Netflix stock implodes and has crashed 21%
Netflix stock implodes and has crashed 21%, dropping below $400 after trading at $510 yesterday and at $700 two months ago, after the streaming-video company’s first-quarter subscriber outlook missed estimates, sparking panic over slowing growth. Several Wall Street firms cut the stock and slashed price targets, though long-term bear Benchmark upgraded the shares.
As Bloomberg notes, Netflix’s consensus rating – a proxy for its ratio of buy, hold, and sell ratings – stands at 4.08 out of five, compared with 4.27 over the weekend. Meanwhile, the average price target has dropped to $552 (with 30 buy recos)…
… down from about $653 with 36 buy recos, on Thursday, confirming once again that all sellside research is a momentum-chasing penguin game.
Below are some of the most notable highlights from Wall Street reports commenting on the company’s guidance.
Downgrades to neutral from outperform, PT to $450 from $740
There is still a large opportunity in global streaming, and Netflix should retain its leadership position, but growth expectations are being reset lower
“As revenue growth heads towards single digits investors will start shifting from EV/Sales to more traditional valuations that are less favorable for Netflix at its current growth trajectory
Downgrades to neutral from underperform, PT to $395 from $615
The subscriber outlook is disappointing, and contributes to “a more uncertain outlook”
Competition is becoming a bigger problem, and the macroeconomic set-up has become more challenging
Downgrades to equal-weight from overweight, PT to $450 from $700
Analyst Benjamin Swinburne now assumes base case of continued content spending growth, but more muted net adds outlook
A more rapid deceleration in growth creates more balanced risk/reward
KeyBanc Capital Markets
Downgrades to sector weight from overweight
Netflix now screens as a “low-double-digit grower,” analyst Justin Patterson writes, noting a decelerating subscription business
Investors will focus on the degree that paid net adds need to accelerate in 2H to surpass 20 million, Patterson says, adding that he sees few catalysts
Downgrades to equal weight from overweight, PT to $425 from $675
Lack of growth visibility may not be just a 1Q22 issue, analysts led by Kannan Venkateshwar write in a note
Guidance was worse than worst-case expectations, though 4Q performance was roughly in line