Netflix will be a ‘stronger business’ after password-sharing crackdown: analyst

Netflix(NFLX) controversial crackdown on password sharing Although it hit U.S. users on Tuesday, analysts remain bullish that the move could lead to higher revenue and earnings for the company.

CFRA analyst Ken Leung told Yahoo Finance that cracking down on password sharing would turn Netflix into a “stronger business,” adding, “This really builds the business on a more loyal subscriber base. It’s an opportunity to do so,” he added.

Netflix stock rose shortly after the announcement on Tuesday, but has since fallen 2%. Shares rebounded on Wednesday, closing the day up about 2.5%. Shares tumbled 1% on Thursday.

Investors expect turbulent quarters ahead, but Netflix is ​​in a stronger position by the fourth quarter, with a “strong buy” valuation and a $390 price target. , and should be poised “very well for 2024,” he said.

Asked if he was worried about churn, Leon said, “Cursion doesn’t happen to people who haven’t paid for their subscriptions.”

among them Quarterly Shareholder Letter Netflix said last month that it expected short-term withdrawals to occur before users signed up for their accounts: “In Canada, which we believe is a reliable predictor for the United States, our Our paying member base is now larger than it was before we launched our paid service.” Share and revenue growth have accelerated and are now growing at a faster pace than in the United States. ”

Netflix's controversial password-sharing crackdown hit US users hard on Tuesday. But analysts remain bullish about the move's potential to boost revenue and earnings.

Netflix’s controversial password-sharing crackdown hit U.S. users on Tuesday, but analysts remain bullish that the effort could bring in more revenue and profits.

Shortly after the announcement, Oppenheimer reiterated its outperform rating and raised its price target to $450 per share from $415.

The move represents a roughly 25% upside from current levels, and the company sees “multiple tailwinds, including less competition, a long-term reversal of linear TV, and the start of advertising and password sharing.” are listed.

In a note to customers, Oppenheimer, who conducted a survey of about 2,000 US Netflix users, said the survey results could add about 36 million new subscribers for streamers. I wrote.

Nearly half of the respondents said they were willing to pay the $7.99 fee for remote users, and 70% said they were willing to sign up for the $6.99 advertising tier plan.

Oppenheimer analyst Jason Helfstein wrote, “Our research suggests that pricing above ad space will skew a significant portion of these users to advertising.” “We believe that the true benefits of password sharing and inventory are not properly factored into the estimates.”

Alexandra Canal Senior Reporter at Yahoo Finance. follow her on her twitter @allie_canal, LinkedIn, Email

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