Why This Analyst Thinks Netflix Has a 50% Upside


According to new research published on Thursday, this large tech company is poised to surge over the next 12 months.

Netflix (NASDAQ: NFLX) has had a history of dramatic price swings, gaining or losing 20-40 percent in a month or two. While the stock has remained relatively uneventful for the past few months, one analyst has gone on record to warn investors that they could be missing a massive opportunity with Netflix.

Michael J. Olson, an analyst at Piper Jaffray, wrote a research note on Thursday that suggested that Netflix’s recent expansion into international markets means that it could dramatically spike in price. He argues that in the past, the company has remained to focused on fixed-broadband households.

Instead, he suggests that other segments, such as with mobile users, offers a major opportunity. When coupled with international expansion opportunities, this could be the perfect recipe for a major breakout in the months to come. Currently, no other analyst in the markets is taking this type of international, mobile-centric approach to analyzing Netflix’s potential growth.

“We now believe this is too limiting, given the potential for mobile-first and mobile-only users to adopt the service, especially outside the U.S.,” Olson wrote according to Barrons. “While consensus estimates assume a high rate of ongoing international sub growth, we see relatively more aggressive scenarios that have a realistic change of playing out.”

In the first quarter, Netflix reported they had 148.9 million subscribers, with 60.2 million coming from the U.S. and 88.6 million coming internationally. According to Olson’s research, 2021 subscriber counts are expected to skyrocket in international markets, jumping to 152.5 million internationally. In comparison, U.S. based subscribers would only grow to 68.3 million. However, the analyst goes on to say that these are conservative estimates and that it wouldn’t be surprising for Netflix’s international subscribers to grow to 179.3 million.

Many customers, especially outside of the U.S., are households that don’t have broadband but instead are mobile-only in their internet access. Current estimates project that there are 575 million mobile-only international internet households, giving Netflix plenty of room to grow. The company offers its services to almost every country in the world except for China.

Shares of Netflix inched up 2.3 percent over the course of the day. While the past couple of months have seen the stock stay relatively the same, the stock surged dramatically in January and February, jumping from around $250 to $350 per share.

Although Netflix has a very large market cap alongside a massive P/E ratio of 132, suggesting at least on some level the stock is overpriced, recent price swings suggest that a further 50 percent jump as the analysts suggest could still be possible. Time will tell whether Olson’s opinion will be vindicated.

Netflix Company Profile

Shares of Aleafia were up around 15 percent on Thursday, gaining $0.135 and putting the stock at just over $1.06. The 300-million-dollar company, considered a penny stock at its current trading price, saw its single best trading day since September 21st 2018. For the past few months, shares have continued to fall from $2.10 to its current level. – Warrior Trading News