Netflix, Inc. (NASDAQ:NFLX) Investing Heavily In Original Programming

Netflix, Inc. (NASDAQ:NFLX) disclosed that its video-streaming service reported 62 million subscribers worldwide. The number of U.S. subscribers surged by 2.28 million in the first quarter and the international subscribers’ accounts jumped 2.6 million. Both figures are better than the company forecast. The sales surged 24% to $1.57 billion in-line with analysts’ guidance.

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The investment

Netflix stated that it is investing aggressively in original programming to boost the U.S. business. It is to support the international expansion plans of the company. The new shows including “Bloodline” and “Unbreakable Kimmy Schmidt” drove U.S. viewing. However, the strength in the U.S. dollar adversely affected the international sales and resulted in losses overseas. Paul Sweeney, an analyst with Bloomberg, said that the company can be termed as a subscriber growth momentum story. As long as international and domestic subscribers continue to grow, people have a reason to invest in the stock. Original programming is taking a bigger part of the company’s content budget.

The attractive target

Barton Crockett, who is an analyst with FBR & Co., raised his one year price target on Netflix stock to $900 from initial price target of $400. He talked about a proprietary survey and projected the company could triple its worldwide subscribers. He said that the subscribers of Netflix love its service more than television. The users account for almost 40% of TV households in the U.S. The expectations are that the company can have 180 million global users by 2020.

The performance

Netflix, Inc. (NASDAQ:NFLX) reported its 1Q earnings last week and reported net income of $24 million compared to $53.1 million. The reason behind decline in revenue was the strong dollar that accounted for losses outside the United States. The high-quality content supported the growth in the U.S. The company also released new series on its platform over the past few weeks. It included the drama “Daredevil.”

About the Author

Coper graduated from the University of Chicagi with majors in political science and journalism.

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