Wall Street Loves Netflix on the iPad. Maybe a Bit Too Much.

Published on April 7, 2010
by Peter Kafka

On Monday, Wall Street investors decided that the clear winner from last weekend’s iPad launch was…Netflix. And they’ve been buying CEO Reed Hastings’s stock ever since, pushing it up nearly $10.

Perhaps it’s time to rethink that one, argues Barclays Capital’s Douglas Anmuth. The analyst has downgraded Netflix (NFLX) for primarily technical reasons, but along the way, he makes a good point about the company’s well-received app for Apple’s (AAPL)┬ánew gadget: It’s pretty awesome, but it may not generate many subscriptions for the movie rental service.

Why? Because Anmuth thinks just about everyone who has an iPad already has a Netflix subscription.

We view the new iPad app positively as it should help increase the value of a Netflix subscription and result in more loyalty and less churn, but we do not view it as a major driver of subscriber growth, especially given that many iPad purchasers are likely already Netflix subscribers. The large install base of the iPhone (48 million globally) could be more material with the pending app, but we believe consumers would generally prefer to view content on a bigger screen.

Time for some crowd-sourced opinion polling: Anyone out there who has an iPad and the Netflix app? Anyone who has bought a subscription because of the app? Anyone out there waiting to subscribe until the app comes to the iPhone?

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