Mark Mahaney, senior managing director at Evercore ISI, revealed his new price target for Netflix’s high-flying stock during an appearance on “Varney & Co.”
Netflix said on Thursday it added more than 8 million subscribers in the second quarter, benefiting from a crackdown on password sharing and popular titles like “Bridgerton,” “Baby Reindeer” and “Roast of Tom Brady.”
While subscriber growth beat analysts’ expectations of 5 million, Netflix was cautious about its third-quarter outlook and said advertising won’t be its main driver of revenue growth until at least 2026.
Netflix shares reversed an initial decline after the earnings report and rose 1% in after-hours trading. The company’s shares have risen by nearly a third so far this year.
“Netflix remains the best and most profitable streaming company, but with tech stocks generally declining in recent days, some investors may be tempted to sell on the generally positive news and lock in profits while waiting for a time when the stock price may move higher again,” said Michael Ashley Shulman, chief investment officer at Running Point Capital.
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Netflix’s latest subscriber numbers beat analyst expectations. (Mario Tama/Getty Images/Getty Images)
The streaming-video pioneer is facing saturation in the U.S. and will stop regularly reporting new subscriber numbers next year, as investors focus on its relatively new advertising business as a potential source of growth.
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| NFLX | NETFLIX Inc. | 643.04 | -4.42 | -0.68% |
Netflix said Thursday that its subscriber growth in the third quarter will be lower than the same period in 2023, when it first began enforcing password restrictions.
The company also announced that its vice president of advertising sales, Peter Naylor, would be stepping down from his role.
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Third Bridge analyst Jamie Lumley said Netflix’s advertising business “is still unproven in terms of revenue.”
“Our experts stress that Amazon is having a bigger impact on the advertising market and that Netflix needs to continue working to scale in this area if it wants to become a major player,” Lumley said.
LSEG said Netflix earned $4.88 per diluted share in the April-June period, beating the consensus estimate of $4.74. Revenue for the quarter was $9.56 billion, in line with expectations.
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Netflix said that while advertising revenue is growing steadily, it won’t become a major source of revenue until 2026. (Nikos Pekkiaridis/NurPhoto via Getty Images/Getty Images)
As of the end of June, Netflix’s global subscriber base exceeded 277 million, thanks to new subscriber additions.
Netflix said its ad-tier membership grew 34% from the previous quarter, but did not disclose how many subscribers had opted into the option.
“Our advertising business is growing well and is an increasing contributor to our business,” Netflix said in a letter to investors, “however, building a business from scratch takes time, and combined with the size of our subscription revenue, we do not expect advertising to be the primary driver of revenue growth in 2024 or 2025.”
Netflix’s ad tier will be available as part of Comcast’s StreamSaver bundle, which also includes Netflix, Peacock Premium and Apple TV+. (Courtesy of Comcast/Fox News)
Netflix Chief Financial Officer Spencer Neuman said in a video after the earnings call that the company’s advertising business is “growing well” but that it is still building from a small base.
“It’s a significant contributor,” Newman said, “and we expect it to become even more significant in ’26 and beyond, to the point where it becomes a major contributor.”
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The company said it expects third-quarter revenue to increase 14% from the same period last year.
Marking the third year of its video game efforts, Netflix announced it will release a multiplayer game based on the Korean dystopian drama series “Squid Game” when season two of the series premieres later this year, and also plans games related to “Emily in Paris” and “Selling Sunset.”
