Netflix Stock Predictions: Original Content Is Why Netflix Is Booming

motek 1The 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.

NFLX Stock Predictions


  • The judicious decision of Netflix to bet big on original content is paying off. Content is king when it comes to who will dominate paid streaming.
  • Original programming is likely behind the fast growth in subscribers since 2013. Hit original content is partly why Netflix doubled its subscribers from 2013 to 2017.
  • Netflix has set aside $6 billion for original content this year. Original, exclusive content is a great way to keep customers happy and loyal.
  • Instead of spending too much money licensing other firms’ video/TV content, Netflix is better off creating its own library of exclusive content.

My last go-long endorsement for Netflix (NFLX) was last October. The stock has since risen 24%. I am again endorsing a Buy rating for NFLX. I firmly believe that Netflix still has upside potential of up to 20% within the next 12 months. My optimism is due to original content finally paying off big time for Netflix. The company’s quarterly revenue keeps posting steady Q-o-Q growth.

This is in spite of Netflix focusing more on creating original programming rather than license shows created/owned by third-party companies like Disney (DIS) or Time-Warner. The $6 billion budget for 2017 is convincing evidence that Netflix has matured to a full-pledged media publisher. It is no longer just a paid streaming service provider. With own growing library of original programming, Netflix has upgraded itself as a media giant like Disney and Time-Warner.

On a one-year return basis, NFLX has grossly outperformed my DIS holdings. My fearless forecast is that NFLX will again outperform Disney and Time-Warner for the next 12 months. Yes, Disney and Warner has far large libraries of original content. However, Netflix’s killer advantage is that it has 94 million monthly paying subscribers.

netflix stock predictions

(Source: Google Finance).

NFLX therefore is a better buy than DIS right now. Disney is now stagnant. NFLX is dynamic, evolving, and still growing.

Original Programming Keeps Subscribers Happy and Loyal

The multi-billion annual investments on original programming since 2013 definitely helped Netflix’s rapid subscriber growth. It was always my belief that consistency in creating original, exclusive content is a great way to retain the loyalty and repeat business of Netflix subscribers. Netflix has dozens of acclaimed TV shows that aren’t available anywhere else.

Exclusivity of content offered is also key to attracting new subscribers. People will sign-up for paid streaming where there are shows that aren’t available on other streamers. The success of Netflix original programming strategy is likely why Amazon (AMZN) is imitating it. Amazon is also spending an insane amount of money on original programming. Amazon is trying to catch up with Netflix’s runaway success.


Amazon’s enthusiasm to compete with Netflix is easy to understand. The global video streaming market generated revenue of $26.27 billion in 2015. Stratistics MRC expects this business to mature in to $83.41 billion by 2022. The firm with the most amount of loyal subscribers are going to benefit the most.

Netflix has 94 million happy customers right now thanks to a steady diet of original programming.

Original Shows Are Cheaper To Bring To Other Countries

It is also cheaper for Netflix’s international expansion to focus more on original programming. Hollywood media giants charge separate licensing fees for every country their content gets streamed to. The added extra licensing cost for international streaming is why there’s a lot of third-party U.S. Netflix shows that aren’t available on Netflix Philippines.

Non-U.S. Netflix customers will keep on subscribing if they get new shows regularly. Producing original shows is the cheaper way for Netflix to increase its offering to international subscribers. Keeping non-U.S. subscribers happy and loyal is very important to Netflix’s future.

Video streaming is best consumed using the fastest internet speed. The United States doesn’t have the fastest average internet speed. Other countries like Hong Kong and South Korea are better suited for Netflix’s paid video streaming services. My point is Netflix should really take good care of its non-U.S. subscribers because they are in great position to be consistently happy subscribers.

Going long on Netflix is timely and wise. This company is the future of entertainment. Hollywood giants like Disney and Warner Bros are outdated. In my book, Netflix is the new Hollywood dream gig for actors, cinematographers, videographers, screenwriters, directors, and creative artists. The 94 million subscribers require Netflix to continuously invest in new programming.

The more Hollywood movie and TV stars that joins Netflix is good for the company. The loyal fans/viewers will follow their idols. If its takes $9.99/month just to watch their Hollywood idols, fans will gladly pay it.

My buy rating for NFLX is again backed by the positive algorithmic forecasts from I Know First. One year from now, NFLX’s price is likely going to be notably higher than $161.

It is also worth noting that the big boys of hedge funds are very positive over Netflix. Hedge funds have steadily increased their NFLX exposure since Q4 2016.


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. This allows users 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.

Past I Know First Success With NFLX

I Know First has been bullish on NFLX shares. In one such case, on September 15, 2016, I know First issued a bullish article highlighting Netflix’s continued trend in revenue increase. Netflix has been investing its future by expanding abroad to maintain high growth rates. These factors, along with favorable consumer trend of cutting its cords with the cable companies have greatly benefited Netflix. Since the article’s release, NFLX shares have increased by 62.61%.


(Source: Google Finance)

This bullish forecast for NFLX was sent to I Know First subscribers on September 15, 2016. To subscribe today click here.