On November 16, Netflix announced that it will share data on content viewership differently. Until now, the company counted the number of accounts that had watched each top show or movie for at least two minutes. Now, the reported metric will change to “number of hours watched” for each piece of content.
(Read more from MavenFlix: Jim Cramer: It Is Shortsighted To Sell Disney Stock Now)
Netflix’s top 10 weekly
Netflix said that it will release a weekly list of the top 10 TV series and movies based on airtime. The initiative could be in response to some criticism that it has received for lack of proper transparency on operating performance. The move could also have a positive impact on investors' perception of the company.
The most recent data released by Netflix covers the past few months (see below). Squid Game has been, by far, the most viewed content during the period. Having this information can be bullish, since it underscores Netflix's ability to generate big profits with little investment made on low budget production.
Should Netflix continue to produce inexpensive shows that reach a wide audience, for example, costs could decrease and lead to higher expectations for NFLX stock price appreciation.
A competitive advantage?
Disclosing the data can highlight Netflix's relevance within the video streaming segment. Today, Netflix has the largest market share by number of subscribers. The weekly reports can help to draw conclusions on market share by time spent on the platform as well.
If the likes of Disney (DIS) - Get Walt Disney Company Report and Amazon (AMZN) - Get Amazon.com, Inc. Report begin reporting similar metrics that fall short of Netflix’s, it can become more obvious that the Los Gatos giant is a better company and stock in the space. If the same transparency is not offered, investors could reasonably imply that Netflix has a competitive advantage reflected in viewership, as suggested by a whopping 2.1 billion hours of Squid Game watched.
We appreciate having access to yet another data point that can help investors make better informed decisions. We think, for example, that viewership trends can help to forecast number of subscriber net adds, as a slowdown in platform engagement could mean low retention of current subscribers or lower incentives for potential subscribers to sign up.
(Read more from MavenFlix: Netflix Stock: How Games Can Help To Push NFLX Past $700)
Netflix will report number of hours watched for each of its top shows and movies each week. As an investor, could this have an impact on NFLX stock?
Is the price right?
Looking at a company’s business fundamentals is only half the work needed to find a good stock. How much one pays to own the shares is a key factor in the success of any investment. This is why valuation analysis is so important.
Alpha Spread’s user-friendly platform allows you to estimate a stock’s fair value –through valuation multiples, discounted cash flow, and more. I believe that the service is a must for anyone looking to own the right stock at the right price. Check out alphaspread.com and get started with a 7-day free trial.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting MavenFlix)