Netflix (NFLX.US) shares jumped over 3.5% on Tuesday after Bank of America upgraded its stance on the media giant all the way to ‘buy’ from ‘underperform’ and raised its price target to $370 saying the newly launched ad-supported streaming tier can drive 23% upside. The ad plan, called “Basic with Ads,” was introduced on November 3 in the US and costs $6.99 a month — just below Disney’s ad-based price point of $7.99 which starts on December 8.
BofA analyst Jessica Relf Erlich pointed that new ad-supported streaming tier, a crackdown on password sharing and a return to “steady” subscriber growth were the reasons behind the stock upgrade. “We believe this pivot provides several benefits such as better utilizing its existing scale and 1st party data (advantages advertisers covet), potentially monetizing engagement of password sharing viewers, and expanding the long term TAM (total addressable market) of subscribers (particularly internationally),” she wrote in an investors note.
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Netflix (NFLX.US) stock fell nearly 50% since the beginning of 2022, and has climbed over 60% over the past six months. Recently buyers managed to break above major resistance at $300.00 per share which coincides with 23.6% Fibonacci retracement of the last downward correction. If buyers manage to uphold current momentum, next resistance at $370.00 per share may be at risk. Source: xStation5
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