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Netflix cracks down on users sharing passwords

Yahoo Finance Live checks out Netflix's shares after Atlantic Equities upgrades the company's stock to "Neutral" and the streaming platform announces plans to limit password sharing.

Video Transcript

DAVE BRIGGS: NFLX spiking today and an upgrade from Atlantic Equities from neutral to overweight, bumping its price target significantly from $211 to $283, implying more than 17% upside. Netflix also the subject, though, of some heated criticism in Latin America. And that's where it started that crackdown on password sharing. According to reports, any long-term use outside the user's home location will log out the original account holder, who will then be prompted to pay an additional fee once they log back in. It's not entirely clear how this is going to roll out here, but bumpy so far in Latin America.

More bad news on the horizon. A survey from reviews.org showed 25% of Americans plan to cut their Netflix subscription this year as a result of their price increases and inflation. Netflix shares, though, up more than 9% on the day. What a spike, but still down almost 60% year to date. That number, though, if it is real, a significant cut into their numbers, Rachelle. 25% of people plan to cut their service. I think this password sharing crackdown is going to be very bumpy in terms of how they police it, multiple family members using it in different locations.

RACHELLE AKUFFO: I mean, it's true. And clearly, Netflix is really sort of trying to look for some other options, as we saw those subscriber numbers started falling, more competition in this space. We're even seeing them increase their push into gaming. We're seeing that they're launching an internal gaming studio. In Finland right now, they have 1/3-- about 31 games on the app. Netflix isn't something you usually associate with gaming, so they're definitely trying to broaden their horizons in a very difficult time for streamers right now.

SEANA SMITH: I don't know. It could make a lot of sense when you take a look at this bullish call here from the Street. Cowen was out a couple of months ago, saying that their new ad tier plan could potentially be a game changer here in order to attract those subscribers that maybe do plan to cut the cord because of higher prices. So if you're able to bring in new subscribers, maybe those who share an account and might be forced off here in a couple of months, it could be a strong play here for the company. Obviously, Netflix has been under pressure, so a valuation call as well.