Stock market experts believe the volatile Netflix (NFLX) stock could soar to new heights in 2016. That’s something people doing online stock trading need to watch out for, though things may not be so optimistic for NFLX now.
Why Things Could Change for Netflix
As things stand now, shareholders do not have positive sentiments, since the year has seen NFLX stock fall 15% while it has slipped 30% overall from its 52-week high. Analysts, however, believe that Netflix could reach new highs or at least come close to them as the year comes to an end.
And there’s a strong reason for such an optimistic outlook. Netflix will finally start its content deal in September with Walt Disney Co.
So can NFLX stock keep on moving higher into 2017?
How the Disney Deal Could Make the Difference
Netflix would be nothing without its library of movies and other content. These are what the company uses to satisfy customers and potential subscribers. And Netflix has been busy doing that all through its existence. It is expected to spend $5 billion in 2016 alone for expanding its content, and $6 billion in 2017.
But all that money spent may not convey the feeling of satisfying subscribers and gaining new ones, as much as the deal with Disney would. Disney brings to the table a load of content, also from its other concerns such as Marvel, Pixar and LucasFilm. And for all this content, all that NFLX has to do is pay a few hundred million. That’s sure to send its stock high.
It’s worth remembering that Disney’s film studio controlled 20% of the market share in 2015, which was a significant increase from the 15% it controlled in 2014. But in just the first six months of 2016, it has managed to control 30% of the market. And all those gains would filter down to Netflix when the deal is completed in September. It doesn’t take much to figure out that this would have a massive bearing on NFLX stock.
Acquiring and Retaining Subscribers Could Be Easier
Much of the NFLX stock losses last year have been attributed to fears relating to higher prices for Netflix content combined with increased competition from other such content providers. But with Disney in tow, the undisputed leader in the industry, such fears will cease to make their presence felt significantly among traders. With the Disney deal and its universe of content, there’s little that Netflix competitors can throw at it.
There is also an increased possibility of attracting new subscribers to the growing list of Disney’s blockbuster movies combined with Netflix’s other collections. The chances of subscriber retention are significant too as customers wouldn’t want to forgo the vast collection of movies on offer.
Ultimately, this would translate to shareholder and stock trader sentiment moving towards increased positivism. NFLX stock could attain those past highs finally by the end of 2016.
What Netflix Must Do to End the Volatility
To ensure Netflix stock remains high and keeps rising through 2017, finally escaping the volatility that has characterized it, it must succeed in effectively monetizing the opportunity Disney offers. Currently Netflix is significantly cheaper than cable and raising its monthly subscription would still ensure it remains cheaper than cable. And with the Disney in tow, subscribers may not mind the increased subscription. But it would enable Netflix to earn more annually from its US business, since the Disney deal does not extend to international markets.
Netflix could be a bit of a goldmine for traders now. Such insight is essential for effective trading. But for online stock trading, the right infrastructure is needed as well. TradeZero offers that and more. Get in touch with us at +1 954-944-3885 or email firstname.lastname@example.org.
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