Netflix Shares Turn Up the Volume
Shares of Netflix (NASDAQ:NFLX) never seem to disappoint investors looking for excitement. After hitting all-time highs above $300 in July 2011, shares plummeted like a roller coaster to finish the year at $70. The stock price rebounded to almost $130 earlier this year, to only suffer another dramatic drop-off. Now, Netflix is on the rise again as the online streaming giant tunes-out any negative waves.
On Wednesday, Coinstar (NASDAQ:CSTR) and joint venture partner Verizon (NYSE:VZ) announced more details in their plans to challenge Netflix. “Redbox Instant by Verizon” is set to go into invitation-only beta launch later this month, with an official launch starting next year. The service will offer a selection of streaming movies for $8 per month and the option to rent up to four DVDs from Redbox kiosks. The service will also offer a streaming-only option for $6 per month. So far, it has arranged to offer streaming of around 5,500 titles from Time Warner (NYSE:TWX) and Epix.
Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.
The presence of another competitor in the online streaming industry might be expected to weigh on Netflix, but shares surged more than 5 percent on heavy volume. It appears that investors found comfort in a price target hike. Analyst Scott Devitt from Morgan Stanley (NYSE:MS) kept his overweight position on Netflix and raised the price target to $105 from $80, representing a 31 percent hike. Devitt explains that Netflix is “on course to potentially disrupt the long-standing premium cable ecosystem.” He also believes the Walt Disney (NYSE:DIS) deal “is meaningful in that it is Netflix’s second output deal with a major film studio as well as the fact that it is Disney, one of the most successful film franchises.” Shares have gained more than 30 percent year-to-date.
Despite popular online destinations like Amazon.com (NASDAQ:AMZN) and Youtube (NASDAQ:GOOG) expanding their video offerings, Netflix raised the bar on content quality by recently signing a multi-year licensing agreement with Disney. For three years, beginning in 2016, Netflix will be able to provide its customers with all of Disney’s theatrically released films, including animated projects from Pixar and superhero movies from Marvel. Netflix will also have non-exclusive streaming rights to its older library titles. Competitors will not only have to catch up to Netflix’s deep library, but they will also have to do so with quality content. Netflix outmatches Redbox by more than 50,000 titles for streaming, and offers over 100,000 DVDs for delivery.
Investor Insight: How Private is Your Kid’s Mobile Usage?