Netflix has released its third-quarter financial results, prompting initial reactions from Wall Street regarding the implications for the streaming service and its stock. Many experts entered the earnings report with an optimistic outlook, although some cautioned that Netflix’s rising market value may necessitate patience for future stock appreciation.
Under the leadership of co-CEOs Ted Sarandos and Greg Peters, as well as executive chairman Reed Hastings, Netflix concluded the third quarter with 282.72 million subscribers globally. The quarterly net gain of 5.07 million subscribers fell short of last year’s figures, which saw an increase of 8.76 million.
Notable original content for the quarter included the launch of 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, management expressed enthusiasm for their upcoming releases, mentioning Squid Game season 2, the Jake Paul/Mike Tyson fight, and two NFL games on Christmas Day. This has led Netflix to project higher paid net additions for the fourth quarter compared to the third.
Following the earnings report, several analysts maintained their ratings and increased their price targets for Netflix stock. The stock jumped more than 6 percent in pre-market trading, surpassing $730, although analysts also issued caution about the sustainability of this upward trend.
TD Cowen’s John Blackledge reiterated his “buy” rating for Netflix, raising his price target by $45 to $820, and subsequently to $835, supported by an improved subscriber forecast and adjustments to revenue and profit estimates for 2024 and beyond.
Mark Mahaney of Evercore ISI also reaffirmed his “outperform” rating and increased his price target by $25 to $775, citing solid operating margins and a promising fourth-quarter outlook buoyed by strong content.
BMO Capital Markets analyst Brian Pitz raised his price target by $55 to $825 while maintaining an “outperform” rating, noting better-than-anticipated revenue growth projections for 2025 and the significant potential for ad revenue.
Guggenheim’s Michael Morris also holds an optimistic view, upping his target to $810 from $735, praising the expanding content offering as a key growth catalyst.
William Blair’s Ralph Schackart maintained his “outperform” rating, emphasizing improved profitability, while Pivotal Research’s Jeff Wlodarczak, the most bullish analyst, raised his price target from $900 to $925, underscoring Netflix’s strong performance and promising future projections.
Conversely, Bernstein’s Laurent Yoon, maintaining a “market-perform” rating, raised his target by $155 to $780 but expressed caution over subscriber growth concerns, particularly in Latin America. He acknowledged that future developments could be more promising.
Benchmark’s Matthew Harrigan, a skeptic, kept a “sell” rating and increased his target to $555, warning about potential growth risks against an intensifying competitive landscape.
MoffettNathanson’s Robert Fishman provided a balanced perspective, recognizing Netflix’s strong performance but questioning whether subscriber growth will persist. He referenced the challenges associated with pricing power and overall viewership dynamics.
Additionally, Madison and Wall analyst Brian Wieser noted Netflix’s significant market share in video services, stating it accounts for approximately 10 percent of total U.S. spending on video, despite representing only 8 percent of total viewing time. He also highlighted the rising popularity of Netflix’s ad-supported tier, which has doubled in subscribers since its launch.