Netflix Stock Forecast: NFLX Will Continue To Prosper In Spite of Disney+ And Apple TV+

motek 1This Netflix stock forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary on Netflix Stock Forecast:

  • There is lingering pessimism over Netflix because of the upcoming intensified competition on paid streaming entertainment.
  • Apple TV+ will debut on November 1. Disney+ TV streaming service will also launch on November 12.
  • Many are skeptical over the future prosperity of Netflix. This is because of the low basic monthly fee of Disney+ ($6.99), and Apple TV+ ($4.99).
  • Most people are not going to abandon Netflix. The cheap monthly fees of Disney+ and Apple TV+ does not automatically mean Netflix will lose subscribers.
  • My takeaway is that people will keep their Netflix subscriptions in addition to subscribing to Apple TV+ and Disney+.

I do not share the continuing cynicism over Netflix (NFLX). The stock is already down -28.89% from its 52-week high price of $385.99.  I am highly confident Netflix can prosper despite competition from Disney (DIS) and Apple (AAPL). Yes, Netflix will lose some subscriber growth after next month’s launching of the $4.99/month Apple TV+ and $6.99/month Disney+ streaming services.  Netflix’s stunted growth opportunity is probably why Evercore ISI reduced its price target from $380 to $300.

On the other hand, I firmly believe NFLX still deserves a PT of $350. My optimism is shared by others. The average 12-month PT of NFLX at TipRanks is $400.56.

nflx stock prediction
(Source: TipRanks)

Paid Streaming Entertainment Is Not A Zero-Sum Contest

Apple and Disney’s cheap streaming services convinced me that Netflix will not lose any customers. Going forward, majority of Netflix subscribers will not unsubscribe. A recent survey revealed that 75% Netflix subscribers do not intend to subscribe either to Apple TV+ or Disney+. Those 25% who said yes said they will retain their Netflix subscription if ever they sign-up for Apple TV+ and/or Disney+.

The most probable scenario is most people will just add Apple TV+ and Disney+ to complement their current Netflix subscriptions. Even people here in the Philippines have multiple paid streaming services. We subscribe to Netflix and iFlix.

The point is that paid streaming online entertainment is not a zero-sum game. Netflix, Apple TV+, and Disney+ can all prosper together. Their affordability means most people can afford to subscribe to all three of them simultaneously. Subscribing to three of them will cost just $22/month. It’s cheaper than my current DSL broadband internet plan.

The company that offers the greatest number of exclusive shows and movies will likely emerge the largest and most successful. My bet is that Netflix will remain the runaway leader. Disney will probably come in second and Apple in third place.

Yes, Netflix does not have the financial muscle of Apple or Disney. However, Netflix is generating enough subscription revenue so that it can spend $15 billion/year in producing original movies/TV shows. Consistency in producing original/exclusive shows will keep most Netflix subscribers very loyal. Netflix already generates almost $5 billion in quarterly revenue. It is not going to go bankrupt spending $15 billion on original content.

nflx stock prediction
(Source: Seeking Alpha)

I do not think Disney and Apple will dare spend $15 billion in producing new original shows. They will only do that after they get substantial number of paying customers. My estimate is that they cannot match the 150 million subscriber count of Netflix within the next five years.

Netflix Is Already Too Successful

Apple and Disney are playing catch-up. Yes, they have lots of cash to burn but Netflix is already too big and too successful. Netflix already has more than 150 million paid subscribers. It was obvious that the low monthly prices of Apple TV+ and Disney+ were intentional. Apple and Disney were not confident enough to match the $9.99/month of Netflix.

netflix stock forecast
(Source: Statista)

The massive international success of Netflix is most likely why Apple and Disney became envious. Those two badly need new sources of revenue because they are stagnating companies. Please refer to the chart below. Apple and Disney’s 5-year revenue CAGR are both under 8%. I hate to say this… but it needs to be said, Disney+ and Apple TV+ are desperate moves by firms who ran out of other expansion ideas. Netflix showed us all there is big money to be made from affordable paid streaming entertainment. Disney and Apple have no choice but to try and imitate Netflix’s success.

netflix stock forecast
(Source: Seeking Alpha)

My suspicion is that Disney tried to buy Netflix before but got rejected. Disney+ is a vindictive move of a rejected admirer.

Netflix Stock Forecast Conclusion

The $15 billion/year annual budget for original TV shows/movies will keep Netflix well ahead of Disney+ and Apple TV+. I agree that it will be hard now for Netflix to reach 200 million subscribers because of the low-cost competition from Apple and Disney. However, Netflix can be a profitable company with 150 million subscribers going forward.

My buy recommendation for Netflix is congruent with the stock’s super-bullish one-year market trend score. Like me, the stock-picking AI of I Know First is ignoring the emerging threat from Apple TV+ and Disney+. A stock only needs to score 100 to get a buy signal from I Know First and yet NFLX touts a one-year forecast score of 651.87.

How to interpret this diagram

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