- Benchmark analyst Matthew Harrigan reiterated a Sell on Netflix Inc (NASDAQ:NFLX) and lowered the price target to $470 from the prior $485 (21.4% downside).
- The analyst believes Netflix is “more of a media name than a moated category killer tech entrant.” The analyst remains on the Sell-side as “creative execution remains erratic.”
- It is unclear how event projects like Red Notice, Netflix’s most-viewed despite mediocre reviews, enhance member growth versus original series or evergreen IP like Seinfeld.
- Valuation is vulnerable to inflationary expectations given limited immediate free cash flow and possible consumer intractability in tolerating price increases.
- All else equal, an increase in anchored inflation expectations to 4% from 2% as suggested by former Treasury Secretary Larry Summers would lower the 2022 NFLX fair valuation to $390, the analyst said.
- The international Forex market is also creating a headwind for Netflix, with the analyst seeing a 3.5% to 5% hit to 2022 results not reflected in the consensus.
- The analyst also took note of the research conducted by the UK creative research firm Enders Analysis, which showed that European SVOD penetration would peak below US levels.
- Earlier this week, Netflix slashed its pricing for India to 199 rupees ($2.62) monthly for its basic plan.
- Price Action: NFLX shares traded lower by 0.93% at $592.43 in the market session on the last check Wednesday.
