In the face of stiff competition from Disney, Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Warner Bros., Comcast (NASDAQ:CMCSA), and Paramount Global, Netflix (NASDAQ:NFLX) is changing its strategy from subscriber growth to earnings maximization. This shift comes as the company implements post-Hollywood actors strike price hikes, launches an ad-supported service, and cracks down on shared accounts.
Netflix, a prominent player in the Entertainment industry, as pointed out by InvestingPro Tips, has been operating with a moderate level of debt. The company's liquid assets exceed its short-term obligations, indicating its financial stability. However, the company's stock has taken a significant hit over the last week, as reflected in InvestingPro's real-time metrics, with a 1-week price total return of -7.84%.
The move follows the recent discontinuation of Netflix's DVD-rental service. Despite a surprising increase of 5.9 million subscribers in July, the company's third-quarter revenue guidance of $8.52 billion fell short of the expected $8.66 billion. In response to this lower than anticipated guidance, Jefferies analysts reduced their price target on Netflix shares.
Barclays analysts voiced concerns about weak revenue growth expectations for Netflix. Meanwhile, Needham predicts that linear TV will regain subscribers in the next 2-3 years.
Netflix shares have seen a significant increase this year, climbing 21% with an average price target of $459.47. This rise comes amidst Amazon's plan to raise streaming prices and Disney considering asset sales. Analysts' recommendations for Netflix shares are mixed: Wedbush analysts are bullish on Netflix, while Cowen analysts expect 6.5 million new paid subscribers with a mix of 23 buy, 20 hold, and two sell recommendations among analysts.
Amazon, another significant player in the industry, has seen a revenue growth acceleration, as per InvestingPro Tips. The company's net income is expected to grow this year, and it operates with a moderate level of debt. However, Amazon's stock has seen a 1-month price total return of -7.55%, according to InvestingPro's real-time metrics.
The InvestingPro platform offers additional tips and real-time metrics for both Netflix and Amazon, providing valuable insights to investors. For more information, visit the InvestingPro's pro/pricing page.
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