Netflix Stock Should Move Higher On Phase-Out Of Basic Plan, Bull Analyst Says

Netflix Inc NFLX shares were moving higher Wednesday after the company announced plans to phase out the “Basic” option from its price plans for Canada.

The widespread removal of the company’s Basic Plan would be incremental to revenue per subscriber, according to Oppenheimer.

The Netflix Analyst: Jason Helfstein maintained an Outperform rating for Netflix while raising the price target from $450 to $500.

The Netflix Takeaways: The company’s shift from the lowest-priced ad-free tier will unlock around $15.50 in revenue per subscriber, Helfstein said in a Tuesday note.

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“Assuming 30% and 40% of NA/EMEA and APAC/LATAM subs, respectively, are on the Basic plan, with rev/sub through advertising on Standard plan $4.00-$5.50 higher than the Basic plan, we believe a phase-out of the Basic plan could generate an incremental $4.4B for NFLX over a 12-month period,” the analyst said. 

“[An] extended writers strike would disrupt back-to-school TV calendar, likely pushing more users/viewing to NFLX, given its programming lead-time,” he said stated.

Netflix is also likely to benefit from media job cuts, “as competitors struggle amid ad market weakness and subscription services cash drain,” Helfstein said. 

NFLX Price Action: Shares of Netflix were trading 3.9% higher at $433.36 Wednesday morning. 

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