Netflix shares up on Q4 subscriber growth: time to buy?

on Jan 19, 2023
  • Netflix Inc added 7.7 million subscribers in its fourth quarter.
  • Wedbush's Pachter sees upside in Netflix shares to $400.
  • The stock has already doubled versus its low in May 2022.

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Netflix Inc (NASDAQ: NFLX) is trading up in extended hours after the streaming giant said it added way more subscribers in its fourth quarter than expected.

Should you buy Netflix shares?

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The on-demand media company added 7.7 million subscribers in its recently concluded quarter. In comparison, analysts had called for 4.58 million additions only.

Consequently, Michael Pachter (Wedbush analyst) recommended buying Netflix shares and said they had upside to $400 – more than a 25% gain from where the stock closed the regular session today. On CNBC’s “Power Lunch”, he said:

Fundamentally, there’s value here. They’re generating positive free cash flow. They’ve gotten religion on costs. They’re trimming production and staff costs and focusing on profitability. I think people will pay 25-30 times earnings for that.

Pachter is bullish on the recently launched ad-supported tier (find out more) and upcoming password sharing crackdown as well. According to Netflix, it will not issue guidance on subscriber number moving forward.

Notable figures in Netflix Q4 earnings report

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  • Earned $55 million versus the year-ago $607 million
  • Per-share earnings also slipped from $1.33 to 12 cents
  • Revenue climbed nearly 2.0% year-on-year to $7.85 billion
  • Consensus was 55 cents a share on $7.86 billion revenue

Netflix announces a major leadership shakeup

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Also on Thursday, founder Reed Hastings said he’s stepping down as the chief executive but will remain with Netflix Inc as its executive chairman.

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Greg Peters (Chief Product Officer) will assume his role and lead the company with Ted Sarandos moving forward, as per the letter to shareholders.

Netflix shares have now doubled versus their record low in May 2022.  


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