UPDATED with final price. The Netflix stock, which has fallen over the past few months, went up on Thursday as analysts gave confidence to the prospects of the voting giants.
Stocks closed at $ 280.48, their highest level in three weeks and up nearly 5% for the day. After a disappointing second quarter earnings report in July, the stock has retreated and lost more than 10% of its value to date.
Netflix reports its third quarter financial results on October 16, with the numbers capturing a period that includes blockbusters as the third season of Stranger Things .
Goldman Sachs is still concerned about the company, although it cut its 12-month price target on the stock to $ 360 from $ 420. It expects the company to make its own estimate of 7 million more global subscribers. "Netflix & # 39; s incremental online subscriber increments have grown steadily despite significant competitive pressure," Goldman analyst Heath Terry wrote in a note to clients Thursday. "We continue to believe that the relative value (price divided by consumed content) of Netflix far exceeds any of the current or planned competitive offerings, making it unlikely that any of them will replace Netflix as the consumer's primary streaming choice."
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Goldman's note included a detailed chart (see below) describing the competing threats Netflix has faced consumer entertainment offerings lately decade – in addition to. The bar chart shows that since these new deals have hit the market, Netflix has only continued to acquire subscribers and raise prices in the United States
Terry said his reduced price targets were due to lower expectations for the next quarterly earnings report, as well as a larger contraction in internet companies' stock prices .
Competition in the streaming arena is a key variable when it comes to valuing the Netflix stock. The long-time streaming leader will face a new level of competition in the coming months. Disney and Apple launch subscription streaming feeds in November and WarnerMedia and NBCUniversal are preparing their own initiative for next spring. That these alternatives are popping up – and requesting the withdrawal from Netflix of popular licensed shows like Friends and Office – has excellent bears on Wall Street to say that Netflix is in a bind. The thought goes, a company with $ 14 billion in debt cannot continue to use the road to dominance.
And yet, the prevailing view of analysts on the company's shares is still secretive. Eric Sheridan, a UBS analyst who has long maintained a "buy" rating on Netflix shares, gave a earnings preview on Wednesday that forecasts a solid quarter.
"Although the short term is likely to remain unstable, we do not think much has changed about the long-term dynamics of Netflix & # 39; s business model," Sheridan wrote, "a flywheel with compound subscriber growth leading to scale as Content creation success continues to produce price strength and rising margin / free cash flow dynamics. "
Here is the Goldman Sachs chart: