Netflix a ‘Cultural Necessity’, Shares Up Ahead of Earnings
Germany's largest and the world's 15th largest bank, Deutsche Bank (NYSE:DB), today proclaimed Netflix a 'Cultural Necessity' and thinks sunny days are ahead for the internet's leading TV streaming platform.
And "platform" is the key word here as that's where Deutsche sees strength in Netflix (NASDAQ:NFLX). The fact that has such a large installed base and a mature streaming backbone should help it maintain its position of dominance according to the bank.
The Netflix secret sauce is in its talent
Bryan Kraft is the analyst covering the streaming service at Deutsche and he had this to say:
Platform status brings network effects not available to peers and competitors. Specifically, this is making Netflix even more of a go-to destination when consumers want to watch something, and it means having Netflix is becoming more of a cultural necessity for people around the world. It also makes Netflix a magnet for talent. And it means that consumers stay captive within the Netflix walled garden for significant amounts of time. Aside from pay TV, which is losing audience share, there are no other competing platforms that approach Netflix’s reach.
Germany's largest bank believes that among platform strengths that have matured over the years, Netflix is able to attract the world's foremost talent when it comes to both show creators and actors. Deutsche believes that despite onslaughts from AT&T's HBO (), Hulu, Amazon, and Disney+, Netflix will continue to show consistent subscriber growth.
Deutsches's Kraft thinks Wall Streets estimates for subscriber growth fall short of what the company will actually realize. The bank upgraded their price target from $360 to $400 this morning, and shares of Netflix have been steadily gaining today. As of this writing, prices are hovering around $360, up 3 percent from yesterday.
Deutsche's optimistic appraisal of Netflix is a bit surprising. Their offering, while the world's largest, is facing an immense increase in competition from some very focused and competent players. Amazon recently splurged on a $150 million dollar contract for HBO's Westworld creators, and Disney surprised with a $7.99 subscription fee for their Disney+ service which could very well be unbeatable for households with children. Only time will tell if Netflix can manage to continue to add subscribers. In fact, stay tuned because we will have coverage later this very evening of Netflix's earnings!