Netflix has the potential to “double or triple” its market capitalisation, says T Rowe Price Global Technology Equity fund manager Josh Spencer.
Stock in the entertainment business soared 20 per cent this week as earnings for the third quarter exceeded expectations. Quarterly revenues rose to $2.3bn as it added 3.2m customers worldwide – higher than the 2m the market had predicted.
“Compared to other high-profile tech companies in the market – such as Apple and Facebook – Netflix is a much smaller company, with a market cap of just over $40bn,” Spencer says.
“It is not an outlandish suggestion to say it could double or triple from here.
Spencer says while the film and television service had been in a “rut” in the first half of the year when it came to its content slate, the Stranger Things series had been a surprise hit. He also expects Narcos II to do well globally.
“We often like to do a sanity check on the market and try to identify stocks able to double over the next five years. At a market cap of $640bn, this is just not possible from Apple.”
The Global Technology Equity fund holds 4.7 per cent in Netflix, having bought back into the business in Q3.