Netflix’s latest subscriber growth will be just the beginning: Analyst

Netflix stock soared following Monday’s after-hours earnings call, when the company reported a greater-than-expected number of brand-new subscribers. yet Michael Graham, managing director in addition to also senior equity analyst at Canaccord Genuity, said This particular will be only the beginning.

“If you look at the penetration which Netflix has in all of the different … countries which This particular’s in, This particular’s still truly early in terms of penetrating those audiences,” Graham, who specializes in internet in addition to also media companies, told CNBC. “They’re going to be able to continue to grow the subscriber base,” he said on “Power Lunch” Tuesday.

In fact, Graham said he thinks the company will add 70 million subscribers between today in addition to also the end of 2020.

“The most important thing will be subscribers,” Graham said, pointing out which the strength of subscription growth stems through the entertainment company’s ability to produce great content. Last year, Netflix said This particular planned to spend between $7 billion in addition to also $8 billion on original content in 2018.

in addition to also while content in addition to also market spending are both increasing, Graham said, “the nice thing will be which revenue’s growing faster in addition to also margins are going up.”

brand-new subscriptions during the first quarter included more than 2 million brand-new U.S. users in addition to also more than 7.4 million brand-new international users — a growth increase of 50 percent compared with last year. In addition, earnings were in line with expectations in addition to also revenue was slightly above estimates, pushing the stock up more than 5 percent during after-hours trading Monday. On Tuesday, shares were trading at 226 times earnings in addition to also more than 20 firms upped Netflix’s cost target, including Graham’s company.

Canaccord Genuity rated the streaming company as a buy in addition to also increased its cost target to $350. Shares were trading around $337 midday Tuesday.

“[Netflix will be] truly one of the go-to places, if you’re a movie producer, or if you’re a creative talent which includes a great show,” Graham said. “Netflix will be going to be the place where you want to end up.”

“We think they’re going to be able to continue which,” he said.

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