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Netflix declines as analysts cut ‘full’ 2024 forecasts by

Netflix declines as analysts cut ‘full’ 2024 forecasts by | Author Senad Karahimetovic

Edited by Ambhini Aishwarya

Published on 13 October 2023 at 12:52

Shares of Netflix ( NASDAQ:NFLX ) fell more than 2% in early trading on Friday after Wolfe Research analysts downgraded the rating to Peer Performance from Outperform.

“The 2024 ARPU outlook looks full, while today’s net share payments lead to an overall lack of additions tomorrow,” they said in the downgrade note.

While Netflix is ​​expanding its share of global premium video revenues, analysts point out that growth forecasts for 2024-2025 are too optimistic.

“If future growth falls short, we doubt NFLX’s 50% P/E ratio and 70% EBITDA to the S&P will hold up.”

The previous bullish thesis was built on the expected transition from a land-grabbing phase to a more efficient phase, which aims to monetize existing viewership by addressing issues such as ad-supported video (AVOD) and password sharing among 100 million people around the world. Users.

“With reports indicating slow AVOD adoption, recent ARM shortages indicating lower trade, management indicating less margin expansion, and a lack of compelling 3P data on subsidiary growth, we believe the risk/reward for NFLX is balanced,” the analysts added.

Downgrade calling is also supported at 100-150 bps/year. Operating rate reductions. In ’24E+ and 200-300 bps/yr. to EBITDA.

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