Oppenheimer Positive On Netflix Despite Reported Ad-Tier Execution Issues

Netflix NASDAQ: NFLX) shares are down by more than 50% in 2022, and recent reports have stated that the company is having issues with the execution of its ad-supported tier, but one analyst is still positive about its outlook.

Oppenheimer analyst Jason Helfstein reiterated an Outperform rating and $365 price target on Netflix shares in a research note on Tuesday in response to a recent Digiday article pointing to those aforementioned ad-tier execution issues.

WELCOME BONUS - Free Share Bundle When You Invest £50! Get up to £500 cashback for investing with IG.

Invest in 15,000+ shares and ETFs. Open an account now, invest at least £50, and you’ll get a free share bundle worth between £40 and £200. T&Cs apply.

5.0

Open Account Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Helfstein explained that he believes Netflix’s stock will be driven by subscriptions, not revenue, with current data on viewership being indicative of in-line or better-than-expected subscriptions.

The analyst added that he is less concerned for four reasons, such as the fact that it is early in the launch, if true, the $55 CPM is a bullish starting rate, advertisers want to move unspent funds to Q1, and the fact that Microsoft likely has minimum guarantees, so it is unlikely that Netflix will miss advertising revenue in short-term.

In addition, Helfstein said Netflix Top Ten data indicates more hit releases as of December 11 compared to the third quarter, while 3P data show Netflix churn remains well below the industry average.

However, on Tuesday, The Wall Street Journal reported that subscription analytics firm Antenna estimated that the new ad-supported plan launched by Netflix was the least popular tier in November, making up around 9% of new sign-ups in the US during the month.

According to TipRanks, out of 31 analysts polled, 15 have a Buy rating on Netflix, 13 have a Hold rating, and three have a Sell rating on the stock, with the average price target of $302.76, representing around a 5% upside from current levels.

Netflix closed Tuesday’s session almost flat at -0.04%, while it has risen 0.69% premarket Wednesday.