Netflix (NASDAQ: NFLX) has been a battleground stock between the Netflix bulls and bears. Its meteoric rise has elicited a heated discussion within the investor community from both sides of the divide.
Recent Earnings Report
Based on recent figures, it points to increased optimism as the next earnings call looms. In its most recent earnings report, the company reported an EPS of $3.29 for the quarter ending June 30. That was higher than the expected EPS of $2.86, a surprise of 15.15%. However, the report was a mixed bag as revenue was $8.19 billion, lower than the expected $8.29 billion. The June 30 EPS was a 2.81% increase year-over-year, which the bulls have pointed to as a positive sign. However, the bears point out that the 12-month EPS for the quarter ending June 30 was $9.29, a 16.53% decline year-over-year.
Netflix Bulls vs. Bears
The Netflix bulls argue the streaming giant’s content slate continues to grow, and subscriber growth remains solid. In its most recent fiscal Q2 report, the company reported 5.9 new subscribers, with over 1 million new subscribers in all of their regions globally. Additionally, the report pointed out that Netflix remained a leader in streaming engagement. It also points out that the streaming service had the top original streaming series in the US for 24 of the first 25 weeks of 2023 and the top-rated movie for 21 weeks.
On the other hand, the bears point out that Netflix’s cash burn rate remains a major issue. Additionally, there is growing competition from new entrants in the streaming space.
The bulls point to the company’s focus on growth. In its Q2 report, the company forecast revenue of $8.5 billion, a 7% increase on a year-over-year basis, which would be a slight increase for the 6% growth rate in Q2. The report concludes by stating that the company expects to grow its subscriber base by figures similar to Q2 2023 in fiscal Q3.
Netflix Stock Forecast
NFLX stock has taken investors on a wild ride in the past few years. At the height of the pandemic, the company’s shares were nearly 50% higher than the current level due to increased subscriptions and surprise hit shows during the lockdown.
While the company is no longer a darling of investors as it was in the early days, there is still broad optimism as it shifts its focus to growth.
Bullish analysts give Netflix Stock an optimistic price target of $600 from the current price of $366.51 as of October 12, 2023, 10:28 AM ET. The forecast is based on the streaming service’s underlying momentum and unique qualities. On the low end, the analysts forecast a price of $325, with an average price target of $468.38. The analysts also give NFLX shares a moderate buy rating.
The Netflix Bulls Could Be Vindicated
As laid out in its most recent earnings report, Netflix has certain unique strengths. However, certain factors need to be considered since it is a global company. The IMF has projected slower global economic growth for 2023-2024. However, all factors considered, Netflix is primed for a bull run.
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