Is NFLX Stock A Good Buy Now After The Recent Pullback?
Video streaming services have been in the headlines a lot this year. The streaming wars commenced with the launch of Disney+ late last year and HBO Max this year. Many thought that new competition was going to put pressure on Netflix Inc’s (NFLX Stock Report) stocks. The truth is, not only did the company manage to stay at the top, NFLX stocks have climbed more than 40% year to date. In fact, Netflix stock skyrocketed to an all-time high on Wednesday, just a shy away from the $500 mark. Now the stock has pulled back on Thursday to close at 476.89, is this the time to load up on NFLX stock?
Netflix Tops ABC As Favorite TV Channel
In survey results released last week, Solutions Research Group Consultants said Netflix grabbed the No. 1 spot in SRG’s “Must Keep TV” chart. Last year, Netflix was second on the annual list behind Walt Disney (DIS Stock Report) owned ABC. When a recent study asked people to pick television services they couldn’t live without, more people chose Netflix than any other streaming service, cable channel, or broadcast network. Separately, a Piper Jaffray survey last year found US teens who prefer watching Netflix outnumbered those who prefer cable TV by 3 to 1. As such, there’s no denying that Netflix is the best video streaming stock in the stock market today.
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Here’s Why Analysts Are Optimistic On NFLX Stock
The boom in new subscribers during the coronavirus lockdown has left analysts divided about where the stock will go from here. Some may agree that the second half of 2020 may well see some new subscribers ditching the service. But, chances of it happening may be quite low. Now, there are few reasons for that. After all, many consumers continue to stay home and limit outdoor social activities. They are not going back to cinemas in droves just yet. Netflix remains one of the best in-home entertainment services in the market right now.
Among the analysts, Canaccord Genuity analyst Michael Graham reiterated his “buy” rating on Netflix stocks. He raised his previous target price of $500 to $550. That’s a 15% potential upside from the current stock price. Bank of America Merrill Lynch also included the stock to its “US 1” list of top-quality investment ideas. This makes NFLX one of the best video streaming stocks to watch in the market right now.
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Bottom Line For NFLX Stock Investors
Of course, what Netflix has been trying to do is not only to increase its viewership, but the time spent using its service. That’s how the company is assessing its growth opportunities. This is because the company found that even in its most mature market, the United States, streaming hours on Netflix only consist of 10% of total TV usage. Cable and satellite TV providers still dominate the market for now. With all that being said, there is still ample room for Netflix to grow and for NFLX stock to climb higher. This is despite fiercer competition from Disney, HBO Max, and Amazon Prime.
As pointed by Forbes last year, the average American household was subscribing to 3.4 streaming services at an average cost of $8.53 per month for each service. A $29 monthly streaming bill is just a fraction of the average $107 monthly cable bill. With the increasing cord-cutting phenomenon, it is hard not to assume that Netflix will continue to gain from the switch. After all, Netflix is already spending more on content than most of the cable providers. Gone were the days when people discussed shows that they saw on TV last night. Now, everyone is talking about how exciting the latest show on Netflix is. With its massive head start in terms of content and number of users, NFLX stock remains one of our favorite streaming stocks by far.
