Netflix Inc (NFLX)

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Netflix Could Monetize 40M Borrowers By End Of 2024, Analysts See Over 25% Upside
By: Benzinga | April 25, 2024

Netflix NFLX continues to showcase robust performance in its first-quarter earnings report for 2024.

The streaming company is now on track to monetize about 40 million borrowers (i.e., people who do not live in the same household but share the same account).

In order to curb sharers/borrowers of an account outside a household, Netflix has restricted access to sharers beyond a household. The company also devised ways to make it easier for borrowers to transfer Netflix profiles into their own account.

The initiative ultimately means more paying accounts for Netflix.

With revenue surging to $9.37 billion, a 14.8% year-over-year increase, and earnings per share standing at $5.28, surpassing analyst estimates, Netflix demonstrates its resilience and ability to thrive in the ever-evolving media industry.

The company’s relentless pursuit of growth is evident in its addition of 9.33 million paid subscribers during the first quarter alone, bringing its total subscriber base to a staggering 269.60 million, marking a significant 16.0% increase from the previous year. Such impressive numbers underscore Netflix’s unparalleled position as a market leader in the streaming space.

Netflix stock is up 68.72% over the past year, 14.02% YTD.

Netflix Strategy Through The Lens Of JPMorgan

Moreover, insights from JPMorgan’s Video Streaming Survey shed light on Netflix’s strategy to further capitalize on its user base.

The survey reveals 44% of Netflix borrowers in the first quarter indicated their intention to either obtain their own subscription (38%) or become an additional member (6%). This data suggests that Netflix is effectively converting borrowers into paying customers, with projections estimating the potential monetization of approximately 40 million borrowers by the end of 2024.

Netflix’s initiatives to curb password sharing and introduce an ad-tier plan are notable developments aimed at enhancing monetization opportunities.

With 65% of Netflix users now restricted from sharing their accounts outside their households, and a growing awareness of the ad-tier option among subscribers, Netflix is diversifying its revenue streams and catering to varying consumer preferences.

Analysts See Over 25% Upside For Netflix Stock

In light of these developments, analysts remain bullish on Netflix’s future prospects.

Following the release of the Q1 earnings report, Evercore ISI Group, B of A Securities, and Oppenheimer issued their latest ratings, collectively assigning an average price target of $691.67 for Netflix stock. This projection implies a substantial 26.03% upside potential, reflecting analysts’ confidence in Netflix’s ability to capitalize on its expanding subscriber base and innovative monetization strategies.

As Netflix continues to invest in original content, expand its global footprint, and innovate its platform, the company remains poised for sustained growth and profitability.

With a compelling combination of subscriber growth, revenue diversification, and analyst optimism, Netflix stands at the forefront of the digital entertainment revolution, poised to deliver significant value to both investors and consumers alike.

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