Netflix‘s new password- sharing rules have caused a debate among subscribers and on Wall Street, but one Oppenheimer analyst is upbeat about what the changes will mean for the stock.
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Oppenheimer analyst Jason Helfstein rates Netflix (ticker: NFLX) as Outperform with a $515 price target. That implies a 25% increase from the stock’s closing value on Tuesday. One reason for his optimism about the stock, which has already climbed over 40% in 2023, is the potential revenue surge from the password crackdown.
“Our estimates imply Netflix directly recaptures 46% of the total estimated 100 million account sharers by the end of 2025. Given the partial rollout of paid sharing yielded about 6 million subs in one month, we believe there is upside to our above consensus 2024 net add estimate of about 24 million,” Helfstein wrote in a research note Tuesday.
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Netflix toughened its rules for password sharing earlier this year in an attempt to gain more subscribers who pay for their own accounts, as opposed to sharing an account with a relative or friend in a different household. The crackdown seems to be working: Netflix reported a bigger gain in subscribers in its June quarter than Wall Street expected.
“NFLX remains the dominant streaming platform and maintains the largest market share of U.S. TV viewership. We believe NFLX’s dominance will continue, given its clear advantage in producing high-engagement content and monetizing that content more effectively than peers,” Helfstein said.
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Shares of Netflix were up 4.7% to $432.63 on Wednesday afternoon, making it the best performer in the S&P 500.
