Nasdaq NFLX NetFlix

You shouldn't expect most investments to make you lots of money right away. Most of the time, investing boils down to finding companies and stocks that can deliver wealth-building results in the long run.

It's a difficult time to be in the digital advertising business.

Netflix (NASDAQ:NFLX) impressed investors with its Q3 performance, delivering better-than-expected subscriber numbers. Further, it recently launched its basic ad-supported subscription plan to boost subscriber growth. These positive developments have led renowned hedge fund managers like Ray Dalio to increase their holdings in NFLX stock. However, in aggregate, hedge funds have been net sellers of Netflix stock. 

TipRanks’ Hedge Fund Trading Activity tool shows that hedge funds sold 42K NFLX stock last quarter. Sellers include Frank Sands of Sands Capital Management LLC and Catherine Wood of ARK Investment Management LLC, among others. 

While Netflix is taking measures to boost its paid subscriber growth, the above figures indicate that hedge fund managers remain skeptical. Additionally, a couple of analysts are doubtful about the ad-supported tier. 

Raising concern over the new low-priced subscription plan, Needham analyst Laura Martin said, “In fact, since the new ad-lite tier is 30% cheaper than NFLX’s current lowest-price $10/month tier in the US, even faster adoption by this tier could result in negative rev growth near-term.” 

Martin recommends a Hold on NFLX stock. She added, “We worry about rising churn and NFLX’s mix shift toward lower ARPU (average revenue per user) geographies.”

Meanwhile, Rosenblatt Securities analyst Barton Crockett sees Disney+ (NYSE:DIS) as a better ad play in 2023. He suggests a Hold on NFLX stock. 

What’s the Prediction for NFLX Stock?

On TipRanks, NFLX stock is a Moderate Buy based on 13 Buy, 14 Hold, and four Sell recommendations. These analysts’ average price target of $284.20 implies an upside of about 9.9%.

Bottom Line

Hedge funds are famous for generating market-beating returns. Thus, it is crucial to keep a close watch on their moves. As for NFLX, hedge funds selling its stock is a negative sign.

The company is facing increased competition, saturation in developed markets, and macro uncertainty that could hurt its growth. Also, NFLX scores a six out of 10 on TipRanks’ Smart Score system, indicating a Neutral outlook.

Disclosure 

Shares of video-streaming giant Netflix ( NASDAQ: NFLX ) are attempting to stage a comeback after crumbling under pressure this year. Netflix stock, which shed around 75% from peak to trough, is now up more than 55% from its bottom of around $163 per share. Though Netflix's lower-cost, ad-based tier is sure to be a game-changer for the firm as the streaming world enters new waters, I do think concerns regarding the cannibalization of the highest-price tier are overblown. In any case, analysts and investors are eager to get a first glimpse of how such a tier will impact financial results going into a potential recession year. Netflix's Move into Ads Could Help It Weather a Storm With a bit of subscriber bleed suffered this year, I think Netflix's decision to embrace ads could help stage a substantial recovery, even as macro storm clouds get uglier and move closer. At the end of the day, Netflix still has a robust content lineup and pipeline. Though competition has picked up in recent years, the streaming pioneer still has many hit television shows that are sure to be discussed around the water cooler. Whether it be  The Watcher or the latest season of  Love is Blind, there's always something on Netflix to binge. While a lack of competitiveness versus an increasingly-crowded streaming market may be partly to blame for Netflix's subscriber weakness, I think a financially-strapped consumer is more to blame. The ad-based tier could easily solve affordability issues for consumers who scrapped Netflix because they could no longer afford it due to economic circumstances or anticipation of more challenging times. Understandably, many premium subscribers may be enticed to downgrade their subscriptions. However, I think most of those who can afford the ad-free tier will stay put. Why? A few bucks a month to spare yourself from ads is a great value proposition. Though Netflix may limit ads relative to television channels, it really does get in the way of the immersion factor. As such, I do think concerns about cannibalization are greatly overblown. Netflix may be reluctant to get into ads, but it chose the perfect time, as inflation and recession cause a one-two combo of affordability issues and subscription cuts. I remain bullish on shares of Netflix, even as we enter a recession. Netflix Stock's New Valuation is Compelling After such a substantial valuation reset, shares of Netflix now trade at a comfortable 23.6x trailing earnings multiple. With an ad-based tier likely to mitigate recession headwinds, I think Netflix stock is a standout bargain of all names in the FAANG cohort. If anything, Netflix could see subscriber momentum pick up where it left off a few quarters ago. Additionally, a cheaper tier of the service could open doors to a new wave of cost-conscious consumers that may be enticed to upgrade their subscriptions once their financial circumstances improve alongside the economic cycle. The latest (third quarter) round of earnings results was encouraging. Subscriber gains marked the end of two straight quarterly losses. As management looks to test new "waters," I do think Netflix stock is more than capable of experiencing further multiple expansion from these levels. Now, Netflix may never trade at over 40x earnings again. However, I think a richer multiple could be in the cards if the firm can reignite top-line growth without hurting margins. Further, Netflix is serious about getting into the gaming business. Recently, the company bought Spry Fox, the developer behind Cozy Games. As Netflix continues to improve its mobile-game development capabilities, the company could draw in fans while enhancing the stickiness of its platform with minimal incremental expenditures. Indeed, relative to blockbuster hits, mobile games could help move the bottom line without excessive amounts of spend. For now, the gaming business has yet to pick up steam. With every studio deal, though, I think Netflix is closer to becoming a gaming powerhouse that could make Netflix the ultimate entertainment "bundle." Is NFLX Stock a Buy or Sell, According to Analysts? Turning to Wall Street, NFLX stock comes in as a Moderate Buy. Out of 31 analyst ratings, there are 13 Buys, 14 Holds, and four Sell recommendations. The average Netflix price target is $284.20, implying 11.6% upside potential. Analyst price targets range from a low of $162.00 per share to a high of $375.00 per share. Takeaway: NFLX Looks Attractive at Current Levels After the crash, Netflix stock has a fresh slate and an intriguing new strategic plan. Ad-based tiers and gaming are low-risk endeavors that could propel Netflix to much higher multiples, even in a recession. With a five-year beta of 1.28, Netflix stock has consistently been more volatile than the market. At these depths, I think Netflix stock could be less volatile, given lowered expectations and the recession resilience from its ad-based tier. Disclosure 

