Why the renewed bullishness about Netflix as Disney prepares to launch a rival streaming service later this year? Wall Street believes that any threat from a Disney-Fox combination has long been priced in to the stock. Meanwhile, Netflix has been preparing for years for Disney to pull its content from Netflix’s library, stocking up on its own share of must-watch titles.
That message was driven home Wednesday as Netflix unveiled a trailer for its long-awaited third season of Stranger Things, only a few hours after the Disney-Fox merger officially closed.
The trailer’s arrival followed a cryptic tweet teasing the new season on Stranger Things‘ Twitter account on Tuesday. Which, coincidentally or not, was timed close to Disney’s official announcement yesterday about the completion of its merger with Fox.
At least one analyst has downgraded Netflix this month, citing Disney’s imminent streaming offering as a key factor. But according to Barron’s, two analysts have come out this week with research notes bullish on Netflix’s prospects, thanks in good part to the groundwork Netflix has laid in overseas markets during the past several years.
Imperial Capital analyst David Miller wrote Wednesday that Netflix’s move to create content from outside the U.S. is not only boosting viewers abroad, it’s also delivering new hits for its domestic audience.
“Examples are Bodyguard, a crime drama filmed in Europe but which is playing well all throughout continental Europe; The Protector, a drama/fantasy series filmed and set in Turkey; and Baby, an Italian teen drama which is also finding cross-border appeal,” Miller said. “Too many media investors think of Netflix’s international business as simply U.S. content that is dubbed in various foreign languages, but in many cases the inverse of that is starting to take hold.”
Meanwhile, RBC Capital’s Mark Mahaney said Netflix is gaining in popularity in Japan, citing a survey of 2,000 Japanese consumers who are not only watching more shows on Netflix but are “reporting high levels of satisfaction with the service.”
Netflix stock rose 4.6% to close at $375.22 a share Wednesday. Disney’s stock closed down 0.34% at $109.99 a share.