As we move into earnings report season, you can see the clear change in sentiment towards Netflix (NASDAQ:NFLX). But this is not coming from the retail side.
Institutional investors and Wall Street experts are now the ones leaning bullish again. Usually, when this happens, it’s wise for investors to pay attention.
So what exactly are they seeing? Let’s break it down.
Wall Street Is Raising Its Expectations
One of the most obvious indicators of this change is the upgrade on Netflix by Goldman Sachs’ (NASDAQ:GS) analyst, Eric Sheridan, to a “Buy” rating.
The price target was increased to $120, which means upside potential from here on out. So what makes Eric so sure of this potential? Well, he points out that things have changed due to one thing: the risk/reward has become more attractive.
Netflix is no longer being seen by institutions as a high-risk bet. Instead, it’s starting to look like a company that has figured out its model. Now you can see the firm has a steady execution plan and is improving monetization.
That’s precisely the kind of thing that institutional money is usually looking for as earnings approach.
When major investment banks upgrade a stock just weeks before earnings, it often means confidence in the upcoming results.
Interestingly, Goldman Sachs isn’t the only firm seeing this potential surge. But before we go into other firms, let’s understand why there are now bullish expectations.
Netflix Has Started to Look Beyond Just Streaming
If you step back for a second, you’ll realize that Netflix is not just a streaming service anymore.
Sure, content will always be the backbone, and Netflix Originals and new launches will keep making headlines. But that’s not where the true story lies.
We’re now seeing expansion into:
- Live programming
- Gaming
- Creator-led content
Each offers new opportunities for engagement loops, but more importantly, new revenue streams.
Then there is advertising, which may very well be the biggest unsung hero of the whole story.
Netflix’s ad tier is picking up steam, and the initial moves suggest a high level of interest. The more subscribers who take up lower-priced plans, the more chances Netflix will have to earn from them twice, once as a subscriber and again through advertising.
Eventually, it will even out the revenue difference between …