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Netflix stock drops after Needham turns bearish, says company needs to add an ad tier

Investment News

Shares of Netflix Inc. NFLX, -1.98% are off 2.4% in premarket trading after Needham analyst Laura Martin downgraded the stock to underperform from hold, writing that she expects the streaming giant to shed 4 million U.S. subscribers in 2020 due to the high price of its service relative to other streaming offerings. “We believe Netflix must add a second, lower priced, service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, each of which have $5-$7/month choices,” Martin wrote. She argued that the company’s balance sheet wouldn’t be able to sustain lower revenue from this lower-priced tier so Netflix should consider adding six to eight minutes an hour of advertisements for this hypothetical tier priced at $5 to $7. The stock has gained 15% so far this year as the S&P 500 SPX, -0.32% has increased 25%.

 

As seen on www.marketwatch.com, Written by Emily Bary

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