April 14, 2022
Netflix’s subscription price hike last month, the service’s third since 2019, should insulate the SVOD behemoth against slowing subscriber growth in North America and beyond. So says longtime Netflix bear analyst Michael Pachter with Wedbush Securities in Los Angeles.
Pachter, who has a “neutral” rating on Netflix shares, believes that as sub growth continues to cool, any marginal sub gains will occur in less developed regions worldwide at lower subscription prices.
The analyst contends the streamer will add 2.5 million subs worldwide in the first quarter (ended March 31) to up its global membership base past 224 million, in line with company guidance. Pachter said he believes any sub gain was likely offset in part by the elimination of all Netflix users in Russia due to the ongoing war in neighboring Ukraine.
The analyst believes Netflix added 400,000 subs in North America, with revenue in the region boosted by price increases. The service added 750,000 net subs in Europe, Middle East and Africa (EMEA), with price increases in the quarter likely offset by unfavorable currency headwinds. Another 300,000 net sub adds in Latin America, with lower average-revenue-per-user (ARPU) due to currency headwinds. Finally, Pachter says Netlfix added more than 1 million net subs in the Asia Pacific region, driven in part by lowered price in India that likely drove user growth in the quarter.
“Netflix’s first-mover advantage and large subscriber base provides the company with a nearly insurmountable competitive advantage over its streaming peers,” Pachter wrote in an April 14 note. “Subscription price increases in the west should fuel additional content production and growth in other regions, and our bias is that cash flow will turn positive in 2022 and beyond, as management has guided.”
Netflix reports Q1 fiscal results after the market close on April 19.