About the Netflix Group:
The Netflix Group is an American group specialised in Video On Demand (VOD). It offers a service of continuous online viewing of films and series through a monthly subscription model. This group has also developed a DVD rental by mail activity.
Although they achieve over 70% of their turnover in the United States, the Netflix Group has succeeded in positioning their service in other markets throughout the world including Europe.
The principal competitors of Netflix:
Netflix stands as one of the VOD leaders worldwide but its supremacy is currently challenged by a number of serious competitors that it is important to know about if you wish to trade in these shares online. Here therefore are details on the major serious competitors of Netflix in this highly popular sector.
- Amazon is undoubtedly the major competitor of Netflix since its implementation of a VOD service that offers over 40,000 films and series under the name Instant Video in the United States. With 10 million subscribers already it could rapidly spread throughout the world.
- Hulu Plus functions along the same business model as Netflix. Currently available in only a few countries, it is priced around the same as Netflix and offers a large video catalogue.
- Google is also a potential competitor of Netflix with the launch of Chromecast, a device that enables the synchronisation of internet activities with a television monitor.
- Finally, Canal Play of the Canal + Company, belonging to the Bolloré Group, is the major competitor of Netflix in France. Slightly more expensive than its competitor it offers more than 1,500 films and 6,000 series episodes for a slightly lower price.
The major partners of Netflix:
- In 2016 Netflix signed a partnership with Disney, Lucas Films, Marvel and Pixar to obtain the exclusive distribution rights of the latest films and series of these great names in Cinema.
- In 2017 Netflix signed a partnership with Altice and SFR to cover France, Portugal, Israel and the Dominican Republic with the SFR box.
- Netflix is also working with Google at present on the development of a virtual reality headset, the ‘DayDream’ that can be used to view Netflix content.
Analysis of the Netflix share price:
The price of Netflix shares is currently quoted on the Nasdaq All Markets stock market in the United States. It is also integrated in the rate of the Nasdaq stock market index.
The historical stock market chart of Netflix shares reveals an initial peak of this asset from February 2010 to July 2011 followed by a slight retreat. Another rising trend, much stronger this time, began in September 2012 and continues even now.
Important stock market information about Netflix shares:
A good investment in the stock markets requires a certain amount of knowledge about the shares and the company that you plan to speculate on. Therefore the specific data that we have previously mentioned such as a historical technical analysis of the Netflix share price or data resulting from a fundamental analysis are extremely important. However, it is also important not to neglect other, more general, information such as that we will reveal here which will assist you in more easily understanding the position of Netflix shares on the stock markets together with that of its asset.
- In 2017 the total stock market capital of the Netflix Company came to U.S. $69,072.70 million.
- The number of shares issued by the Netflix Company and currently in circulation on the stock markets is 430,054,000.
- The price of Netflix shares is currently quoted on the Global Select Market of the Nasdaq All Markets stock market in the United States.
- The Netflix Company shares are also included in the composition of the American stock market index, the Nasdaq 100, this company is therefore one of the top 100 companies in the new technology sector in terms of stock market capital.
- Shareholdings in the Netflix Company are composed as follows: 12.04% is held by the Capital Research Global Investors Group, 6.10% by The Vanguard Group, 5.45% held by the American investment fund Growth Fund of America, 4.57% by Fidelity Management and Research Company, 3.97% by the State Street Corporation, 3.51% by T Row Price Associates, 2.48% by Jennison Associates and 2.37% by SRS Investment Management. The rest of the company shares are held by numerous individual investors that trade Netflix shares on the international stock markets.
The advantages and disadvantages of Netflix as a stock market asset:
Before beginning to invest on Netflix shares, it is necessary to know the advantages of this company first and thus the possibilities of an upward evolution of this asset. Here is a summary of the advantages of this company in the years to come.
First, Netflix offers its services at a rather affordable price which enables it to reach a wide range of public. The video on demand platform offers subscriptions for under €10 for the simple membership and up to €12 euros for a premium one.
In addition, Netflix has the advantage of offering a wide range of content with several original series which have built its success and are done every year including Marvel, House of Cards, Sense 8, Stranger Things which have a very strong popularity and optimal communication. In order to guarantee better quality content, Netflix has in fact been able to set up numerous and varied strategic partnerships, particularly with Disney, Lucasfilm and Pixar studios. Netflix original content is in fact a real advantage of this platform when compared to its competitors. In the past and very recently, some original content has increased the number of subscribers to the platform thanks to the significant success that they have encountered.
