Netflix, Inc. (NASDAQ:NFLX)‘s stock price has popped more than 32% since the start of this week–an insane move for any publicly traded company, let alone one with a $12 billion-plus market cap and a beta below 1.0. In fact, over the past six months, Netflix shares have returned more than 260%, easily the best performance among the entire large-cap equity universe, according to FinViz data.
While a stock this grandiose is covered by bloggers from every angle, there’s something that has flown under the radar of Mr. Market today; Netflix, Inc. (NASDAQ:NFLX)’s epic “Long Term View” document just uploaded to its investor relations page.
The 11-page document reads more like a manifesto than a mission statement, and literally begins with a quote from Francis Underwood, the main character of Netflix, Inc. (NASDAQ:NFLX)’s smash hit original show, “House of Cards.”
The quote reads as follows:
“Look at the bigger picture.”
Simple, elegant and to the point.
It’s clear that in this document, Netflix is taking a look at the bigger picture, and is sharing it with its shareholders, rather than keeping them in the dark.
It’s actions like these that should endear the streaming content provider to its investors–potential and current–as it’s rare to find such open-ness in today’s tech world, aside from accidentally pre-released earnings reports, that is (looking squarely at you, Google).
Back to the point, Netflix, Inc. (NASDAQ:NFLX) revealed many interesting tidbits, the most important of which we’ll cover here. After all, when something this big is presented publicly, and no one is talking about it, it can provide early readers with a leg up on their competition, so to speak.
The Netflix document starts out with the following three thought points:
“Over the coming decades and across the world, Internet TV will replace linear TV.”
“Apps will replace channels, remote controls will disappear, and screens will proliferate.”
“As Internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way.”
The first point is relatively universally accepted, as demographic information among younger age groups already indicates that this shift is well on its way, as Internet is teens’ and young adults’ preferred medium to digest digital content.
The second is something we’ve begun to see with content providers like Time Warner Inc (NYSE:TWX)‘s HBO and The Walt Disney Company (NYSE:DIS)‘s ESPN, which are mentioned alongside Netflix, Inc. (NASDAQ:NFLX) in the third point. It’s no coincidence that HBO is mentioned by name–the company has publicly stated that they view the Time Warner subsidiary as their primary competitor. What’s more interesting, though, is that ESPN is mentioned explicitly, as Netflix hasn’t shown a strong interest in providing sports-related content as of yet.
More specifically, Netflix, Inc. (NASDAQ:NFLX)’s document mentions the following:
“In addition to Netflix, most of the world’s leading linear TV networks are moving into Internet TV. The WatchESPN app runs on many Internet platforms and is specifically designed to showcase sports. ESPN will keep improving their app to try to stay ahead of MLB.tv, which is another terrific Internet TV sports app. The HBO GO app makes HBO’s films and series much more accessible than on HBO’s linear channel. The BBC iPlayer app in the UK provides a rich and popular on-demand interface for a wide range of BBC programming. The other major linear networks are not far behind.”
A key competitive driver that many Netflix investors likely forget about is the fact that existing “linear” TV providers, as the company calls them, are in the process of moving into more organic structures, be it via web browser-based or app-based technologies.
We’ve listed four such revelations from Netflix’s document, let’s take a look at 17 more.
Check them out on the following pages:
