Netflix faces growing fears that it could lose out in the streaming wars, but Goldman Sachs said in a note to clients on Thursday that the company has fought off competition before, making it likely to weather the storm. But Goldman cut its its 12-month target price from $420 to $360 anyway, citing long-term pressures to subscriber growth and margins. The stock currently trades at $274, up more than 2% on Thursday morning.
A bevy of new streaming services are set to launch from Disney, Apple, AT&T and others, but Netflix has faced many competitive challenges from traditional media companies and larger technology companies, Goldman analysts said. Among those include HBO, Starz, Amazon, Google‘s YouTube, Viacom and Comcast‘s Sky.
The analysts put together this chart, reprinted here with permission, to show that Netflix’s subscriber numbers kept going up and to the right even as competition stiffened:
Goldman Sachs analysts say Netflix’s long history of competition should help it weather the streaming wars.
“Netflix’s incremental net subscriber additions have grown continuously despite significant competitive pressure,” Goldman Sachs analyst Heath Terry said in a note to clients. “We continue to believe that the relative value (price divided by content consumed) of Netflix far exceeds any of the current or planned competitive offerings, making it unlikely that any of them will replace Netflix as consumers’ primary streaming choice.”
Goldman said Netflix’s fourth-quarter results are likely to meet analysts’ expectations, driven by its strong content slate, a “more stable pricing environment” and incremental subscriber growth.
Netflix’s stock has suffered as the streaming wars accelerate, with shares down more than 28% in the previous three months.