Netflix has released its results for the third quarter, along with initial assessments from Wall Street regarding the implications for the streaming service and its stock performance. Despite some caution about the potential for growth in its market value, most analysts approached the earnings report with optimism.
Under the leadership of co-CEOs Ted Sarandos and Greg Peters, along with executive chairman Reed Hastings, Netflix concluded September with a total of 282.72 million subscribers globally. The company reported 5.07 million new subscribers for the quarter, which fell short of last year’s additions of 8.76 million.
Among the original programming Netflix launched in the third quarter were new seasons and titles such as Emily in Paris season 4, The Perfect Couple, Beverly Hills Cop: Axel F, A Good Girl’s Guide to Murder, and the final season of The Umbrella Academy.
Looking ahead to the fourth quarter, Netflix management expressed excitement about their lineup, which includes Squid Game season 2, a fight between Jake Paul and Mike Tyson, and two NFL games on Christmas Day. They anticipate higher net additions in the upcoming quarter compared to the third.
This positive outlook led many analysts to maintain their ratings for Netflix and even increase their price targets. In pre-market trading on Friday, Netflix shares surged over 6 percent, exceeding $730. However, analysts cautioned that sustaining this upward momentum may be challenging.
TD Cowen analyst John Blackledge reaffirmed his “buy” rating and elevated his price target from $820 to $835 following the earnings release, citing a revision of subscriber forecasts and adjustments to revenue expectations for 2024 and beyond.
Evercore ISI’s Mark Mahaney also maintained an “outperform” rating and raised his target by $25 to $775, highlighting a record operating margin and a strong fourth-quarter outlook.
BMO Capital Markets’ Brian Pitz revised his target from $770 to $825 while reiterating his “outperform” rating, noting better-than-expected revenue growth predictions and increased confidence in ad revenue metrics for the future.
Guggenheim analyst Michael Morris expressed optimism, keeping his “buy” rating intact after raising his price target from $735 to $810.
William Blair’s Ralph Schackart emphasized the continuing margin expansion trend, maintaining his “outperform” rating without specifying a price target.
Conversely, Benchmark’s Matthew Harrigan remained bearish, downplaying the stock’s value despite slightly increasing his price target to $555. He pointed out the risks of member growth and heightened competition.
In contrast, MoffettNathanson analyst Robert Fishman acknowledged Netflix’s successes but questioned future subscriber growth, considering the impact of the company’s ad business and pricing strategies.
Bernstein’s Laurent Yoon adopted a cautious stance, raising his target to $780 while highlighting concerns over subscriber growth amid a less favorable content slate.
The latest results prompted interest from analysts outside of traditional finance as well. Madison and Wall principal Brian Wieser noted that Netflix accounts for nearly 10 percent of all video services spending in the U.S., suggesting a strong consumer preference for the platform.
Wieser also reported a significant increase in subscribers opting for ad-supported plans, indicating continued growth in this area since the tier was launched.