1. Solid Competitive Strengths
Competitors such as Amazon and Time Warner’s HBO are
relevant risks to watch. But highly in-demand content such
as House of Cards and Orange Is the New Black is a crucial
differentiating factor for Netflix.
Proprietary data analytics technology allows Netflix to
evaluate the tastes and viewing habits of consumers, and
this is remarkably helpful when it comes to purchasing or
Content is king, and Netflix is proving its ability to deliver
successful content for a competitively low price to
“People look at them as multiple channels. You saw that Amazon
included us on the Fire TV and of course we’ve been before on the
Kindle Fires and it's a great relationship all around where we have
got unique content, they have got some unique content. They are
also doing originals. There are multiple networks out there. It's very
much not a zero-sum game and we are building this ecosystem
together that's about Internet video and the more players there are
in Internet video, the bigger that ecosystem gets. The big theme is
Internet video is taking share away from linear video. So we are all
participating in that transformation.”
Netflix CEO Reed Hastings
2. Accelerating Growth
Netflix added 4 million members during the first quarter of 2014, which brings the
total base to 48.35 million global subscribers. Growth is accelerating, as this is a
considerable increase from the 3.05 million members Netflix added in the first
quarter of 2013.
Still Growing Substantially in the U.S.
Even in a relatively mature market such as the
U.S., growth is accelerating.
The company gained 2.25 million members in the
U.S. during the first quarter of 2014, for a total of
35.67 million U.S. members.
This compares favorably against 2.03 million net
additions in the first quarter of 2013, and it shows
that growth is still accelerating in Netflix's main
Ample Room for International Growth
Netflix gained 1.75 million new international
members in the first quarter of 2014, reaching a
total of 12.68 million international members.
This is an acceleration versus 1.02 million new
international members in the first quarter of 2013.
The company is still in its initial stage when it
comes to international expansion.
3. Expanding Profitability
Content costs are expensive, and Wall Street
analysts have always been concerned about the
company's ability to operate profitably.
However, revenues are clearly outgrowing
expenses and profit margins are increasing.
Management expects growing profit margins
both in the U.S. and international markets in the
Netflix is consolidating its competitive strength via
Growth is as strong as ever, both in the U.S. and in
Profit margins are consistently moving in the right
Rapid sales growth in combination with increasing
profit margins should provide a double boost to earnings
in the years ahead.
The $2.2 trillion war for your living room
can be a huge opportunity for investors. Do
you know how to profit from it?