Various media giants have been under focus for the year to come; Netflix, Amazon Video, and Disney+ have all been subject to scrupulous analysis as pandemic streaming trends give way to traditional viewing habits.
Last week, an analyst from JPMorgan announced that Disney+ was the firm’s favorite media pick on estimations for a return in growing subscriber numbers towards the end of 2022. Analysts at Guggenheim shed a different angle, suggesting that the pace of profit growth is somewhat of an alarm bell. Netflix (NASDAQ: NFLX) has seen a little less coverage, but as the largest streaming platform – it’s worth looking at what the company’s recent pricing changes might mean for investors.
Well, JPMorgan analyst Doug Anmuth stepped up today to maintain his ‘Overweight’ rating of the stock, with a price target of $725. The coverage follows Netflix’s decision on Friday to amp-up subscriber pricing; which in turn could drive an incremental $1B+ of revenue in 2022. Investors might be hesitant, bearing in mind each price increase will drive away subscribers. However, increased “friction” is bearable for the incremental revenue that will drive further content spending, and most likely, attract subscribers back again.
So, should investors look to Netflix in the year to come? Realistically, the company’s increase in revenue should outshine a slight curve in subscribers; but as long as content spending moves in line with revenue increase – the company’s overall model remains attractive.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.