Netflix rockets higher, while East Bay video store closes and South Bay cinemas gather dust

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Netflix might cost you $10.99 a month to subscribe to its streaming TV service. And if you want to buy a share of Netflix stock, that will set you back about $380 today.

But, that lofty price tag might actually be a bargain, if the expectations of Goldman Sachs analyst Heath Terry come to pass.

On Wednesday, Terry lifted his price target on Los Gatos-based Netflix’s stock to $490 a share from his previous forecast of $390. Terry’s new target for Netflix also represents an almost 35 percent increase from where the company’s shares closed on Tuesday. And if you bought Netflix at the end of 2017, well, good on you. Because Netflix’s shares have almost doubled in value since finishing last year at $191.96.

But the South Bay company’s ride into the stratosphere has come as some Bay Area video stores and cinemas wither away.

So, why does Terry think Netflix can climb to almost $500 a share after the stock has already torn up Wall Street over the past six months?

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Part of Terry’s opinion is based on Netflix’s big content-spending plans. Netflix has said it will spend $8 billion to produce, acquire or license content this year, and Terry believes such spending levels “will allow the company to drive additional subscriber growth, particularly in markets where the company’s brand presence isn’t as strong as it is in the U.S.”

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Source:: The Mercury News – Business


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