Netflix Inc (NASDAQ: NFLX) opened 10% up this morning after returning to subscriber growth in its fiscal Q3. But a JPMorgan analyst says that’s only a trailer of what’s to come.
On Wednesday, Doug Anmuth recommended buying Netflix stock that, he said, could climb to $330 a share – another 25% upside from here.
Netflix will launch its cheaper, ad-supported tier in early November. That and its commitment to cracking down on password sharing, the analyst wrote, paints a rather rosy picture of what the future holds for this streaming giant.
Coming out of 3Q earnings, we have increased conviction in Netflix’s ability to accelerate revenue growth with the help of advertising and monetisation of account sharing, expand operating margins, and increase free cash flow.
He cited the likes of “Stranger Things” and the “Dahmer” series to suggest the media company is recovering in terms of content consistency as well.
For the year, Netflix stock is still down more than 50%.
Management now sees 4.5 million new subscribers in the current financial quarter – about half a million more than the analysts’ call. (read more)
Netflix stock is trading just below its “200-Day MA” today. A break above the $282 level would clear way for a further rally. Discussing ads as a potential catalyst, Anmuth further noted:
We’re encouraged that Basic With Ads unit economics should be at least neutral across all markets, and significantly accretive in large ad markets such as the U.S., with even greater positive impact to revenue and operating profit.
Rival Disney+ is also launching an ad-supported subscription on December 8th. But it’ll cost $7.99 versus $6.99 for Netflix Inc.
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