Hundreds of Trefis members have created forecasts for two key drivers of Netflix's (NFLX) - Get Report stock over the last week: (1) Monthly Netflix Subscription Fee, (2) Netflix Subscribers. Their forecasts suggest that Monthly Netflix Subscription Fee and Netflix Subscribers will trend higher than the Trefis forecast. These projections may not bode well for companies like Comcast (CMCSA) - Get Report and Time Warner Cable (TWC) that compete with Netflix to deliver the latest film rentals to consumers.
We currently have a Trefis price estimate of $82 for Neftlix's stock, about 32% below the current market price of $121 based on concerns that Netflix's average subscription fee will trend downward based on a rising mix of low-end plan subscribers and Netflix's subscriber base will not grow as fast as the market expects.
In comparison, Trefis members expect a slight rebound in average Netflix plan pricing and higher subscriber growth, leading to an estimate of around $120 for Netflix's stock, in line with current market prices and more than 45% higher than our estimate for Netflix's stock.
Netflix's stock is quite sensitive to both 1) Monthly Netflix Subscription Fee and 2) Netflix Subscribers. Below are the charts showing recent estimates created by Trefis members for the two drivers in detail.
1. Monthly Netflix Subscription Fee
The average of forecasts for Monthly Netflix Subscription Fee created by Trefis members indicated a small projected increase from $13 in 2010 to $14 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from $12 in 2010 to $11 by the end of the Trefis forecast period. The member estimates imply an upside of 33% to the Trefis price estimate for Netflix's stock. In the past, Monthly Netflix Subscription Fee has decreased from $17 in 2005 to $13 in 2009.
You can drag the Monthly Netflix Subscription Fee forecast trend-line above to express your own view, and see the sensitivity of Netflix's stock to Monthly Netflix Subscription Fee.
complete analysis for Monthly Netflix Subscription Fee is here.
2. Netflix Subscribers
The average of forecasts for Netflix Subscribers created by Trefis members indicated a projected increase from about 20 million in 2010 to about 40 million by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 16 million in 2010 to 37 million by the end of the Trefis forecast period. The member estimates imply an upside of 12% to the Trefis price estimate for Netflix's stock. In the past, Netflix Subscribers has increased from an average of 4 million in 2005 to an average of 12 million in 2009.
You can drag the Netflix Subscribers forecast trend-line above to express your own view, and see the sensitivity of Netflix's stock to Netflix Subscribers.
complete analysis and model for Netflix's stock is here.
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