Shares of video-streaming giant Netflix (NASDAQ: NFLX) are attempting to stage a comeback after crumbling under pressure this year. Netflix stock, which shed around 75% from peak to trough, is now up more than 55% from its bottom of around $163 per share. Though Netflix's lower-cost, ad-based tier is sure to be a game-changer for the firm as the streaming world enters new waters, I do think concerns regarding the cannibalization of the highest-price tier are overblown.

In any case, analysts and investors are eager to get a first glimpse of how such a tier will impact financial results going into a potential recession year.

Netflix's Move into Ads Could Help It Weather a Storm

With a bit of subscriber bleed suffered this year, I think Netflix's decision to embrace ads could help stage a substantial recovery, even as macro storm clouds get uglier and move closer. At the end of the day, Netflix still has a robust content lineup and pipeline.

Though competition has picked up in recent years, the streaming pioneer still has many hit television shows that are sure to be discussed around the water cooler. Whether it be The Watcher or the latest season of Love is Blind, there's always something on Netflix to binge. While a lack of competitiveness versus an increasingly-crowded streaming market may be partly to blame for Netflix's subscriber weakness, I think a financially-strapped consumer is more to blame.

The ad-based tier could easily solve affordability issues for consumers who scrapped Netflix because they could no longer afford it due to economic circumstances or anticipation of more challenging times.

Understandably, many premium subscribers may be enticed to downgrade their subscriptions. However, I think most of those who can afford the ad-free tier will stay put. Why? A few bucks a month to spare yourself from ads is a great value proposition. Though Netflix may limit ads relative to television channels, it really does get in the way of the immersion factor. As such, I do think concerns about cannibalization are greatly overblown.

Netflix may be reluctant to get into ads, but it chose the perfect time, as inflation and recession cause a one-two combo of affordability issues and subscription cuts.

I remain bullish on shares of Netflix, even as we enter a recession.

Netflix Stock's New Valuation is Compelling

After such a substantial valuation reset, shares of Netflix now trade at a comfortable 23.6x trailing earnings multiple. With an ad-based tier likely to mitigate recession headwinds, I think Netflix stock is a standout bargain of all names in the FAANG cohort.

If anything, Netflix could see subscriber momentum pick up where it left off a few quarters ago. Additionally, a cheaper tier of the service could open doors to a new wave of cost-conscious consumers that may be enticed to upgrade their subscriptions once their financial circumstances improve alongside the economic cycle.

The latest (third quarter) round of earnings results was encouraging. Subscriber gains marked the end of two straight quarterly losses. As management looks to test new "waters," I do think Netflix stock is more than capable of experiencing further multiple expansion from these levels.

Now, Netflix may never trade at over 40x earnings again. However, I think a richer multiple could be in the cards if the firm can reignite top-line growth without hurting margins.

Further, Netflix is serious about getting into the gaming business. Recently, the company bought Spry Fox, the developer behind Cozy Games. As Netflix continues to improve its mobile-game development capabilities, the company could draw in fans while enhancing the stickiness of its platform with minimal incremental expenditures.

Indeed, relative to blockbuster hits, mobile games could help move the bottom line without excessive amounts of spend. For now, the gaming business has yet to pick up steam. With every studio deal, though, I think Netflix is closer to becoming a gaming powerhouse that could make Netflix the ultimate entertainment "bundle."

Is NFLX Stock a Buy or Sell, According to Analysts?

Turning to Wall Street, NFLX stock comes in as a Moderate Buy. Out of 31 analyst ratings, there are 13 Buys, 14 Holds, and four Sell recommendations.

The average Netflix price target is $284.20, implying 11.6% upside potential. Analyst price targets range from a low of $162.00 per share to a high of $375.00 per share.

Takeaway: NFLX Looks Attractive at Current Levels

After the crash, Netflix stock has a fresh slate and an intriguing new strategic plan. Ad-based tiers and gaming are low-risk endeavors that could propel Netflix to much higher multiples, even in a recession.

