Most movie buffs out there know that, once upon a time, Blockbuster Video had the opportunity to purchase streaming giant Netflix (NFLX) for a comparative song, but passed. However, new reports have emerged that noted that, once, the shoe was on the other foot, as online retail kingpin Amazon (AMZN) once tried to buy Netflix, but was rebuffed…by Netflix. The “why” may surprise you, but shareholders’ reaction might not. Shares of Netflix snapped up over 1.5% in Thursday afternoon’s trading.
During a taping of the First Time Founders with Ed Elson podcast, Reed Hastings revealed that Jeff Bezos wanted to meet him and Marc Randolph, co-founders of the DVD magnate turned streaming titan. Bezos had ambitions of streaming video even back in Netflix’s early days, and so, was considering acquiring Netflix to make that happen.
The offer never got far, the report noted, but Bezos was willing to offer “…somewhere in the low eight figures” for Netflix as far back as 1998. Randolph and Hastings considered the matter on the flight home, and noted that Netflix was not exactly in the position it is today. Its business model was neither scalable nor profitable, and though it was doing solid business, its costs were high. But the duo decided that they were “…on the brink of something,” and passed on Bezos’ offer.
“Not Recession Proof”
Meanwhile, many are looking for safe havens in the market right now. The recent run-up in precious metals prices suggests that much. And some, therefore, are looking to Netflix to serve as such a safe haven. The motivation behind such a move is reasonable; after all, people stay home more in a recession, and the movies have historically beaten recessions, even outright depressions, before.
But, noted one report, Netflix is not necessarily recession-proof. It is still, after all, a discretionary purchase in a field of competitors. Netflix may even find itself competing with itself, as customers scale back their subscriptions to a lower tier. The ad supported tiers offer another revenue stream for Netflix, but the loss of premium subscribers may not make up for the difference.
Is Netflix Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NFLX stock based on 29 Buys, 10 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 60.76% rally in its share price over the past year, the average NFLX price target of $1,109 per share implies 13.03% upside potential.
