June 10, 2022
Wall Street powerhouse Goldman Sachs June 10 shifted its “neutral” rating on Netflix shares to “sell,” lowering its price-per-share target on the subscription streaming pioneer to $186 from $265.
Netflix shares closed June 9 at $192.77 per share. The stock, which is down more than 10% in pre-market trading, has declined 72% since a market high of $690.31 per share on Oct. 21. 2021.
Sachs analyst Eric Sheridan, writing in a note, cited ongoing inflationary concerns and rising competition from Disney+, HBO Max and Paramount+, among others, for putting the brakes on Netflix’s stock.
“We [also] have concerns … on demand trends (both in the form of gross adds and churn), margin expansion, and levels of content spend and view Netflix as a show-me story with a light catalyst path in the next six to 12 months,” Sheridan wrote.
The analyst said he is lowering Sachs’ 2022-23 revenue estimates for Netflix to incorporate a greater probability of a weaker macro environment going forward, which includes greater subscriber losses.
“More specifically, we modestly lower our paid streaming subs across every region but incorporate higher [average-revenue-per-user] levels in the U.S. in 2024 and beyond to reflect Netflix’s initiatives around its ad-supported tier and password sharing,” Sheridan wrote.