Netflix Stock Had Its Worst Day in Nearly 2 Decades. What Wall Street Is Saying

Apr 20, 2022

Netflix Stock Had Its Worst Day in Nearly 2 Decades. Wall Street Is Saying

Netflix stock dropped dramatically on Wednesday after the streaming company reported poor first-quarter results, causing a flurry of price target reductions and analyst criticism.

Netflix lost 200,000 customers in the third quarter, falling far short of its target of 2.5 million net additions. The streaming platform would have gained 500,000 customers if it had not lost 700,000 Russian subscribers. The business expects to lose 2 million net users in the June quarter.

Netflix stock slumped 35.1% to $223.69 on Wednesday, its lowest day since October 2004, when it lost 41%. So far, in 2022, the stock has lost 63%.

"The loss in subscribers, along with projection for an even bigger decline, is likely to keep optimists away unless there is some sign that the number of subscribers will rise again," Wedbush analyst Michael Pachter said.

Pachter kept his Neutral rating on the company but reduced his price target from $342 to $280. Due to slower subscriber growth, the price target represents a more modest growth of $600 million per year, compared to his previous expectation of $1 billion yearly growth.

Netflix cited a number of reasons for its poor results, including macroeconomic headwinds, the Ukraine crisis, account-sharing, increasing competition and market saturation in North America and Canada.

"It amounts to a 1% decline in subscriptions over a two-quarter period, but it illustrates one of the trends we've been pointing out: penetration is a headwind in established markets, and content does not drive the same engagement in core markets or in new markets," KeyBanc Capital Markets analyst Justin Patterson commented. Patterson rates the company as Sector Weight but does not have a price target.

Netflix intends to keep investing in content and monetize account sharing to address weak growth. According to the corporation, in addition to the 222 million paying households, there are 100 million utilizing shared accounts.

In a research note, Benchmark analyst Matthew Harrigan expressed skepticism that tightening down on password sharing would be a growth game-changer, notably as it probably annihilates full-ride subscriber growth. He predicted that tightening down on passwords may result in a little less than a 6% increase in revenue, without including the negative impact on cash-strapped clients canceling subscriptions in an inflationary economy. Harrigan rates the company as a Hold.

https://liquidity-provider.com/app/uploads/2022/04/unnamed-9.png

CEO Reed Hastings stated that management discussed launching ad-supported lower-priced membership options in the coming years.

Given the success of competitors such as Hulu, an ad-supported membership tier might benefit the company, as Raymond James analyst Andrew Marok noted.

In contrast, Harrigan was less certain, saying he didn't think "that Netflix's scripted shows, especially when viewed in binge-mode, are conducive to toleration of advertising."

Marok is worried about the persistent instability around consumer demands and the impact this may have on revenue growth in the near term. The analyst kept a Market Perform rating on the company but reduced his yearly revenue estimates for 2022 and 2023 by 3.6% and 5.5%, respectively. He has no price target for the stock.

Doug Anmuth of J.P. Morgan was similarly concerned about poor subscriber numbers and their effect on potential earnings. According to the analyst, all of Netflix's challenges might reduce revenue growth to approximately 10% in 2022, with pressures lasting far beyond 2023. Anmuth lowered the stock from Overweight to Neutral and reduced his price target by nearly 50% to $300 from $605.

Following Wednesday's results announcement, market opinion on the stock deteriorated dramatically. Only 33% of the 45 analysts covering the stock surveyed by FactSet ranked it Buy or Overweight, while 58% ranked it Hold, and 9% rated it Sell. By the end of March, 55% of analysts ranked the company as a Buy.

Piper Sandler also lowered the rating from Overweight to Neutral, reducing the target price to $293 from $562. According to analyst Thomas Champion, while password-sharing and ad-supported tiers "look intriguing," integration is probably more than two years away.

Even several analysts who maintained their Buy reviews were more skeptical about the stock. Guggenheim Partners analyst Michael Morris reduced his price target from $555 to $350.

"While management anticipates a 'creative excellence' and renewed revenue growth acceleration driven by new monetization over the next 18 months, we have significantly downgraded our membership and financial growth projections over the next decade, significantly lowering our target valuation," Morris stated on Wednesday.

William Blair kept his Outperform rating, citing a more optimistic stance on the corporation's development strategy. Analyst Ralph Schackart feels Netflix's self-funded business model is underappreciated and that the firm may find a way to re-energize growth.

"We continue to be bullish on Netflix given its strong, exclusive content portfolio and broader digital streaming expansion," he said in a research note. William Blair does not set a target price for Netflix.

Subscribe Our Newsletter

Apple to Keep iPhone Production Flat as Market Grows Tougher
Apple to Keep iPhone Production Flat as Market Grows Tougher

Additionally, Apple will strive to impress consumers with a more advanced model than last year's one. New screen sizes, including satellite-based text messaging, are expected to be offered in the upcoming iPhone 14 handsets. The iPhone 13 was viewed by consumers as a minor upgrade.

Companies
Brands_Face_Serious issues

Milena

Brands Face Serious Issues With The New Twitter Verification

A crowd of impostors caused the social network to briefly stop its delivery of verified badges for $8 monthly subscribers.

Companies
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Nato

How to Find the Best Paying Jobs in Real Estate Investment Trust
Considering a career in real estate? Look beyond traditional paths! Explore the best paying jobs in Real Estate Investment Trust.

discover
Understanding Fibonacci Retracement: A Key Tool for Traders

Constantine

What is Fibonacci Retracement, and How to Use it in Trading?

Discover the essentials of Fibonacci retracement, a popular technical analysis tool used by traders to identify potential reversal levels in financial markets.

Trading
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Triple Net Lease

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Alexander

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Hazem

    Megaphone Pattern​: What Is It? How to Use It In Trading

    Megaphone Pattern​: How to Read & Trade with It

    Constantine

    Top 5 Liquidity Bridge Providers in DeFi

    Top 5 Liquidity Bridge Providers in DeFi

    Hazem

    Max Funded IUL Explained: Is It a Legitimate Financial Strategy?

    Understanding Max Funded IUL

    Alexander

    Tax Refund Timeline: When Will You Get Your Tax Return?

    how long does it take for tax refund

    Constantine

    Crypto Liquidity — What is it, and How to Measure It?

    What is Crypto Liquidity and How to Measure It?

    Constantine

    AI in Finance: A Game-Changing Trend Shaping the Industry

    AI in Finance

    Hazem

    5 Ways to Make Money with ChatGPT and Build Your Wealth

    Make Money with ChatGPT

    Constantine

    Top AI Companies to Invest in April 2025

    Top AI Companies to Invest in March 2025

    DeepSeek vs ChatGPT: Which AI Technology is Better For You?

    DeepSeek vs ChatGPT: Feature-by-Feature AI Tool Comparison

    Constantine

    Top Solana Meme Coins in 2025: Best Presales and Where to Buy

    Solana Meme Coins 2025

    Alexander

    How Renewable Energy Stocks Can Supercharge Your Portfolio

    How Renewable Energy Stocks Supercharge Your Portfolio

    SEC Crypto Regulations: What Financial Advisors Need to Know

    SEC Crypto Regulations: Insights for Financial Advisors

    Hazem

    The Cup and Handle Pattern – How Trade Using This Bullish Indicator?

    Cup and Handle Pattern – How to Predict Price Breakouts?
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.