In a strategic shift responding to heightened global media competition, Netflix (NASDAQ:NFLX) is moving its focus from subscriber growth towards profit maximization. The streaming giant's new strategy includes price hikes, introducing ad services, and cracking down on account sharing. This shift comes as the company prepares for its Q3 report, which anticipates a rise in earnings per share from $3.10 to $3.49 and an increase in revenue from last year's $7.93 billion to $8.54 billion.
InvestingPro Data shows that Netflix's revenue for the last 12 months (LTM2023.Q2) is $32.126 billion, showing a steady growth rate. However, it's important to note that according to InvestingPro Tips, the company's revenue growth has been slowing down recently.
Despite experiencing a 41% decline from its pandemic peak of $610.34, Netflix shares have demonstrated resilience with a 21% rise this year, outperforming the S&P 500's 14% increase. Analysts tracking the company have given an average price target of $447.90, with ratings divided into 24 buy, 22 hold, and 2 sell. Interestingly, InvestingPro's fair value for Netflix is slightly lower at $446.26.
Among them, TD Cowen analyst John Blackledge has adjusted his price target for Netflix from a previous high of $515 to $500. This change reflects expectations of gradual margin growth and an addition of 6.5 million paid subscribers, underlining Netflix's robustness in the evolving streaming landscape.
The shift towards profit maximization signals an important change in Netflix's business model as it adapts to the increasingly competitive global streaming market. In light of this, one of the InvestingPro Tips suggests that the company is a prominent player in the Entertainment industry and has been profitable over the last 12 months.
For more detailed analysis and additional tips, readers can visit InvestingPro. There are 15 more tips available for Netflix and other companies, providing a comprehensive guide to making informed investment decisions.
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