Netflix Growing To 262M Subscriptions And 72% Of America, Analysts Say

Netflix will grow to 262 million subscriptions within a decade, including 72% of the United States, says Citi Research.

That's a big jump from its current 118 million.

"At a high level, our $305 price target implies that in ten years Netflix has 262 million total subs (representing 72% U.S. penetration, 37% penetration of other developed markets, and 21% penetration of emerging markets ex-China)," say analysts Mark May and Hao Yan.

At that penetration, Netflix should have a global average revenue per user of $19/month.

To grow to these levels, Netflix will have to continue to add content aggressively, which is reflected in its costs of acquisition. Citi estimates that Netflix will spend $14.7 billion in 2018, $16.5 billion in 2019, and $17.5 billion in 2020 to acquire and develop new shows and movies.

That content acquisition budget will hit almost $20 billion in 2028.

Adding subscribers, however, should turn Netflix's current net cash flow deficits into positive numbers by 2021. Citi says Netflix will have over $3 billion in cash flow deficits this year, and over $2 billion next. Positive cash flow should hit $4 billion in 2022, $6.3 billion in 2023, and $8.7 billion by 2024.

The big numbers are still to come, however.

By 2028, Netflix should be seeing $17.2 billion in positive free cash flow.

Netflix's top competitors are Amazon, Hulu, Apple, and all the legacy video content players in cable TV. Google's YouTube is also a formidable competitor as video content increasingly moves to digital/online formats, driven by the mass movement of TV advertising budgets to online platforms.

Source: Forbes

Interesting read... Netflix has increasingly become a hell of a beast. Yet Amazon keeps purchasing every start-up and getting into every "business" possible it seems...