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

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

Barton Crockett, FBR Capital Markets 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 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 on 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 vertical in earnings. I mean, each million subscribers they add drops $100 million to the bottom-line at scale and content cost which arguably [in Europe] people love this service as much.”

Tons Of Value Creation To Come

“They have pricing leverage, each buck drops another $750 million to the bottom line. So, I think after building up scale, you're 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 tons of value creation to come from them,” Crockett said.

Latest Ratings for NFLX

Jan 2017Loop CapitalMaintainsBuyBuy
Jan 2017MacquarieUpgradesUnderperformNeutral
Jan 2017MizuhoUpgradesNeutralBuy

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Posted-In: Barton Crockett FBR Capital Markets VetrAnalyst Color CNBC Analyst Ratings Media


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