Stock of the Week: Netflix

Password sharing doesn’t seem to be the problem.

Andrew Willis 2 May, 2022 | 1:56AM
Facebook Twitter LinkedIn



Explore more Stock of the Week episodes here

Andrew Willis: Netflix (NFLX) encountered its first streaming subscriber net loss ever in the last quarter, following increased competition and recent price increases to their service – yet management seemed to focus on password sharing and shortages in smart TVs for the loss in customers…

Senior equity analyst Neil Macker says cracking down on the 100 million-plus non-paying households that use Netflix will not be the panacea that investors might expect, while it might be able to squeeze a few bucks out of some subscribers, others might just cancel.

Plus, the last thing a streaming service should do is remind customers of the monthly fees. Yet that seems to be happening a lot recently. And those customers that had a borrowed password? Many of them might not view the service as valuable enough to pay for.

Maintaining a strong audience is also important for things like advertising, where the company is likely to try out lower prices in markets like India, combined with lower-priced ads. This move isn’t likely enough to jumpstart growth, but we do expect it to help make up around 70 million more members by 2026 – so at least Netflix doesn’t seem to be going the way of Blockbuster just yet.

For Morningstar, I’m Andrew Willis.


Editor's Note: All images are courtesy of and AP Images. 

Get the Latest Stock Insights in Your Inbox

Subscribe Here

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Netflix Inc669.38 USD2.47Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy       Disclosures        Accessibility