Netflix, Inc. (NASDAQ:NFLX) has remained the talk of the week seen by the impressive gains that the stock has amassed in a matter of days having been pounded in the past over a slow growth on subscriptions. CNBC’s, Jim Cramer, notes that any investor who had paid attention to Stifel Nicolaus and Cowen &Co upgrade of the stock could have amassed some of the gains that the stock has generated this week alone. Unlike Amazon, the analyst expects Netflix to be profitable as push for growth in international markets gains momentum.
Stifel Nicolaus analyst Scott Devitt had upgraded the stock from a Hold to a Buy when it was trading at the $323 mark noting that the company was undergoing a transition to higher subscription growth. Cowen and Co research analyst, John Blackledge, on the other hand having carried out a research on over a thousand Americans found out that most of them were spending more time on Netflix, Inc. (NASDAQ:NFLX) largely because of its original content.
The analyst notes that price increase are no longer a concern to most of the subscribers who continue to yearn for more original content. Netflix should generate better margins than Amazon.com, Inc. (NASDAQ:AMZN) as subscribers remain receptive to the current prices.
“In fact the survey showed that more Netflix users watch Marco Polo than House of Cards 14% vs. 10%, and this is a virtual cycle of high-quality content that will continue to drive new subscribers. Plus the desire to binge watching in Netflix, Inc. (NASDAQ:NFLX) programming show that prices increases won’t be a problem and that could mean a dramatic increase in profitability down the road,” said Mr. Cramer.
Cramer notes that the analyst did not point out opportunities for growth that Netflix is poised to enjoy on the international front something that justifies a buy at the current margins. The Mad Money Analyst maintains that Netflix subscriptions will no longer be a concern as the company continues to pursue growth away from home.
Netflix, Inc. (NASDAQ:NFLX) is looking to grow its subscription base to 61 million by the end of the year which Cramer believes will further accelerate prospects for profitability.Profitability should kick in as Netflix continues to attract more subscribers unlike Amazon.com, Inc. (NASDAQ:AMZN), despite an increase in subscription fees.
“[…] The good news here is that in the shareholder letter CEO, Reed Hastings, said because of the low cost of original programming and the ability to get people to sign at reasonable prices which I think means higher prices than now. The company will show material global profitability in 2017, in other words, this won’t be Amazon.com, Inc. (NASDAQ:AMZN),” said Mr. Cramer.
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