Netflix subscribers grow after password-sharing crackdown
Netflix’s stock experienced a significant 16% surge in response to a promising quarterly earnings report. The streaming giant reported notable successes, particularly a remarkable 70% increase in subscribers for its new ad-supported subscription tier. In addition, Netflix outperformed overall subscriber estimates by adding 8.76 million new subscribers during the third quarter, surpassing Wall Street’s estimated 5.49 million. This surge in subscribers is the largest since the second quarter of 2020, when the COVID-19 pandemic and stay-at-home measures boosted sign-ups.
This growth marks a recovery for Netflix, which had faced its first net subscriber loss in over a decade in April 2022, raising concerns about market saturation. Analysts reacted positively to this news, with Morgan Stanley upgrading the stock to overweight and raising its price target to $475. They anticipate Netflix to achieve its objectives, including accelerating revenue growth, expanding margins, and returning to double-digit growth.
Furthermore, Truist analyst Matthew Thornton predicts that efforts to combat password-sharing will continue to drive subscriber growth into the next year. The firm upgraded Netflix to a buy rating and increased its price target from $430 to $465. They emphasize the potential benefits of ongoing password sharing, advertising expansion, and share buybacks, as well as Netflix’s strong content portfolio, which includes popular titles like “Squid Game,” “Wednesday,” and “Stranger Things.” Video games are also seen as a potential growth lever for the company.
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