Netflix saw a remarkable 16% surge in its stock on Thursday, following a highly promising quarterly earnings report. The streaming giant celebrated numerous achievements, with a significant 70% increase in its new ad-supported subscription tier.
In the third quarter, Netflix made a noteworthy addition of 8.76 million subscribers, surpassing Wall Street’s expectations of 5.49 million. This marks the most substantial subscriber increase since the second quarter of 2020, when the surge was attributed to stay-at-home measures during the Covid-19 pandemic.
The latest report solidifies Netflix’s return to growth after experiencing its first net subscriber loss in over a decade back in April 2022, raising concerns about market saturation. This turnaround has elicited enthusiasm from various analysts (Netflix News).
Morgan Stanley analysts have upgraded the stock to an overweight rating and raised the price target to $475. In a Thursday analyst note, they stated, “We have confidence that Netflix will fulfill its objectives set a year ago, accelerate revenue growth into double digits, and expand margins.”
Matthew Thornton, an analyst at Truist, expressed in a Thursday note that the ongoing crackdown on password sharing could continue to fuel subscriber growth into the upcoming year. The firm has also upgraded Netflix to a buy rating and increased the price target from $430 to $465 (Netflix News).
Thornton noted, “Our upgrade to Buy is based on our belief in the continued benefits of password sharing (through 2024), the long-term potential of advertising, and the addition of $10 billion in share buybacks. Furthermore, with three major upcoming releases by 2025 (Squid Game, Wednesday, Stranger Things) and the potential for video games, Netflix has numerous growth opportunities at its disposal.”
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