Bonner maintains a Hold rating on Netflix’s stock heading into the company’s earnings report next week as the company’s recent price increase to its two highest tiered memberships “underscores its strong operational momentum.”
In fact, Netflix’s price increase could result in many subscribers becoming disappointed and parting ways with their membership although this could prove to be transitory over the longer term. After all, the company is mostly judged on its subscriber acquisition metrics, which may be a near-term negative, especially when factoring in management’s upward revised guidance of free cash flow burn in 2017 from $2 billion to $2.0 billion–$2.5 billion.
Also, Netflix hasn’t announced any plans for similar price increases in its international business, which represents its “driver of subscription growth.”
Meanwhile, Netflix is seeing more competition as rivals are looking to take advantage of the growth in the overall streaming video industry, including those with very deep pockets. Granted, Netflix remains much less expensive than other streaming video providers like DISH Network Corp (NASDAQ: DISH)’s Sling at $20 to $45 per month and Amazon.com, Inc. (NASDAQ: AMZN)’s Amazon Prime Video requires an upfront $99 per year payment.
Latest Ratings for NFLX
|Oct 2017||Loop Capital||Maintains||Buy|
|Sep 2017||Wells Fargo||Initiates Coverage On||Outperform|
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