Will Netflix, Inc. (NFLX) Face Revenue Issues Due to Black Market Accounts?


As shares of Netflix, Inc. (NASDAQ:NFLX) are down quite a bit today, we also hear more and more about issues the company is facing concerning black market accounts. That’s right, accounts which are stolen and then resold on the internet’s black market.

Netflix, Inc. (NASDAQ:NFLX) generates a large portion of their revenue from their streaming service which as we all know is quite lenient when it comes to sharing accounts. I know I have an account which I share with my wife, son, and brother. We pay one fee, and they all get access. However, hackers are using this to their advantage to make a few bucks, while basically stealing from Netflix. They use methods to steal users’ passwords and then sell their account login info on third party websites for a fraction of the cost of a traditional membership. Each and every person that purchases one of these black market accounts is a potential customer that Netflix is missing out on.

If the company wants to continue growing, they will need to find a way to greatly reduce or eliminate the number of black market accounts circulating around the net. It won’t be easy, but a solution is a must before things get too much out of hand and revenues begin to take a hit.

The stock is down 3.44% or $3.04 following the news, hitting $85.41 per share. Approximately 4.67 million shares traded hands. NFLX shares have declined 5.41% since July 8, 2015 and are currently downtrending. It has outperformed the S&P500 by 4.06%.

From a total of 30 analysts covering Netflix (NASDAQ:NFLX) stock, 22 rate it a “Buy”, 1 a “Sell”, and 7 a “Hold”. This means that 73% of the ratings are positive. The highest target price is $175 while the lowest target price is $45.0. The mean of all analyst targets is $126.76 which is 48.41% above today’s ($85.41) stock price. Netflix was the topic of 48 analyst reports since August 4, 2015 according to the firm StockzIntelligence Inc. Piper Jaffray upgraded shares on February 2 to a “Overweight” rating. Drexel Hamilton initiated shares with a”Buy” rating and a $150.0 target share price in their report from a January 14. Wedbush maintained NFLX stock in a recent report from January 20 with a “Underperform” rating. Robert W. Baird downgraded the rating on January 4. Robert W. Baird has a “Neutral” rating and a $115 price target on shares. Finally, Pivotal Research maintained the stock with a “Buy” rating in a report they issued on a January 20.

The institutional sentiment increased to 1.54 in Q2 2015. It’s up 0.29, from 1.25 in 2015Q2. The ratio improved, as 58 funds sold all their Netflix, Inc. shares they owned while 194 reduced their positions. 149 funds bought stakes while 238 increased their total positions. Institutions now own 639.63 million shares which is 1081.93% more than the previous share count of 54.12 million in 2015Q2.

Srs Investment Management Llc holds 40.42% of its total portfolio in Netflix, Inc., equating to 11.81 million shares. Technology Crossover Management Vii Ltd. owns 5.04 million shares representing 34.23% of their total US portfolio. Moreover, Ctc Llc has 33.44% of their total portfolio invested in the company, equating to 645,718 shares. The Pennsylvania-based Barton Investment Management has a total of 29.76% of their portfolio invested in the stock. Tiger Global Management Llc, a New York-based fund reported 18.00 million shares owned.

Since February 25, 2015, the stock had 0 buys, and 11 insider sales for a total of $32.60 million in net activity. Barton Richard N sold 2,800 shares worth $281,260. Hastings Reed sold 86,037 shares worth $8.68M. Battle A George sold 49,000 shares worth $5.29 million. Cranz Tawni sold 1,512 shares worth $190,179. The insider Peters Gregory K sold 6,545 shares worth $841,491.

Netflix, Inc. is a provider of Internet television network. The company has a market cap of $37.55 billion. The Firm has over 57 million streaming members in over 50 countries. It has 304.18 P/E ratio. The Company’s members can watch more than two billion hours of television shows and movies per month, including original series, documentaries and feature films on Internet-connected screen.