Netflix and its global dominance of the streaming market shows no signs of slowing down, with a new report claiming that nearly three-fourths of all Americans will subscribe to the streaming service. A new report from Citi Research reveals a new price target of $305 per share (the current price is $285.20), while projecting that Netflix will grow to 262 million global subscribers, a sharp increase over the 118 million subscribers it currently has. Here's what Citi Research analysts Mark May and Hao Yan had to say in say in their report, revealing that projection reflects "72% US penetration."
"At a high level, our $305 price target implies that in ten years Netflix has 262 million total subs (representing 72% U.S. penetration, 37% penetration of other developed markets, and 21% penetration of emerging markets ex-China)."
We reported last October that Netflix was planning on launching over 80 original movies in 2018 alone, with the streaming service estimating that they will have over 700 original movies and TV shows in their lineup by the end of this year. If Netflix wants to hit these projections in subscriber growth, Citi believes they have to continue aggressively adding more programming. The research firm estimates it will spend $14.7 billion on content this year, which is projected to increase to $16.5 billion in 2019 and $17.5 billion in 2020. By the year 2028, Netflix is expected to spend $20 billion a year on creating and developing new content.
There was also a report from last August which revealed Netflix had $20 billion in debt, although Netflix CEO Reed Hastings stated that the quicker they grow their content library, particularly their original programming, the quicker they'll be out of debt. According to Citi's report, Hastings' statement is true, claiming they will have $3 billion in cash flow deficits this year, which will drop to $2 billion next year. However, Citi also estimates that positive cash flow will reach $4 billion in 2022, $6.3 billion in 2023 and $8.7 billion in 2024. By 2028, the year Netflix is expected to hit 262 million subscribers worldwide, they are expected to see $17.2 billion in positive cash flow.
Netflix will still have its fair share of competition though, with Amazon aggressively pursuing new content for its Prime Video streaming service, including a new Lord of the Rings show that is expected to cost $1 billion on its own. Apple is also picking up a number of new shows ahead of its own streaming service launch in 2019, with Disney also slated to launch their streaming service that year as well, while Hulu continues to rapidly expand and YouTube continues launching new programming, such as the highly-anticipated Cobra Kai through their YouTube Red subscription service.
This report from Forbes doesn't offer any specifics as to how many specific movies and TV shows Netflix is aiming to release each year over the next decade, but given this aggressive growth projections, don't expect the streaming service to slow down one bit over the next decade.