The past year has been near-spectacular for Netflix. It has grown its core subscriber numbers and revenues, expanded the number of countries covered and a growing approval rating for much of its high-quality output.

Yet, shareholders seem disenchanted and of late its share price has slipped (down from $131 back on December 4th to less than $90 on February 5th).

Analysts at MoffettNathanson (MN), in a February 5th report to clients, suggest a number of reasons but say there might now be anxieties that Netflix’s core US domestic take-up – some 46 million subscribers – may be slowing, and a fear that expanding to new markets is all very well but if this means that investment in programming for its US market is stretched too thin then those North American subs might start evaporating. MN states that the “share price narrative has shifted from invincibility to concern”.

Indeed, MN lower their target share price for Netflix from $98 to $85. MN remind clients that Netflix remains confident that US domestic subs will continue to grow on a long-term basis (and well beyond 60 million).

Moreover, a planned May price increase for US subs (and perhaps other markets) will also hit churn. MN forecasts Q2 US paid subs-numbers to grow a net 450,000, which is not bad but would be a 39 per cent fall on the same period last year, with Q3 and Q4 also suffering from a slower increase in net numbers.

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