Netflix�s stock rose by about 10% last week before falling lower, driven by rumors about potential acquisition by Verizon. While reports indicated that Verizon may be seriously considering the acquisition at around $4.6 billion, the company denied that it has organized any talks or meetings with Netflix. We think that Netflix will not sell itself at the implied price per share that results from $4.6 billion bid. For details see Verizon Would Have a Tough Time Acquiring Netflix which talks about why an acquisition at stated value is unlikely, be it by Verizon or another potential suitor Amazon. In general, several analysts including Trefis analysts see any acquisition as highly unlikely. [1]
See our full analysis for Netflix
On the content side, there were certain developments last week. Netflix continued its efforts towards original programming and is close to signing a deal which will result in production of 13 episodes of horror series, Hamlock Grove [2] The more Netflix tries for original and first-run content, the more it pits itself again traditional pay-TV providers. It will need to tread carefully. In addition to this deal, the company added new Telemundo content for its Latin American streaming services as well as signed a deal with BBC to offer its shows.
It appears that the analysts� tone on the stock is somewhat between neutral and positive if we look at the price target from some of the reputed research firms. [3] Our price estimate of $126 for Netflix echoes positive tone, implying a premium of about 70% to the market price.
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