Netflix (NFLX) Set to Film First Australian Original Series – May 16, 2017


Netflix Inc. (NFLX Free Report) is reportedly expanding its presence in Australia through its first original series, Tidelands. The series, a supernatural crime drama, will be a 10-episode project and is set to be filmed in southeast Queensland in early 2018.

We note that expanding original content portfolio and improving penetration in international markets were the key catalysts behind Netflix’s strong performance in the last one year. These have driven substantial subscriber growth, which has crossed the 100-million mark in recent times.

We note that the stock has outperformed the S&P 500 over this period. While the index gained 17.3%, Netflix appreciated 81.6%.

Accelerating Subscriber Growth

Netflix’s phenomenal subscriber growth has driven its top-line growth in the recent past. The streaming giant added 4.95 million net new subscribers in first-quarter 2017. At the end of the quarter, Netflix had approximately 98.75 million subscribers across the globe.

Management expects to add 600,000 subscribers in the domestic streaming segment and 2.60 million subscribers in the international segment for the second quarter of 2017.

Netflix is also focusing on expanding original content. Management has noted that there will be 30 original movies this year, with expenditure on original content being $6 billion in addition to another billion dollars on marketing, in 2017. (Read More: Tech Roundup: NFLX, IBM, LRCX, EBAY, FB)

Expanding International Original Content

Netflix’s intent to strengthen international original content portfolio has been the key growth driver in recent times. The global popularity of its first Brazilian original show “3%” shows that the company’s strategy of developing regional content and local programming is a success.

The company is expanding in South Korea with its original series, Love Alarm and Kingdom,  both of which are set for a 2018 release. Per Deadline, Netflix recently ordered its second original French series, Osmosis, which will be shot exclusively in France in 2018.

Commenting about the global reach of Netflix, management in the last earnings call stated that they are filming local shows in 13 different countries, including India and Japan.

We also note that Netflix has signed a licensing deal with Chinese search giant, Baidu Inc. (BIDU Free Report) , which will allow its shows to be accessible in China on Baidu’s online video portal, iQiyi. Reportedly, with nearly 500 million users, iQiyi is one of the leading online video platforms in China along with Alibaba (BABA Free Report) owned Youku Tudou, Sohu Video and Tencent Video. (Read More: Netflix Inks Licensing Deal with Baidu, Breaks China “Wall”)

Zacks Rank & Key Pick

Netflix has a Zacks Rank #3 (Hold). NTN Buzztime Inc. (NTN Free Report) , with a Zacks Rank #2 (Buy), is a better pick in the same sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long term earnings growth for NTN Buzztime is currently pegged at 20%.

5 Trades Could Profit “Big-League” from Trump Policies

If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington’s changing course.

Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>