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Netflix's 'Q3 search trends in-line with expectations': RPT

Yahoo Finance's Ines Ferre shares the latest findings on Netflix ahead of its third-quarter earnings report from a new note from Piper Sandler.

Video Transcript


BRIAN SOZZI: Welcome back to "The First Trade." Netflix and chilling during the pandemic means another big quarter for Netflix is probably on tap. Ines, I know you're diving into some new notes this morning from Piper Sandler.

INES FERRE: That's right. I know from Piper Sandler with an overweight rating saying that the September quarter in Netflix, Navigator, the search index that they've been using, points to a third quarter subscriber growth, essentially in line with what analysts had been expecting. And Piper Sandler is expecting growth of 8.8% for subscriber growth in the US and Canada, 34.5% for subscriber growth internationally. As far as competition is concerned, the note is basically saying that they anticipate little impact from HBO Max, which launched back in May 27. And also despite increasing competition, Netflix continues to capture a significant share of content consumption dollars, according to the analyst.

Now, you'll note that yesterday Netflix was up more than 2% when a lot of stocks were either flat or down, and Disney was also up more than 3% after Disney said that it was going to be focusing on Disney Plus streaming directly to consumer. I do want to mention that Netflix says that it will stop offering free trials in the US. This is a move that has been expecting. Netflix has been going towards this move with other countries like Mexico, one of the first countries to end these free trials.

But Brian, many analysts feel that as far as streaming is concerned, Netflix, it's their world. Everyone else is living in it. We had a note recently from Jefferies with a price target increase with Jefferies having an overweight rating on Netflix saying that Netflix can increase the amount it charges to subscribers anywhere between $1 and $2, depending from market to market, and that this will produce incremental revenue anywhere between 500 million up to $1 billion. So really, Netflix can increase the price that it charges subscribers, and subscribers will still stay with the streaming service.

One other note I want to make about this recent note from Piper Sandler is that they've cited a survey, 41% of respondents intend to maintain Netflix subscriptions after the stay at home regulations ease. And also, they cited a separate survey, which says that 52% in a separate survey indicated a willingness to absorb a price increase. So again, Netflix can increase prices, subscribers will still stick with Netflix.

BRIAN SOZZI: Wait, no more free trials?

INES FERRE: No more free trials in the US. The company intends to stop those free trials in the US. That's right.

BRIAN SOZZI: Straight up wrong. All right, thanks so much, Ines.