Netflix Grows Subscribers, but Shares Still Overvalued

The international expansion continues to track ahead of expectations on the subscriber side, as Netflix now has 27.4 million paid streaming subscribers, up from 24.0 million last quarter and 16.8 million a year ago. Management announced at CES that Netflix would be available in an additional 130 countries immediately, raising the total countries served to more than 180. While the company was expected to complete its global roll out by the end of 2016, the immediate launch in so many countries was impressive. However, most countries received the skinny launch package with limited library consisting of Netflix originals and acquired global rights programming with the majority of content in English. As management acknowledges, this package will appeal to a thin slice of consumers in many of these new markets, primarily English-speakers with the disposable income to pay $7.50 to $8.00 per month.

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