![]() ![]() Also, check out on analysis on Netflix Revenue for more details on how Netflix revenues are trending.Global streaming giant Netflix kicked off Hollywood’s second-quarter earnings season with the typical bang after the market close on July 19, with the stock taking a hit in after hours, and Wall Street analysts updating their subscriber and financial models overnight. See our analysis Netflix Valuation: Expensive or Cheap for more details on what’s driving our price estimate for Netflix. Netflix is also looking to protect its operating margins in the interim, reiterating its 19% to 20% margin guidance for 2022, while noting that it intends to grow operating income at a quicker pace compared to revenues. This is a reasonable valuation in our view, given that despite the near-term headwinds, Netflix is looking to sustain double-digit revenue growth, via multiple avenues including through the lower-priced ad-supported plan and better monetization of shared Netflix accounts. Based on the current market price, Netflix stock trades at under 16x consensus 2023 EPS. There are a couple of good reasons to remain optimistic about Netflix stock at current levels. However, our price estimate still marks a meaningful premium over the market price of about $190 per share. We have reduced our price estimate for Netflix from $400 per share to about $320 per share, to account for the slower growth and competitive pressure the company is witnessing. Although streaming may be a relatively small-ticket spend in the context of household budgets, the impact on Netflix is likely to be more pronounced as the company’s plans are among the most expensive in the streaming space, with its standard plan priced at $15.50, compared to just about $8 for Disney+ and $5 for Apple TV+. Consumer confidence is also on the decline, as surging energy, grocery, and housing prices eat into household budgets. economy could be headed into a recession, as the Federal Reserve looks to hike interest rates at a more aggressive pace to tame surging inflation. There might be still more headwinds for Netflix stock. For perspective, Disney’s streaming operations added 7.9 million subscribers over the last quarter, while Paramount added close to 6 million subscribers across its streaming platforms over Q1. ![]() While the decline is partly due to the fact that people are relying less on streaming services for their entertainment needs following the easing of Covid-19 restrictions, Netflix’s competitors appear to be gaining ground at its expense driven by lower pricing and fresh content offering. Netflix lost around 200,000 subscribers over Q1, its first net loss of subscribers in about a decade, and projects another 2 million losses over Q2. There are several factors impacting Netflix NFLX. Netflix stock has declined by about 68% year-to-date and currently trades at just about $190 per share. Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images GERMANY - 4: In this photo illustration a Netflix logo seen displayed on a tablet. ![]()
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