Netflix Stock Forecast for 2017

BlairThe article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

Netflix Stock Forecast for 2017


  • Netflix Stock Forecast for 2017
  • I Know First Algorithmic Bullish Forecast For Netflix

Netflix Stock Forecast for 2017

Netflix Inc is an Internet television network with over 86 million members in over 190 countries enjoying more than 125 million hours of television (TV) shows and movies per day, including original series, documentaries and feature films. Members can watch as much as they want, anytime, anywhere, on nearly any Internet-connected screen.


Analysts aren’t looking favorably at NFLX currently. Wedbush and Jeffries rated NFLX as “underperform” while Piper Jaffray rated it “overweight,” 7 other analysts rated the stock as “sell,” and 16 analysts have rated NFLX as a “hold.” Bank of America and Pivotal Research were the only companies to rate NFLX as a “buy.” Price targets on the stock range from $60.00 per share to $155.00 per share, where the actual share price at close on January 10, 2017 is $129.89. These negative ratings on NFLX shouldn’t entirely come as a surprise as the stock has seen a 42-week low of $79.95 and a high of $129.29, with a market cap at about $54 billion and a P/E ratio of 339.43.

However, NFLX hasn’t been doing terrible in the last year. NFLX last quarterly earnings were released on Monday, October 17, 2016. EPS growth actually exceeded expectations which were at $0.06 and the stock’s actual EPS was $0.12 for the quarter. Revenue during the quarter equaled $2.29 billion as opposed to estimated $2.28 billion. Year-over-year, revenue increased 31.7%. On January 18, 2017, NFLX will be releasing it’s Q4 earnings, so we will soon have an idea of which way the stock is moving.

Netflix has been investing on their original content to gain a competitive advantage. The companies goal is to boast 50% of their overall content as their Netflix originals. This investment makes it so that Netflix will have exclusive content that can only be viewed on their platform, driving consumers straight to them to watch certain shows and movies. Competition within video streaming platforms has turned to original content. There is very little that differentiates the companies, so their content is a way to make them look more attractive. The race to the top will simply be based on the popularity of the shows that are provided on each platform.

On another note, there are rumors of possible acquisition on Netflix. Facebook and Disney are possible buyers for Netflix. Facebook though, is a less plausible buyer as the discussion about the buy is just rumors. Disney, however; has had this rumor continuing since December and there are actual outlines as to why the sale may be beneficial for both parties.

Disney would benefit by purchasing Netflix because their content, as well as newer acquired content from Marvel, Pixar and Lucas Films, would have a new, refreshing distribution platform. Also, because Netflix is an international platform, Disney would be able to quickly and easily grow into the global market, even further than it already has. Surprisingly, 45% of Netflix subscribers are international consumers. This could open up new doors for Disney downloadinternationally as their sales outside of the US are only 27% of total revenue, barring Disney theme park sales around the world.
Disney also boasts 90 million subscribers for ESPN and ESPN2, which could be integrated into Netflix. This, however, may not be a benefit. If ESPN and ESPN2 become part of Netflix, subscription fees may go up. While for sports fans, this isn’t a huge problem, it is for the rest of Netflix subscribers when there is competition at a lower rate such as Amazon Video and Hulu. Although there is content on Netflix that subscribers are unable to receive on other platforms, it’s a small loss compared to having to pay extra for services that are unwanted. All in all, it doesn’t make financial sense to acquire Netflix for Disney as the cost would run them around $65 billion which is more than a third of the market cap on Disney stock.

I Know First Algorithmic Bullish Forecast For NFLX

I Know First currently maintains a bullish stance on NFLX with signal strength of 111.02 and predictability 0.42 for the 1-year forecast.


In the past I Know First was also bullish on NFLX. This bullish forecast on NFLX was sent to current I Know First subscribers on October 12, 2016, where NFLX had a signal of 23.63 and a predictability of 0.18. NFLX showed returns of 26.24% in the 14 day period.

Quant Trading

For more information on past performance, click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm, allowing the user to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.


No matter what happens, NFLX will continue growing its user base as it grows its own original content. Hulu and Amazon are competitors but Netflix continues to dominate the video streaming sector.