I've already written many posts on Netflix (most recently on January 25th this year and October 24th last year, for the earnings report). Each time it's the same story with an impressive growth between +40 and 50%. For a e-retailer with $1bn trailing revenues, this is truly remarquable !
As a comparison, Shutterfly, the US equivalent of Photoways which is like Netflix targetting consumers (different from VistaPrint which is mostly a soho e-retailer), enjoyed the same growth in 2006, but from a revenue base 8 times smaller than Netflix (roughly $120M).
Yesterday sunday, they announced they had hit a nice milestone : the 1 billionth DVD shipped since the launch of the business in 1999 ! When I attended the 2nd Jefferies Internet Conference last February in NYC (see note here), Netflix was a guest speaker and they announced at the time they were shipping over a million DVD a day ! This figure should now be up by 40%, and with 2 DVDs in average per order, Netflix should be the Internet retailer with the largest number of shipments per day, even before e-tail king Amazon.
Congratulations for the 1 billionth milestone, nothing more to say than in my previous posts : the model is rock solid and both the customer service and the logsitics are fantastic.
At c $23.5, stock price is more than 30% below its all time high reached in May 2006, I see it as a long term buying opportunity.
Because of the coming of VOD, the market has recently been rather skeptical about Netflix and its DVD-shipping model. True, VOD is changing the business, but number 1 it will certainly not happen overnight, number 2 Netflix is now also positionning itself in this channel (announced their move mid January), and number 3 I do value a lot their extensive consumer intelligence. Indeed, the Joe Netflix subscriber orders around 50 DVDs per year in average, so the company with its today 6 Million customer base has an extraordinary intelligence of which types of movies is liked by which types of customers. I bet they will be able to leverage this knowledge on the future.
This company could be a 3 bagger in the coming 5 years, which is not too bad for an investment (c 40% a year).
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