Netflix Analyst Predicts Q4 Subscriber Beat, Cautions On Q1 Guidance: Subs That Joined For NFL, Boxing 'Could Churn Off'

Netflix (NFLX) is expected to report a strong subscriber growth in the fourth quarter of 2023, driven by the introduction of its ad-supported tier and the crackdown on password sharing. However, an analyst warns that subscribers who joined specifically for events like NFL games or boxing matches could churn off in the first quarter of 2024.

Rosenblatt analyst Barton Crockett maintained a Neutral rating on Netflix with a $680 price target, predicting that the streaming giant could beat revenue estimates for the quarter. He also expects Netflix to report a significant increase in paid net subscriber count, driven by the NFL Christmas Day games and the Tyson vs. Paul boxing match.



Crockett estimates that Netflix will have ad revenues from two NFL games in the fourth quarter, which could be over $60 million per game, or $120 million for the two. He also sees subscriber growth coming in ahead of estimates, with viewership for top 10 titles up 25% year-over-year in the fourth quarter.

However, Crockett cautions that Netflix could lose some subscribers in the first quarter of 2024 who joined specifically for these events. He notes that it is common for other streamers to have consumers sign up for big sporting events and then churn off afterwards. He will look for a defense of sports rights ROI at Netflix on the earnings call.

Netflix's strong subscriber growth in the fourth quarter is expected to continue into 2024, with the company forecasting healthy double-digit revenue growth on a foreign-exchange-neutral basis driven by continued membership growth and improvement in average revenue per membership. The company also expects strong growth from its new lower-priced ad-supported subscription tier, which began rolling out in November 2023.

However, Netflix will cease reporting on subscriber numbers from Q1 2025, as it repositions itself to better reflect its investment-grade status. The company plans to be at 300 million global subscribers when it ceases publicly reporting on these numbers, up from 269.6 million in Q1 2024.

In conclusion, Netflix is expected to report a strong subscriber growth in the fourth quarter of 2023, driven by the introduction of its ad-supported tier and the crackdown on password sharing. However, subscribers who joined specifically for events like NFL games or boxing matches could churn off in the first quarter of 2024. Netflix's strong subscriber growth is expected to continue into 2024, with the company forecasting healthy double-digit revenue growth and strong growth from its new lower-priced ad-supported subscription tier. However, Netflix will cease reporting on subscriber numbers from Q1 2025, as it repositions itself to better reflect its investment-grade status.