No upside catalyst? Some investment banks still see some opportunities for Netflix

After the U.S. stock market on Thursday, January 20th, Eastern Time, Netflix (NASDAQ: NFLX) announced a poor fourth quarter 2021 earnings report. The market’s attitude is directly reflected in the stock price. As of press time, Netflix’s U.S. stock market fell 19.72% to $408.00 in pre-market trading on Friday.

Netflix price hike goes into effect for US, Canada - Polygon

According to the data, the company’s Q4 revenue increased by 16% year-on-year to $7.709 billion, compared with market expectations of $7.708 billion; net profit was $607 million, compared with market expectations of $374 million; diluted earnings per share were $1.33, compared with market expectations of $0.82.

However, operating profit plummeted by 34% year-on-year to US$632 million, mainly due to the pressure from the concentrated increase in cost amortization after the content-intensive release; the net increase of global users in the fourth quarter was 8.28 million, lower than the previous guidance of 8.5 million. What caused the stock to plummet was the company’s guidance for paying subscriber growth in the first quarter of 2022 of 2.5 million, significantly lower than the market’s forecast of 4.5-6 million.

After the earnings report, the following investment banks have different views on Netflix:

Piper Sandler analyst Thomas Champion maintained an “overweight” rating on Netflix and lowered his price target to $562 from $705.

Netflix vs. decision fatigue: How to solve the paradox of choice | by Sara  Laurent | UX Collective

Thomas Champion pointed out in a report that in the fourth quarter of 2021, Netflix will have a net increase of 8.28 million paid subscribers worldwide, which is lower than the bank’s forecast of 8.5 million; even more disappointing is that the company’s 2022 No. The global guidance for new paying users in the first quarter was only 2.5 million, far below market expectations of 4.5-6 million, which also caused the stock to plummet by more than 20% after the earnings report.

Thomas Champion said that while the number of new subscribers in the fourth quarter was disappointing, the company outperformed expectations in the U.S. and Canada; in addition, Netflix “remains attractive” globally. Analysts say the company is still in the early stages of transitioning the market from cable to streaming and has many opportunities in businesses such as gaming and merchandising.

KeyBanc analyst Justin Patterson downgraded Netflix to “wait and see” from “overweight.”

Netflix Will Cost More In 2022: The Service Updates Its Subscription Prices  - Somag News

Justin Patterson said the stock’s current price-to-earnings ratio is questionable given Netflix’s “decelerating subscription business.” Analysts said that Netflix’s current performance is “low double-digit growth”, and investors will be concerned that its new paying users will need to accelerate in the second half of the year to reach more than 20 million new paying users per year. The goal. Analysts see few catalysts for the stock.

Goldman Sachs analyst Eric Sheridan has a “neutral” rating on Netflix and a $580 price target.

Eric Sheridan said the market had reacted negatively to Netflix’s earnings report amid a “mixed” trajectory for user growth and profit margins in the fourth quarter. Analysts pointed out that the stock has been underperforming for the past 18 months, and the market is still debating how the company will grow in a normal post-pandemic scenario.