Netflix’s new fiction, The Squid Game, has led its shares to exceed $ 637, bringing the company up more than 20% in the stock market so far this year. Experts believe that successful titles such as the South Korean series can make the company increase its volume of subscribers and, therefore, its potential in the markets.
Netflix is once again celebrating thanks to the success of one of its own productions: The Squid Game.
The streaming company is in a cloud of optimism at the reception of its new fiction and investors, meanwhile, are already beginning to reap its fruits.
Netflix shares have weathered the selloff in the markets of other big tech names like Facebook, Amazon, Apple and Alphabet, Google’s parent. The explosion in popularity of the new series, which can be seen in at least 90 countries, appears to be a key catalyst for the increase in downloads of the Netflix application and, therefore, new users.
Disney + continues to release news, such as its STAR channel. If you sign up for the annual subscription, you will save the equivalent of two months compared to the monthly subscription.
The illusion generated by the Korean title is causing analysts to consider Netflix’s prospects for the medium term to be positive.
Sergio Ávila, an IG analyst, assures Business Insider Spain that the fact that The Squid Game may become its most viewed content may be a boost for its aspirations on the stock market, taking into account the moment in which its business is located .
“Undoubtedly, the more pull a series has, the greater the number of users who register and pay for the subscription and the greater the viewing time that users spend on the platform“, aim.
Hence, the journey that the streaming firm can take on the parquet, with that reference, could be positive, according to analysts.
“Netflix is in a clear uptrend, technically it has a target triggered by a lateral range breakout at $ 685, which is likely to eventually meet; while, at a fundamental level, its intrinsic theoretical value would place it around $ 770, so it is undervalued”, Avila deepens.
Similarly, Doug Anmuth, an analyst at JPMorgan, is just as optimistic in his forecasts for Netflix in a report collected by Barron’s. The analyst sets the target price for the stock at around $ 705.
Anmuth exposes that current investor expectations for net new subscribers of about 3.5 million in the third quarter and 8.5 million in the fourth quarter could be conservative, given the surprising popularity of the launch of The Squid Game. .
The US bank expert, citing data from Apptopia, points to 22% year-on-year growth in September downloads in the Asia-Pacific region as a sign of the series’ potential in the region.
“Importantly, this title can help open up even more subscribers in the region, which has low penetration, and is another example of local content that travels well globally,” he writes.
For his part, Rafael Ojeda, senior macro analyst at Fortage Funds, goes up to that same theory despite raising the alarm about the possibility that Netflix is now trading in existing numbers. In other words, that it is expensive in the markets.
“It has a PER of 65 times the profits, with a capitalization of 280,000 million dollars, which is demanding, but it is true that it has an interesting beta of 0.71, so despite being a company with a very high valuation, it is a metric that gives consistency to the stock on the stock market”, He argues.
In his view, this shows that it is a very solid company, with good fundamentals and returns and, above all, with high expectations for the future so that its profits will be cheaper than the value.
“I see the title at $ 650,” predicts Ojeda.
With the magnifying glass on the results and in the long term
The company’s next earnings report, scheduled for October 19, could be an entry point to invest in its shares, as New Street Advisors Group CEO Delano Saporu explains on CNBC.
“Netflix still has more room to run,” says Saporu. “I was looking at the price of their stocks at $ 610, which is roughly the most recent high, and after it has been beaten, I think there will be more room to accumulate profits,” he adds.
With the stock moving above $ 637 Saporu believes that too high expectations could create some downward pressure when it presents its quarterly accounts.
“That could lead to a pullback in the stock of the company where investors could look for an opportunity to buy,” he addresses. what to expect and see what happens with your results to see if there is a possibility of entry “, recommends the expert.
Another of the expert voices that are optimistic about the accounts is Joaquín Robles, an analyst at XTB, who tells Business Insider Spain that Netflix has just become the most awarded channel at the Emmy Awards.
“After the strong increase in subscribers during the second semester of 2020 driven by the lockdowns, in this second quarter it only managed to grow 1.5 million and now expects a growth of 3.8 million subscribers, which would allow to reach 209 million worldwide“, He says.
Robles believes that investors justify the current prices based on the progressive growth of earnings per share, which have gone from 0.43 dollars in 2016 to 6.08 in 2020.
“For this reason, even though Netflix is at its highest, it is trading in a price / earnings ratio at the lowest levels of the last decade, so if you maintain your growth prospects, you can continue to climb”, He assures.
This article was published in Business Insider Spain by Héctor Chamizo.