A new band of Wall Street analysts rushed to cut price targets and ratings on Netflix in response to deeply disappointing results, though shares of the pioneering streaming service have been under pressure for months.
Shares of Netflix
tumbled around 29% in premarket trading on Wednesday, the morning after the company delivered a considerable slowdown in revenue growth and a surprise net loss of subscribers. While Netflix shed 200,000 subscribers in the first quarter, the company predicted it could lose 2 million more in the second quarter.
Read: Netflix eyes ad-supported tier and targets password-sharing as subscriber total shrinks, stock plunges
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Though a wave of analysts downgraded Netflix shares after a downbeat report three months back, more piled on after Tuesday’s earnings. UBS analysts warned that increased competition, macroeconomic pressures, and a saturated market could further impact Netflix’s ability to boost its subscriber count. They cut their rating on the shares to neutral from buy, and lowered their price target to $355 from $575 a share.
Pivotal Research analysts slapped a double downgrade on Netflix, cutting their rating on the shares to sell and taking a mixed view on some of the company’s recently discussed efforts meant to jolt momentum.
The analysts thought that Netflix could boost average revenue per user by cracking down on password sharing, though they warned that such a move could also cause “materially higher churn.” Additionally, the Pivotal team was unconvinced about the merits of a potential advertising tier on Netflix, writing that “it cheapens the brand and the product vs. the current great consumer experience and introduces ad volatility to results.”
The Pivotal analysts lowered their rating to sell from buy and slashed their price target by more than half, to $235 from $550.
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