Netflix has such a hold on its customers that nearly all of them would stick around if it raised prices again (NFLX, AMZN)
Netflix customers love the service so much, they would accept another price hike, GBH Insights' Daniel Ives found in a new survey.
They also watch more than 10 hours of Netflix per week — which is nearly double the amount of time Amazon subscribers spend watching Prime video.
Data like that makes Ives bullish on Netflix's stock, and he raised his price target to $400 a share.
It's no surprise that Netflix's customers love the service.
But what may be somewhat shocking are some of the indications of just how fond they really are of it.
Some 87% of customers would keep on subscribing to it even if the company raised its prices again, Daniel Ives, a financial analyst with GBH Insights, found in a new survey. Meanwhile, Netflix users spend more than 10 hours streaming video from the service, which is nearly double the amount of time subscribers to Amazon Prime and Hulu spend watching their video services.
That's an "'eye-popping' disparity," Ives said in a research note issued Thursday. Netflix "remains in the early days of a golden market opportunity," he continued.
Ives used the report to raise his price target on Netflix's stock from $375 to $400 a share. Netflix's shares closed regular trading Thursday at $325.22.
The streaming media giant raised its prices in 2015, and again last year — and now charges $11 a month for its most popular service level. Some analysts have been counting on Netflix raising prices again to increase revenue and profits — and decrease its massive cash burn .
Netflix has said that it plans to spend as much as $8 billion acquiring and producing TV shows and movies this year, up from a little more than $6 billion last year. While all that spending is leading to a big outflow of cash, it's also solidifying the company's position, Ives said. The company is increasingly able to attract top talent to produce content for its service. And the higher-quality offerings are luring more subscribers and convincing existing ones to stick with the service.
"Content is king for Netflix," Ives wrote. "The underlying growth and franchise model at Netflix all revolves around [its] original content build out fueling consumer engagement and subscriber growth."
At the end of the first quarter, the company had 56.3 million paying subscribers in the US and 68.7 million internationally. But it should hit 60 million in the US by the fourth quarter and 100 million internationally by 2020, Ives predicted.
"We believe the Netflix growth story will transition from purely domestic driven into a global streaming play," he wrote. SEE ALSO: A Wall Street analyst thinks he's figured out the real price Netflix would need to charge to break even — and he says it would destroy the company's growth
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