Piper Sandler's Survey Suggests Intent to Keep Netflix (NFLX) Subscriptions Post Covid and Pricing Power

August 25, 2020 10:28 AM EDT
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The latest survey conducted by Piper Sandler shows that 41% of respondents intend to maintain a Netflix (NASDAQ: NFLX) subscription even after Covid-19 rules ease.

“Despite new competition in HBO Max and Disney+ as well as stalwarts Amazon Prime, Hulu and Cable TV, Netflix was the leading service by 13ppts over second place Amazon,” senior research analyst Yung Kim wrote in a note to clients.

"We asked respondents, "What video services will you use after stay-at-home rules ease?" Of the ~1,000 respondents, 41% chose Netflix with Amazon Prime Video second on our list at 28%. We also included Cable TV (19%) and new competitors HBO Max (7%) and Disney+ (17%)," it is said in a note.

In a separate survey, the majority of subscribers said they would still pay to see Netflix content, even with a price increase. Accordingly, a weighted average price increase is $2.20/mo, which is lower than $2.20/mo registered in February. One of the reasons for a drop is a higher number of respondents said they would accept the price increase.

"We do not expect Netflix to raise U.S. pricing in 2020, but do believe an increase is likely in the next 12-24 months. We anticipate that the launch of HBO Max (May-20), at $15/mo, will validate the idea that Netflix can raise pricing, given we see HBO Max as the most similar standalone streaming service to Netflix," Kim added.

“We believe Netflix has furthered its position as the go- to streaming option and while we recognize some of the record setting sub adds were pulled forward, we also believe the trend was an acceleration of an ongoing shift from broadcast TV to streaming”.

All in all, Piper Sandler’s analyst believes that Netflix is well-positioned to “capture an outsized share of traditional content consumption dollars as that spending migrates to streaming”.

Kim maintains an “Overweight” rating on NFLX, with a price target of $534 per 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 $488.81 yesterday.

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