Netflix stock launched immediately after last night’s earnings report, but it’s been on a bumpy ride since. The stock reached a new record intra-day high of $204.38 this morning before flipping into the red. It seems investors don’t know what to do with Netflix stock, which makes sense. Both bullish and bearish analysts raised their price targets while prominent bears such as Doug Kass are saying avoid it like the plague.
The hedge fund manager said after the company’s third-quarter report last night that Netflix stock has gotten so high that the company’s valuation is starting to make him feel “air sick.” He continues to see the stock as a Sell due to continual cash burn, adding that Netflix’s “great” original content is showing its age and new originals must be added on a regular basis at vast expense.
Wedbush analyst Michael Pachter is another notable bear when it comes to Netflix stock, but even he raised his price target following the 3Q17 earnings report. He reiterated his Underperform rating and boosted his price target for Netflix stock from $88 to $93. Like Kass, he continues to cite cash burn and content acquisition as his main concerns for the company.
Pachter also warned in his note about the Netflix 3Q17 earnings report that the company may find international profits to be “elusive,” especially since the company raised its monthly subscription prices. However, other analysts cited Netflix’s international growth as a strong point.
Piper Jaffray analyst Michael Olson said in his note about the third-quarter report that the company’s strong international results was boosting investor optimism on Netflix stock. The company added 5.3 million subscribers during the quarter, versus the consensus of 4.5 million. It added 850,000 domestic streaming subscribers and 4.45 million international subscribers, versus the consensus numbers of 810,000 and 3.69 million.
For the fourth quarter, Netflix guided for 1.25 million domestic streaming subscriber adds and 5.05 million international subscriber adds, versus the consensus numbers of 1.62 million and 4.63 million. This indicates that Netflix is expecting stronger growth internationally than what Wall Street had been expecting. Olson believes that by 2020, Netflix’s international penetration could be higher than what Wall Street is currently expecting. He reiterated his Overweight rating on Netflix stock and raised his price target from $215 to $240 following the 3Q17 earnings release.
Oppenheimer analyst Jason Helfstein maintained his Outperform rating on Netflix stock and boosted his price target from $215 to $245 after the print. He also highlighted the company’s international business, but he focused on profitability. Unlike Pachter, he seems to think Netflix will be able to turn a profit outside the U.S. as he noted that the company’s guidance points to a higher international average selling price. He noted the strong international contribution margin guide, which was driven by “broader than anticipated ASP increases.” Because of that, he raised his estimates for international contribution profits.
A multitude of other analysts also raised their price targets for Netflix stock after the 3Q17 earnings report. Raymond James moved its target from $205 to $220 while Stifel raised its target from $225 to $235. JPMorgan upped its target to $242 from $225, UBS moved from $225 to $237, and RBC Capital boosted its target from $210 to $250.
After hitting a record intra-day high, Netflix stock turned lower and entered the red, falling by more than 2% before reversing course again. As of this writing, the stock is down 1.8% at $199.04.