Netflix shares slide as Goldman downgrades on grim economic picture -Breaking
(Reuters) – Netflix Inc (NASDAQ) shares dropped 5% Friday following Goldman Sachs’ (NYSE:), downgrading the streaming company. The firm is currently facing a slowdown of consumer spending as well as stiff competition from Amazon.com and Walt Disney World (NASDAQ). Disney (NYSE:) Co.
In April, the streaming giant lost its subscribers. This is a warning sign that trouble lies ahead for the entertainment industry. Rising prices for food and fuel left consumers with very little money to spend on entertainment.
Netflix was also affected by the decision to suspend its Russian services after the Ukraine invasion.
Goldman downgraded shares to “sell”, from “neutral”, and lowered the price target to $186, from $265. According to Refinitiv data it is the lowest PT of analysts that cover the stock.
All streaming services will be affected by the cost of living crisis. “The market is saturated with streaming media providers chasing too few services,” Paolo Pescatore from PP Foresight said.
Given the nature of streaming services, expect to experience high levels of churn. Expect some users to shift more toward a discounted bundle yearly to attract them and to build their loyalty.
After the popularity of Disney+ and HBO Max, Netflix has already begun to look into a lower-cost subscription with advertising.
Netflix is covered by 48 equity analysts. Twelve rate it “buy” or better, 31 give it a “hold”, and five suggest a “strong sell” or “strong buy”. The stock’s median target price is $297.50.