Netflix's recent price cuts could actually raise revenue and be a test for its future

Netflix $Netflix(NFLX)$ recently enacted price cuts in roughly 100 of its smaller markets, but investment firm Citi said the actions are "inextricably" linked to the streaming giant's password sharing enforcement and could actually wind up boosting revenue.

Analyst Jason Bazinet, who has a buy rating on Netflix (NFLX) stock, said the price cuts - which amount to a roughly 50% drop - could wind up boosting the company's aggregate revenue by 1% and help align the retail price in the markets "with the utility each user derives from the service," compared to the household that pays for the service.

Looking at it from a holistic standpoint, the advertising market in the roughly 100 markets that Netflix (NFLX) lowered the price point of its subscription is small and penetration rates are low, making an ad-supported subscription not feasible in these markets.

Additionally, Netflix (NFLX) is only enforcing password sharing in four markets - Canada, Spain, New Zealand and Portugal - and only Canada and Spain have the ad tier.

As such, it's possible the performance of these markets could dictate how Netflix (NFLX) handles the roughly 90 "status quo" markets.

"If the ad tier performs well, the ad tier may expand," Bazinet wrote in the investor note. "If it does not, we could see price cuts expand beyond the current footprint of [roughly] 100 markets."

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  • YeddaJohnson
    ·2023-04-07
    Anytime it drops below $340, cover and RUN for the hills. Because this will skyrocket to $375 - $380 after Earnings then steady climb to $400 by next month.
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  • shining87
    ·2023-04-07
    The stock moves on subscriber adds not earnings. I think the quarter was lower to inline but the guidance will be strong.
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  • XantheJuliana
    ·2023-04-07
    As long as it holds its 50 dma at 332 the trend is still up.
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  • fishinglo
    ·2023-04-07
    NFLX is embarrassing shorts with this weak dip lol
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  • YorkTurner
    ·2023-04-07
    I'm not feeling confident about NFLX's upcoming ER.
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  • CYKuan
    ·2023-04-02
    thanks for sharing
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  • Yamazaki月
    ·2023-04-02
    cool
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  • CindyLoh
    ·2023-04-02
    good
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  • ee244c
    ·2023-04-02
    Ok
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  • Minjow
    ·2023-04-01
    good
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  • HockLai
    ·2023-04-01
    good
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  • LSK9092
    ·2023-04-01
    ok
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  • Camper
    ·2023-04-01
    [Cool]
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  • WendyK
    ·2023-04-01
    Okie
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  • Joseph Hito
    ·2023-04-01
    great
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  • VivianChua
    ·2023-04-01
    ok
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  • YueShan
    ·2023-04-01
    Good ⭐⭐⭐
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  • LEESIMON
    ·2023-04-01
    Ok
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  • boonhong21
    ·2023-04-01
    [Happy]
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  • DURH
    ·2023-03-31
    Good
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