Netflix has released its third-quarter financial results, and early assessments from Wall Street analysts are largely positive, though some caution remains regarding the company’s market valuation. Co-CEOs Ted Sarandos and Greg Peters, along with executive chairman Reed Hastings, reported that Netflix ended September with 282.72 million subscribers globally. The company added 5.07 million net subscribers during the quarter, which is lower than the 8.76 million added in the same timeframe last year.
In the third quarter, Netflix launched several original titles, including season 4 of “Emily in Paris,” “The Perfect Couple,” “Beverly Hills Cop: Axel F,” “A Good Girl’s Guide to Murder,” and the final season of “The Umbrella Academy.” For the upcoming fourth quarter, Netflix management expressed excitement about a strong lineup expected to contribute to subscriber growth, featuring “Squid Game” season 2, the Jake Paul/Mike Tyson fight, and two NFL games on Christmas Day. Management anticipates that paid net additions will surpass those of the third quarter.
Following the earnings report, multiple analysts maintained their positive ratings and raised their price targets for Netflix shares. The shares experienced a surge in pre-market trading, climbing over 6 percent to exceed $730. However, some analysts issued warnings about potential limitations on sustained upward momentum.
TD Cowen analyst John Blackledge reaffirmed his “buy” rating and increased his price target after the earnings update to $835, projecting positive trends in subscriber growth and tweaks to revenue and earnings forecasts through 2024. Evercore ISI’s Mark Mahaney also maintained an “outperform” rating, raising his target to $775 and highlighting strong operational margins and content offerings.
BMO Capital Markets’ Brian Pitz joined the trend by elevating his price target from $770 to $825 while also endorsing an “outperform” rating. He pointed out better-than-expected growth projections for revenue and advertising, underscoring Netflix’s significant content investment.
Guggenheim analyst Michael Morris, who is also optimistic, raised his target from $735 to $810. He attributed his outlook to Netflix’s expanding content slate. William Blair analyst Ralph Schackart kept his “outperform” stance, indicating improved profitability expectations.
On the conservative side, Bernstein’s Laurent Yoon held a “market-perform” rating, adjusting his price target to $780. He expressed concern over subscriber growth slowing, particularly in Latin America, though noted that fears about the latest results may have been overblown.
Conversely, Benchmark analyst Matthew Harrigan maintained his “sell” rating while increasing his target to $555. He cited potential issues with member growth amid rising competition and shifting consumer behavior towards short-form video content.
MoffettNathanson’s Robert Fishman highlighted the company’s success in monetizing its user base, yet he questioned whether momentum could be sustained going forward, especially as Netflix expands its advertising and pricing strategies. He also noted that Netflix’s shares may appear expensive compared to growth forecasts.
Analysts are noting that Netflix now commands a significant share of overall video service spending in the U.S, estimated at nearly 10 percent. The company’s ad-supported tier is also gaining traction, with 50 percent of sign-ups in advertising markets opting for the ad plan, indicating a growth trend since its launch.