Stock Market News

Netflix Defended at JPMorgan, Analyst Says ‘Never Count Them Out’

2022.05.13 13:34

Netflix Defended at JPMorgan, Analyst Says 'Never Count Them Out'
Netflix (NFLX) Defended at JPMorgan, Analyst Says ‘Never Count Them Out’

JPMorgan) analyst Doug Anmuth reflected on the recent weakness seen in Netflix (NASDAQ:NFLX) stock.

Netflix trades over 70% lower YTD and roughly 75% from the record high. Anmuth reminds investors that “this is a 20% GAAP operating margin business that should still have positive FCF this year.”

Analysts are currently looking for $772 million in FCF for 2022, much higher than JPMorgan’s estimate of $500 million.

“We’ve seen NFLX go through tough times in the past—2007/2008 w/Blockbuster & 2011/2012 post Qwikster—among others. We’d never count them out,” Anmuth told clients in a note.

In the meantime, he shared 3 major concerns about Netflix that are coming up in conversations with investors.

  1. Lack of clarity on timing & the range of outcomes around account sharing efforts & advertising;
  2. Lack of visibility on 2H22 subscribers & limited catalysts near term;
  3. Many still don’t understand how NFLX flipped from interpreting recent soft subscriber numbers as pandemic hangover to a function of competition & higher penetration due to account sharing.

Anmuth especially paid close attention to the first subject.

“We believe an ad-supported tier is somewhat more complicated as NFLX does not have advertising in its DNA. But it does have several hundred million viewers, & the average member HH still likely spends 2+ hours/day on the platform. NFLX can partner with 3rd-parties while also building out a 1st-party sales team for bigger brand marketers. What’s less understood is how many existing subscribers across Basic/Standard/Premium would trade down to an ad-supported tier,” the analyst added.

By Senad Karaahmetovic

 

Source

Related Articles

Leave a Reply

Back to top button