Shares of Netflix (NFLX, Financial) have pulled back considerably this year, and many investors are starting to believe the bubble has popped.
Although the company’s growth in the domestic market has slowed down, Netflix can still continue growing at a rapid rate, which is why I am bullish on the stock going forward.
Aggressively focusing on international market
Netflix has prolonged its services in approximately 130 new international markets. Recently, the company introduced its services in India as well. The company has not revealed the subscriber count in India but said it is one of the most enthusiastic markets.
In India, Netflix offers a one-month free trial service first, and after the expiration of the free trial, the company offers three types of packages starting from INR 500, INR 650 and INR 800 (Basic, HD, and Ultra HD). The company believes India is one of the most significant new markets as it is the third-largest country in terms of Internet subscribers.
The company is aggressively putting effort into making its presence strong in the international market. It is producing localized content to match its fundamental U.S.-focused TV shows such as "Daredevil" and "House of Cards." The main reason why the company is placing its emphasis on international viewers is because around 40% of its subscribers are from other countries. That is a surge of 6% compared to a year-ago period.
Other factors
Recently, Apple (AAPL, Financial) approved the deal that allows Netflix a 15% price surge for its mobile subscribers, and the company can anticipate a considerable number of mobile subscribers signing up for services provided by Netflix.
At the end of 2015, the company introduced a new mobile signup option as it believes smartphones have turned into the most significant way to access the Internet. The mobile signup option is a great move by Netflix; it will help the company grow at a rapid rate because many people have smartphones.
The company has introduced its services in most countries, but still Netflix is not available in China. In many countries, mobile will be the crucial way people find, sign up and access Netflix services. Hence, this move is a long-term winner for Netflix.
Conclusion
International growth and focus on mobile should help drive Netflix’s growth in the future. The stock may have pulled back considerably from its 52-week high levels, but the company is still growing rapidly.
Disclosure: I don't hold a position in any of the stocks mentioned in the article.
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