Controversy over the release of “Cuties” Netflix Inc. (Nasdaq: NFLX) has led to some uncertainty around the churn and subscription numbers for the company.
Netflix Analyst: Bofa Securities analyst Knot Schindler maintains a buy rating on Netflix with a Net 575 price target.
Netflix Headwinds: Schindler cited several headwinds that could lead to Netflix shares.
Headwinds increased competition from platforms such as Disney + and Peacock; The influx of new subscribers in the first half of 2020; Live sports return; Return to movies; And the elevated churn from the “cuties.”
Netflix Churn, analyzing subscriber numbers: Schindler looked at data from ANTENNA and Google Trends to see how the Netflix churn plays out.
ANTENNA shows that the monthly rate in August was at 2.97%. This is up from 2.72% in July and 2.93% in August 2019.
Following the release of the controversial “Cuties”, the term “Cancel Netflix” has seen a huge spike and is by far the highest on Google Trends, with analysts saying it could hurt the September churn numbers.
He said the daily U.S. cancellation was five times higher than average in the short time since the release of “Cuties”.
This is significantly higher than the average 1.7x increase The Walt Disney Company (NYSE: DIS) Schindler says streaming platform Disney + has been released.
Data from CensorTower shows that Netflix’s mobile downloads are slowing down, the analyst said.
In the third quarter, downloads fell by 2% per year in the United States and 1% per year in international markets.
Schindler said third-quarter download figures were down 23% from a second.
“We see additional uncertainty in reversing guidance and investors expect the potential upside to be less than 1Q / 2Q.”
NFLX Price Action: Shares of Netflix fell 3.77% to $ 507.61 during Friday’s publication.
Photo courtesy of Netflix.
Latest ratings for NFLX
| Date | Company | Action | From | To |
|---|---|---|---|---|
| September 2020 | Jefferies | Maintains | Purchase | |
| September 2020 | Guggenheim | Maintains | Purchase | |
| September 2020 | Keybank | Enables coverage | Overweight |
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