Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Benchmark analysts still cautious on Netflix despite positive ad-tier reports

Published 21/03/2023, 14:06
Updated 21/03/2023, 14:06

By Sam Boughedda 

Benchmark remains cautious on Netflix (NASDAQ:NFLX) despite recent reports indicating that its ad-supported service has gained approximately one million active users in the US after its second month on the market.

Benchmark analysts said in a note to clients Tuesday that advertising initiatives and the "nettlesome password sharing crackdown should be ARM accretive," but in their view, it largely positions the stock to offset subscription video on demand (SVOD) competitive pressure.

They maintained a Sell rating and a $250 price target on the stock, stating that Netflix's indication for $3 billion in 2023 free cash flow is positive but not impressive relative to its $135B market cap without significant growth acceleration.

"We fully expect Netflix's advertising alternative to emerge as a significant member share component as reflected in our model," they added.

"Bloomberg also suggested, with Netflix declining comment, that the advertising user base grew 500%+ in its first month and another 50% in its sophomore month, not surprising given the law of small numbers and access to a huge member base."

"Netflix is subject to the same difficult streaming market conditions as its peers, even as its operating margins benefit from maturity relative to newer entrants."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.