But think of it as much more consistent with the past than different.” “Ted’s got some increased external stature, and he can put bigger deals together for us, and that’s really cool. “In terms of the day-to-day running of Netflix, I do not expect much to change,” says Hastings. Sarandos will remain chief content officer, and Hastings will continue to focus on strategy. He and Sarandos have effectively led the company together for years, and this change is just a formal acknowledgment of that.
Netflix stock price split full#
“And as co-CEO, it’s two of us full time. The rock stars are relevant even if they weren’t technically CEOs, because they are in content, like Netflix.įounder Reed Hastings says he will be for at least a decade. Yes, two heads are often better than one. The duos co-lead two of the most successful and productive bands in history, the Beatles and the Rolling Stones. In the realm of content production, I could also cite John Lennon and Paul McCartney, and Mick Jagger and Keith Richards. One of the most successful tech companies? Or Steve Ellis and Monty Moran at Chipotle One of the most successful insurance and investment companies in history? Or Larry Page and Sergey Brin at Alphabet Seriously? What about Charlie Munger and Warren Buffett at Berkshire Hathaway They latched on to the idea that enterprises with two leaders underperform because it’s never clear which agenda subordinates should follow. Netflix doubters made a big deal about the fact that Sarandos was just appointed co-CEO. The co-CEO “problem” is a false narrative “This is why they will continue to have the advantage in content.”ĭespite COVID-19 related production slowdowns, Netflix still expects to launch more original programming in 2021 than it will this year. “The real story with Netflix is that many producers always want Netflix to be their first choice of distribution,” says Jeff Sica, CEO of Circle Squared Alternative Investments which advises content producers. It has subscriber tracking down to a science, microanalyzing viewership to figure out what people like, so executives can replicate the dynamic.Īnother reason Netflix is so good is that its popularity reaches beyond consumers. Part of the reason Netflix content is so good is that it’s a big data and tech company as much as a content provider. More money means more content, which means more subscribers, which begets more revenue to invest in more content. Netflix has more than three times as many subscribers as its closest competitor. This creates the kind of growth feedback loop that can really help investors. Its first-half mega growth means this will continue, since it has more money to produce more hits. Netflix obviously has a knack for producing content people like at a reasonable cost, from shows like “Money Heist” to “Stranger Things,” “Orange is the New Black” and “Tiger King” as well as reality programming like “Too Hot to Handle” and “Floor is Lava.” Netflix is good at what it does and it’s getting better The wild card: China lets global media inside. Netflix has about 130 new non-English original programs in 18 languages slated for 2020 and beyond, three times that of. Meanwhile, international growth could boost profit margins because foreign markets are generally less competitive and local production costs can be dramatically lower.
He just upped his 12-month price target to $610 from $500. That subscriber base could produce $50 in earnings per share, which could translate into a $1,000 stock in five years, says Mahaney. There’s little reason to doubt the company can hit U.S.-level penetration abroad, because RBC Capital Markets surveys tell us foreign customers like Netflix even more than U.S. And it only has about 10% market penetration in most major markets abroad, says Mahaney. For context, Netflix currently has around 193 million subscribers in the U.S. If Netflix can match the 57% penetration rate in the U.S., that means it could get nearly 500 million subscribers. There are about 800 million broadband households, and over two billion smartphones in the world (outside of China), says RBC Capital Markets analyst Mark Mahaney. Netflix is a great international growth story “They set the bar low for the third quarter, and if they beat those numbers, the stock is going to go up,” said one mutual fund analyst who follows the company. One “conspiracy theory” going around is Netflix deliberately guided low to create an easy win for newly appointed co-CEO Ted Sarandos in the third quarter.
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