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Truist analyst Matthew Thornton cut the firm’s price target on Netflix (NASDAQ:NFLX) to $210 from $300 on Friday, maintaining a Hold rating.
Looking ahead to Netflix’s next earnings report, Truist lowered estimates but stated the planned ad-subsidized tier could add nearly $2 billion in revenue by 2025.
“Mobile app download growth (proxy for gross-add growth) decelerated slightly in 2Q (-4% y/y from -1% y/y) due to decels in UCAN and APAC, partly offset by accels in LATAM and EMEA. We model net-adds inline with guidance at -2.0m,” wrote Thornton. “Net-net, we now model 2022 revenue/EBIT at $31.7b/$6.2b vs consensus $32.4b/$6.3b and 2023 at $33.5b/$6.5b vs $35.3b/$7.”
Thornton added that “mobile app downloads growth (proxy for gross member adds) decelerated slightly, driven by deceleration in UCAN and APAC, partly offset by acceleration in EMEA and LATAM.”
Speaking on Netflix’s anticipated ad-tier subscription, the analyst believes it can add $1 billion in incremental revenue in UCAN by 2025 (assuming a 2023 launch) and $0.9 billion in total revenue across International by 2025.
