Netflix shares Plummet 10% amid Disappointments-Budrigan ltd review
Budrigantrade.com - (NASDAQ) Netflix Inc. After Jefferies downgraded the stock from buy to hold, (NFLX) shares dropped another 10% on Monday.
Additionally, analyst Andrew Uerkwitz decreased Netflix's price target from $737 to $415 per share.
The streaming company's stock fell 21.7 percent last Friday as a result of lower subscriber growth guidance.
In a research note, the Jefferies analyst informed clients that their prior buy thesis was based on steady subscription growth, low churn, and international content advantage, which they believed would provide operating leverage as content spend stabilizes at approximately $21 billion.
"We are sure about being in the center innings of streaming entrance, however presently see it taking significantly longer adding vulnerability. "We believe Netflix is not moving quickly enough on the adjacency front," Uerkwitz stated.
He went on to say that the United States and Canada "may go ex-growth this year" and that the "best content slate we've seen is doing little to drive sub growth."
"May mean we could be entering a period of slowing content spend at Netflix and the broader industry," according to Netflix's guidance for the first quarter, as well as content consolidation and slower subscriber growth at some of its competitors.
"With low churn, unique scale advantages, and strong library of content, Netflix is in a position to significantly increase FCF (free cash flow) with minimal sub adds via pricing, smaller/stable content budgets, and potentially leveraging catalog," the analyst stated, despite his cautious assessment of Netflix's immediate dangers.
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