic during peak evening hours. In addition to its lock on the video streaming market, Netflix has also emerged as a content creator as well, releasing a variety of original comedy, drama, documentary, and family programming in recent years. As a result, the young company has greatly expanded its global reach, and all signs point to continued growth in the years to come.
Although Sanderson is optimistic about the future of Netflix, other industry officials aren’t so sure about the financial future of the company as it pertains to the stock market.
Dennis Davitt of Harvest Volatility Management recently debated this subject with Sanderson on the CNBC “Power Lunch” program:
“I’ve seen a lot of really good investors lose a great amount of money on stocks like Netflix,” Davitt said, “and that usually comes from when they short them. It’s a momentum stock.”
A 2000 Rutgers study showed that companies that took advantage of employee stock ownership plans (ESOPs) actually grew between 2.3% and 2.4% faster than similar organizations without an ESOP. However, not only does Netflix offer a unique ESOP program, it’s also become famous for its unique work culture, which encourages employees to take unlimited overtime.
For now, Netflix stock is one of the best-performing tech stocks of 2017, and its price is up more than 30% year-to-date.
“I think Rob’s right, personally,” added Davitt. “But if Rob’s not right, it costs you 5% to own the ‘insurance policy’ on the stock.”
As of May 27, 2017, Netflix stock was valued at $162.43. The overall trend for the tech company was quite flat from the late 1990s until 2013 when subscriber rates really took off. The most growth has been from 2014 until the present day, with market prices trending upward — way upwards.
However, considering that Netflix has been in business for 30 years, it’s already ahead of the curve in the modern-day tech industry.
