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Here’s Why Netflix Stock Could Rebound In The Third Quarter, Despite Analysts Slashing Forecasts

Crucial quote: CreditSights analysts Hunter Martin and Jordan Chalfin, who admit future competition is a looming risk, wrote: “Despite our Underperform recommendation, it is important to highlight that we are not members of the ‘Debtflix’ permabear club.”

Topline: With its third-quarter earnings due next week, Netflix looks set to prove doubters wrong after a rough few months by showing Wall Street that it can maintain growth and not lose footing in the streaming wars.

  • Once a high-flying tech stock that helped drive the bull market higher, Netflix shares, which currently trade near $280, have been flat in 2019—down 0.05%.
  • The stock has lost over 30% since mid-July, when investors dumped shares following a disappointing second-quarter earnings report that showed a decline in U.S. subscriptions, the first such drop since 2011.
  • While revenue grew 26% in the latest quarter, that showed a downward trend compared with the 40% growth posted a year earlier.
  • The company’s slowing revenue and subscription growth is a sign that the streaming wars are heating up: Netflix CEO Reed Hastings admitted as much last month, warning of increasingly “tough competition” coming from Apple and Disney.
  • Disney+ and Apple TV+ are both priced cheaper than Netflix and will continue to compete for market share.
  • Netflix shares rose almost 5% on Thursday, in part thanks to reiterated confidence from Goldman Sachs analysts, who said that it is unlikely to be replaced as the “primary streaming choice” for consumers.

Further reading: Wall Street analysts are generally positive on Netflix’s long-term prospects: The stock has 31 “buy” ratings, ten “hold” ratings and four “sell” ratings, according to Bloomberg data.

  • UBS analyst Eric Sheridan recently lowered his price target to $370 from $420 per share, while still maintaining a “buy” rating. While he predicts the short term to “remain volatile,” citing weak demand in markets like Brazil and the U.K., Sheridan sees solid growth in the long term.
  • Goldman Sachs analyst Heath Terry also lowered his price target, to $360 per share, but reiterated Netflix’s upside potential thanks to “a stronger seasonal period for subscriber growth” and a bolstered content lineup for the rest of the year.
  • Piper Jaffray analyst Michael Olson puts Netflix’s price target at $440 per share, similarly citing a “more engaging content slate” in the third quarter. Trailer views for Netflix originals are up 17% from the previous quarter, he points out, thanks to the return of more popular series, such as Season 3 of Stranger Things.
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Crucial quote: CreditSights analysts Hunter Martin and Jordan Chalfin, who admit future competition is a looming risk, wrote: “Despite our Underperform recommendation, it is important to highlight that we are not members of the ‘Debtflix’ permabear club.”

What to watch for: The company will report third-quarter earnings on October 16.

What to watch for: The company will report third-quarter earnings on October 16.

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I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I’ve reported at Money Magazine, The Villager NYC, and The East Hampton Star. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com

Source: Here’s Why Netflix Stock Could Rebound In The Third Quarter, Despite Analysts Slashing Forecasts

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The world’s most popular streaming service Netflix has suffered a rather dramatic drop in its stock prices. Namely, the Netflix stock price lost has dropped a whopping 20% in just the past several weeks. So in this video we will offer a closer look at the Netflix stock analysis to help determine what you can expect the Netflix stock price to be like throughout the rest of 2019. What caused this significant Netflix stock crash had a lot to do with the service’s expectations regarding new subscribers. Instead of the estimated 5 million, last quarter only saw a mere 2.7 million new users, which understandably brought the Netflix stock down to what we are seeing today. Furthermore, competing service providers like Amazon Prime and HBO have put additional pressure on Netflix stock 2019 prices, contributing to their rapid drop since mid-July. However, that might very well soon change, as the management of Netflix anticipates another 7 million increase in its list of subscribers this next quarter. So, essentially, if you are asking yourself the fundamental question of “Is Netflix stock a buy right now?” the answer is: it could be if you believe subscriber growth is a certaintyYes, it most certainly is. But more importantly, in our video on Netflix stock analysis 2019 we will also cover all the angles of trading how to profit from Netflix over the course of the next few months. Watch our full Netflix stock analysis to 2020 for a comprehensive overview of all the most important Netflix stock news to be aware of, as well as the factors influencing Netflix stock prices at the moment. #Netflix #Stocks #Trading *** Explore trading and start investing with Capital.com. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.8% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

 

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