Oppenheimer analysts believe Netflix, Inc. (NASDAQ:NFLX) shares, being down 22% post-Q4 highs around higher churn from enforcing password sharing and slower ad launch, are attractive at current levels.

However, the analysts believe nothing has changed from their original thesis: advertising increases the TAM, content competition is easing, and paid account sharing will be a long-term tailwind.

While enforcement of account sharing should drive material upside to revenue long term, investors look at this as a headwind to the stock. Depending on the recapture rate, the analysts see a $2–8 billion revenue upside.

Q1 engagement is trending weaker than the previous two quarters but in line with the company's previous 6-quarter average. Meanwhile, competitors appear more focused on profitability, suggesting we are past peak competition, as evidenced by the company's second-highest streaming net adds in Q4, recent increased content spend efficiency and Q4 management comments around lower churn. The analysts also believe account sharing will be meaningfully accretive to EBITDA.

Super Group Reports Q4 Results, Provides Guidance

Published at 2023-03-16 17:38:00

By Davit Kirakosyan

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