In the face of stiff competition from Disney, Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Warner Bros., Comcast (NASDAQ:CMCSA), and Paramount Global, Netflix (NASDAQ:NFLX) is changing its strategy from subscriber growth to earnings maximization. This shift comes as the company implements post-Hollywood actors strike price hikes, launches an ad-supported service, and cracks down on shared accounts.
Netflix, a prominent player in the Entertainment industry, as pointed out by InvestingPro Tips, has been operating with a moderate level of debt. The company's liquid assets exceed its short-term obligations, indicating its financial stability. However, the company's stock has taken a significant hit over the last week, as reflected in InvestingPro's real-time metrics, with a 1-week price total return of -7.84%.
The move follows the recent discontinuation of Netflix's DVD-rental service. Despite a surprising increase of 5.9 million subscribers in July, the company's third-quarter revenue guidance of $8.52 billion fell short of the expected $8.66 billion. In response to this lower than anticipated guidance, Jefferies analysts reduced their price target on Netflix shares.
Barclays (LON:BARC) analysts voiced concerns about weak revenue growth expectations for Netflix. Meanwhile, Needham predicts that linear TV will regain subscribers in the next 2-3 years.
Netflix shares have seen a significant increase this year, climbing 21% with an average price target of $459.47. This rise comes amidst Amazon's plan to raise streaming prices and Disney considering asset sales. Analysts' recommendations for Netflix shares are mixed: Wedbush analysts are bullish on Netflix, while Cowen analysts expect 6.5 million new paid subscribers with a mix of 23 buy, 20 hold, and two sell recommendations among analysts.
Amazon, another significant player in the industry, has seen a revenue growth acceleration, as per InvestingPro Tips. The company's net income is expected to grow this year, and it operates with a moderate level of debt. However, Amazon's stock has seen a 1-month price total return of -7.55%, according to InvestingPro's real-time metrics.
The InvestingPro platform offers additional tips and real-time metrics for both Netflix and Amazon, providing valuable insights to investors. For more information, visit the InvestingPro's pro/pricing page.
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