A Netflix Inc (NASDAQ:NFLX) analyst predicts the streaming company gained a large amount of subscribers in the fourth quarter, but could struggle to keep them around after the Christmas Day NFL games.
The Analyst: Rosenblatt analyst Barton Crockett maintained a Neutral rating on the Los Gatos, California-based company with a $680 price target.
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The Analyst Takeaways: Sports could be at the forefront of Netflix's fourth-quarter financial results on Jan. 21, Crockett said in a new investor note.
The platform's growth in sports could drive upside to subscribers in the fourth quarter versus guidance, Crockett says.
"A big question is the economics of this move into sports by Netflix," he adds.
Netflix's advertising for sporting events and audience metrics will be keys in the financial report and commentary to show that the company can disrupt the sports market from traditional media companies, Crockett said.
Crockett thinks Netflix could beat revenue estimates for the quarter.
"Netflix will have ad revenues from two NFL games in 4Q24, that it didn't have in 3Q24. That could be over $60 million per game, or $120 million for the two."
The analyst said the company sold out its advertising slots for the NFL games.
Crockett also sees subscriber growth coming in ahead of estimates with viewership for top 10 titles up 25% year-over-year in the fourth quarter.
While things could look good in next week's earnings report, Crockett is cautious on the first-quarter guidance and future results.
"Netflix will lose the NFL ad lift in the 1Q25. Some subs that joined for the NFL Christmas games or Paul/Tyson fight could churn off."
Crockett said it common for other streamers to have consumers sign up for big sporting events and then churn off afterwards.
"We will look for a defense of sports rights ROI at Netflix on the earnings call."
Price Action: Netflix stock is up 0.4% to $852.16 on Thursday versus a 52-week trading range of $475.26 to $941.75. Netflix stock is up 77% over the last year.
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