Netflix Content is King

October 16, 2017

Netflix beat earnings estimates and the stock soared initially. Tuna Amobi, Analyst at CFRA Research, and Phil Bak, CEO of ACSI Funds, join Cheddar to discuss one of the most important parts of Netflix's model: its international growth. The streaming service reported 4.45 million international subscribers signed up for the service in Q3 and forecasts another 6.3 million global subscribers will be added in Q4.

Tuna believes international business is not getting the credit it deserves at this point. He says investors shouldn't focus on the valuation metrics, they should be looking at the optionality the international business provides.

Netflix also announced it will spend up to $8 billion on original content, and Phil believes this is imperative. He says Netflix isn't the only company streaming shows, so it needs to be the "king of content." What it has to do in order to stay at the top is own that quality content and come out with it often.

Plus, Netflix increased its standard service price to $11 a month. Phil says he expects the company to continue to increase prices little-by-little, and that it can get away with as much as a 10-15% price hike without customers getting angry.