Netflix Inc (NASDAQ:NFLX) seems to be focusing on finding ways to accelerate subscriber additions and “defer the ARPU story,” according to BofA Securities.
The Netflix Analyst: Nat Schindler maintained an Underperform rating on Netflix while reducing the price target from $300 to $240.
The Netflix Takeaways: While the company initially drove new subscriber adds by offering original content, “the new wave of acceleration will likely be driven by pricing,” Schindler said in a Wednesday note.
The rollout of Netflix’s ad-supported tier in the fourth quarter of 2022 came as a surprise but could “help address some of the lower and middle-income bands that are more cost sensitive in addition to potentially pulling in more of the broader streaming wallet, rather than remaining the sole premium platform consumers can’t live without,” the analyst said.
“However, it also presents damaging prospects to revenue mix, with lower-income customers in developed markets perhaps opting instead to exchange their existing subscriptions for the ad tier,” he added.
NFLX Price Action: Shares of Netflix were down 1.95% at $174.19 late Wednesday morning.
