Netflix: Costly Streaming Wars
The streaming video wars should reach peak competitive levels in 2019.
Netflix enters the competition while burning cash at a $3 billion annual rate.
The entry of the tech giants leaves Netflix at a balance sheet disadvantage with net debt approaching $10 billion in 2019.
The stock is due for another rally in early 2019 for investors to fade.
The planed addition of several tech giants along with traditional media players into the direct-to-consumer streaming video segment should expose the biggest weakness of leader Netflix (NFLX). The problems with developing a leading market position without building up a pristine balance sheet is that competitors can easily attack the company's weakness and ultimately prevent a player like Netflix from achieving the massive cash flows and profits warranting a market valuation of $132 billion.
Netflix has so far held the support below $280 suggesting the stock makes that rally back above $400 per analyst targets and my thought that an eventual retest of the highs at $420 occurs.
- The average price target on Netflix (NFLX +0.9%) is up 5.2% to $400 since the streamer reported Q3 results on October 16.
- The average price target on Netflix (NFLX +0.9%) is up 5.2% to $400 since the streamer reported Q3 results on October 16.
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