Will Netflix Becomes a $100 Billion Company?
Netflix Inc. (NFLX, +1.57%) is all over the news and in most cases, for all the right reasons. Now to top it off, on Friday, analysts at Stifel Nicolaus stated that by 2020, only 5 years from now, this streaming media company could become a $100 billion company by market cap. According to Scott Devitt, an analyst at Stifel Nicolaus, by the end of 2020, the operating income of Netflix is expected to reach $3.8 billion. This is based on the assumption that the company achieves 150 million paid subscriptions which can be calculated at an average of $9 per customer in revenue as well as an operating margin of 23 percent. In order for Netflix to achieve the $100 billion market cap, Devitt has stated that Netflix will need to have a subscription price of $10 per user as well as operating margins of 30 percent. This means that the company would generate approximately $5.4 billion in operating revenue. As a result, Netflix’s stock price would be at approximately $1,600 a share. Added to this, Devitt also said that the $100 billion mark is achievable as long as the company’s operating leverage continues to benefit from global licensing deals while the expansion of Netflix internationally will also play a key role. Netflix shares are currently trading at $680.60 a share.
On Friday, U.S. stocks rallied. This came in response to a positive sentiment among investors regarding Greece and its debit crisis with hopes that the country will not exit the eurozone. Added to this, Chinese stocks saw a sharp rebound which also helped to boost sentiment. Last week, the main benchmark indices saw major volatility in the commodity and global equity markets while the stop in trading on the New York Stock Exchange on Wednesday did little to support the indices. The Dow Jones Industrial Average (DJIA) traded up 1.2%, or 211.79 points, on Friday to 17,760.41 with all 30 components closing higher. For the week, the blue chip index gained 0.2%. Also on the upside was the Nasdaq Composite index (COMP) which rose 1.5%, or 75.30 points, to 4,997.70. Despite this gain on Friday, the tech heavy index finished the week 0.2 percent lower. Meanwhile, on Friday, the S&P 500 index (SPX) posted its biggest one-day gain in 2 months, yet despite this, the index ended the week virtually flat. The SPX advanced 1.2%, or 25.31 points, to 2,076.62 with all ten main sectors trading higher.
On Friday, the U.S. dollar (USD) traded lower. This came in response to the limited progress in the debt negotiations in Greece which continues to boost support for riskier assets. The EUR/USD traded at 1.1184, up 1.35 percent. This increase came in response to comments by Eurogroup President Jeroen Dijsselbloem who stated that the latest reform proposals received by Greece in order to secure a 3rd bailout were "thorough". Meanwhile, the GBP/USD traded at 1.5525, up 0.95% while the USD/JPY traded at 122.56, up 1.01%. Against the currencies in Switzerland, Canada and Australia, the greenback traded mixed with USD/CHF down 1.10% at 0.9373, with USD/CAD up 0.17% at 1.2729 and with AUD/USD down 0.17% to trade at 0.7434. Also, the U.S. dollar index was at 95.81, down 0.88%. This marked its lowest level since the end of June.
On Monday, crude oil prices fell sharply in Asian trading. This came in response to events in Brussels regarding Greece's bailout package while trade data out of China came in lower than expected. In June, China's trade surplus reached $46.6 billion while imports fell by 6.1 percent. On the upside, exports gained 2.8% which was a positive sign and above the 0.2% decline recently seen. WTI crude oil for delivery in August traded at $51.93 a barrel, down 1.54%, on the NYMEX. Meanwhile, on Friday, Brent crude oil for August delivery traded at $59.00 a barrel, up 0.2 percent or 12 cents, on the ICE Futures Exchange in London. This came after the contract reached a 3-month low of $55.09 a barrel on Friday. On Monday, the OPEC (Organization of Petroleum Exporting Counties) will publish its monthly assessment of oil markets.