“While there is a lot of excitement for the series to come, the consensus seems to be that the recent rise in stocks is pretty incredible,” Dan Morgan, senior portfolio manager at Synovus Trust, told Bloomberg. “It doesn’t have much margin for error.”
Netflix will report its third-quarter results next month, and expects 3.5 million more subscribers in the period, up from 1.54 million. last quarter . Wall Street expects 3.7 million, according to the Bloomberg Consensus estimate.
The company’s last two reports were disappointing in user trends and were met with a negative reaction on the stock market, contributing to the stock’s underperformance so far this year. Even with the recent rally, the 2021 gain of around 9% is less than the 21% advance of the Nasdaq 100 Index, as well as the nearly 30% rise of the S&P 500 Communication Services Sector Index on Wall Street.
“I don’t see many metrics to justify the stock jump,” said David Barse, CEO of Xout Capital, which sold its position in Netflix after the latest report. “I’m a fan of ‘Seinfeld,’ but we don’t know what it will mean for the company’s ability to attract subscribers.”
Netflix is about 2% below the average price target estimated by analysts, a sign that there could be limited potential for further hikes, especially compared to other names in the video streaming space. Walt Disney, Discovery, ViacomCBS and streaming platform Roku have a potential double-digit increase, according to this metric.
Amazon buys MGM studios to strengthen its catalog and face Netflix