Now is the time to buy Netflix stock, says Bank of America/Merrill analyst Nat Schindler in a report this morning.
After investors saw some noise around Facebook movie streaming, and Amazon's instant streaming announcements, the stock dropped 22% from its high giving investors a chance to buy at a discount.
Schindler is dismissive of those so-called threats saying, "Netflix’s huge increase in content has created a very high competitive barrier and with Netflix already a low cost service, we see few opportunities for an emerging competitor to pose a serious threat."
Here's the key points from his report on why Netflix will beat back these new rivals:
- The Facebook-Warner Brothers deal is NOT competitive with Netflix. It's one move for rental, not subscription. It's "video on demand which is already ubiquitous in most households through cable, Amazon, and other services and is fundamentally different from Netflix’s subscription service."
- Facebook-Warner Bros. is based on the PC, not the TV. For now, Facebook is PC centric. Netflix, on the other hand, can be on your big screen TV pretty easily.
- Amazon is not as big a threat as people think, either. Amazon lacks the same library of content as Netflix, and Schindler says, "we do not think Amazon is serious in building a competitive service at this point." He also adds that if Amazon DID want to build a real threat it would cost $800 million to secure the rights, and he doesn't think it's worth it.
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Disclosure: Mathias Döpfner, CEO of Business Insider's parent company, Axel Springer, is a Netflix board member.
