The much-feared coronavirus resurgence is here with some countries to soon go into lockdown again. New cases in the US also detect that they will soon be joining the other countries in lockdown. These factors will be very beneficial for the Netflix stock investors because the number of subscribers always shoots high up during lockdown as it did before. With the holiday season and no signs of a corona vaccine to be developed anytime soon, Netflix will see a good amount of 200 million subscribers within these 3 months. Not only that, 20 more million people are expected to subscribe to the channel in the coming year.
Since the subscribers were not enough, it led to the revaluation of the usual Euro bond to be tanked net income. This incident happened despite a Q3 revenue beat. Though the latest news for it was quite positive, the Netflix stock shares were involved in the sector of tech selloff. The big picture is what is to be focused on by the Netflix stock investors.
There’s other good news as well! Netflix announced a rise in the price in the US. The raised price of the two most popular packages is still very low as compared to cable services which is an advantage.
After estimating the ratio of subscribers of the October quarter 2020, the number of American subscribers is 65 million, though Netflix does not take into account country wise. With this number even if Netflix’s average revenue is increased by $1 per person, it would go a long way in earning the total amount of $750 million annually.
Nevertheless, Netflix is shifting towards meaning profitability since the last few years, and that brought the operating margins to about 20%.
Current Netflix Stock Status
Last Thursday when the pricing changes were announced, the shares of the company became a little unstable. Late in the following weeks, it was restored by the weakness in the tech sector. The average price target for the Netflix stock on the street was $545.12 on Tuesday meaning that there was 11% more upside. It is surprising to see that future hikes concerning the price target in the future. At the same time, the analysts, reflecting the new pricing structure are seen raising the estimates in earning.
The valuation of Netflix stock is actually very normal if seen from the view of the average price target. The shares have performed pretty well in the past several years. According to the street, each year the company’s earnings are expected to rise by 22%.
With such broad potential in the profit margin of Netflix in the coming weeks, you surely do not want to miss investing in the Netflix stock. Go ahead and enjoy your holidays know it is only making you richer.
