Netflix (NASDAQ:NFLX) is still up 40% year to date and 45% in the last 12 months. Regardless of the beating the FANGs have taken, that kind of run in NFLX stock even after the bloodbath the market has seen, is still pretty impressive.

Remember, slowing growth has slammed companies as powerful as Apple (NASDAQ:AAPL), so NFLX sporting a heady trailing price-to-earnings ratio of just under 97 and still having a strong year, says something about this entertainment company. One obvious thing is, it’s not tied to chips and manufacturing and tariffs.

Earlier this week, Netflix officials explained that it was interested in China but wasn’t putting much effort there currently because the competitive environment was inconsistent from the regulatory perspective.

And given the escalating tensions of the China-U.S. trade war — China is boycotting U.S. soybeans and the U.S. is trying to extradite a top Huawei executive from Canada — that is smart move.

When Netflix’s Chief Content Officer Ted Sarandos made these remarks couple days ago at the UBS 46th Annual Global Media and Communications Conference, it was before the latest ratcheting up in US-China trade tensions.

And while NFLX sold off after the remarks, a couple days later the wisdom of that strategy is more apparent.

As Sarandos said at the conference according to DigitalTVEurope.com, “You can really spin up your wheels trying to get a lot of programming sold into China and then for no rhyme or reason, the show gets blocked or kicked out.”

His larger point was, this isn’t the time to spend a lot of time and effort in China when India is much more compelling at this point.

NFLX Stock and India
Netflix is starting to make inroads into the second most populous nation in the world. And it’s a much more predictable regulatory environment.

NFLX stock is also adapting its entire marketing strategy to bring on subscribers as well. This is something that has paid off for Netflix in other markets. It also shows that the company isn’t interested in imposing its will on the new markets but does its homework on new markets and learns how to best enter and compete in them on the new market’s terms.

That is why NFLX stock continues to grow its subscriber base even in markets where customers may not be able to afford or access a plan that works in, say, the U.S. or Canada.

It’s also why investors are will to excuse its gigantic P/E. Given the fact that the broad market is barely keeping its head above water, the fact that Netflix is outperforming so significantly shows that it is already recognized as a stock that is beyond the markets and sitting in consumers’ hands.

And given the fact that consumers are doing well in this global economy, it’s much better to rely on consumers than having your fate tied to politicians and trade policy.

As streaming grows along with cable cutting, NFLX stock has found growth even where it’s already established. This show just started.

— Louis Navellier

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