Netflix Stock (NASDAQ:NFLX)
J.P. Morgan is the latest research group to sing Netflix’s (NASDAQ:NFLX) praises after the price dropped over the previous month and recommends purchasing Netflix stock on dips.
From its 2023 highs in late January, Netflix’s (NASDAQ:NFLX) stock has been down 18%. After a reasonably decent fourth-quarter earnings release, it has dropped 4% versus a flat wider market.
Analyst Doug Anmuth pointed out that this is happening at the same time as the “noise” around Netflix’s “password crackdown” (the adoption of its Pay Sharing plan in select foreign regions – Canada, New Zealand, Spain, and Portugal).
According to the numbers, “volatility has risen across all four Paid Sharing markets since the deployment, but we suspect headlines may also be hurting additional regions where Paid Sharing has not yet been carried out, including the U.S.,” he said.
Nevertheless, with just a few days remaining in the first quarter, there is increasing fear that early friction might delay the launch, pushing it further into Q2 (a traditionally poor quarter anyway) or far into the future.
One positive side effect of a more deliberate sharing deployment is that Q1 net subscriber additions may exceed expectations; J.P. Morgan forecasts 1.5M adds, slightly below consensus for 2.3M.
Whatever the precise timeline, Anmuth predicts that Netflix will keep working on weaning its customers off of joint accounts by making subtle adjustments to its policies and customer service. We anticipate that NFLX will produce more money via Additional Members and new standalone accounts, particularly when Paid Sharing is coupled with the low-priced Basic With Advertising tier.
He claims that the company is aware of the distractions in the near future and thinks it will be simpler to acquire Netflix stock for the next 12 months than buy shares for the next 3 to 4 months.
Despite this, he continues to be optimistic, giving the stock an Overweight rating because of the company’s rapidly increasing revenues (thanks to strong content, ads, and paid sharing) and its rapidly widening operating margins as revenues accelerate thanks to cost controls. It’s rapidly widening free cash flow on improving profits.
He expects it to rise to $390, which is a gain of 29%.
Previously, Netflix said it would be expanding into the gaming industry, announcing that it would release a new game each month this year, with more than 100 titles planned for release.
Featured Image: Pexels @ cottonbro studio
Author Shariq Khan 
