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Netflix's New Subscription Strategy May Propel Stock to New Heights

Netflix's New Subscription Strategy May Propel Stock to New Heights

Published - May 25th, 2023 @ 9:50 AM (GMT+2 )

Netflix’s Account Restriction Policy Could Boost Subscriber Numbers

With Netflix's (NASDAQ:NFLX) recent crackdown on account sharing, analysts are projecting a potential boon for the streaming giant's stock. This initiative, which restricts accounts to a single household, could significantly augment its customer base. According to a note to clients by Wolfe Research strategists led by Peter Supino, millions of new subscribers could be added this year. They maintain a buy rating for the stock with a $388 price target, suggesting an 8% upside from Netflix’s Wednesday share price of $359.

Contrarily, Jason Helfstein and his team at Oppenheimer are even more bullish, raising their target from $415 to $450, predicting a surge of over 25% - the highest level since last January. If actualized, this growth would far surpass Wall Street expectations, with consensus estimates predicting a swell of 3.2 million subscribers in the U.S. and Canada by next year's end.

This year has seen Netflix rally by 21% amid similar trends among other tech giants such as Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Meta (NASDAQ:META), each seeing gains of 30% or more.

Account Sharing Crackdown Extended to the US

The crackdown on account sharing began last year in Latin America and has now been introduced in the U.S. Netflix has outlined its new pricing scheme for those who wish to continue sharing accounts outside their household. Emails are being sent to those sharing passwords, offering them an account-sharing option for an extra $8 monthly. This is only available to customers on the $15.50 standard plan and the $20-a-month premium version.

Crackdown May Result in Revenue Upsurge Despite Initial Share Dip

Netflix has estimated that up to 100 million households worldwide, including 30 million in the U.S. and Canada, use an account that isn't paid for. This move is part of a broader strategy to generate increased revenue. Despite an initial 2.4% fall in shares to $354.31 in New York, Netflix's stock was still up 23% year-to-date through the close Monday.

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