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Barclays analyst Kannan Venkateshwar has reflected negatively on Netflix (NASDAQ:NFLX) ahead of the Q2 earnings report.
The analyst sees the streaming giant losing as much as 2.8 million subscribers, higher than the company’s guidance of 2 million subscribers lost. Moreover, the analyst told investors that the bank’s credit card data for April and May shows “US subs likely declined sequentially.”
“Despite a strong slate of returning shows (Stranger Things, Ozark, Peaky Blinders), Netflix app download and engagement metrics are trending lower. The release of Stranger Things did result in daily downloads picking up and peaking in 2Q, but this faded fast in June. The overall impact however doesn’t appear to have been very material, which is a bit surprising given the global awareness of the show,” Venkateshwar further explained.
The analyst also sees a tough third quarter ahead for Netflix given the quality of content that is due to be released on HBO, Amazon (NASDAQ:AMZN), and Disney+.
As a result, Venkateshwar slashed the price target to $170.00 per share from the prior $275.00.
On the other hand, the analyst is more positive on Disney (NYSE:DIS) as the company’s streaming business seems to be benefiting from the content slate.
“Disney+ download and MAU performance was strong in 2Q due to EMEA market launches and new releases (Ms. Marvel, Star Wars: Obi-Wan Kenobi, Doctor Strange). Hotstar continued to benefit from the IPL season in 2Q. HBO Max’s growth moderated in the second quarter while Peacock was pacing down due to a tough comp against Olympics.”
Shares of Netflix are down over 2% today.
