Commenting on Netflix’s quarterly results, KeyBanc analyst Justin Patterson argues that subscription businesses, particularly well-penetrated ones, are slow rate of change businesses and the reacceleration will occur with volume first and ARM growth after. While the firm its “encouraged” that cancel risk was low and future price increases now have a churn reduction mechanism with the ad-supported plan, KeyBanc views valuation and a free cash flow peak in 2023 as near-term overhangs. The firm has a Sector Weight rating on the shares.
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