Why Is Netflix Declared a Double?

Citi has doubled down on Netflix, (NASDAQ: NFLX  ) sticking to a $120 price target -- which is exactly twice the cost of shares today. Watch the preceding video for the full story on this upgrade, including reasons behind Citi's bullishness on the company and what Fool.com analyst Eric Bleeker believes is the key issue here for investors.

While Netflix's (NASDAQ: NFLX  ) first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some deep-pocketed rivals, namely Amazon.com (NASDAQ: AMZN  ) . Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? Citi certainly doesn't seem concerned, but should you be? These kinds of issues are a must-know for investors, which is why Fool.com analyst and Netflix expert Jim Mueller has written a premium research report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to consider both buying and selling the stock. Click here now to learn more and access your copy today.

Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Netflix. Motley Fool newsletter services recommend Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On October 03, 2012, at 7:33 PM, redsox2005 wrote:

    Where's the beef on this video? Just recanting what the analytst is saying?

    Fool subscriber for 10+ years and tired of the reiteration of other commentaries.

    Fool - you are going corporate and that is sad.

  • Report this Comment On October 03, 2012, at 7:41 PM, GatorATL wrote:

    The nay-saying on Netflix has been ridiculous of late, with everyone pointing to selection encroachment by the other big players, particularly Amazon.

    Let's get something out in the open. If you are looking for an all-you-can-watch buffet of streaming movies/TV you will NOT choose Amazon. It is not even a competition. Their focus is on Video On Demand which makes them a competitor of the likes of Comcast but not Netflix. The selection for unlimited streaming (Prime) customers is downright lousy.

    I'd also like to point out that Amazon's distributed systems engineers (those that manage the backbone of their distribution network) are some of the best in the WORLD (Disclaimer: I'm an engineer). Consider that when you use VOD streaming apps (on XBox, PS3, etc). They are downright pathetic from a user experience standpoint, clearly showing that their head is NOT in the game the way everyone says.

    Reed Hastings messed up. Everyone knows that. But the service hasn't changed. Content deals start and end frequently enough that a movie you want to see might be there a week from now. Hence the Watch list feature. I believe most of the negative comments on FOOL or Seeking Alpha are from puffed up traders that lost their shirt when the stock tanked. That is unfortunate but Netflix is quite undervalued at the current price and I'm glad Citi said so.

  • Report this Comment On October 03, 2012, at 8:05 PM, pauldeba wrote:

    Netflix undervalued? They can't make money streaming, without the dying DVD business, they're gone. Content costs are increasing faster than revenues, they have to maintain advertising to offset churn, the international markets all start decelerating after 6 months - canada did, latin america did, UK we'll see in a few weeks. They already failed in the UK 5 years ago and closed shop, they are entering marginal markets like Scandinavia. They will just keep losing money and other companies will start chipping away at their US customer base, destroying the only market they could possibly make a profit in. This should be $10 including a premium for perfect execution of their strategy. It is really $0 and will get there some day.

  • Report this Comment On October 03, 2012, at 8:18 PM, Risky88 wrote:

    I was part of netflix for 2 years

    switched to amazon 6 months ago once it was available on my playstation

    I'm very happy with the service

  • Report this Comment On October 04, 2012, at 10:51 AM, BioBat wrote:

    GatorATL,

    I use Amazon almost exclusively for my all you can eat streaming needs and supplement it with free viewing of newer content on HULU. On Amazon, there's more than enough content on their to make it worth my while AND I get free 2 day shipping AND I can borrow free ebooks on my Kindle. All for $6.50 a month. That's a tremendous value that nobody can touch.

    As far as applications go - I stream Amazon via PS3 and find the UI intuitive and functional, as good as, if not better than the comparable Netflix app.

  • Report this Comment On October 04, 2012, at 2:43 PM, TMFJMo wrote:

    Bottom line here folks is that there are just a LOT of streaming options today. Heck even Toys R Us is getting into the gig:

    http://www.bloomberg.com/news/2012-10-04/toys-r-us-continues...

    I'm not saying they'll be successful. But there are just a lot of choices. Netflix's competitive advantage was in DVD by mail. In streaming they had a first-mover advantage for a little while, but that's mitigated with every new entry into this market. It's awesome for us as consumers, but investors need to take a bit of a different perspective in my opinion.

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