Netflix, Inc. (NASDAQ:NFLX) added about 17 new subscribers last year, with a bulk of them being from the international market rather than the U.S. Netflix recently made their services available to 130 countries, and this might make their global growth even faster. According to Netflix CEO Reed Hastings, ‘U.S growth is harder than in the past’. This statement was attributing to the company’s already high penetration in the U.S market
Netflix’s fourth-quarter earnings report had an encouraging upside in the international sub growth but with a significant misfire in the domestic sub growth. Hastings, note that while the international opportunities are excellent in comparison to The U.S, he believes that the U.S is the model of what they should expect abroad. He noted that evidence of them reaching maturity in the U.S was only a slight setback as compared to the international opportunities.
Analyzing 2016, Barton Crockett- FBR & Co. analyst, noted that the sub quarterly growth was 18% lower than the previous year, and the company was headed for a 23% decline in domestic sub growth in the first quarter, this account for 1.75 million net additions. The international net sub grew by about 66% during the last quarter and a 68% in the first quarter. This translates to 4.4 million net additions. Japan, Spain, Italy, and Portugal were noted to be in the first quarter. The lift from the named countries and the additional 130 will continue meaning a higher growth rate in the international market.
Crockett also noted that at this point Netflix subscribers are nearing a peak. For four years, Netflix has enjoyed the sub-domestic growth of 5.5 million to 6.3 million per year pace. This is likely to change in 2016, and the trend will be near 4 million. He noted that their sense in the international market is that in many occasions but not all, the best growth is usually in the launch year. This argument means that foreign growths are nearing a peak growth.
John Blackledge- Cowen & Co. analyst, known for his outstanding rating of Netflix raised his price target by $5. This brings it to $155. He argued that Netflix first-quarter U.S sub had dropped but would be compensated by stronger international gain.