Analyst Matthew Harrigan emphasized that he thinks the pricing is “too optimistic” for a subscription that integrates advertisements that the company will soon launch, in the opinion of Netflix shareholders
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are expected to experience further declines in the share price. The analyst reiterated his sell recommendation on the streaming company, while giving a target price of $157 for Netflix shares, a 30% drop from the current price.
“Netflix has very high pricing, with unrealistic expectations in relation to the limited capabilities of advertising technology in a challenging market like streaming,” he wrote. Netflix shares are up 1% today. Since the beginning of the year it has fallen 64%, following subscription data that disappointed investors.
As a reminder, the company plans to launch a discounted subscription for customers, but which includes advertisements. This combination, may take Netflix on a new path after it seems as if the company has already maxed itself out. It will be able to profit both from new subscribers who will be exposed to Netflix due to the lowering of the cost, and from the revenues that will come from the advertisers who will pay Netflix.
Harrigan also referred to the prices that Netflix demands: “The price that Netflix demands is almost twice what Disney’s Hulu is asking and also twice the price of Amazon’s streaming service.” Although Netflix’s interface is better than the competition, he still believes that Netflix should not be more expensive.
In complete contrast to the analyst’s recommendation, in the last few hours Netflix announced that it expects that the ad service, in the third quarter of 2023 (somewhat distant) will accumulate 40 million views around the world. Following the announcement, the stock temporarily jumped 3%.
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