Netflix Stock Analysis: Netflix is Worth Adding to Your Portfolio for The Long Run

zack Zack Tobin is a Financial Analyst  at I Know First

NFLX Stock Analysis

  • Netflix Stock AnalysisNetflix Stock was the highest growing S&P 500 stock in 2013 and 2015
  • It will continue its global expansion
  • HBO Now and Amazon Prime provide competition
  • I Know First’s Bullish Netflix Stock Analysis

Netflix has had great success over the past couple of years, with it being the best performing stock in the S&P 500 in 2013 and 2015. However, this past January has left many believing we are headed for another recession. This fear has affected many tech stocks, with Netflix falling 27% in the past 3 months. As of now the company is trading in at around $85.

NFLX Stock Analysis

This isn’t the first time that the company has seen a dip. In November of 2014, the company had fallen to $70 only for it to recover and reach new heights in a year later. While it’s unclear when Netflix will bounce, considering it is one of the big 4 FANG stocks (Facebook, Amazon, Netflix, and Google), it’s safe to say that it will bounce back.

Growth Potential

The struggle of the FANG stocks is from a distress in the market, rather than the long-term performance of the companies. The FANGs have sold off is because many of the hedge funds are majorly invested in them.  When the hedge funds are falling, it’s easy to bail out by selling shares out of their largest stocks.

Out of the four FANG stocks, Netflix arguably has the largest growth potential.  The company started out as a small DVD rental company in 1997 but has continued to completely obliterate expectations.  They are currently streaming in 50 countries worldwide.  While that’s a very high number, there is still plenty of room for global expansion. By 2017, they are hoping to reach 200 countries. These new countries would include countries with big markets such as China and South Africa.

NFLX Stock Analysis

Netflix has also set lofty expectations for their original content.   In 2015, they released 24 new shows, many of which have garnered critical acclaim. All of their successful shows will be back with a new season along with 31 original programs and movies. As Netflix’s original content becomes more popular it will be easier raise their monthly subscription.

Netflix is also going to benefit from cell carriers offering better and less expensive streaming packages. It is already prepared for heavier streaming with its investment in the mobile and handheld device market.


Netflix isn’t the only streaming service around, as it faces some stiff competition primarily from HBO Now and Amazon Prime. The threat from HBO Now has received a particular amount of attention as they have just received 800,000 subscribers. This still dwarfs in comparison to Netflix, which has over $45 million domestic subscribers.  An HBO Now subscription is also nearly twice the amount of as a Netflix subscription and offers far less content.

It’s unlikely to see Amazon Prime become the new king of streaming services either. They only make up 13% of the market share, compared to Netflix who makes up 36%. Amazon Prime also lacks the original content power that Netflix has, with far less popular programming. All this shows that it’s very unlikely that any streaming will overthrow Netflix the way Netflix overthrew blockbuster.


The only real fear Netflix should have been of its programming costs. The company will have to continue to spend money in order to grow. Buying Programs will become more expensive, which could affect the free cash flow. In order to outgrow expenses, Netflix will need to expand globally for their plan to work and be a success.

I Know First uses an advanced state of the art algorithm based on artificial intelligence and machine learning to foresee market performance for more than 7,000 assets including stock forecasts, world indices, commodities, interest rates, ETFs, and currencies.   The algorithm generates a forecast with a signal and a predictability indicator. The signal is the number at the center of the box. The predictability is the figure at the bottom of the box. At the top, a particular asset is identified. This format is standardized across all forecasts. The middle number indicates strength and direction, not a price target or percentage gain/loss. The bottom figure, the predictability, signifies a confidence level.

I Know First operates in the highly competitive financial advisory services space, occupied by buy- and sell-side analysts, and others claiming to be investment gurus. Our edge is our unique self- learning predictive algorithm, which we use to send daily forecasts to our clients. Whereas other advisors rely mainly on analysis and/or apply the common fundamentals to analyze an investment, we eliminate natural human biases (and costs) of the forecasting process.

NFLX Stock Analysis

As you can see above I Know First is Bullish for Netflix in the 3 months and year forecast. This is in line with most analysts’ stance, which is also bullish in their forecasts as well. The signal for the 3 months is 5.39 and the predictability 0.38 and for the 1-year forecast, the signal is 13.39 and predictability 0.43.

NFLX Stock Analysis

Previously I Know First predicted Netflix’s stock movement in the aggressive stock forecast from the 12th of January 2015. It had a signal of 138.73 and predictability of 0.49 bringing after a one-year return of 148.05%. Also in early January 2015 I Know First wrote another article about Netflix and gave a prediction of its stock movement for the 3 months and 1 year periods.  The signal for the 3 months was 50.16 and predictability 0.46 and the Year forecasted signal was 158.48 and predictability of 0.51. The Algorithm correctly predicted both time frames and brought returns greater than 133%.


The analysts have recommended to Buy NFLX for the time being. Their earnings growth is predicted to plunge by the end of 2016, They are forecasted to earn more in 2016 than they did in 2015 but not by much. The P/E growth is 10.14. Agreeing with the Algorithmic prediction of I Know First.

NFLX Stock Analysis