Analysis of Netflix Stock: Record Revenue and Growing

Netflix Inc. (NASDAQ: NFLX) is adding subscribers despite fierce competition in the streaming market, which fosters favorable circumstances for revenue and profit development. The Q3 2023 report, which was made public on October 18, 2023, clearly shows this trend and contributed to a rise in Netflix Inc. stock prices of more than 17%.

This article will present an overview of the American streaming service, look at quarterly data, analyze the main factors driving its increasing financial performance, and dig into the company's management and Wall Street analysts' predictions for the current quarter.

Q3 2023 Report From Netflix

As of Q3 2023, Netflix Inc.'s revenue for the months of July through September reached $8.54 billion USD, a 7.77% increase over the same period in 2022. The net profit increased to 1.68 billion USD, or $3.73 per share, a 19.96% increase. FactSet conducted a survey of experts who predicted 3.49 USD profits per share and 8.54 billion USD in sales for the upcoming quarter.

In Q3 2023, Netflix Inc. increased the amount of money it was authorized to acquire shares to $10 billion USD and carried out a share repurchase program valued at about 2.5 billion USD.

The number of people using premium streaming services surpassed the consensus estimate of around 5.9 million, rising by 8.76 million to 247.15 million. The company's executives credit the launch of a new ad-supported price tier and attempts to prevent user account data sharing for this rise.

Regional Distribution Of Paid Audience And Quarterly Income

• UCAN (USA and Canada): 1.75 million more paying customers and 3.7 billion USD in revenue

• 3.95 million new paying subscribers and 2.7 billion USD in revenue were recorded in EMEA (Europe, Middle East, and Africa).

• Latin America (LATAM): 1.14 billion USD in income, plus 1.2 million more members who are paying

• Asia-Pacific (APAC): 0.95 billion USD in income with 1.9 million more paying customers

• The management of Netflix had projected Q4 2023.

• According to Netflix Inc.'s forecast, Q4 2023 sales will total 8.69 billion USD, and profits per share will be 2.15 USD. Revenue is expected to be around 8.77 billion USD, according to experts.

The business updated its operating margin estimate for 2023 from 18% to 20%, with the expectation that it will rise to 22-23% in 2024, assuming no notable changes in exchange rates.

Expanding Netflix's enterprise

Management Of Subscriptions

Netflix introduced a new advertising-supported monthly membership option on November 3, 2022, for 6.99 USD. By the conclusion of the third quarter of 2023, there were 70% more people signed up for this plan.

Additionally, the business intends to increase the cost of membership plans for the US, UK, and France by at least 20% in Q4 2023. The monthly costs of the normal plan and the ad-supported membership will remain at 6.99 USD and 15.49 USD, respectively.

This fosters an environment that is conducive to an increase in the number of ad-supported subscriptions, which may benefit collaboration with advertisers and ad income.

Taking Care Of Password Sharing

Netflix Inc. launched a campaign in May 2023 to prevent customers from sharing data from their premium accounts with one another. This deals with scenarios in which a single streaming platform account was being used by several families. The performance for Q3 2023 indicates that this endeavor has produced fruitful outcomes.

Netflix Home

The company unveiled the Netflix House proposal on October 12, 2023. This creative idea entails building themed venues where viewers may completely lose themselves in the universes of their favorite television programs. Netflix House will feature food, shopping, and live entertainment. The business intends to launch the project in more places once the first two US facilities open in 2025.

Professional Views About Netflix

Experts started raising the ratings of Netflix Inc.'s stocks after the release of its Q3 2023 report. Morgan Stanley (NYSE: MS) analysts raised their target price from 430 USD to 475 USD on October 19, 2023, and changed their recommendation from Hold to Strong Buy. This move is justified by Netflix Inc.'s expanding company, robust password sharing policies, and superior market position compared to rivals.

Experts from DZ Bank and Truist stocks upgraded their recommendations on Netflix Inc.'s stocks from Hold to Buy, with a target price of 465 USD, according to Defense World. The streaming service's shares were given a Strong Buy recommendation by KeyBanc Capital Markets analysts, with a target price of USD 510.

Analysis of Netflix stock

A few days before to the publication of the Q3 report, in the first part of October 2023, Netflix Inc. shares crossed above the rising trend line and left the ascending channel. This event probably means that the rising trend is coming to an end.

Stock prices sought to reenter the upward trend when July–September 2023 financial figures were released. But additional price increase was halted by a pre-existing declining trendline. The quotations bounced back from the declining trendline as of October 30, 2023, when this piece was being written, possibly signaling weakness among optimistic investors and the prospect for more price falls.

The management of Netflix Inc. has provided an optimistic outlook for Q4 2023, and the positive evaluations from analysts point to the possibility of additional gains in the company's stock price. This prediction can only be verified by technical analysis in the event that the declining trendline is broken. The shares would probably aim for the resistance level, which is about 450 USD, in such a scenario. Should they exceed this threshold, they could be able to get closer to the highest amount of 485 USD. That being said, there is a good chance that price reductions will continue if the shares stay in the declining channel.

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Summary

In the third quarter of 2023, Netflix Inc. had a 20% rise in net profit and an 8% increase in sales. In the fourth quarter, the business anticipates sales of 8.69 billion USD and profits per share of 2.15 USD. It is reasonable to assume that any prospective decline in stock prices, as suggested by technical analysis, would probably be temporary in light of the financial reports and projections.

The possibility of falling stock prices is likely to be rendered inconsequential if the resistance level is broken. In this instance, expert forecasts, technical and fundamental analysis, and alignment may have a favorable effect on the streaming service's stock value.