Lately, whenever people discuss Netflix (NASDAQ:NFLX), they talk about it in terms of the recently-enacted ad-support subscriber tier, and what it could do for the stock’s bottom line. But what about the content on the site itself? That may be prompting some trouble for Netflix, though the stock is up fractionally in Friday afternoon’s trading. The notion of a problem at Netflix, over content, is likely something most never considered. But at Monness, Crespi, Hardt—by way of analyst Brian White—it’s a problem that resonates all too well.
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In fact, the firm noted, all that “less compelling” content may actually hurt the stock’s growth going forward. While things look good on the surface—White expects a 7% sequential rise in subscriber count, in line with Street projections—even the positive figures may not last that much longer. With a writer’s strike hampering new content acquisition—not to mention an overall cutback in content acquisition across multiple platforms—that may make trouble for all streamers, Netflix included.
It’s not surprising, either. Netflix canceled the new series “Snowflake Mountain” after one season. However, this is ameliorated by a new recently-inked deal with Constantin Film. Now, Netflix will have access to German and other international productions. That could give it an edge over other streamers who can’t get access to content thanks to the strike. However, with Netflix shuttering productions that quickly, it might be that Netflix’s content is, as White suggests, just less compelling.
Analyst consensus, however, is somewhat more split on the matter. With 19 Buy ratings, 14 Holds, and two Sells, Netflix stock is a Moderate Buy by analyst consensus. Nevertheless, with an average price target of $411.74 per share, Netflix stock comes with 6.37% downside risk as well.
