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Goldman Sachs analyst Eric Sheridan maintained a Sell rating and a $186 per share price target on Netflix (NASDAQ:NFLX) heading into the Q2 earnings report.
The analyst expects to see “inline or weaker Q2 net add results” that reflect “a soft demand environment.” He adds that app downloads are indicating declining trends.
Hence, Sheridan remains bearish on Netflix stock going forward given “concerns around the impact of a consumer recession as well as heightened levels of competition on demand trends (both in the form of gross adds and churn), margin expansion, & levels of content spend.”
Goldman Sachs analyst adds that Netflix is a show-me story given a light catalyst path in the next 6-12 months.
As for the management’s efforts to build an advertising-supported tier, Sheridan sees a potential opportunity for ~$1-2 billion in incremental revenue.
Netflix is due to report earnings on July 19.
