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Netflix upgraded in Oppenheimer as lower-priced ad tier should drive subscriber growth

Netflix upgraded in Oppenheimer as lower-priced ad tier should drive subscriber growth

Written by Sinad Karahimetovic

Shares of Netflix (NASDAQ ๐Ÿ™‚ rose more than 1% in premarket trading Monday after an Oppenheimer analyst upgraded to Outperform with a share price target of $325.

The upgrade move comes after Oppenheimer analysts conducted in-depth research into the company’s advertising opportunity, along with the results of a private consumer survey.

โ€œAlthough the ad tier will attract some newbies, there is a greater chance of re-attracting floundering subscribers. Of the 15% inflated US subscriptions, 43% will re-subscribe at a lower rate. Of the 9% who have never signed up, 30% will do so at a lower price. Less The analyst said in a client note that roughly 70% of existing basic subscriptions will be downgraded to ad level versus 55% standard and 46% premium.

The company is seen as being โ€œuniquely positioned to bring together large audiences and control the timing of chain releases for top-tier advertisers, resulting in a high CPM.โ€

The analyst believes that Street’s estimate is conservative and does not reflect the full advertising opportunity.

โ€œThe Street has not yet considered the opportunity to announce, and we believe sentiment should improve as more analysts update the models. We expect net subscriber additions of 15m/21m/19m vs. Streets forecast of 11m/13m/19m At ’23E/24E/25E, respectively’, the analyst concluded.

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