Netflix, Inc. (NASDAQ:NFLX) is poised to become the second biggest media company in the world in coming three years, according to Barclays. The statement came out immediately after the stock of the company gained another 2.2 percent a few days ago. Meanwhile, the production for its hit show “House of Cards” has started.
The stock of Netflix has gone up by more than 1450 percent in the past five years. Even then it is still not too late for the investors to invest in the company, says Barclays analyst Kannan Venkateshwar. He opined that the growth of Netflix can be evaluated on the basis of two numbers- subscriber growth and content cost. According to Venkateshwar, if Netflix continues to grow its subscriber count at a faster rate than the content cost, the stock of the company is most likely continue to outperform.
The analyst from Barclays said that the total addressable global market size of Netflix could reach 185 million by 2025 and the media company can additionally add 53 million international subscribers in the coming next three years. Simultaneously the company will continue to beef up its content library aggressively.
According to Venkateshwar, Netflix will invest around $10 billion and $12 billion on content in 2018 and this estimate is much higher than the estimate of $8 billion by Bank of America released a few days ago. The costs are rising but even then Venkateshwar feels that Netflix will likely maintain a larger degree of pricing power even in the face of other streaming competitors including new services from Walt Disney Co. (DIS).
The analyst stated that customer inertia is the single largest component of media pricing power and the cord-cutting generation of Netflix customers now sees the media channel as a must-have subscription.
Netflix Resumes ‘House Of Cards’ Production
As per the latest report, the media channel has resumed the production of “House of Cards.” The streaming service recently started the production of the sixth and final season of the political drama around four months after its co-star Kevin Spacey was alleged with a series of sexual harassment and had to be dropped from the show.