Earnings Of Netflix Have Come At The Cost Of Price Hike Of Its Services
With the release of first quarter earnings by Netflix Tv, Wall Street is confident to receive great figures again. Netflix, the California based internet TV provider is expecting to accumulate a growth of around 25% along with more number of subscribers and the expansion of the company to 130 more countries earlier this year.
But, the experts are more interested in knowing the forecast of the company in the US market. A vast majority of the members will witness $2 increase in the months to come, so their monthly bill is going to rise to $9.99. This increase, which has been announced a couple of years ago is going to affect 17 million customers as estimated by UBS investment bank.
According to Michael Pachter, MD of Wedbush equity research, there could be as many as 30 million subscribers who would be affected by the hike in the Netflix monthly subscription. The report also states that some people may return to the network after dropping it.
Michael Pachter also expects the overall revenue of the Netflix to be around $2 billion, which is quite an increase comparing to the last year’s revenue, which was around $1.97 billion. The figures are obtained by S&P Global Market Intelligence.
Moreover, the number of subscribers that Netflix currently has will be increased from $6.1 million to more than 200,000. Michael Pachter has also found an amazing fact regarding the increment in the subscribers, which states that there are around 1.8 million subscribers in the US and around 4.5 million overall, bringing a total of around 84 million subscribers.
Shareholders of Netflix are also quite happy with the progress of the company, as the value of the share has also increased in the last seven years. The increment is around 40% in the past four years, but have gone down to 6% in the last three months.
Max Wolff, a prolific Economist working at Manhattan Venture Partners told CNBC Friday that the rate to earnings ratio of the company is around 400, which makes all of us quite nervous.
There is a division in the group of analysts working on the Wall Street after seeing the company’s growth, especially in terms of sales and the number of subscribers. Not to forget, the analysts are also divided over the development of new content for the subscribers’ aspect as well.
Scott Devitt and John Egbert, two members of Stifel Financial Corporation have a special buy rating along with a target price of around $143. They expect Netflix to have a mammoth amount of subscribers in the global market.
On the other hand, Wedbush Pachter is not that confident about the Netflix and its performance, thus setting its target price to $45. He believes that the shares of Netflix will dip in the months of June to September.
The most sought after analysts have put the revenue figures of Netflix App to be at a better position than what Wall Street analysts have determined. People like Christine Short who is Vice-President at Crowdsourced Financial Service.
With the decision to add 600 hours of high quality digital content, will help the company to grow even further. The company is going to spend around $6 billion to make a good position in the market where competitors like Hulu and Amazon are also giving a tough competition. Christine Short also believe that the company’s focus to invest in the international market with a boatload of new content is going to bring the revenue down.
Netflix Free is on the path of getting more subscribers and revenue, but there are small obstacles in the way, which Netflix has to address.