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Netflix Expected to Have Strong Earnings, Says UBS Analyst
UBS Analyst Raises Price Target on Netflix
UBS analyst John Hodulik has increased his price target on Netflix to $525 per share from $390, ahead of the company's second-quarter results. Hodulik predicts that Netflix's report will show accelerating growth in the second half of the year, leading to a positive outlook for investors. The new target represents a 19.3% upside from Tuesday's closing price.
Paid Sharing Drives Positive Growth
Hodulik's optimistic perspective comes from the introduction of paid sharing on the platform, which has experienced positive growth. He believes that Netflix will be a "main beneficiary" as more streamers prioritize profits. The introduction of paid sharing is expected to contribute to a 5%+ revenue increase and drive scale in advertising. Additionally, the elimination of the basic ad-free tier in Canada and the de-emphasis of it in the US is predicted to boost Average Revenue Per User (ARPU) by 10% over time.
Anticipation for Earnings Report
Netflix shares have already performed well, with a nearly 50% increase this year. Investors are eagerly awaiting the upcoming earnings report, scheduled for July 19th. Hodulik's positive outlook and increased price target suggest that the second quarter will surpass management's guidance, with expectations of accelerating growth in the second half of the year. The introduction of paid sharing and the elimination of the basic ad-free tier are seen as key drivers of future profitability for Netflix.
Conclusion: The Impact of Netflix's Strong Earnings on New Businesses
With UBS analyst John Hodulik's optimistic outlook for Netflix's strong earnings and accelerated growth, it is evident that the streaming giant continues to dominate the market. This promising trajectory opens up opportunities and provides valuable insights for new businesses entering the streaming industry.
One key takeaway from Hodulik's analysis is the introduction of paid sharing on the Netflix platform. This innovative feature has experienced positive growth, suggesting that consumers are willing to pay for enhanced streaming experiences. New businesses in the streaming industry can take note of this trend and consider implementing similar paid sharing models to generate additional revenue streams.
Furthermore, the elimination of the basic ad-free tier in Canada and its reduced emphasis in the US indicate that advertisements may play a crucial role in driving revenue growth for streaming services. This highlights an opportunity for new businesses to explore incorporating targeted advertising strategies within their platforms, allowing for increased profitability and scalability.
Netflix's strong performance and investor anticipation for their earnings report signify a positive outlook for the streaming industry as a whole. Investors are eager to see the company's accelerated growth in the second half of the year, indicating a potential surge in consumer demand. This can serve as an encouragement for new businesses to enter the market, as there is still room for growth and competition.
In conclusion, Netflix's expected strong earnings and future prospects offer valuable insights for new businesses looking to thrive in the streaming industry. By taking note of the successful introduction of paid sharing and the potential of targeted advertising, entrepreneurs can position themselves for success in a market that is poised for continued growth and innovation.
Article First Published at: https://www.cnbc.com/2023/07/12/ubs-hikes-netflix-price-target-ahead-of-earnings-says-shares-can-jump-nearly-20percent.html.svg)
