According to Goldman Sachs, strong app download trends recommend that Netflix may exceed net subscriber addition estimates when it releases its second-quarter effects next week.
In a note released Friday, Goldman raised his Netflix value target to $670, representing a possible 32% increase since Thursday’s close.
The company justified the incredibly high estimate with data from SensorTower, which shows that the Netflix app posted a quarterly download record and that year-over-year download expansion peaked since the first quarter of 2016.
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Goldman rejected Netflix’s unusual bassist thesis: “If you’re not a subscriber now, you never will be.” The company said Netflix is benefiting from an acceleration in the video streaming trend induced by the COVID-19 pandemic, as very few video streams can compete with the length of its ad-free content library.
The company said it believed that investors continued to underestimate Netflix’s “addressable global market, the effect of increased content spending, Netflix’s development pricing for content providers and creators, weakening the competitive landscape, and accelerating the global adoption curve in today’s environment.” Goldman says.
Goldman highlighted the new content of the quarter that may have helped attract new subscribers, adding the new seasons of “Money Heist”, “13 Reasons Why” and “Dead to Me”.
In addition, the company said Netflix could report positive loose money of $99 million for the quarter, as spending on content runs out due to the convenient closure of TV shoots and movies amid the COVID-19 pandemic.
Shares of Netflix surged as much as 3% to record highs on Friday. Netflix is up 61% year-to-date.
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