Netflix Stock Falls After Much Lower New Subscriber Additions

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  • #21266
    ThePitBoss
    Participant

    Streaming giant Netflix reported better than expected second…

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    #21273
    ThePitBoss
    Participant

    Open > Netflix, Inc.
    NASDAQ: NFLX
    323.43 USD −39.01 (10.76%)

    #21279
    ThePitBoss
    Participant

    Morgan Stanley analysts note mainatins an overweight rating on Netflix stock and a price target of $450

    “Did the world change in the last three months?” “We do not believe it did. Moreover, layering in the second-half guide leaves our full-year estimates largely unchanged. If it delivers, 2019 will be another year of record net adds and nearly double-digit ARPU (average revenue per user) growth.”

    Analysts notied that Netflix has missed quarterly net additions once a year in each of the last three years, only to outperform “meaningfully” in the quarter after the miss.

    The second quarter is seasonally weak and tends not to include major releases they said. And the magnitude of the miss—the company added just 2.7 million paid subscribers in the quarter, compared with its own forecast of 5 million—is similar to other misses.

    “Ultimately, we take the view that Netflix’s ability to forecast its business has not meaningfully changed,” they wrote.

    #21280
    ThePitBoss
    Participant

    [size=5][b]Piper Jaffray analyst Michael Olson reiterated his overweight rating and $440 price target
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    Expects Netflix will continue to capture a “significant” share of traditional content dollars. The miss showed how important the company’s content slate is in attracting new customers, he wrote.

    “In the second half, there should be a positive impact from an improving slate and we are, therefore, optimistic about the company’s opportunity to grow subscriber additions y/y in a FY basis,” Olson wrote. He cited the new seasons of “Stranger Things,” “The Crown,” and “Orange is the New Black” along with films from Martin Scorcese and Michael Bay as examples of content he expects will be strong draws.

    #21281
    ThePitBoss
    Participant

    Stifel reiterating a buy rating for Netflix and $400 price target.

    “We believe explanations for the current quarter miss appear reasonable, though with a likely louder market narrative around competition leading up to the November 12th Disney+ launch in the U.S., Netflix shares may be range bound until the next meaningful catalyst, 3Q earnings,” analysts led by Scott Devitt wrote in a note. “At that time, Netflix will have to prove, as it has done many times, that its value proposition remains one of the best on the net.”

    Netflix is facing a slew of new competitors that are planning to launch streaming services later this year or in 2020, including Walt Disney Co. DIS, -0.81% Apple Inc. AAPL, +1.21% AT&T’s T, -0.35% HBO Max and Comcast Corp.’s CMCSA, +0.31% NBCUniversal. As a result, Netflix is going to lose some shows that are understood to be among its most popular, notably “Friends” and “The Office.”

    #21282
    ThePitBoss
    Participant

    [size=5][b]JPMorgan rate NFLX as equivalent of buy with a $425 price target based on a sum-of-the-parts valuation.
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    “We continue to view the 2H content slate as perhaps NFLX’s best-ever,” he wrote. JPMorgan

    #21283
    ThePitBoss
    Participant

    [color=red][size=5][b]Wedbush analyst Michael Pachter rates Netflix stock at the equivalent of sell. raised his price target on the stock to $188 up from $183, he remains one of the most bearish on Wall Street.
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    “We expect content spending to trigger substantial cash burn for many years; notwithstanding four Netflix price increases in the last five years, cash burn continues to grow,” Pachter wrote in a note.

    “Content migration and price hikes could cause a deceleration in subscriber growth, and consistently negative FCF (free cash flow) makes DCF (discounted cash flow) valuation impossible,” he wrote.

    #21540
    ThePitBoss
    Participant

    Disney Earnings Netflix Affects:

    Disney on Tuesday missed expectations on the top and bottom lines for its fiscal third quarter, and shares were down 5.5% Wednesday morning.

    Needham Note on NFLX

    Subscribers to Disney+ will “mostly come” from Netflix’s subscriber base, Needham says.
    Disney announced Tuesday that it would offer a bundle of Disney+, ESPN+ and ad-supported Hulu for $12.99 per month, the same price as Netflix’s standard plan.
    The stand-alone Disney+ will cost $6.99 per month or $69.99 for a year.

