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They said the firm remains positive on the stock into its second-quarter earnings, with a paid sharing lift this year. Netflix will update the market on its latest quarter on July 19.
“NFLX shares have significantly outperformed since 1Q earnings, up +33% vs. the SPX +8%, as the company has more smoothly rolled out paid sharing across 100+ markets since late May, which should drive incremental revenue, subs, & profit,” the analysts wrote.
They note that Apptopia data suggests accelerating download and DAU trends in June, with data tracking to ~2.4 million net adds based on JPMorgan’s regression.
“As a result, we are tweaking our 2Q net adds higher from 1.0M to 2.5M. Our 2.5M estimate is essentially in-line with Netflix’s expectations for 2Q net adds ‘roughly similar to 1Q,’ which was 1.75M, & broader investor expectations for 3M+,” the analysts added. “We now project net adds of 2.5M in 2Q, 6.75M in 3Q, & 10M in 4Q, bringing 2023 total net adds to 21M. More importantly, we’re modeling strong revenue acceleration from +6.4% FXN Y/Y in 2Q ($8.37B, guide of $8.24B) to +11.8% FXN Y/Y in 3Q ($8.95B), & to +19.1% FXN Y/Y in 4Q ($9.48B).”
