Netflix stock is the ‘best recession play’ for 2023: Analyst

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on Dec 12, 2022
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  • Cowen analyst is bullish on ad-tier Netflix launched last month.
  • He also expects paid sharing to help boost revenue next year.
  • Netflix stock is still down nearly 50% versus the start of 2022.

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Netflix Inc (NASDAQ: NFLX) is a great stock to own for next year especially if the U.S. economy slides into a recession, says John Blackledge – Senior Research Analyst at Cowen.

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Ad-tier will be a catalyst for the Netflix stock

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Blackledge is particularly bullish on the ad-supported subscription Netflix launched last month as Invezz reported here.

Historically, an economic downturn tends to weigh on advertising. But the Cowen analyst sees it a bit differently.

We view Netflix as the best recession play in our internet coverage universe given if macro conditions worsen, you have this ad-tier available for a value conscious consumer. We think it will dive accelerating member net ads in 2023.

The number of subscribers on the ad-supported tier, he’s convinced, will shoot up from about 8.0 million at the end of 2023 to roughly 43 million by 2028. It’s also noteworthy here that the Netflix stock is still down nearly 50% for the year.

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Netflix is set to introduce “Paid Sharing” in 2023 that Blackledge says will further help accelerate revenue next year. On CNBC’s “TechCheck”, he noted:

Depending on how many they convert of the 100 million global paid sharers, we have the paid sharing solution driving potentially 5.0% upside to U.S. and Canada revenue. So, they have multiple potential revenue drivers next year.

Blackledge also expects a massive increase in its free cash flow to $3.0 billion next year. He recommends buying Netflix stock also because it continues to beat rivals in terms of “minutes viewed” by a significant margin.

The Cowen analyst has a price target of $405 on “NFLX” – up another 30% from here.

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