Wedbush Upgrades Netflix on Churn-Reduction Strategy, AVOD Plan

Staggered releases of popular TV series could prop up the subscriber count at Netflix, Wedbush Securities analyst Michael Pachter wrote investors Monday, upgrading the stock to "outperform." The analyst believes Netflix will exceed guidance for Q2 due to the staggered release date for Ozark, and it believes the same approach for Stranger Things in Q3 could also reduce churn. “Netflix is positioned to grow,” as the subscription VOD service “gradually” raises prices and rolls out an ad-supported option, Pachter said; he doesn’t believe Netflix’s share price will approach 2021 levels “for many years.” Wedbush sees recent Netflix losses as the result of “deep saturation” in the U.S. and Canada. The company’s plans to crack down on password sharing -- which Netflix estimates at 30 million households in those two markets and 100 million globally -- will bring it a “few million new customers.” But its plan to offer an advertising-supported tier “has great potential to drive significant revenue,” he said. Raising prices in mature markets would allow Netflix to drive up its average revenue per user, and its level of profitability, allowing it to reinvest profits to continue growing in Latin America and Asia-Pacific, he said.