Bernstein SocGen Group has reiterated its positive stance on Netflix Inc. NFLX, maintaining an Outperform rating and a price target of $1,200
What Happened: Bernstein SocGen Group’s analyst, Laurent Yoon highlighted the recent 40% price increase for Netflix’s standard tier in the U.S., which translates to a 7% CAGR in pricing since Q1 2020. Despite this hike, user consumption has remained relatively stable, according to a report by Business Insider.
Although the average revenue per membership (ARM) has remained steady due to currency exchange fluctuations and the launch of an ad-supported tier, the analyst believes that average revenue per user (ARPU) could be a significant factor in driving future profit growth, reinforced by an increase in subscribers.
The analyst also highlighted Netflix’s ventures into live events, sports broadcasting, and possible forays into new content areas like Formula 1 racing and podcasting. Bernstein analysts suggest that this action is in line with the company’s wider strategy to grow its total addressable market (TAM) and increase user engagement.
Netflix is reportedly securing exclusive agreements with popular podcasters or providing ad-free versions of existing shows for paying subscribers.
According to Bernstein, these efforts provide a sustainable approach for Netflix to validate future price increases. Yoon’s analysis expresses confidence in Netflix's ability to adjust its content strategy to uphold its status as a leading value provider in the streaming industry.
SEE ALSO: Warner Bros Announces Shanghai Harry Potter Studio Tour—Set To Be Four Times Larger Than London’s
Why It Matters: The Bernstein SocGen Group’s report comes after Netflix’s impressive fourth-quarter performance, which saw an addition of nearly 19 million new subscribers.
Meanwhile, the streaming giant has been in the spotlight amid its recent strategic moves, including diversification of its revenue streams. Netflix has ventured into the restaurant business with the launch of ‘Netflix Bites Vegas’, a new restaurant experience in Las Vegas.
On Wednesday, Netflix also unveiled its 2025 lineup of Japanese films and TV shows, featuring a diverse range of period dramas, action-packed films, and captivating unscripted content. Meanwhile, Netflix’s hit series ‘Squid Game‘ will premiere its third and final season on June 27.
The shares of Netflix have surged more than 84% over the year to close at $1,058.60 on Friday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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