Netflix is Positioned for Profitability Boost with Ad-Supported Tier and Password-Sharing Crackdown: Analyst
Portfolio Pulse from Anusuya Lahiri
Wedbush analyst Michael Pachter reiterated Netflix Inc (NASDAQ: NFLX) with an Outperform and a $475 price target. Pachter believes that Netflix's ad-supported tier and password-sharing crackdown will boost profitability and cash generation. He also expects the company's free cash flow (FCF) to grow steadily, particularly if average revenue per user (ARPU) rises due to the password-sharing crackdown and higher cost per thousand impressions (CPMs) from the ad-tier. Despite a recent dip in NFLX shares, Pachter maintains his Q2 estimates for revenue of $8.242 billion.
July 14, 2023 | 7:09 pm
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Netflix's ad-supported tier and password-sharing crackdown are expected to boost profitability and cash generation. The company's FCF is expected to grow steadily, particularly if ARPU rises due to the password-sharing crackdown and higher CPMs from the ad-tier.
The analyst's positive outlook on Netflix is based on the company's strategies to increase profitability and cash generation. The introduction of an ad-supported tier and a crackdown on password sharing are expected to increase ARPU and reduce churn, which would positively impact the company's financial performance. This could lead to a potential increase in the company's stock price.
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