On Wednesday, Rosenblatt maintained a neutral stance on Netflix (NASDAQ:NFLX) shares, keeping the price target unchanged at $554.00. The firm observed a year-over-year decline in the weekly viewing minutes of Netflix shows within the top 10 rankings in the US, according to Nielsen data. Specifically, there was a 5% drop in the second quarter of 2024 as compared to the corresponding period in the previous year.
The data also revealed that Netflix's share of total TV viewing time in the US edged up slightly to 8.4% in June 2024 from 8.2% in June 2023. However, despite the overall streaming viewing share increasing from 37.7% to 40.3% year-over-year in June, Netflix did not fuel this growth. Instead, free ad-supported platforms like YouTube and Tubi were the main contributors, with Netflix's share of streaming dipping to 20.8% in June 2024 from 21.8% in June 2023.
The top-performing title on Netflix for the second quarter of 2024 was "Bridgerton: Season 3," which garnered 45.1 million weekly views in the week of May 19, 2024. This viewership, however, fell short of the first quarter's leading title "Damsel," which achieved 50.8 million weekly views in the week of March 17, 2024.
Rosenblatt's assessment indicates a shift in viewing patterns among US audiences, with competition from other streaming services evidently impacting Netflix's market share. Despite a slight increase in total TV viewing share, Netflix's performance in the streaming segment shows signs of a slowdown, as highlighted by the comparative year-over-year data.
In other recent news, Netflix has witnessed a significant increase in its ad revenue, while its total revenue is projected to have grown by 16.4% to $9.53 billion. Despite a slowdown in subscriber growth, the streaming giant continues to dominate the market with its original content.
Analysts from Guggenheim maintain a Buy rating on Netflix shares and have raised the target price to $735, citing strong member growth trends. Meanwhile, BofA Securities has also increased Netflix's price target to $740, maintaining a Buy rating. On the other hand, Benchmark maintains a Sell rating but has raised the price target to $545.
Netflix is making strategic moves to increase its live offerings and is developing an in-house advertising technology platform in partnership with Microsoft (NASDAQ:MSFT). The company's decision to add an ad-supported subscription tier and explore sports content, including a deal with the National Football League, are recent developments that investors are closely watching.
InvestingPro Insights
As Rosenblatt maintains a neutral stance on Netflix, the InvestingPro metrics provide a broader financial context to this streaming giant's position in the market. With a P/E ratio of 44.65 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 43.95, Netflix trades at a high earnings multiple, suggesting that investors have high expectations for future earnings growth. This is supported by a PEG ratio of 0.8, indicating potential for growth relative to earnings. Additionally, the company's market capitalization stands at an impressive 282.81 billion USD, reflecting its dominant status as a prominent player in the entertainment industry.
Despite a dip in viewing minutes and streaming market share as reported by Rosenblatt, Netflix's revenue growth remains robust, with a 9.47% increase over the last twelve months as of Q1 2024, and an even higher quarterly growth rate of 14.81%. This financial resilience is further evidenced by the fact that Netflix's cash flows can sufficiently cover interest payments and it operates with a moderate level of debt. For readers looking to delve deeper into Netflix's financial health and future prospects, there are additional InvestingPro Tips available, including insights on valuation multiples and profitability forecasts. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and gain access to these valuable investment insights.
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