With a five-year beta of 1.28, Netflix stock has consistently been more volatile than the market. At these depths, I think Netflix stock could be less volatile, given lowered expectations and the recession resilience from its ad-based tier.

Disclosure 

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Netflix (NFLX) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.

Netflix (NFLX) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.

Netflix ( NASDAQ:NFLX ) is reportedly interested in streaming live sports on its platform, as per a Wall Street Journal ( WSJ) report that cited people familiar with the matter. Live sports and other content, like news, could help the company expand its subscriber base. The streaming giant recently bid for the ATP tennis tour’s streaming rights for some European countries, including France and the U.K., but pulled back later. Netflix also contemplated bidding for other sporting events, including the U.K. rights to the Women’s Tennis Association and cycling competitions. The report added that Netflix executives have considered buying lower-profile leagues to avoid the expensive costs associated with the bidding of sports rights. Streaming Giants Turn to Live Sports to Boost Business Streaming giants are increasingly looking to gain access to sporting events to make their platforms attractive. For instance, Amazon's ( AMZN ) Prime Video has exclusive rights to the National Football League's (NFL) Thursday Night Football games. Earlier this year, Apple’s ( AAPL ) Apple TV+ marked its foray into live sports when it won the exclusive rights to telecast two Friday Night Baseball games each week in the U.S. and eight countries. Similarly, in April 2022, Comcast’s ( CMCSA ) NBCUniversal reached a deal with Major League Baseball to stream a weekly game (scheduled on Sunday mornings) on its Peacock streaming service. Is Netflix a Buy or Hold? In a recent research report, Needham analyst Laura Martin listed a number of actions that Netflix should take to improve its competitive positioning. These initiatives include the addition of an ad-driven streaming tier to maximize addressable market, the addition of sports and news content, bundling with other products to reduce churn, and the acquisition of an extensive film and TV content library. Martin has a Hold rating on NFLX stock.   Netflix scores a Moderate Buy consensus rating based on 13 Buys, 14 Holds, and four Sells. The average Netflix stock price prediction of $284.20 implies nearly 8% upside potential. Shares have declined over 56% year-to-date. Conclusion After losing subscribers for two consecutive quarters, Netflix added 2.41 million net subscribers in the third quarter. Live sports and other popular content could help Netflix retain existing subscribers and attract new ones to the platform. Disclosure

Netflix (NASDAQ:NFLX) is reportedly interested in streaming live sports on its platform, as per a Wall Street Journal (WSJ) report that cited people familiar with the matter. Live sports and other content, like news, could help the company expand its subscriber base.

The streaming giant recently bid for the ATP tennis tour’s streaming rights for some European countries, including France and the U.K., but pulled back later. Netflix also contemplated bidding for other sporting events, including the U.K. rights to the Women’s Tennis Association and cycling competitions.

The report added that Netflix executives have considered buying lower-profile leagues to avoid the expensive costs associated with the bidding of sports rights.

Streaming Giants Turn to Live Sports to Boost Business

Streaming giants are increasingly looking to gain access to sporting events to make their platforms attractive. For instance, Amazon's (AMZN) Prime Video has exclusive rights to the National Football League's (NFL) Thursday Night Football games.

Earlier this year, Apple’s (AAPL) Apple TV+ marked its foray into live sports when it won the exclusive rights to telecast two Friday Night Baseball games each week in the U.S. and eight countries. Similarly, in April 2022, Comcast’s (CMCSA) NBCUniversal reached a deal with Major League Baseball to stream a weekly game (scheduled on Sunday mornings) on its Peacock streaming service.

Is Netflix a Buy or Hold?

In a recent research report, Needham analyst Laura Martin listed a number of actions that Netflix should take to improve its competitive positioning.

These initiatives include the addition of an ad-driven streaming tier to maximize addressable market, the addition of sports and news content, bundling with other products to reduce churn, and the acquisition of an extensive film and TV content library. Martin has a Hold rating on NFLX stock.  

Netflix scores a Moderate Buy consensus rating based on 13 Buys, 14 Holds, and four Sells. The average Netflix stock price prediction of $284.20 implies nearly 8% upside potential. Shares have declined over 56% year-to-date.

Conclusion

After losing subscribers for two consecutive quarters, Netflix added 2.41 million net subscribers in the third quarter. Live sports and other popular content could help Netflix retain existing subscribers and attract new ones to the platform.

Disclosure

NEW YORK (Reuters Breakingviews) - Walt Disney boss Bob Chapek is knee-deep in the video-streaming money pit. The $182 billion entertainment empire reported on Tuesday that operating losses in the division housing its Disney+, ESPN+ and Hulu services ballooned

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Walt Disney Co said on Tuesday its marquee streaming service, Disney+, gained more subscribers than Wall Street had expected, but investment costs dragged quarterly earnings below analysts' targets.

Walt Disney Co said on Tuesday its marquee streaming service, Disney+, gained more subscribers than Wall Street had expected, but investment costs dragged quarterly earnings below analysts' targets.