American entertainment company Netflix’s shares hit an all-time high on Friday, surging past $200 for the first time ever, an event that is widely being discerned as a ‘milestone’ for the video streaming company that is posing a challenge to the otherwise traditional media industry. After soaring as much as 2.5 per cent to $200.82, the stock prices came down to $198.75 a share. The company is expected to report third quarter earnings on Monday.
The reason for the recent rise in the share prices of Netflix was multiple top analysts on Wall Street raising their forecasts for the price of the shares of the US entertainment giant. This years’s gains have primarily gained ground because of the growing subscribers for Netflix at a remarkable pace.
Goldman Sachs reiterated its buy rating on Friday and also raised its price target for Netflix shares to $235 which was highest on Wall Street. It made a prediction that the company will post subscriber gains above market expectations for the next two quarters.
“We believe consensus subscriber estimates for Netflix ahead of Monday’s earnings remain too low, particularly for the quarter, 4Q, and beyond,” analyst Heath Terry wrote in a note to clients (as reported by CNBC). JPMorgan also reaffirmed its overweight rating on Friday and raised its price target for Netflix shares to $225 from a previous $210. In April, Netflix accrued 100 million total subscribers, three years after surpassing the 5o million mark.
“Looking at the history of past Netflix price increases, the impact on the pace of net sub additions has not been severe, and has been decidedly temporary — and we believe the Netflix service is even stronger and more entrenched now,” analyst Todd Juenger wrote in a note to clients (as reported by CNBC). “We believe this price increase, sooner than expected, shows Netflix management has reason to be confident in their sub trajectory and price inelasticity,” added Juenger.
Netflix has increased the prices for new subscribers at a rate of 10 per cent per year since 2014, the analyst noted, and still has been able to increase its subscriber base to more than 50 million from 34 million.
(With Inputs from CNBC)