    The new Disney+ streaming service will lure customers from Netflix and win the direct-to-consumer streaming wars, according to Needham. The firm said customers will “mostly come” from Netflix because “US consumers have shown a reluctance to add” more streaming services.

    Disney, which is launching the service in November, announced Tuesday it will offer a bundle of Disney+, ESPN+ and ad-supported Hulu for $12.99 per month, the same price as Netflix’s standard plan.The stand-alone Disney+ will cost $6.99 per month or $69.99 for a year. Netflix’s service starts at $8.99 a month.

    This price difference between the most basic versions of Netflix and Disney+ is one of the main reasons Disney is set to attract Netflix’s customers, according to Needham.

    The five other reasons the firm listed are:
    Disney will have most Pixar, Star Wars, Marvel and Disney princess films available at launch.
    Disney’s current customer base lowers customer acquisition costs.
    The bundle with ESPN+ and Hulu will lower churn.
    Disney’s strong balance sheet and cash flow gives it “more staying power” than Netflix.
    Disney already has several content studios.

    Needham maintained its hold rating on Disney, citing concern about how the $71 billion acquisition of Fox will affect earnings in the near term. Disney on Tuesday missed expectations on the top and bottom lines for its fiscal third quarter, and shares were down 5.5% Wednesday morning.

    Disney generated $1.35 in earnings per share on $20.25 billion in revenue as it continues to integrate Fox’s entertainment assets. Analysts expected $1.75 in earnings per share and $21.47 billion in revenue.

    #22125
    ThePitBoss
    Participant

    Goldman Sachs on Netflix (NFLX) ahead of upcoming third-quarter earnings lowered its Netflix price target to $360 per share from $420 Thursday, but reiterated its “buy” rating.

    Goldman expects the company to report subscriber growth “modestly below guidance” in its upcoming report.and is on its way to “a stronger seasonal period for subscriber growth” driven by a bolstered content lineup, analyst Heath Terry wrote. The “unprecedented” fourth-quarter slate including Martin Scorsese’s “The Irishman” and the third season of “The Crown” — could shield Netflix from increased competition and create new subscriber growth among TV customers,

    The analyst said. “We continue to believe that traditional television (broadcast, basic/premium cable) creates the largest opportunity for Netflix, and streaming in general, to take share,” Terry wrote.

    #22126
    ThePitBoss
    Participant

    Goldman Sachs on Netflix (NFLX) ahead of upcoming third-quarter earnings lowered its Netflix price target to $360 per share from $420 Thursday, but reiterated its “buy” rating.

    Goldman expects the company to report subscriber growth “modestly below guidance” in its upcoming report.and is on its way to “a stronger seasonal period for subscriber growth” driven by a bolstered content lineup, analyst Heath Terry wrote. The “unprecedented” fourth-quarter slate including Martin Scorsese’s “The Irishman” and the third season of “The Crown” — could shield Netflix from increased competition and create new subscriber growth among TV customers,

    The analyst said. “We continue to believe that traditional television (broadcast, basic/premium cable) creates the largest opportunity for Netflix, and streaming in general, to take share,” Terry wrote.

    UBS on Netflix (NFLX) ahead of upcoming third-quarter earnings dropped its price target to $370 from $420 Wednesday and reiterated its “buy” rating.

    UBS analyst Eric Sheridan said investors “have grown fearful” the company will report disappointing subscriber figures again. The bank projects the third quarter will bring strong US subscriber trends, but revised its international growth target lower, citing “weakness in key mature markets” like Brazil and the UK.

    While the short-term “will likely remain volatile,” Netflix is likely to reach solid growth before other streaming services enter the fray, Sheridan said.

    #22127
    ThePitBoss
    Participant

    NFLX has fallen nearly 25% since it reported second-quarter subscriber growth came in under Wall Street’s estimate with looming competition from Apple and Disney.

    Netflix is scheduled to release its third-quarter report on October 18.

    The company has 31 “buy” ratings, 10 “hold” ratings, and four “sell” ratings from analysts, with a consensus price target of $367.80, according to Bloomberg data.

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