![]() ![]() The move to relying on original content has added costs and risks. Read more about Netflix’s fair value estimate. Our domestic subscriber and pricing forecast generates 6% average annual revenue growth between 20, as Netflix benefits from price increases every 18 months. Due to the additional of lower-priced ad-supported plans and lower prices in markets like India, we expect the global streaming paid subscriber base to expand to 297 million by 2026 from 221 million in 2021. In general, we are skeptical of the claim that pricing increases won’t harm customer counts globally. Price elasticity plays a major role in our fair value estimate. Our fair value estimate of $290 per share assumes that Netflix’s domestic paid streaming subscriber count expands only slightly to 76 million in 2026. Netflix leverages its data set across its offerings in multiple ways to derive durable competitive advantages. This new content not only strengthens its relationship with its current customers but also attracts new customers via word of mouth and the halo effect from critical acclaim and award nominations. Netflix mines this data in order to better purchase and create content. Our narrow economic moat rating is based on intangibles resulting from the use of data stemming from Netflix’s massive worldwide subscriber base. While the potential audience could be large, particularly in emerging markets, management will need to ensure that the lower-priced tier doesn’t cannibalize the full-price subscriber base in more saturated markets like the U.S. Netflix is trialing an ad-supported tier in the fourth quarter into 2023 as it looks to capture potential subscribers who were unwilling pay the ad-free price. It then leverages this customer data to better purchase content as well as finance and produce original material. The company has used its scale to construct a massive data set that tracks every customer interaction. From its origin in the United States, Netflix expanded rapidly into markets abroad and now has more subscribers outside the U.S. Netflix NFLX is a pioneer in subscription video on demand and is now the largest online video provider in the world. ![]()
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