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Netflix (NFLX) -1%, Roku (ROKU) +4% on Tuesday after analyst notes
Streaming service Netflix (NFLX) traded lower on Tuesday after Benchmark spoke of waning sub growth, while media platform Roku (ROKU) went higher on its ad revenue potential.
Netflix (NFLX) shares were down 1%, while Roku (ROKU) made gains of 4% after respective notes from analysts set the tone for investors during trading on Tuesday.
Benchmark’s Matthew Harrigan is bearish on Netflix due to his expectations that new subscriber growth will slump again in Q4, following the steep drop-off in Q3.
Netflix also fell short of the Wall Street consensus for earnings in its last quarterly report.
Harrigan backed up his pessimism with a sell rating and $412 price target.
He added that there appears to be little enthusiasm for Netflix’s slate of original content for 2021, even though many consumers will be glued to small screens this year amid a recent surge in COVID-19 cases.
Harrigan noted: “Netflix’s trading correlation with other prominent Nasdaq 100 and FAAMG names has now clearly broken down.”
Greater competition from rival services such as Disney+ from Walt Disney (DIS) and Apple TV+ from Apple (AAPL) has also pressured Netflix’s position in a previously relatively uncontested space.
NFLX stock did rise after the first bell on Tuesday, but it slipped into negative territory (-0.39%) later in the morning for a new $520.84 share price.
Roku fared better after Wells Fargo reiterated an overweight rating and added $139 to a new price target of $414, the highest on Wall Street.
Analyst Steven Cahall believes that Roku is well placed to benefit from a recent rise in “advertising video on demand”.
Roku’s monetisable ads generated $1.79 revenue per user last year, according to Wells Fargo.
The Wall Street Journal reported earlier this week that Roku could add Quibi’s content catalogue after it moved closer to securing a deal.
Roku shares rose 4.07% to $330.83 on the Nasdaq on Tuesday.
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