Can Alibaba Thwart Netflix on Growth Ambitions?

Netflix had previously announced a plan to expand to over 200 countries over the coming years first starting in Europe. There might be unforeseen complications with Netflix entering China ahead of schedule or ill-prepared.

Speculatively, if Netflix, HBO and Alibaba are all operating in China, there could be a price war on the horizon — and price wars are generally not good for companies, even if consumers love price wars. The margins in the online streaming industry are already slim enough as is, and this could make the entire venture unprofitable or at a nearly breakeven level.

Netflix could also face some complications entering the Chinese market with regulatory obstacles and hurdles. If you were a Chinese regulator, would you be more favorable to Alibaba or to Netflix?

Regardless of what may or may not happen in the future, Netflix knows what it must do now. Expand. The company needs to ramp up its subs growth across Europe and prepare to expand into other large markets. This future growth opportunity is a huge part of what supports the high valuations that Netflix investors have to pay to own it.

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Shares of Alibaba were down 0.4% at $86.33 on Monday afternoon. The stock has a consensus analyst price target of $107.62 and a 52-week trading range of $77.77 to $120.00.

Shares of Netflix were down 1.3% at $652.65 on a 52-week trading range of $315.54 to $692.79. The stock has a consensus analyst price target of $596.68.