As expected, the U.S. Federal Communications Commission voted to repeal the net neutrality rules implemented under the Obama administration to prevent internet service providers from limiting customer access to websites and manipulating service speeds. Without the net neutrality regulations in place, companies like Netflix, Inc. (Nasdaq: NFLX) could be forced to pay premium fees to ISPs for top-tier streaming speeds, but Netflix investors aren’t sweating the ruling.
Netflix stock finished Thursday’s session up by 0.9 percent as investors shrugged off the impact of the FCC vote. Although it has officially opposed the rollback of net neutrality rules, Netflix is likely too large of an internet company to be impacted by the vote.
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Earlier this year, Netflix CEO Reed Hastings said the net neutrality vote isn’t particularly important to Netflix or its investors because the company’s size gives it leverage with ISPs such as Comcast Corp. ( CMCSA), Verizon Communications ( VZ) and AT&T ( T). Hastings said net neutrality would have been much more critical to Netflix 10 years ago.
While Netflix likely won’t be impacted by the net neutrality decision in a meaningful way, Netflix spokesperson Bao-Viet Nguyen says the company has always supported net neutrality.
“Netflix’s position on net neutrality hasn’t changed: we support strong net neutrality protections, even if we are at less risk because of our popularity,” Nguyen said in an email.
But while the net neutrality repeal may technically be a loss for Netflix, analysts aren’t concerned. Earlier this year, Height Securities analyst Nils Tracy said large content providers like Netflix, Facebook ( FB), Amazon.com ( AMZN) and Alphabet ( GOOG, GOOGL) are likely insulated from the net neutrality ruling.
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“[Over-the-top] providers with large capitalizations … should be able to fend off predatory paid prioritization by ISPs through the strength of their content and the economic clout of their subscriber numbers,” Tracy said.
This week, Cowen & Co. analyst Paul Gallant said Netflix, Google and Facebook are the ones calling the shots with ISPs, with or without net neutrality regulations.
“If Facebook or Netflix or Google or Amazon go pull their content off a particular ISP, that’s a problem for the ISP,” Gallant said, according to Bloomberg.
Cowan doesn’t see the ruling slowing down Netflix stock for long-term investors. Cowen has a “buy” rating for Netflix and a $215 price target for the stock.
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Net Neutrality Isn’t a Big Deal for Netflix, Inc. (NFLX) originally appeared on usnews.com
