Netflix (NFLX) shares jumped higher Monday after analysts at Citigroup boosted their rating on the stock and details emerged of a $20 million purchase by CEO Reed Hastings.
In a note providing updates on Netflix and Spotify (SPOT), Citigroup analyst Jason Bazinet lifted his Netflix rating to 'buy', from 'neutral', citing the streaming group's ability to raise prices in compensation for slowing subscriber growth, but slashed his price target by $145, to $450 per share, following the stock's worst monthly decline in more than a decade.
Co-CEO Hastings, meanwhile, grabbed $50,000 Netflix shares, worth around $20 million, in the immediate aftermath of its post-earnings slump on January 21, according to Securities and Exchange Commission filings.
Netflix, in fact, lost $50 billion in market value during that Friday trading session after it told investors that first quarter subscriber growth would slow to 2.5 million, compared to a market forecast of 5.9 million, citing what it called "Covid overhang" in key overseas markets.
“While Netflix and Spotify may see more modest sub growth, we see other top-line vectors," Bazient wrote. "For Netflix, we believe the firm has ample pricing power. For Spotify, we believe the firm can improve ad-supported monetization.”
Netflix shares were marked 9.7% higher in early afternoon trading Monday to change hands at $421.40 each, a move that would still leave the stock with a six-month decline of around 18.2%.
Last week, another big-name investor, billionaire hedge fund manager Bill Ackman, revealed a new $1 billion stake in the streaming group as Pershing Square Capital Management began buying shares in Netflix when they first slipped below $400 following its weaker-than-expected fourth quarter earnings report.
"We are pleased to add Netflix to our portfolio," Ackman told investors in his hedge fund late Wednesday. "Netflix is a primary beneficiary of the growth in streaming and the decline in linear TV driven by its superior customer experience, a vast and diverse amount of superb, constantly refreshed content, global improvements in bandwidth, and the proliferation and continuous improvement and convenience of devices on which one can watch."
Netflix said last week that earnings for the three months ending in December were pegged at $1.15 per share, down 3.3% from the same period last year but firmly ahead of the Street consensus forecast of 82 cents per share, while revenues rose 16% to $7.71 billion.
In terms of revenues, Netflix said it sees a top line of $7.9 billion for the current quarter, with net income in the region of $1.304 billion, translating into earnings of $2.86 per share.
