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Investment Firm Benchmark Maintains Cautious View on Netflix’s Initiatives

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The streaming media behemoth’s endeavours in advertising, password sharing, and gaming are still in the early stages, according to investment firm Benchmark, which repeated its cautious view on Netflix (NASDAQ:NFLX) on Tuesday.

Analyst Matthew Harrigan highlighted the company’s initiatives in advertising and reducing password sharing are anticipated to be “accretive” to revenue over time, but only offset some of the challenges for subscription revenue. Harrigan has a sell rating and a $250 per share price objective on the stock.

Yet, Harrigan acknowledged that the company’s subscription that is financed by advertising is probably going to grow to be a “substantial” portion of its total subscriber base.

According to our current estimates, subject to execution, [advertising-video-on-demand] could generate $15 to $38 in share value, depending on the time frame.

At the end of 2022, Netflix (NFLX) had 230.75M paying subscribers.

Netflix (NFLX) announced on Monday that it aims to release 100 new games, including monthly releases, with another 70 games in development. According to Harrigan, this update will probably only have “moderate retention effects.”

The price of Netflix (NFLX) shares increased slightly on Tuesday in premarket trading.

Earlier this week, J.P. Morgan advised investors to purchase Netflix (NFLX) stock as it began to roll out paid sharing more broadly.

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