Wall Street analysts are split on Netflix, following the company’s second-quarter earnings report, with some predicting the stock is set for a rebound after the latest subscriber loss wasn’t as bad as feared, while others think the company still has a long way to go with his plan to restart growth.
Shares of Netflix popped over 7% on Wednesday as investors reacted positively to the company’s second-quarter earnings report: The streaming giant reported a loss of 970,000 subscribers, far less than the 2 million it had previously forecast.
A shocking subscriber loss in the first quarter had led to a wave of downgrades from Wall Street analysts, who called into question the company’s long-term growth plan, but after the latest results, some experts have now grown more optimistic Netflix could recover soon.
The stock’s post-earnings rally could signal that a bottom is near, assuming subscriber growth doesn’t “hit any new cliffs,” according to Wells Fargo analyst Steven Cahall, who remains bullish about the company’s plan for a new ad-supported subscription tier , which should start to pay off next year.
Stifel analysts upgraded Netflix to a “buy” rating on Wednesday, arguing there are “signs of stabilization in the subscriber base,” which makes the prospect of a “prolonged period of subscriber losses . . . increasingly unlikely.”
Others on Wall Street remain highly skeptical, with analysts at Bank of America calling the earnings “better than feared, but still not great,” adding that the company didn’t provide as much information as expected on its plans for advertising on the platform.
The firm has a “sell” rating on the stock and lowered its price target to $196 per share based on “higher content costs,” as well as more “technology spend on ad integration,” which may affect future earnings.