Here's How Credit Suisse Expects Netflix To Fare In Q2

Credit Suisse analyst Douglas Mitchelson believed a meaningful Q2 or Q3 subscriber beat or miss might temporarily move Netflix, Inc NFLX shares post-earnings.
However, he expected the shares to revert to their trading range as visibility will remain low, and the company's pivot to advertising does not even begin in earnest until late 2022.
Mitchelson also highlighted intensifying streaming competition, especially in the second half of 2022.
He expected multiple outstanding advertising questions to likely remain. They included the percentage of viewing addressable with ads, ad loads, CPMs, ramp in ad tier subs, cannibalization risk, the cost to update content rights to allow ads, and the number of markets where ad tiers were worthwhile.
He expected the strong U.S. dollar headwinds to offset some of the management team's cost efforts, and macro pressures might forestall price increases.
For 2Q, he was in line with guidance at -2 million subscribers, with little conviction regarding a material beat/miss for the quarter.
For 3Q, he saw +3 million net adds, reflecting favorable seasonality vs. 2Q, further distance from price increases (and their associated churn), the potential benefit of Verizon's +play service, and further distance from the pandemic and its growth pull-forward.
Mitchelson has a Neutral rating and a price target of $350 on the shares.
Price Action: NFLX shares traded higher by 5.06% at $200.60 on the last check Tuesday.
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