The market's chilly reception of Netflix
It's not that Schindler woke up to the company's improving fundamentals. His price target of $72 isn't budging. When the stock was trading higher than that earlier this summer, he was rightfully bearish. Now that the stock has fallen considerably short of that mark after last month's disappointing quarterly report, the path to $72 is higher rather than lower.
Schindler is still encouraged by the company's strengthening domestic streaming business. DVD-based customers are bailing on the company, but the streaming service is as popular as ever.
All but 2.5 million of Netflix's 30.1 million subscribers are streaming these days. For the first time ever, more than two-thirds of Netflix's customers are exclusively streaming.
Was there more growth to be milked out of optical discs? Sure. Coinstar's
Right now, Netflix has more domestic subscribers than any single cable- or satellite-TV provider. The gap is growing. Even market darling DirecTV
Consumers are changing the way they interact with their TVs and how much they're willing to pay for video entertainment. Netflix is leading the way on that front. This may not be as lucrative a business as it once had -- for now -- but the company would rather be early than late to the undeniable trend toward digital video on demand.
It was easy to hate on Netflix last summer, when the stock was overvalued and the company misunderstood the consumer. The tide is turning, and it may have been consumers all along who misunderstood where the future of TV was heading.
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Longtime Fool contributor Rick Munarriz has been a Netflix subscriber and shareholder since 2002. He owns no shares of any of the other stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has a disclosure policy.