After Big Push, Will Netflix Stock Ride The Bull Or Get Bitten By The Bear?

Netflix stock is rising rather quickly. Will the rise continue, or begin to descend?

Cinema Blend is reporting that the recent push Netflix stock received in the first quarter of 2015 puts the value of Netflix at $32.9 billion. This surprising result makes Netflix more valuable than CBS Networks at $30.6 billion and Viacom at $28.8 billion. The $4.2 billion Netflix stock has gained alone is more valuable than the Starz Network ($3.8 billion) and just under the value of Lionsgate Studios ($4.6 billion).

Even with the good news about the value of Netflix stock, currently standing at $546.60 per share, the future is less certain. Some stock experts think the bear will bite down and lower the Netflix stock within this next year to around $270 per share. Others think the Netflix stock will ride the bull to a much higher value to around $625 per share.

Netflix has certainly become more than just a DVD and streaming service. Netflix now creates its own content, like Orange Is The New Black, House Of Cards, and the new Daredevil. Netflix has also rescued shows cancelled by other networks, such as Arrested Development and Longmire. Investors must remember, however, that this technology industry is still in its infancy, and thus subject to the constantly-changing technological advances. Those changes could affect Netflix stock.

According to The Motley Fool, some of the bullish estimates for Netflix stock is still low. FRB Capital sees the 70 percent increase and developing technology capable of rising to at least $900 per share. Bold, to be sure, but FRB Capital sees it as possible. They have upgraded Netflix stock to outperform, thinking it can cover the 60 percent gain from its current level.

FRB came about these numbers after a survey of 2,000 persons, 40 percent of which are Netflix subscribers, like the service more than traditional cable or satellite services. FRB Capital also believes that Netflix can reach 180 million global subscribers, 60 million in the USA alone. They also feel that Netflix can generate more than 40 percent contribution margin by bringing average user per growth to the mid-single digits by 2020.

With these assumptions, a discounted cash flow shows a value of Netflix stock in the United States at $300 per share. FRB Capital thinks it’s the international market, though, that will provide the massive growth. Though it will take time, it is felt that Netflix stock will grow to six times the value internationally than in the United States. FRB Capital sees the international market is worth twice the American market, for a total of $900 dollars per share.

As long as Netflix can continue its growth internationally and maintain the gains they have made in the United States, it is quite possible. The only potential downfall is new and emerging technology. Any new service or system could take customers away from Netflix. Though nothing is known to be in the pipeline, anything can happen within the next four and a half years.

[Image courtesy of Tech Crunch]