Netflix Inc.'s stock experienced a significant surge of 5% on Wednesday following an optimistic note that highlighted the video-streaming giant's potential for revenue growth.
Analysts at Oppenheimer expressed confidence that Netflix's average revenue per membership would see a boost as the company implements various strategies. These strategies include the introduction of ad sales through a new service, raising subscription prices, and cracking down on password sharing.
According to the analysts, these initiatives have the potential to increase revenue by approximately 40% compared to the fiscal year 2022, with exceptionally high incremental margins. They highlighted that investors are currently underestimating the complexity and impact of these multiple drivers, as only 2% of their benefit has been realized thus far.
In addition, Oppenheimer emphasized that their analysis points to a clear path for Netflix to achieve double-digit revenue growth, which they believe fully justifies a price-to-earnings ratio of ~25x. They anticipate a positive impact from Netflix's paid sharing and advertising tier, projecting favorable outcomes through fiscal year 2025.
Regarding account-sharing households, Oppenheimer predicts that Netflix will regain approximately half of them. Their estimates suggest that by the end of 2025, Netflix will directly recapture approximately 46% of the estimated 100 million account sharers.
Overall, this bullish note from Oppenheimer has significantly bolstered investor confidence in Netflix's future revenue potential. With a strong vision and strategic initiatives in place, Netflix appears poised to deliver substantial growth in the coming years.