FBR Capital Markets Senior Analyst: 'Netflix's Business Is On Fire Right Now'

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It was reported by various media outlets on Friday that streaming giant Netflix, Inc. NFLX is in talks with a Chinese media company backed by Alibaba Group Holding Ltd BABA founder, Jack Ma, to start providing its services in the country.


Barton Crockett, FBR Capital Markets & Co. senior analyst, was on CNBC Friday to weigh in on that and to share his outlook on Netflix’s earnings.


On Fire


“Netflix’s business is on fire right now,” Crockett said. “I mean that the consumer is loving this service. We have surveyed consumers, half or more consumers say if they had to choose, they will drop pay TV before Netflix. They spend as much or more time watching Netflix than they do pay TV. Pay TV costs $90, Netflix costs $10.”


China Will Love It


He continued, “The rest of the world loves what we watch in the TV in the United States. This is very exportable. I think China is going to love it. So, I think that these guys are going to be go verticals in earnings. I mean, each million subscribers they add drops $100 million to [their] bottom-line [at] scale and content cost which arguably [in Europe] people love this service as much.”


Tonnes Of Value Creation To Come


“They have pricing leverage, each […] drops another $750 million to the bottom-line. So, I think after building up scale, you are going to see this company go vertical in earnings and you want to own that. This company is really at the forefront of the change in home entertainment. People want on-demand content, Netflix is leading that. I think there’s tonnes of value creation to come from them,” Crockett concluded.

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Posted In: CNBCMedia
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