Netflix Stock Soars 6.9% as Subscriber Growth Surpasses Target, Company Announces Changes in leadership
Company plans to focus on high-quality content and monetization strategies to drive subscriber growth and generate strong free cash flow
Netflix's (US:NFLX) shares rose 6.9% on Friday as investors bought on news that the reaming giant added 7.7 million new subscribers in the fourth quarter surpassing a 4.5 million target.
The company plans to address password sharing and launch a new ad-supported subscription option to support the gains.
The new option allows viewers to stream Netflix free with advertisements, and it hopes it will reduce password sharing while creating a new revenue stream. Furthermore, the company also announced the appointment of Bela Bajaria as the chief content officer and Scott Stuber as chairman of Netflix Film, suggesting that the company is placing more emphasis on creating and acquiring high-quality content to drive subscriber growth and retain customers.
Also on Thursday, co-founder Reed Hastings stepped down as co-CEO and would serve as the executive chairman. Former COO, Greg Peters, is taking over as co-CEO.
The company told investors and analysts that it is past the most cash-intensive phase of building its business and is now focused on generating strong free cash flow. It is worth noting that the competition in the streaming market is fierce, and these companies will also have to adapt and innovate to stay relevant and grow their subscriber base. H
Hastings's move to executive chairman suggests a shift in focus from day-to-day operations to a long-term strategy and vision for the company. Furthermore, Peters's takeover as co-CEO could indicate the company is emphasizing monetization strategies, such as the ad-supported tier, to generate strong free cash flow.
The moves look well received.
According to Fintel Research, Netflix Inc. (NFLX) has received a mix of analyst recommendations and price targets. As of Jan. 20, 2023, the stock has an estimated share price of $313.17, a decrease of 0.64% from its current price. The projected quarterly revenue for the company by Dec. 31, 2024, is $9,763 million, an increase of 24.34%. The company's projected quarterly earnings per share by Dec. 31, 2024, is $2.19, an increase of 2.07%.
Analysts have varied opinions on the shares, according to Fintel data.
On Jan. 19, Morgan Stanley maintained its equal-weight recommendation for the stock, while Wedbush and UBS maintained their outperform and neutral recommendations, respectively. Truist Securities maintained its hold recommendation, while Oppenheimer maintained its outperform recommendation. Jefferies upgraded its recommendation from hold to buy, while Goldman Sachs maintained its sell recommendation.