Netflix’s Wall Street Expectations Drop After Slow Ad Tier Performance
By Movieguide® Contributor
While Netflix’s stock prices went up after announcing plans to increase prices and stop password sharing, Wall Street has now lowered its expectations for the streaming giant.
“Netflix is expected to post strong subscriber gains when it reports its latest quarterly results on Oct. 18, but you couldn’t tell that from the stock’s performance since the global streamer’s July earnings update, when it added 5.9 million subscribers to total 238.4 million global paid memberships,” the Hollywood Reporter wrote.
“Last week, analysts at Morgan Stanley, TD Cowen, and Wells Fargo all reduced their respective price targets for Netflix,” Barchart reported.
Several things have contributed to investor revaluation. Netflix co-CEO Spencer Nuemman commented about the company’s plans for tier advertising and a password-sharing crackdown, saying that they have “a lot of work to do.” Other Netflix executives have said much of the same. It is also widely estimated that the company will need to spend a significant sum on more licensed content.
Netflix just announced a new upcoming ad product that will allow viewers a free episode if they binge a certain amount of shows or movies. But co-CEO Ted Sarandos recently said that the platform’s ad system is still “definitely not at the scale that we want it to be at yet.”
“The changes for Netflix, which will report third-quarter earnings after the bell on Wednesday, come as analysts surveyed by Zacks Investment Research are expecting the company to report earnings of $3.47 per share on revenue of $8.54 billion for the quarter,” the Wrap reported.
Stocks are now down by 22 percent since Netflix’s July earnings report was published. But for the year-to-date tally, Netflix is up by 20 percent.
Movieguide® reported on an increase in Netflix shares in early October:
“Netflix plans to raise the price of its ad-free service a few months after the continuing Hollywood actors strike ends, the latest in a series of recent price increases by the country’s largest streaming platforms,” The Wall Street Journal reported.
The company’s shares have gone up by 3% since Netflix released the news. The amount of the price increase isn’t stated, but the hike will start with the U.S. and Canada and might include other countries.
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