Quick Look:
- Analyst Optimism: Morgan Stanley’s Benjamin Swinburne forecasts a 30% upside for Netflix, targeting a price of $850.
- Subscriber Growth: Netflix aims for over 30 million net subscriber additions this year, driven by advertising and anti-password sharing measures.
- Advertising Expansion: The ad-supported tier reached 40 million global users, up significantly from 15 million in November.
Netflix (NFLX) stock surged 2%, fuelled by a wave of optimistic analyst predictions highlighting the streaming giant’s promising growth trajectory. Notable among these was Morgan Stanley’s Benjamin Swinburne, who provided a detailed analysis underscoring Netflix’s potential, suggesting a significant upside for the stock.
Morgan Stanley’s Optimistic Outlook
Morgan Stanley analyst Benjamin Swinburne expressed a notably positive outlook on Netflix, forecasting a 30% upside from its current trading levels. In his recent client note, Swinburne emphasised Netflix’s dual role as both a driver and a beneficiary of industry disruption. He maintained an “Outperform” rating on the stock, with a bullish target price of $850, contingent on Netflix achieving over 30 million net subscriber additions this year. This projection aligns with Netflix’s ambitious strategies, including expanding its advertising tier and stringent measures to curb password-sharing.
Swinburne’s analysis anticipates continued double-digit revenue growth into the next year, propelled by these initiatives. He highlighted that achieving mid-teens revenue growth in 2025 would necessitate a substantial scaling of Netflix’s advertising business. Nevertheless, he expressed confidence in the company’s ability to meet this target, noting, “We believe it is putting the pieces in place to deliver on this opportunity.”
Expanding Advertising and Live Content
Netflix has demonstrated significant progress in its advertising business, reporting 40 million monthly monthly active users for its ad-supported tier. This figure represents a substantial increase from the 15 million users reported in November and a staggering 35 million user increase year-over-year. This momentum is further bolstered by Netflix’s foray into live events and sports, enhancing its content offering and audience engagement.
A notable highlight is Netflix’s acquisition of streaming rights for two NFL games set to air on Christmas Day as part of a three-season deal. Additionally, the company secured a 10-year agreement with TKO Group Holdings’ WWE, bringing WWE’s flagship program, “Raw” to the streaming platform from 2025. Upcoming live events, such as a wrestling match between Jake Paul and Mike Tyson, are also expected to attract significant viewership and drive subscription growth.
Positive Market Response and Analyst Endorsements
The market’s response to Netflix’s strategic moves has been overwhelmingly positive, with shares climbing approximately 35% since the beginning of the year. Swinburne attributed this appreciation primarily to Netflix’s strong operational execution rather than broader industry trends. Adding to this viewpoint, Evercore ISI analyst Mark Mahaney reaffirmed his “Buy” recommendation on Netflix shares and increased his price target from $650 to $700. Positive survey results and the possibility of further growth through new and live content offerings support his optimism.
Evercore ISI conducted a survey of 1,300 Netflix users in the U.S. It found that fewer people plan to cancel their subscriptions. Now, only 35% of users say they are “extremely likely” or “very likely” to cancel within the next three months. This is a 3% decrease from the last quarter. Furthermore, Netflix’s market penetration remains robust at 57%, outpacing Amazon’
