Netflix Stock: Unshakeable Long Term

Two of the world’s largest brands entered subscription video on demand (SVOD) over the past quarter, which means the upcoming Netflix earnings report on January 21 will be under pressure. However, financial analysts are overestimating Disney and Apple, as these companies will not easily catch up to the top streaming subscription service over the long-term.

Netflix has a Firm Hold on OTT

There are more than 190 OTT providers to keep track of in the United States. This has the market in a frenzy, which is one reason we see whipsaw reactions to news of any kind in the OTT market. For instance, Netflix shed $24 billion in market value following the second-quarter earnings release in July. This could happen again, but in the long-run, it won’t matter.

Netflix’s Stock Price Hinges on Global Logistics

Before third quarter earnings, I had pointed out that Netflix’s opportunity is global, and this is why the balance sheet looks frightening to value investors. Netflix’s stock price has most certainly reflected a market concerned with the company’s debt as the stock has posted 0.17% returns — or nearly 0% — over the past 12 months, while Disney and Comcast are up 30% and 31%, which is more in line with the broader market.

Broadband Penetration and 5G

The OTT market in the United States has taken a decade to surpass pay-TV, with Hulu launching in 2007, popular set-top-boxes launching circa 2008 and Netflix streaming service launching in 2010. This growth has been assisted with the wide availability of high-speed broadband.

Beyond Subscriber Numbers: User Engagement

Netflix is not only capturing market share from cable TV attrition, but the company is also seeping into Hollywood’s addressable market.Recently, Netflix received 24 Oscar nominations, which is more than any major Hollywood studio or distributor.

Conclusion:

Interestingly enough, many criticize Netflix for continuing its lead at 87% of subscribers through 2023. Again, they are also missing the point that this is the law of large numbers, as a leader cannot hit 100% of all OTT households and now Netflix must look outside of the United States for growth.

Review of Netflix’s Stock Price

Netflix has held the $385 resistance zone since late 2018. This is a significant region that Netflix is looking to retest in the coming days and weeks. Netflix just reclaimed the 50-day and 200-day simple moving average (SMA), which will now act as support. It’s also worth noting that the 200-day SMA is signaling that the long-term trend is pointing downward.

Senior Product Evangelist in data and security. All things #startups #mobile, #data #security and #IoT. Snowboarder, book worm.

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