Netflix Stocks Still A "Buy" For Wall Street Brokers Despite Dip In Price

Netflix Stock
The Netflix logo is seen on their office in Hollywood, Los Angeles (Photo: Reuters / Lucy Nicholson)

Following its report of second-quarter earnings that missed analysts' expectations, Netflix stock prices plummeted as some investors lost confidence in the American streaming service provider's ability to perform.

However, some analysts continue to have a positive outlook for the company given its slate of new shows for 2019.

Netflix stocks fell by as much as 11 percent following the release of its second-quarter earnings report. The company's lower-than-expected performance and the upcoming release of Walt Disney's streaming rival further placed a strain on the stock, sparking worries of a continued decline.

The streaming service missed hitting expected subscriber numbers for the second quarter. The quarter, which lasts from April to June, is typically the company's weakest in any given year.

During this period, days are typically longer and the weather is especially warmer, leading to more people going outdoors.

The low number of subscribers has also been attributed to the company's recent rollout of price hikes for its subscriptions by an average of $2 per month.

This resulted in the company losing US subscribers for the first time in eight years.

Netflix added a total of 2.83 million paying subscribers worldwide, slightly lower than the 4.8 million that was expected. The added subscribers pegged the company's total global subscribers to 151.6 million, significantly larger than any of its main rivals such as HBO and Amazon Prime.

Industry experts predict that Netflix may lose some of its subscribers in the coming quarters with the entry of new rivals such as Disney Plus and Apple TV. Although, Netflix global reach may eventually give it a vital edge over competitors. 

Netflix' upcoming programs, slated to be released within the year, is also expected to boost the company's shares in the coming quarters. The company kicked off its third quarter with the release of the third season of its highly popular program "Stranger Things."

The streaming service is also set to release new seasons of shows such as "Orange Is The New Black" and "The Crown."

Market analysts are still positive of Netflix's recovery in the upcoming quarters. Despite the drop in its share prices, ten Wall Street brokerages have chosen not to downgrade their ratings for the stock.

Netflix continues to be rated as a definite "buy," due to its high potential for growth. However, the brokers did decrease their respective share price targets for Netflix stocks. 

Among the largest tech firms in the US, Netflix continues to have the largest price-to-earnings ratio. Since 2015, the company has quadrupled its value with its stock reaching as high as $421 per share.

This year, the company's stocks have plummeted by more than $100 per share when compared to its peak value in 2018.

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