Netflix US, Canada Price Hikes to Fund Growth Elsewhere: Wedbush

Netflix appears to be approaching a ceiling on U.S. and Canadian subscribers, Wedbush analyst Michael Pachter wrote investors Thursday, and its withdrawal from Russia could affect subscriber growth this year by 5 million or more. Netflix is pulling new levers to lower subscriber churn, including additional content production fueled by price hikes in Western markets, he said. Subscriber growth will likely come from less developed regions at lower subscription prices, “with Western subscribers paying higher rates to fund new content,” Pachter said. Full-season content dumps “will likely keep churn high,” as price-conscious customers leave Netflix for a competing service after viewing content they want to see, he said. Profit growth should continue as long as the company can continue raising subscription prices, “but competition may limit future price increases,” he said. Netflix shares have dropped from a high of $691 in mid-November to Wedbush’s $342 price target in early March, where they have hovered since, he noted. Shares closed 2.7% lower Thursday at $341.13.