Netflix (NASDAQ:NFLX) reported worse-than-expected results and guidance yesterday to send its shares over 27% lower in after-hours trading.
At least 9 analysts downgraded Netflix stock, including several rating cuts by two notches.
However, Needham & Company analyst Laura Martin moved to upgrade Netflix stock to Hold from Underperform after the company indicated it plans to introduce a low-priced subscription option in the next 18-36 months.
“NFLX stated that it now believes it is a 'show me' story, not a 'tell me' story. We agree. NFLX created the streaming category (kudos!) but it has been slow to adopt streaming innovations of late entrants, which undermines their first-mover advantage, we believe,” Martin said in a client note.
Martin also listed 6 key concerns in 2022: 1) slowing y/y rev growth, and weak 2Q22 guidance; 2) rising sub churn; 3) employee churn; 4) lower op margin guidance to flat, vs up 300 bp/year; 5) US saturation; and, 6) entertainment focus is not enough.
By Senad Karaahmetovic