Netflix’s headquarters in Los Angeles.
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Netflix prepares to kick off Hollywood’s Q1 2024 earnings season on April 18th, with momentum from subscriber growth, ad inventory and password-sharing crackdown expected by investors and Wall Street analysts. This will be one of the areas of focus for the company.
Investors will also listen to potential comments on content strategy, including a reorganization of the film division under new head Dan Lin. According to officials, hollywood reporter The feature category will be divided into genres such as science fiction, romance, and faith-based. Netflix’s first quarter originals included the following series: 3 Physical problems and Avatar: The Last Airbenderand other movies. maiden and alien.
The company’s stock has continued to trend upwards since the start of 2024, rising 30% year-to-date through Monday to close at $.607.15In comparison, the S&P 500 stock index rose 6.7%. However, several analysts have raised their stock price targets ahead of the latest earnings release.
According to management guidance, subscriber growth in the first quarter is lower than the 13.1 million increase in the seasonally strong fourth quarter, but higher than the 1.7 million increase recorded in the first quarter of 2023. That was what was required. The streaming giant had 260 million subscribers at the end of last year.
TD Cowen Analyst john blackridgeFor example, in a recent report, we kept our rating on Netflix at “buy,” but raised our price target by $125. $725. “We have raised our lower-end estimates for the first quarter and full year of 2024, and expect his first-quarter net additions to be 5.11 million, above consensus. [of] 4.11 million, reflecting continued paid sharing momentum,” he wrote, attributing the increase to “continued paid sharing momentum.” He added: “We’re going to look for color in Netflix’s monetization efforts and the advertising VOD (AVOD) tier.”
Blackledge added: “Netflix is benefiting from the dual tailwinds of paid sharing initiatives and strong business demand driven by a robust and increasingly global content base. Netflix is also benefiting from the dual tailwinds of strong business demand driven by paid sharing initiatives and a robust and increasingly global content base. Ad tier adoption is also increasing. , AVOD membership grew nearly 70% sequentially in Q4 2023, with overall monthly active users (MAUs) exceeding 23 million.” It is scheduled to be phased out in the current second quarter, which “should further boost the momentum of the advertising tier,” the expert claimed.
Experts also highlighted positive findings from recent research. “Our first quarter consumer research shows that Netflix remains the top choice for viewing in the living room, while TikTok remains flat,” Blackledge said. We believe Netflix’s broad catalog creates a long-term and durable advantage.”
morgan stanley Analyst benjamin swinburne Revised profit forecast upward, raised price target by $100, 700 dollars, and maintained his “overweight” rating on Netflix stock in an April 12 report. In the meeting, he revised upward his forecast for quarterly subscriber growth to 7.5 million. “With the stock up more than 60% since September 30, 2023, this report revisits our ‘overweight’ thesis and explores the opportunities ahead for the streaming industry leader.” explained.
Here are the experts’ bullish conclusions: “Netflix’s track record includes transitioning from DVD to streaming, scaling the world’s largest studio, and successfully monetizing password sharing. “Live streaming) and compound annual growth in earnings per share of over 25% support the premium multiple.” A rich library may be an undervalued competitive advantage.”
Regarding “Netflix’s content advantage,” Swinburne writes: “While content quality is subjective, what is not subjective are Netflix’s structural competitive advantages. These include: 1) developing, producing, and/or sourcing content from outside the United States; , 2) the depth and breadth of engagement between titles, and 3) the benefits that a vertically integrated model provides through unique programming.Taken together, these benefits include the long-term growth and return on capital of the business. Reinforces our bullish view.”
Pivotal Research Group Analyst Jeff Brodarczak He expects Netflix stock to have further upside, and rates it a “buy.” “We raise our target price for Netflix to the highest price by the end of 2024, with a target price of $65.” $765 This was primarily driven by a combination of rising subscriber numbers and average revenue per user (ARPU) forecasts since 2015,” he said in an April 5 report. “These high forecasts are the result of continued strong momentum in our core business and the compelling absolute and relative value that the Netflix service offers to consumers, which “ARPU levels that we see as leading to significant medium- to long-term upside from current levels,” he explained.
Pivotal experts have raised their 2024 subscriber growth forecast from 18.2 million to 19.5 million. That compared to Wall Street’s consensus estimate of 19.9 million. “By the end of 2030, we now assume total paid subscribers will be 356 million, compared to 347 million previously,” he added. “Netflix is winning the streaming wars, and continued strong subscriber/ARPU and free cash flow generation should drive the stock higher,” Wlodarczak concluded.
Evercore ISI Analyst Mark Mahaney Recent reports raise Netflix’s 2025 financial forecasts, raise price target by $40, $640While repeating his own “outperform” rating. In a first-quarter preview on April 12, Mahaney said he expects subscriber numbers to increase by 4 million in the same period. “We believe investors’ expectations are likely in the range of 7 million to 9 million net additions,” he wrote. “We see this level as possible, but we have limited confidence that we can exceed this range.”
oppenheimer Analyst Jason Helfstein Maintained “outperform” rating on Netflix stock $725 The target price was revealed in a report on April 11th. “Among investors, [are] We expect first-quarter net income to be approximately double that of Street on tailwinds from paid sharing/advertisement, but the tail of paid sharing will be longer than originally thought and we have been able to earn more than we have earned so far. “We believe that only 20% of the 100 million opportunities are available,” he explained. “Notably, mobile password sharing restrictions only went into effect in March, and advertising monthly active user disclosures indicate that advertising tier membership growth is accelerating. Meanwhile, in October We only consider price increases, without the benefits of paid sharing or additional regions, and we believe our average revenue per member estimate remains conservative.”
In addition, we license programming such as: suit Helfstein emphasized that it would be in the economic interest of major Hollywood companies to consider licensing content to Netflix. “Increasing the mix of licensed content is bullish for margins, free cash flow conversion and share repurchases,” he concluded.
wedbush securities Analyst Michael Pachter expects global net subscriber growth of 8.5 million in the first quarter, significantly exceeding Wall Street consensus expectations. He maintains an “outperform” rating, $725 Streamer’s stock price target. “Netflix has carefully crafted its current content with a balance of original and licensed content, allowing us to control content costs while remaining a leader in content consumption among our streaming peers.” he explained. “We believe Netflix has hit on the right equation of global content production, balancing costs and increasing profitability. We expect Netflix to continue to grow profitability.”
Pachter also shared his views on the company’s advertising tier push position. He asserted, “We expect Netflix to report continued growth in the ad tier with less dilution as average revenue in the ad tier approaches parity with the non-ad tier.” “The biggest advantage of inventory is that it limits churn. Still, Netflix is poised to accelerate ad demographic growth through the end of the year and into 2025 by improving its advertising solutions and targeting, and expanding its partnerships. Swinburne is also keeping an eye on the news regarding sports programming plans.
“We believe live sports is a key component of Netflix’s overall addressable market expansion and look forward to building on the investment the company announced in WWE Raw earlier this year. ” Pachter wrote. “We note that the NBA’s exclusive negotiation period with existing partners is set to expire in the coming weeks, and Netflix is looking to secure ancillary rights, including the recently launched and successful in-season tournament. We see it as a dark horse.”
