Despite a recent sell-off due to analyst concerns, shares of Netflix Inc. (NASDAQ: NFLX) have risen 48% in the past year, compared to a 4% dip in the S&P 500. Over the period, Netflix has added over $10 billion in market cap. The primary reason is that Netflix still rules the premium content streaming business, despite plenty of competition.
Granted, Amazon.com Inc. (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL) have products to challenge those of Netflix, as do cable, fiber to the home and satellite TV providers. That has not stopped the company’s revenue from rising from $3.6 billion in 2012 to $6.8 billion last year. Over the same period, net income rose from $17 million to $123 million.
Morningstar analyst Neil Macker wrote:
Already the largest provider in the U.S., Netflix is expanding rapidly into markets abroad. The firm has used its scale to construct a massive data set that tracks every customer interaction. It then leverages this customer data to better purchase content and produce original material such as “Orange Is the New Black”. We believe that this data and ability to leverage will help Netflix to remain the largest provider in the U.S. and enjoy success in many of its newer markets.
That nicely sums up the consensus that has driven Netflix shares so much higher.