It must be said that Netflix has put in place all the technological tools necessary to anticipate the needs and desires of the public and thus detect before the others the content that its likely to be successful. This strategy includes the implementation of certain algorithms in charge of automatically studying the habitudes of consumption of its subscribers enabling the platform to propose them movies and series that correspond to their preferences.
Netflix has become a brand with a very strong reputation over time. In fact, Netflix has become the only brand name for online streaming content and has experienced an increase of more than 6000 % in its price, since 2007, in less than 10 years.
Finally, the large international clientele of the platform is the last major advantage of this company. The company offers its content in more than 190 different countries and counts with more than 100 million subscribers around the world. Thanks to this feat, Netflix has a very strong bargaining power among studios, which has allowed it to easily obtain the rights of some very promising original content.
The disadvantages and weak points of Netflix shares as a stock market asset:
Of course, Netflix does not only have advantages for investors and it is necessary to be cautious before starting to trade this asset on the stock market and learn all the disadvantages of Netflix and the elements that could affect its profitability.
Of course, the first disadvantage of this company concerns the increasingly strong competition around the world, specially in Europe since the American giant is already struggling to position itself in the market. Netflix is in fact only being tried in European countries which are not very familiar with this new way of online consumption and must still build its reputation by reassuring consumers about this new mode of watching paid content.
Another obstacle to the development of Netflix is the cost of the original content offered by the platform. In fact, and even if this content is the basis of Netflix’s reputation and represents therefore one of the company’s advantages, the expenses required to acquire this content is becoming higher and higher. In 2017 alone, Netflix invested more than 2.5 billion dollars only in securing original titles, an expense that is difficult to monetize when the content does not meet the expected success.
It should also be noticed that the company has no rights to the original content. In fact, Netflix does not directly own most of the programs that it offers, unlike traditional television studios. Netflix thus holds the rights of the content it broadcasts for a period of one year without any guarantee that this original content will not be proposed later on to their competitors.
Finally, Netflix has recently suffered a loss of notoriety after being categorized in class D in terms of environmental awareness. This has aroused strong reactions among environmentalists and a bad publicity for the company. It is important to notice that Netflix’s main competitors, Amazon and Facebook use more than 40% of renewable energy for its services.
How to carry out a good fundamental analysis of Netflix shares price?
To carry out your investment strategies on Netflix shares, you must carefully study the stock charts and their main indicators but also the fundamental analysis data by taking a closer look at the opportunities that this company could seize to grow and the possible threats to its development.
Concerning Netflix’s opportunities in the coming years, you should of course take into account the huge market that the video on demand represents with an increasingly large consumption of videos online thanks to a change in the way society approaches television and video content. The binge-watching phenomenon, which is increasingly affecting young audiences and consists in watching a large number of episodes of a series in a row offers a lot of possibilities for a platform like Netflix.
Netflix could also benefit from an expansion of its services on the Chinese market. But in order to do this, the group must first solve some problems concerning the license of its content by creating a joint venture that enables it to take advantage of the 500 million Chinese members who currently transmit in the country.
Netflix could also benefit from the current growth of technology and RV and 4K UHD content to provide new services to its users.
Of course, in order to achieve its objectives of development, Netflix will also have to face some challenges and constraints, including important competition that offers more varied content and ways of viewing this different content such as Amazon Prime or Hulu Plus. The group is also always in competition with illegal downloads despite tougher laws against this type of fraud.
In fact, about this last point, we know that for 30 content providers such as Netflix, hacking generates more than 5.4 billion of multimedia content downloads each year. Just like its competitors, Netflix also sees its business directly threatened by the new methods of illegal downloading. It is even possible that this could pose a problem for Netflix concerning the financing of future content.
We could therefore finish this article by saying that the opportunities of development and growth of Netflix are numerous and also that the group will have to face some significant challenges to be able to carry out its projects. However, we already know that this company has the necessary capacity to adapt to these constraints and that it is particularly capable of entering into new markets. Besides, the strong technological innovation capacity of the company should allow it to bounce back in case of a decrease in demand in certain sectors.
By using the data from the technical analysis along with the main indicators and the data from the fundamental analysis that we just told you about, you should be able to put in place a concrete strategy about this asset.