Netflix Stock Prediction: Netflix Might Also Be An Acquisition Target

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

Netflix Stock Prediction


  • It might be wise to go long on NFLX now.
  • AT&T recently agreed to buy to buy HBO’s parent company Time Warner for $85.4 billion.
  • Disney or another firm might also answer AT&T’s move with a tender offer for Netflix.
  • Netflix has more than 83 million paying subscribers. They represent a huge market for Disney’s TV channels and movies content library.
  • As per the 30-day and 90-day algorithmic forecasts of I Know First, NLFX has strong buy signals.

Event-driven investors should consider making a short-term bet now on Netflix (NFLX). Recent events convinced me that NFLX could shoot up higher very soon. AT&T’s (T) $85.4 billion offer to buy Time-Warner (TWX) should inspire Disney (DIS) to also consider making a bid for Netflix. It was the streaming TV/video service of Netflix that started the cord-cutting trend that is diminishing the growth potential of traditional cable operators like Time Warner.

Mobile and streaming video are the future of paid TV/video entertainment. Time Warner’s content library and HBO/CNN assets will likely be used to extract more money from AT&T mobile subscribers. AT&T acquiring Time Warner definitely presents a new challenge for Netflix. AT&T has more than 131 million mobile subscribers that could be tapped for its own TV/video streaming service.

Disney could also suffer if regulators really approves AT&T’s purchase of Time Warner. Time Warner’s TV channels and movies content library might get preferential treatment in AT&T-serviced mobile devices.  Disney therefore needs a successful streaming service provider like Netflix to reduce the impact of the AT&T-Time Warner deal.

In my book, Netflix could be a pivotal long-term asset for a content king like Disney. Netflix is a better acquisition than Twitter (TWTR) for Disney. They are complementary companies. There are more than 83 million paying subscribers of Netflix.

Netflix Stock Prediction

(Source: Statista)

The 83 million subscribers of Netflix presents a huge ready market for Disney-owned TV channels and movie library.

A Netflix & Disney Tandem Could Be A Winning Combination

The immense popularity of Netflix is compelling the said company to spend more money than HBO on creating original content. Netflix spent more money last year on original content programming than HBO and Turner – both owned by Time Warner. New original, exclusive content is what keeps streaming video subscribers happy.

Netflix Stock Prediction

Netflix is issuing $800 million in new debt to help finance its 20% increase this year in spending for original content programming. Getting bought by Disney would solve Netflix’s current expenses for new content. Disney and Netflix could save money on original content programming by joining forces.

Instead of Disney spending money to create new shows and movies to rival Netflix’s shows, it should just buy Netflix. Disney will be in-charged of creating content and Netflix could focus on growing its global pool of monthly-paying customers.

As of Q2 2016, Disney only has $5.2 billion in cash & equivalents. It obviously cannot afford to do a cash purchase of Netflix. However, Disney doesn’t even have to do an all-cash purchase of Netflix. It could do a decent stock-based offer and Netflix’s management will likely accept it.

The truth is Netflix cannot continue its momo stock valuation due to its growing annual expenditure in licensing content and creating original content. Getting taken over by Disney will largely eliminate Netflix’s growing annual expenses on content.


I am confident that Disney’s management is again considering Netflix as a worthy acquisition. The stock price of Netflix currently trades at a very high valuation. However, maximum monetization of Disney’s empire of content-producing companies needs Netflix’s help.  Buying or merging with Netflix makes a lot of sense for Disney.

Mobile is the future of paid video streaming.  Half of Netflix subscribers already watch movies on their smartphones. Taking ownership of Netflix therefore could also give Disney ready access to a large pool of mobile subscribers. Disney’s needs the attention of mobile video watchers to increase the total addressable market for its TV shows and movies.

I am betting on NFLX based on the possibility of it getting bought out. If not Disney, maybe SoftBank (SFTBY) or Verizon (VZ) will try acquiring Netflix before this year ends. The 30-day and 90-day market trend algorithmic forecasts from I Know First are also hinting strong buy signals for Netflix.


I Know First Past Success With NFLX

I Know First has been bullish on NFLX in past forecasts. On September 15th, 2016, an I Know First analyst had written a bullish article on NFXL in accordance with our state of the art of the algorithm. Since then, NFLX has risen almost 30% to date.


Furthermore, earlier on August 29th, 2016, an I Know First analyst had written a bullish article regarding NFLX and its expansion plans. The algorithm had been bullish regarding NFLX, and as a result the stock has risen over 29% to date.

Netflix Stock Predicition

Additionally, on October 20th, 2016, an Options Package forecast was published showing NFLX had risen 21.16%, since the forecast was sent to I Know First subscribers on October 12, 2016.

These forecasts were sent out to current I Know first subscribers on September 15th, 2016 and August 28th, 2016. To subscribe now click here.