Needham & Company Downgrades Netflix (NFLX) to Underperform on US Subcriber Losses

Needham & Company analyst Laura Martin downgraded Netflix (NASDAQ: NFLX) from Hold to Underperform.

The analyst comments "We project NFLX will lose 4mm US subs in 2020 at its premium priced tier of $9-$16/month. We believe NFLX must add a second, lower priced, service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, each of which have $5-$7/month choices. Since NFLX’s balance sheet cannot withstand lower revenue (our view), we recommend a 6-8 minute/hour ad load to supplement a $5-$7/month consumer fee. CBS All Access and Hulu both offer two price tiers to U.S. consumers. International sub growth will not support NFLX valuations, in our view, because: a) US subs are about 3x more profitable than offshore subs; plus, b) international sub growth is increasingly coming from $3/month mobile only subs, so it takes 4 of these subs to offset revenue lost from a single US sub. NFLX looks more attractive to us around $260/share."

For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.

Shares of Netflix closed at $302.00 yesterday.

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